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Leaseholders' Rights Bill

I thank my hon. Friend for making that point, and I assure him that we would look into it—and, no doubt, discuss it with him—if we were to introduce further consultation on this matter. For the first time, all leaseholders are entitled to receive a prescribed ground rent demand at a certain time before such sums became payable. This provided important protection against a leaseholder inadvertently forgetting about his obligation to pay a ground rent and then facing claims for additional costs alleged to have been incurred by a landlord in recovering these sums. In the Housing and Regeneration Act 2008, we amended the Landlord and Tenant Act 1985 to enable us to introduce measures to ensure that leaseholders will automatically receive a regular statement containing information about their service charges, with the same right to see supporting documentation. Landlords who do not provide the statement or make the supporting documents available will be open to challenge at a leasehold valuation tribunal. We are currently drafting regulations to give effect to this measure, along with other measures to provide protection in respect of service charge moneys held by landlords. Leaseholders will have sanctions if this is not complied with, including the right to withhold service charges. Also, when leaseholders receive demands for service charges and administration charges, they must be given a summary of their rights and obligations in relation to such charges. That means that when they need to know, they are made aware of their important rights where such sums are concerned. Leaseholders can now challenge demands for administration charges covering matters such as payments for consent, which they are required to pay under the terms of their lease. Leaseholders of houses can now also take over the responsibility for insuring their properties from their landlords. I turn to an issue that will be of particular interest to the hon. Member for Beckenham. We have looked at the issue of local authority leaseholders who find it difficult to pay service charges. The Housing and Regeneration Act 2008 increased the options available to local authority landlords to help leaseholders in this position. Since April 2009, landlords have been able to offer interest-free equity loans and to buy equity shares in properties. This is in addition to their long-standing ability to offer loans on varying terms, to spread payment over a longer period, to agree to delay payment until the property is sold, or to buy properties back outright from owners who are in arrears with service charges or cannot cope with the costs of looking after their home. The Government fund part of the cost of such buy-backs by letting the authority retain more of the receipts from property sales. Under the Social Landlords Discretionary Reduction of Service Charges (England) Directions 1997, landlords can also cap service charges if certain conditions are met, including if a leaseholder will suffer exceptional hardship. In 2002, we undertook a review of issues relating to major works service charges paid by local authority leaseholders. That was done because of concerns raised over high service charges that were being levied on local authority leaseholders, principally arising out of work being carried out to bring homes up to an acceptable standard under the decent homes programme. We learned that many local authorities, particularly in London, already offer a range of forms of assistance to their leaseholders. They offer a range of payment by instalment options; some agree to delay payment until the property is sold; others even offer a discount if the bill is paid in full promptly. A written ministerial statement on 29 March 2007 outlined the Government's position and the options on offer to leaseholders at that time—support which, as I have already mentioned, has been improved by legislation. However, I can assure the hon. Lady and other Members present that we are keeping the position under review in the light of current financial and housing market conditions. I therefore hope that Members will agree—although I completely take on board the points made today—that the Government have improved the rights and protections available to leaseholders in many significant respects. They have been empowered by rights that were not available until we took this action. Let me deal with the Bill's proposals in more detail, and begin with the proposal for involving tenants in works. As I outlined earlier, the consultation provisions in the Landlord and Tenant Act 1985 which were amended by the Commonhold and Leasehold Reform Act of 2002, already cover most of what is proposed here. There is a statutory requirement that all landlords must consult their leaseholders before carrying out works to their buildings and estates. These existing consultation requirements, which are contained in regulations made under the 1985 Act, cover most of what is proposed in the Bill. I have already mentioned how the existing consultation rights give leaseholders an input into the procurement process. We have to ask whether the additional requirements proposed in the Bill—to consult on specifications for tenders, to put forward counter proposals and to hold ballots—would add to the consultation process. It would not be helpful to tenant or landlord if we were to replicate or replace rather than add to the process. We need to be cautious not to increase the complexity, time scales, costs and burdens of consultation, given that in some cases those would be passed on to leaseholders. We also want to be clear that there is no risk that leaseholders could also force landlords to accept counterproposals that could put them in a position where they are not able to fully meet their contractual obligations to all leaseholders—and to their tenants—to maintain and repair a building or estate. I am sure that those are consequences that the hon. Lady would want to ensure were avoided in her Bill. Proposed new section 20ZA(1)(g) would require the landlord to make certain documents available for 10 years. Retaining documents relating to service charges, works and agreements should, at the very least, be a matter of common sense where it is not already enshrined in best practice or as a statutory requirement. But it is sensible for both leaseholders and landlords to retain those documents. Because leaseholders can challenge the reasonableness of service charges through a leasehold valuation tribunal, even when they have paid the charges, landlords need to be able to justify those charges with documentary evidence. Without such evidence, they are likely to have a weak case that will not impress a leasehold valuation tribunal. However, it seems unlikely in practice that a leaseholder will need to see information relating to service charges that goes back some 10 years. Further, leaseholders can currently request a summary of service charges, representing the last 12 months, and can ask to see documents supporting the summary. Also, as I have previously mentioned, we will be proposing changes to the legislation so that leaseholders will automatically receive a regular statement containing information about their service charges, with the same right to see supporting documentation. We are drafting the regulations that will give effect to this measure. There will also be sanctions if this requirement is not complied with, including a right for leaseholders to withhold service charges. Landlords would also be vulnerable and open to challenge at a leasehold valuation tribunal if the supporting documents are not available. We need, therefore, to reflect on the need specifically to legislate to compel landlords to retain information for an arbitrary period of time, particularly as it is already in a landlord's interest to do so. Proposed new subsection (5)(g)(iii), which can be found in clause 1(2), would place a requirement on landlords to make publicly available requests to the residential property tribunal service as well as the decisions. We think that that is unnecessary, because determinations made by those tribunals that determine matters under the residential property tribunal service are already publicly available through the residential property tribunal service website. Of course, tribunals make all relevant information available to the parties involved in the dispute. We therefore do not need to add additional burdens and costs to the process by asking landlords to make public all requests to the tribunal. The final element of clause 1 relates to payment arrangements that must be made by landlords when service charges exceed £12,000 in any 12-month period. I recognise the driver behind the clause. I know that quite a number of local authority leaseholders have received high major works service charge bills that reflect the work being carried out through the decent homes programme to overcome years of neglect. The intention of the clause appears to be to allow leaseholders to spread out their contributions to costs over a longer period. However, we need to ensure there is no ambiguity and to ensure clarity in what is proposed. There is a risk that the clause is unlikely to achieve what is intended. In addition, it would also affect all landlords and not just local authority landlords. It would require landlords to make index-linked arrangements for leaseholders to pay in reasonable instalments when contributions exceed £12,000 in any 12-month period. As I said, the clause raises a number of questions that I think would need to be considered. For example, what does it actually mean? Over what period should the instalments be paid? What would be regarded as reasonable instalments? Those matters appear to be left solely to the discretion of the landlord. Clause 2 proposes to amend section 105 of the Housing Act 1985. Section 105 deals with the duty on landlord authorities to engage with their secure tenants on housing management matters that are likely substantially to affect them—for example, if there is a new programme of maintenance, improvement or demolition of dwelling houses let by the authority, or a change in policy or practice. Landlord authorities for that purpose mean local authorities, registered housing associations, charitable housing trusts and development corporations. That means that secure tenants of these authorities must be kept informed about the authority's proposals and given the opportunity to comment. The Bill would require those landlords similarly to consult their secure tenants on all national Government consultations that substantially affect them and where the landlord intends to respond. As proposed, it would appear that that would be a significant additional burden for any authority to carry, without obvious benefits to the tenants. As drafted, the proposal would also appear not to relate to leaseholders, whereas I believe that the Bill's main aim is to help them. Overall, there is a balance to be struck. We all need to satisfy ourselves that what is proposed would provide a greater opportunity for tenants to make their views known to Government, rather than duplicate how the Government received responses. We also need to consider the burden on local authorities and other landlord authorities, which may be forced to consult on issues on which tenants do not wish to engage. To recap and conclude, the proposals in the Bill put forward by the hon. Member for Beckenham, while very well intentioned, are already available under existing legislation. I do not think that the changes proposed would deliver real benefits to leaseholders, and there is a danger that they would add significantly to the procedures with which landlords would need to comply. Again, that would create unnecessary burdens and costs—costs that would, in many cases, be passed on to the leaseholders whom the measures are intended to benefit. The current position strikes a fair balance between the rights and responsibilities of leaseholders, having taken into consideration the sometimes polarised views of those affected, so the Government cannot support the Bill. However, as I have said, I will certainly look at all the issues closely, and will discuss them with my right hon. Friend the Minister for Housing. I ask the House not to support the Bill on Second Reading.