Bill, as amended in the Public Bill Committee, considered.
I beg to move, That the Bill be now read the Third time.
I am moving Third Reading, Mr Speaker, with the consent of my hon. Friend the Member for Kettering (Mr Hollobone), who is the Member in charge of the Bill.
The Bill will make a small change, but one that will be very important for those affected, to the law on the process by which tenants can take advantage of the right to participate in collective enfranchisement and extend the leases of their flats. I am conscious that the Bill was not debated in the Chamber on Second Reading and that this morning provides the only opportunity to explain its purpose and the reasoning behind it. For the benefit of the House, I will set out the current position and the change the Bill seeks to make.
The Bill is, I fear, a rather complex and technical measure, but I will endeavour to explain it as simply as possible. We are fortunate that the issue in question has been the subject of litigation, although I am sure that the participants in the litigation did not think that it was at all fortunate that they were so involved. It does mean, however, that we can use a real-life case to illustrate the problem that the Bill seeks to solve.
First, let me place on record my thanks to my hon. Friend the Member for Kettering, who presented the Bill as I was not able to attend the House on the date set for the presentation of Bills. He has calmly and without complaint fielded the many inquiries that have arisen as a result of the Bill’s title. I must apologise to the many people outside the House who have corresponded with me about leasehold reform and who had rather more ambitious aims for this Bill, and I regret that they might be somewhat disappointed by its lack of content.
I am grateful to my hon. Friend and our hon. Friend the Member for Kettering (Mr Hollobone) for bringing the Bill this far. May I sympathise with him and say that rather than putting the load of necessary leasehold reform and so on on to this Bill, which would not get through the House if it were expanded, we ought to try to ensure that we in this House, the Government and the property chamber bring together the problems, abuses and difficulties that leaseholders face and see whether we can find simple ways of making their lives easier and better?
I am grateful to my hon. Friend for that intervention and I know that he has a specific and long-standing interest in leasehold reform. He is right to draw the House’s attention to the fact that this area of law is complex by any measure. Many outside the House also feel that it would benefit from simplification, whether by the Law Commission or by the Government of the day pulling together the different pieces of legislation that govern the leasehold tenure provisions. There is plenty of scope for improvement, and I think he would agree with me on that.
As I said, I fear that those outside the House who have an interest in this area of law had rather ambitious hopes for the Bill when they saw its title appear on the Order Paper. However, as my hon. Friend will know, it is not really appropriate for a private Member’s Bill to try to deal with all the matters that he may have in mind and would like to see resolved in future; it would run into all sorts of problems in the House if it did.
Hon. Members will appreciate that private Members’ Bills are fairly narrow; they have to be, if they are to make progress. It is not usual for them to make whole-scale changes to a particular area of law. I should add at this point that unusually for a private Member’s Bill that has reached this stage—Third Reading, the final stage in its legislative process through the House—this is a genuine private Member’s Bill. I say that not in any way to belittle private Members’ Bills that contain legislative proposals suggested by the Government of the day, because invariably—indeed, as we have seen in every Session of this Parliament—those Bills contain sensible measures, which are welcomed by those affected. However, this legislation demonstrates that it is entirely possible for a Bill to make progress through the House even though it was not originally conceived within Government.
I have referred to the Bill as a genuine private Member’s Bill. However, I must pay tribute to the work of the Association of Leasehold Enfranchisement Practitioners, which brings together both solicitors and valuers who act on behalf of landlords and tenants in respect of collective enfranchisement and lease extension matters. It seeks to promote best practice and has been campaigning for improvements to the legislation dealing with leasehold tenure, which, as I said, is a particularly complicated area of law. In particular, I wish to place on the record my thanks to Mr John Midgley, the property enfranchisement partner at Seddons solicitors and a member of the advisory committee of ALEP, for his sage advice and assistance.
There are traditionally two types of tenure of land in this country: freehold and leasehold. An owner of the freehold interest in land may either retain the right to occupy that land themselves or choose to allow someone else to occupy the land for a fixed period. The terms and conditions that govern the relationship between the freeholder and the holder of the lesser interest in the land—the leaseholder—are set out in a document that we all know as a lease.
Initially, owners of long leases of dwelling houses were given the right to buy the freehold interest in the land on which the dwelling house was built by virtue of the Leasehold Reform Act 1967. However, that Act applied only to houses; people who lived in flats were excluded. Some 26 years later, long leaseholders living in blocks of flats gained what was called a collective right to buy the freehold of the blocks they lived in under the terms of the Leasehold Reform, Housing and Urban Development Act 1993. That Act also provided for a leaseholder to acquire a new lease to extend the period of years for which they held the property.
To commence the process by which the right of collective enfranchisement can begin it is necessary for a tenant to serve on their landlord a notice pursuant to section 13 of the 1993 Act. A similar notice is required under section 42 of the Act to trigger the statutory procedure to enable a leaseholder to acquire a new lease. Currently, where a leaseholder wishes to give notice under either section 13 or section 42 of the 1993 Act, section 99(5)(a) provides that any notice served pursuant to either section 13 or section 42 must be—and this is the crucial part of the Act that we are hoping to remedy—
“signed by each of the tenants, or (as the case may be) by the tenant, by whom it is given”.
As I will explain, that statutory provision has been interpreted by the courts to mean that the notice must be signed personally by the tenant. Normally, solicitors can, and frequently do, sign legal documents for and on behalf of their clients. It is also normally possible for any person who chooses to do so to execute a power of attorney to appoint someone else to act on their behalf and sign legal documents on behalf of the donor of the power.
Unusually, in my experience, this is one area of law where even a person holding a valid power of attorney would be prohibited from signing the notice on behalf of the donor. As the House can doubtless immediately imagine, that could have potentially devastating consequences for the affected person. Incidentally, the same problem would arise where someone was appointed by the Court of Protection to manage the affairs of someone else who, by reason of mental incapacity, was unable to manage their own affairs. That would happen if an individual became mentally incapable of managing their own affairs but had not previously entered into an enduring power of attorney, or what is now called a lasting power of attorney; the difference between the two terms is of little relevance.
Before I proceed further, it may assist the House if I refer to St. Ermin’s Property Company Ltd. v. Tingay, the leading case on this issue. It concerned the validity of a notice given under section 42 of the 1993 Act. I will refer to the facts of the case, as set out in the judgment of Lord Justice Lloyd, sitting in the chancery division of the High Court of Justice, on appeal from the decision of His Honour Judge Morgan, sitting at Staines county court.
In this case, the tenant of a first floor flat situated at 10 Hill Court on Wimbledon Hill Road in London SW19 held her property under a lease dated 14 May 1976, which granted her and her husband a lease of 60 years less a few days. She maintained that the flat was occupied by her as her only or principal home for almost the whole of the 10-year period up to the date on which the notice was given, which was 11 October 2000. The tenant was elderly. By the time the High Court judgment was given on 19 July 2002, she was less than a month short of her 90th birthday.
In March 2000, the tenant moved out of the flat into accommodation in which her needs could be better attended to. In anticipation of her deteriorating health, this elderly lady had done what we would think of as the right thing to do: executed an enduring power of attorney that gave general authority to her son and daughter to act—jointly and separately—on her behalf.
The elderly lady’s lease was one to which the provisions of the 1993 Act applied, thus allowing her to claim the grant of a new lease. Accordingly a notice was given under the terms of section 42 and, pursuant to the power of attorney, it was signed by her son. The landlord served a counter-notice that made four points, one of which was that the notice did not appear to be in the correct form. The landlord then commenced legal proceedings to seek a declaration that the tenant had no right to acquire a new lease and that the notice was invalid or defective.
At the county court hearing, the judge followed a 1998 decision of His Honour Judge Cowell in the West London county court and held that the notice was not valid. However, the judge gave permission to appeal because the point was not covered by any authority higher than the county court.
I shall quote directly from the High Court judgment of Mr Justice Lloyd, as he set out the problem succinctly. He said:
“It is a short point, but a somewhat puzzling one…As a general proposition things that can be done by an individual may be done either personally or by a duly authorised agent. That is true under the common law generally, and under statute. There are, however, exceptions. In some cases the provision which allows for, or requires, the thing to be done also prescribes that it must be done personally and not by an agent. In other cases, the nature of the thing is such that it requires personal skill or discretion, and cannot be delegated.”
Counsel for the tenant argued that to construe section 99(5)(a) would produce unintended anomalies, but the judge held:
“However, whatever anomalies this provision may produce, or however much of a trap it may be for tenants and their advisers, I agree with His Honour Judge Cowell that the distinction drawn in the construction (in the sense of putting together, as opposed to reading) of sub-s (5), between the method of signature of notices under s 13 or s 42 on the one hand, and other notices on the other hand, is so clear and so plainly deliberate that I cannot give s 99(5)(a) the meaning that it would have in isolation, and I must interpret it as requiring personal signature by the tenant, and not permitting signature on her behalf by anyone else, whether an ordinary agent or an attorney.”
I apologise; I did not have foresight.
May I, through my hon. Friend, put it to the Minister that the Government need to consult senior judges to determine whether, following this Bill becoming an Act, an overall provision is required so that any other unintended consequences arising from the use of the word “personally” can be sorted out without relying on good-natured Members to promote Bills that make minor amendments to major Acts that affect good people?
I am grateful to my hon. Friend for his submission to the Government as it might well be that such a problem exists in other aspects of our body of legislation. I agree that passing a catch-all provision would make corrective legislation such as this private Member’s Bill unnecessary.
The High Court judgment continued:
“A signature by an attorney is still a signature on behalf of the tenant rather than one by the tenant, in the terms of s 99(5), and would therefore be valid for the purposes of s 99(5)(b), but not valid for the purposes of s 99(5)(a).”
The judge went on to say:
“I would only add that another respect in which a distinction was drawn in the legislation between a personal act and an act by an agent is to be found in the provision that I have mentioned, s 42(3)(e), under which the tenant’s notice may state the name of a person appointed by the tenant to act for him in connection with his claim.
One might think it curious that the notice has to be given by the tenant, personally, in a situation in which the tenant has already decided that dealings in connection with the claim are to be with some other person, whether an attorney, a solicitor, valuer or whoever it may be, but the distinction is clear and it is, of course, even clearer in the context of s 99(5) itself. I mention s 42(3)(e) because it shows that in the wider context of the legislation there is other provision, which draws the same distinction.
For those reasons, which are much the same as Judge Cowell in Viscount Chelsea v. Hirshorn…I hold that a notice under s 42 can only be signed by the tenant, personally. A signature by an attorney is invalid, and I therefore dismiss this appeal.”
I think that that case clearly and vividly demonstrates not only why the Bill is such an important measure, but why it is important that legislation passed by the House is carefully scrutinised and that every effort is made to consider all possible unintended consequences of new laws.
I submit to the House that there are five simple reasons why it is right that the Bill should be passed. First, the problem does not apply to leaseholders seeking to exercise their rights under the Leasehold Reform Act 1967. Someone living in a house does not have a problem; it is only leaseholders of flats who are affected by the provision in the 1993 Act. Secondly, in respect of flats, the requirement for personal execution does not apply to landlords, so why on earth should tenants be disadvantaged in such a way when landlords are not?
Thirdly, the Bill does not apply to other notices required to be served under the 1993 Act. It is purely the initial trigger notices that have been found to need a personal signature. Fourthly, the Bill will remove the disadvantage faced by tenants who, perhaps because of mental incapacity or physical disability, are unable to sign. Fifthly, the Bill removes the problems faced by tenants who are temporarily absent from the country, be that on business or on holiday. Bizarrely, if a tenant dies having occupied a qualifying property for two years prior to their death, it is possible for the executors or administrators of their estate to serve a valid notice on the landlord, provided that they do so within two years of the issue of a grant of representation, so someone cannot sign a notice validly if they are alive, but their executors can if they are dead.
The House will be aware that the Bill was amended in Committee. I place on record my thanks to all those who agreed to serve on the Committee. The Committee’s sitting will always live in my memory and was particularly poignant because it was the very last time that I spoke to Paul Goggins, the late Member for Wythenshawe and Sale East, who graciously agreed to serve on the Committee. I remember that, as I left the room, he spoke to me for the last time to thank me for my work on this matter.
The amendments agreed to in Committee essentially made two changes to the Bill. First, they provided that the Bill would not apply to Wales. Since the 1993 Act was enacted, housing matters have been devolved to the Welsh Assembly. Consequently, even if the Bill reaches the statute book, the requirement for tenants to sign notices personally under sections 13 and 42 of the 1993 Act will remain in Wales, unless the Assembly chooses to pass a similar measure. The second small change made in Committee provides for the Bill to come into force two months after the date on which it receives Royal Assent, rather than the one month stated when the Bill was first published.
Tenants who are interested in taking advantage of their rights under the 1993 Act but who may be put off by the complexity of it all will be relieved to know that help is available from a range of sources, including the Leasehold Advisory Service, which published a guide to collective enfranchisement called “Getting Started.” I apologise to that body because, if this Bill is enacted, it will have to amend that document. As page 13 of the guide, which details what is required in the initial notice, correctly states:
“The Notice must be signed by all the participating tenants; no one can sign on their behalf.”
If we are successful in getting the Bill on to the statute book, the wording will need to be revised. I suggest: “The notice must be signed by, or on behalf of, all the participating tenants.”
A private Member’s Bill will generally not make any progress unless it has at least the tacit support of the Government of the day. I am grateful to officials in the Department for Communities and Local Government for recognising the strength of the arguments in support of this small legislative change. I thank them for their help and advice on drafting, and on the technical aspects of the Bill. I also thank the Government and Her Majesty’s Opposition for supporting the Bill. I thank the staff of the Public Bill Office for helping me to navigate the legislative pathway that a Bill of this nature has to follow.
Finally, to aid the understanding of Members and the wider public, explanatory notes were prepared and published with the Bill, but following the minor changes made in Committee and in order to bring the explanatory notes in line with the usual format, it is intended that the notes will be slightly amended and reissued before the Bill is considered in the other place, if it is read a Third time this morning. The Bill is a small but important measure, and I commend it to the House.
I congratulate the hon. Member for Bury North (Mr Nuttall) on championing the Bill through its various stages. I also congratulate the hon. Member for Kettering (Mr Hollobone), my constituency neighbour, who is the Member in charge of the Bill. Although there are many matters on which we differ, instead of rehearsing our disagreements, as happens all too often in this place, we are focused on those causes on which we can agree, particularly our joint campaign to improve our local hospital. I am pleased today to find common cause with him and with the hon. Member for Bury North, who has spoken so strongly in support of the Bill and has set out why the change is needed.
As the hon. Member for Bury North said, this is a simple but important Bill that seeks to address a technical issue that can be frustrating for leaseholders trying to exercise their rights to collective enfranchisement or to a lease extension, without unduly affecting landlords in the process. The Bill aims to remove the need for individual tenants to sign notices personally, and he has set out a wide range of cases in which that has been a real difficulty for people, no doubt including my constituents. Although I have not been approached on this subject directly, I am sure from his examples that many people across the country have been affected.
The Bill would give solicitors, or someone else duly authorised on a tenant’s behalf, such as an attorney, the ability to sign the notices. It is more than 20 years since the Leasehold Reform, Housing and Urban Development Act 1993 was enacted, since when there has been significant amending legislation: the important Commonhold and Leasehold Reform Act 2002, which was passed by the previous Labour Government. The 2002 Act gave important new rights to tenants, but over the years it has become apparent that there are still anomalies in the law that should be addressed. One of those anomalies, as the hon. Gentleman said, relates to the signing of notices under sections 13 and 42 of the 1993 Act. Currently, the notices must be personally signed by the individual tenant, which can cause problems, for example when a tenant has a disability and has given power of attorney to a third party, or when notices need to be signed by tenants based overseas. In many other areas, it is possible for a solicitor or other authorised representative to sign on an individual’s behalf, but as the law currently stands, that is not possible for signing notices under sections 13 or 42. The Government have been encouraged in this brief debate to consider other areas of the law in which that is a problem, but it must be right that, having so clearly identified the anomaly as a problem in respect of leasehold, we take action.
If a tenant cannot sign personally, no claim for a lease extension can be made. In the case of collective enfranchisement for the acquisition of a freehold, that may be prejudicial to getting a sufficient number of people involved. We therefore welcome the Bill making the necessary changes, and we will support its passage through the House.
I very much support the view expressed by the hon. Gentleman that it is right for Back Benchers not only to scrutinise and seek to improve legislation initiated by the Executive, but to seek to introduce legislation in this House in the interests of their constituents and the country. I fully support him in hoping that not only this but other private Members’ Bills, including my Bills, which are further down today’s Order Paper, may pass through this House.
The only connection I have with this Bill is that I was the hon. Member who had the privilege and honour to present it to the House. Any credit owing to it lies entirely with my hon. Friend the Member for Bury North (Mr Nuttall), who has brought to it and to this House his extensive professional experience in the law, acquired before he entered the House, and his diligence in scrutinising legislation and seeing how the law might be amended to the benefit of his constituents and the country as a whole. That has been exemplified in the way in which he has guided this Bill through the House.
When you read the Bill and explanatory notes in preparing for this morning’s debate, Mr Speaker, you will have seen how short they are. We have two pieces of paper—a green piece for the Bill and a white piece that explains it. The Bill is short, effective and to the point, and it does what it says on the tin. It exemplifies legislation that is drafted by Back Benchers and brought to the attention of the Executive of the day, draws on the advice and expertise that Government counsel can provide to tweak it to make it perfect, and is then steered through this House. I hope that its commendable example will be followed in relation to other Bills brought before the Chamber.
I thank my hon. Friends the Members for Wellingborough (Mr Bone), for Christchurch (Mr Chope), for Shipley (Philip Davies) and for Clacton (Mr Carswell) for jointly sponsoring the Bill and having the good sense and foresight to back it right at the start.
In his extremely interesting and informative remarks, my hon. Friend the Member for Bury North quoted at length from the legal judgment that made the case that legislation had to be defined as either personal or via an agent. This Bill has been introduced to the House via an agent—namely me, in the good name of my hon. Friend—and it will have the effect of changing the legislation for those who seek to enter into property matters. That has a nice symmetry that is entirely the responsibility of my good friend, my hon. Friend the Member for Bury North.
Some will know of the controversy there can be over Speakers. No one can be sure whether George Thomas was an avuncular member of the establishment or a firebrand maverick, but what is certain is that his name is associated with the leasehold reform of 1967. The conclusion of leases on houses in Wales had led to a terrible injustice, and he fought and gathered the forces to make reforms.
As my hon. Friend the Member for Bury North (Mr Nuttall) said, flats tend to be held under leases. It is fairly clear from the census that there are 5 million leaseholds. With, let us say, one and a half people per flat, that amounts to 7.5 million leaseholders. Half the properties in London are held under leasehold, and a growing proportion of new ones will be leasehold as well. We know about the scandals in the retirement sector. I will not go into the Office of Fair Trading report on what Peverel and Cirrus did in ripping off their leaseholders because it is not relevant to the Bill.
In making the change proposed in the Bill, we consider how two Government Departments and two extensions of Government ought to come together. What happens in the courts is mainly a matter for the Ministry of Justice. Some property issues are considered at leasehold valuation tribunals when there is a dispute between the leaseholder and the managing agent acting on behalf of a freeholder, and those bodies reach their conclusions. However, there is no method whereby Siobhan McGrath, who heads the MOJ’s property chamber, and the Department for Communities and Local Government can come together to consider what is coming up through the courts, the issues brought forward by Members of Parliament on behalf of their constituents, and what comes from the Government agency, LEASE, which is a source of information for leaseholders in trouble.
As my hon. Friend said, this Bill, which I hope will shortly become an Act, cures an unexpected court judgment over an unintended use of words which describe, though accurately, a false distinction between what a landlord or freeholder can do and what a leaseholder or those acting on their behalf can do. The arguments for the Bill have been put very plainly, and I will go no further in that respect. I will say, though, that matters of professional standards should be considered. I hope that those who look after the professional standards of lawyers—solicitors and barristers—and of accountants and surveyors will give guidance to their members as to whether they should use the nit-picking parts of the law as they see it while bouncing cases between the first-tier tribunal—the property chamber—and the county court, which leads to costs going up. That allows a very wealthy, well-resourced, clever, tricksy freeholder, or the managing agent working for them, to confound a leaseholder or an ordinary tenant. I would expect people in training for these revered professions to be told that if their conduct is clearly unjust—though it may be lawful—the professional standards bodies would consider a complaint against them.
My hon. Friends, with the co-operation of Opposition and Government Front Benchers, are curing one injustice, but many others need to be addressed. Over the next year and a half, we should aim to set up a way of gathering information on what can easily be done to make changes that improve the lives of ordinary people. We must ensure that those who are powerful, often greedy, and sometimes corrupt cannot make their living by ruining the lives of ordinary people, many of whom are elderly, vulnerable, poor and ill.
I congratulate my hon. Friends the Members for Kettering (Mr Hollobone) and for Bury North (Mr Nuttall) on bringing forward this Bill. My hon. Friend the Member for Bury North has been leading on it since it was introduced by my hon. Friend the Member for Kettering in June last year. I congratulate him on the progress that it has made through this House so far and share his hope that it will continue to prosper.
People may sometimes wonder why in Parliament we go through very small details and take great pains to explain them, but that is important in enabling us to get on and get things done quickly. As my hon. Friend the Member for Bury North said, this Bill is a good example of that. It originally went through without debate, so when the courts looked at these issues they were unable to see the intent that Parliament had as regards their ability to qualify personally in any way other than that which they already had. The Bill is also a good example of why making a small difference is sometimes a very big deal for the people it affects.
In thinking about the help that this Bill can provide, particularly to vulnerable leaseholders, we should recognise that, as my hon. Friend the Member for Worthing West (Sir Peter Bottomley) pointed out, the residential leasehold market is a large, growing and important part of the housing sector. Leasehold plays a vital part in a functioning housing market, providing opportunities not only for home ownership, but for private renting. CentreForum’s recent useful report, “A new lease of life”, estimates that there are approximately 2.5 million leasehold properties across England, so a substantial number will potentially be affected by the Bill.
The Minister rightly refers to the CentreForum report, which I think is one of the best reports produced in the past few years. Although the Minister uses its estimate, I think it would now accept that the census data mean that there are twice as many people involved. It may be possible for us to come to an agreement on what the numbers are—though not necessarily today—but we should try to use a figure that is more likely to be right.
My hon. Friend makes a fair point. The reality is that, with every day that passes—certainly with every month that passes—the number of people accessing the market is likely to grow. That highlights the importance of the Bill. It appears, on the face of it, to be short and simple, but it is actually an example of the way in which Parliament sometimes has the ability to make a beneficial difference to people’s lives.
Leaseholds can be complex and problematic—hence the Bill. That is primarily because this is a sector in which a wide range of different interests—financial and otherwise—exist in the same property, which inevitably creates scope for conflict. Ultimately, this relates to people’s homes, an issue towards which we naturally have strong feelings of protection. I assure the House that I am aware of the range of issues that can arise, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins), who has responsibility for housing, will be listening carefully to any concerns.
I thank members of the Committee who considered the Bill in December. In particular, I thank the hon. Member for Angus (Mr Weir) for chairing the Committee and presiding over a short but good-natured and constructive debate. Given the speed with which the Bill has progressed, it is important, as my hon. Friend the Member for Bury North has said, to put on record the intent, purpose and detail behind it so that, as my hon. Friend the Member for Worthing West has said, we do our bit to ensure that in future there are no further issues of interpretation with which a court might struggle.
It is a particular pleasure at this Friday morning sitting to welcome the cross-party support provided by the shadow Minister, the hon. Member for Corby (Andy Sawford), for which I thank him. I am pleased that, on the day of the Committee sitting, the hon. Member for City of Durham (Roberta Blackman-Woods)—who, as I understand it, stepped in at short notice—also gave cross-party support. I thank her for helping the Bill progress.
I endorse the tribute given by my hon. Friend the Member for Bury North to the late right hon. Member for Wythenshawe and Sale East, who was a member of the Bill Committee, which sat shortly before the Christmas recess. He is sorely missed by the House.
I am pleased to say that the Government fully support the Bill and will continue to do so as it goes to the other place, where I hope it will get a fair wind. As my hon. Friend has said, responsibility for it will pass into the hands of my noble Friend Baroness Williams of Trafford. I am confident that she will win wide support and sympathy for the Bill and steer it safely through the other place.
My hon. Friends the Members for Bury North and for Kettering are also to be congratulated on ensuring that the Bill can effectively achieve its worthwhile aim and that its extent is appropriate, thanks to some brief and well-targeted amendments that they, along with my hon. Friend the Minister for Housing, tabled in Committee.
By amending section 99(5) of the Leasehold Reform, Housing and Urban Development Act 1993, the Bill removes current restrictions on who can sign the legal notices required when leaseholders exercise certain statutory rights. The 1993 Act gave leaseholders of flats a range of very important rights. It is a valuable and effective piece of legislation, but it also includes a particular restriction, as we have heard, on signatories of notices. Removing that restriction is the focus of this Bill.
At present, the leaseholder of a flat who wants to extend their lease or take part in acquiring the freehold of their block must personally sign the legal notices required. No one else is allowed—even acting under a power of attorney—to sign on behalf of a leaseholder who is physically unable to do so. Case law confirms that the legislation that this Bill seeks to amend can be interpreted only as to require personal signature by the leaseholder, and that it does not permit signature on behalf of a leaseholder by anyone else, whether they be an ordinary agent or attorney. That includes when a leaseholder has become the subject of mental incapacity and the Court of Protection has issued a direction.
The High Court case of St Ermin’s Property Company Ltd v. Tingay in 2002 concluded that the signature of someone holding a power of attorney would not comply with the existing requirements of the 1993 Act. Put briefly, that particular appeal case concerned the validity of a notice given to the landlord by the relatives of an elderly leaseholder who had to move to accommodation where she could be better attended to. The relatives were acting under an enduring power of attorney that had been executed, giving them general authority to act on the elderly leaseholder’s behalf. The intention was to extend the lease of the flat using the statutory rights to ensure that the elderly leaseholder’s interests were protected. However, the High Court concluded that the legislation requires personal signature by the leaseholder and does not permit a signature on the leaseholder’s behalf by anyone else, whether they be an ordinary agent or an attorney.
That case is so important to the genesis of the Bill that I want to set out briefly a particular aspect of the judge’s summing up. He said:
“I find it difficult to understand quite why personal signature should be required in relation to a Section 42 notice by an individual tenant. However, the words of the Section are very clear.”
That backs up the point made by my hon. Friends the Members for Bury North and for Worthing West. The judge also said:
“One might think it curious that the notice has to be given by the tenant, personally, in a situation in which the tenant has already decided that dealings in connection with the claim are to be with some other person, whether an attorney, a solicitor, valuer or whoever it may be, but the distinction is clear and it is, of course, even clearer in the context of section 99(5) itself.”
The judge could not have set out the nature of the problem more strongly. He could find in the law—as it still stands—no scope for ambiguity and no opportunity to take a flexible approach. Hon. Members will be clear about the very serious hurdle that the current legislation presents to certain leaseholders. It is a problem that this House today has an opportunity to help remove.
As the judge explained, we unfortunately do not know Parliament’s intention in framing section 99 as it did, because there was little or no debate about the issues. That highlights the Bill’s importance and I thank my hon. Friend the Member for Bury North for taking his time to go through exactly why it matters. The Government believe it is important to put clearly on the record why this Bill matters and the beneficial impact it could have. Should the judiciary come to look at the provision in future, I hope they will be able to see a clear outline of Parliament’s intent in framing it. As my hon. Friend the Member for Worthing West has said, it will allow the courts to consider the general intent of Parliament with regard to personal issues.
May I emphasise the point—although I do not think that judges need it to be over-emphasised—that most people give power of attorney or ask somebody else to sign for them when they are incapable of signing themselves? Broadly speaking, they tend to be the most vulnerable, such as the old, the infirm and people who have a condition that makes it impossible for them to write, even though they may have all their senses. For example, I have a constituent who has lost both his hands. How would he sign, except perhaps with a mouth brush? One way or another, the judiciary have to accept, or Parliament should enact, that unless a court believes there is a specific reason why signatures should be made personally, a signature should be allowed to be made on someone’s behalf if they are incapable or unwilling to do it themselves but wish the act to take place.
My hon. Friend makes a good point. To reinforce his comments and because it is important to make clear the Bill’s intent in relation to giving people the ability to act sensibly and reasonably through a power of attorney and agents, I want to quote the judge again. Of the 1993 Act, he said:
“It seems to me that the words are clear and that whether there be good reasons, bad reasons or no reasons, the provision is clear. It is clearly deliberate, and the only way in which one could avoid giving the Section its literal effect is by finding that it produces some anomaly so serious that it cannot have been intended.”
He went on that counsel for the landlord
“submits that the reading, which does not permit a signature by an agent, does produce situations that cannot have been intended. The tenant in the present case is not, in fact, incapable, but what if she were?”
My hon. Friend outlined the case of someone who is vulnerable or incapable. The judge continued:
“Or what if the tenant were mentally capable but paralysed so as to be unable, physically, to impose anything by way of a signature on a document?”
All those issues need to be dealt with. The judge also said that
“whatever anomalies this provision may produce, or however much of a trap it may be for tenants and their advisers, I agree with His Honour Judge Cowell that the distinction drawn in the construction…of sub-section (5), between the method of signature of notices under section 13 or section 42 on the one hand, and other notices on the other hand, is so clear and so plainly deliberate that I cannot give section 99(5)(a) the meaning that it would have in isolation, and I must interpret it as”
—this is the important part of the quotation—
“requiring personal signature by the tenant, and not permitting signature on her behalf by anyone else, whether an ordinary agent or an attorney.”
The Bill will rectify that problem.
I have been listening carefully. The Bill seems to be perfect. Everyone is in accord with it and thinks it is sensible. I just do not understand why we seem to be making a mountain out of a molehill, and why we cannot speed this up and just do it.
I thank my hon. Friend for what I think is a helpful intervention, as well as for supporting the Bill. He is quite right. I suspect that one query received by my hon. Friend the Member for Bury North when the issue first came to his attention was that this is a 1993 Act and we are now in 2014—he introduced the Bill in 2013—so why has it taken so long to find a way of dealing with this problem? That is a reasonable question to ask, but the reality is that we now have the opportunity to correct the situation. It is quite right to deal with it, and I congratulate my hon. Friends the Members for Bury North and for Kettering on doing just that.
I am following my hon. Friend’s excellent speech with great interest. He made a particularly powerful point about the value of scrutinising legislation. However, the benefits of the Bill will not extend to Wales, and premises in Wales will be unaffected by the changes. Can he hear the cries going up throughout Wales, in the valleys and elsewhere, “Let us have the Nuttall amendment or the Nuttall provision”? Will he do all he can, through his good offices, to provide the National Assembly for Wales with whatever assistance it needs to pass similar legislation?
My hon. Friend makes an excellent point. I suspect people in Wales are thinking right now, in relation to their legislation, that a little bit of Nuttall in Wales would do them a whole world of good.
My hon. Friend the Member for Beckenham (Bob Stewart) queried why the change has not been made before. I appreciate that he came into the Chamber only a short time ago, but I again underline the importance of this debate as a chance for all hon. Members to put the clear intent of Parliament on the record. The requirements on signatories do not appear to have been debated during the passage of the 1993 Act, which is a good reminder of why it is sometimes important for parliamentarians to put clearly on the record why we do things, not just to assume that our intent in passing legislation is clear and obvious. It is a great testament to that point that we are doing this work this morning.
The existing restrictions perhaps aim to ensure that the individual leaseholder is fully aware of the commitment they enter into, given the significant financial liabilities that arise from serving the notices concerned. As my hon. Friend the Member for Bury North has outlined, the Bill will enable legal notices to be signed on the leaseholder’s behalf and that change will help, among others, those physically disabled, seriously ill or mentally incapacitated leaseholders who are currently unable to benefit financially and otherwise from the exercise of rights enjoyed by able-bodied leaseholders.
The Bill is clearly focused on helping a particular group of leaseholders, many of whom are likely to be elderly and vulnerable. As such, it has received warm words of support from both sides of the House, which I am sure is appreciated by my hon. Friend. That reflects my hon. Friends’ efforts in gathering support for the Bill, and in highlighting the benefits that it will enable some currently frustrated leaseholders to enjoy.
The changes made by the Bill to the 1993 Act may affect only a relatively small number of leaseholders of flats in England, but they might be very important for those leaseholders currently unable, for one reason or another, to sign the requisite legal notices in person. As my hon. Friend the Member for Kettering has rightly pointed out, the Bill applies only to England, so I hope that the devolved Assembly will look at the provision and perhaps introduce it in Wales. As I have said, those helped by this Bill will often be elderly and more vulnerable leaseholders. The removal of current restrictions will also help those who are charged with looking after the financial affairs of a leaseholder. The example of relatives acting under a power of attorney was given by my hon. Friend the Member for Worthing West.
One sad situation that was brought to a colleague’s attention concerns an elderly leaseholder living in a leasehold retirement development who, because of severe illness, unfortunately had to go into a nursing home to be cared for. I give this example because it is important to provide some colour and life on exactly how the change will make a beneficial impact to people’s lives. The leaseholder’s relatives were looking after her financial affairs under a power of attorney, and could therefore deal with almost all matters that needed taking care of. As she became more unwell, it was necessary for her leasehold property to be sold to assist in paying the care home fees. That is where her relatives reached what can only be described as a bizarre situation: they could sell the flat using the power of attorney, but they simply could not act on her behalf to extend her lease. They therefore had the frustration and sadness of being unable to make the most of their elderly relative’s assets for her benefit simply because they were not permitted to sign the vital leasehold paperwork on her behalf. Had they been able to do so, it is very likely that the flat, with the attraction of an extended lease, would have secured a higher selling price, and maximising the value of their relative’s assets in that way would have helped meet the fees of a suitable care home for her final days.
It is important to give more examples of the people who will be helped by this Bill. For instance, limbless or severely injured Army veterans face many problems. They may wish to extend the lease on their home and to enjoy the financial benefits that such action could bring, but, owing to their disability, they might no longer be able to hold a pen and to sign vital papers. As the law now stands, for that reason alone they are frustrated from exercising their important legal right as the leaseholder. There is no way that that was the intent of Parliament when the Act was passed, and it is right to get through this Bill for that reason alone.
The Bill may help leaseholders living abroad who need to sign notices. For example, work may take the leaseholder of a flat abroad for a prolonged period. Without the ability to have someone act, with the appropriate authority, on their behalf in respect of the property, it may be difficult for them to exercise their statutory rights. Again, that was clearly not Parliament’s intent.
The Bill might also help an aid worker serving overseas in a remote location, where postal services are infrequent and unreliable. If they want to extend the lease on their property back home in England, they will need to receive a paper copy of a document, and they then have to sign and return it. In some parts of the world, even in today’s modern age, that can take months, involve worry and delay, and create problems about getting the work done. If the absent or incapacitated person is the sole leaseholder, even their husband or wife cannot validly sign notices on their behalf.
If an individual leaseholder who lives or works abroad is hindered in that way, it could have an unfortunate knock-on effect on other leaseholders in their block. For example—we have examples of this in this country—a group of leaseholders may want to exercise their collective right to acquire the freehold of their block, but to satisfy the qualifying criteria they may need one or more leaseholders who live or work abroad to sign the documents. Although the Bill would not make any change to leaseholders’ actual rights—we must be clear about that—it could helpfully remove a practical barrier to the efficient exercise of those rights.
Let us also consider an elderly person who is physically fit, but who for years has been accustomed to relying on their long-standing family solicitor to act for them in all legal and administrative affairs. They may decide to take part in the collective purchase of the freehold of their much-loved home, but in that case, the solicitor simply could not validly sign the documents on their behalf.
Since the 1993 Act, we have—I hope—become more aware of the challenges faced by individuals who become mentally or physically incapacitated for one reason or another. Sadly, as that Act stands, even someone acting under the direction of the Court of Protection cannot sign the requisite notices. A possible alternative could be for the leaseholder to take the major step of assigning the lease of their property to a trustee, and setting up what is known as a “bare trust”. Again, the decision on Tingay is very relevant. The counsel for the landlord states that
“it is possible to avoid difficulties of these sorts. What one could do would be to assign the lease to one or more trustees, who would hold it on a bare trust for the former tenant, who could serve a notice relying on the qualifying—”
Order. I have been listening carefully to the Minister and to what has been said previously, and I think he is taking rather a long time to make his point. We do not need to go through all those case studies because everybody in the House is clear, and what the Bill does has been mentioned several times. I would be grateful if he would make a little progress.
I appreciate your point, Madam Deputy Speaker, but I was just giving a two-line quote before summing up the debate. We must bear in mind that this Bill is before the House today because previously, Parliament was not that specific or clear about its intent, and that is what Members have been debating this morning.
Unfortunately, the creation of a bare trust is not a practical option for many people. The procedure could well be cumbersome and expensive to use, and the decisions and processes involved would place a heavy burden on a vulnerable leaseholder.
It may be helpful to the House if I—very briefly, Madam Deputy Speaker—explain the amendments made to the Bill in Committee, which are reflected in the version of the Bill before the House today. The minor and technical amendments were intended to ensure that the proposed amendment to section 99(5) of the Leasehold Reform, Housing and Urban Development Act 1993 fully achieves its aims and is appropriately drafted. In particular, a small amendment was made so that, provided it completes all its parliamentary stages and receives Royal Assent, the resultant Act will come into force two months after it is passed, as is the usual convention, rather than after only one.
It was also necessary to address the extent of the Bill. The 1993 Act applies to England and Wales, but in the 20-odd years since then much has changed, and housing is now, of course, a devolved issue in the Principality. It was therefore essential to ensure that the Bill does not affect the existing application of section 99(5) to Wales—my hon. Friend the Member for Kettering highlighted that point. In other words, the provisions in the Bill would apply only to residential leaseholders of flats in England.
The Bill will offer help and hope to some leaseholders who might otherwise face an insurmountable hurdle in seeking to exercise their rights. It will also, I hope, give greater peace of mind to the families and friends who care for them. I am pleased to give the Government’s support to the Bill. I hope it will receive Third Reading today and pass successfully through the House of Lords and receive Royal Assent.
With the leave of the House, I thank all hon. Members who have spoken in support of the Bill this morning, including my hon. Friends the Members for Kettering (Mr Hollobone) and for Worthing West (Sir Peter Bottomley), and the hon. Member for Corby (Andy Sawford). I also thank the Minister for the Government’s support for the Bill. As has been said, it is a short but important measure which has the capacity to improve the lives of those who will be affected. They will be extremely grateful that the House has taken the time and trouble to pass this small measure this morning, and I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read the Third time and passed.