§ Order for Second Reading Read.
§ Mr. Speaker
Before I call on the first right hon. Gentleman to speak, may I remind the House that many hon. Members have vital constituency interests in the Bill before the House this afternoon. I appeal to hon. Gentlemen whom I call to be reasonably brief in their speeches. I hope that the House will take note of what I am asking.
§ 3.50 p.m.
§ The Minister of State, Ministry of Housing and Local Government (Mr. Frederick Willey)
I beg to move, That the Bill be now read a Second time.
I am entitled to anticipate that this Motion will be generally acceptable to the House. Just a year ago, the House unanimously welcomed—although some Members opposite expressed their approval in somewhat niggardly terms—the proposals contained in the White Paper as a basis for legislation. This Bill is based on the White Paper.
Just before the last General Election, the Conservative Party took the course which the Monday Club has described—and I am sorry that the Monday Club should regard it as regrettable—ofjumping on the bandwagon of leasehold enfranchisement".Indeed, at the last General Election, the Conservative Party declared that it wouldlegislate to allow ground leaseholders to buy or rent their houses on fair terms except where the property is to be redeveloped.I emphasise that any such action must depreciate the landowner's interest. We know that the Conservative Party would not shrink from that consequence. We have the precedent of the Landlord and Tenant Act, 1954. That Act has been a complete failure. It has not stemmed the continued demand for leasehold reform. The Conservative Party admitted this at the last election, and do so today. The 1954 Act allowed the leaseholder to continue in occupation, but only under the terms of a statutory tenancy and only at a rack rent.
The tenant got no real security, he was forced to pay a rent for occupying his own house, and was often faced with 1272 onerous dilapidation claims. But, at the same time, the Act drastically depreciated the value of the landowner's interest. For example, a freeholder's interest which had previously been worth £1,500 as a result of the 1954 Act was depreciated to £550; a freeholder's interest of £4,000 was halved to £2,000. Hon. Members opposite are the last people in the world who can complain of leasehold reform depreciating the value of the landlord's interest.
But all this was quite pointless, because no one was satisfied—neither the landlord nor the leaseholder. Certainly, no one today would claim that this particularly stupid legislation has provided a solution to the leasehold problem, and, clearly, there is still a need for reform.
What I think is equally clear is that the need for such reform is urgent. A great many leasehold estates were built in the second half of the 19th century— particularly in South Wales and in some English industrial areas. The houses had to be built near the pit, or near the mill or factory, and landowners used their monopoly power to allow only leasehold development. Now, in growing numbers, these leases are drawing to an end, and the leaseholders are experiencing the full harshness of the leasehold system.
When I looked at the leasehold problem, another factor struck me very forcibly. Nowadays practically everyone buys his house on mortgage. With a good many years to run, a purchaser of a lease will pay virtually a freehold price. But, as he pays off the mortgage, so also the lease runs its course. What happens when he reaches the end of the mortgage term? The owner-occupier finds that after he has discharged the mortgage he will have an interest which is far less valuable than it was when he bought it. Indeed, he may find it difficult to sell, because a subsequent purchaser may not be able to get a mortgage—and we should not forget that the 1962 White Paper told us that there may be mortgage difficulties whenever a leasehas about 30 years or less to run".The owner-occupier buying on mortgage finds himself caught—the victim of the leasehold system. This is now a matter of urgency, because this is the reality now facing many owner-occupiers who bought their houses when they were particularly scarce, on setting up home immediately 1273 after the war. It is callous to say that they did so with their eyes open. In the first place this is not true, and in the second place, houses were scarce and they had no choice.
Thirdly, when we talk of leasehold, we should not receive ourselves that we are talking about a relic of the bad old Victorian days. A large number of houses now being built are being provided on leasehold terms at a price which is little, if anything, less than a freehold price, and subject to ground rents which very often are quite substantial.
In Greater London, for many years now, about half of the total development of private housing estates has been on leasehold terms. Again, this is largely because houses are still scarce and the house purchaser has really no alternative. Again, against this exploitation, I am sure it is right to protect owner-occupiers by giving them the right to purchase the freehold at a fair price.
But quite apart from any question of exploitation, supposing that some house purchasers prefer to buy on leasehold terms, because it may be slightly cheaper, what we are considering are people's homes, and I cannot see any reason why owner-occupiers should not be able to purchase greater security—should not have the opportunity later of buying the freehold on fair terms.
§ Mr. Alfred Morris (Manchester, Wythenshaw)
While everyone accepts my right hon. Friend's skill and perseverance in bringing in a most important Measure of this kind, may I ask whether, during his speech, he will be spelling out what he means by fair treatment? Can he give any example of what would be the terms for the average type of property?
§ Mr. Willey
My hon. Friend has anticipated what I will refer to in my speech.
I can fairly assume, I am sure that my hon. Friend does, that both the need for leasehold reform and the urgency of that need are established. Equally, I am convinced that the pattern of that reform—leasehold enfranchisement and the extension of the leases—is now generally accepted. The Labour Party has been committed since 1951 and—in spite of 1274 the Monday Club—the Conservative Party since the last General Election.
Faced, then, with the urgent need for leasehold reform, all past experience points to the conclusion that no real solution will be found unless we rectify the fundamental injustice of the leasehold system. This fundamental injustice arises because under the leasehold system the landlord is entitled—indeed, has the impertinence to take—free of charge the house and improvements created and maintained wholly by and at the expense of a succession of leaseholders.
This is nothing but legal confiscation. What is demanded is a radical change of the law. What is needed—and this is just what—
§ Mr. Willey
Mr. Speaker has said that a large number of hon. Members wish to take part in the debate, and I would rather open the debate and allow hon. Members to participate later.
I have been told—and, no doubt, I will be told again this afternoon—that what the Bill is doing is wrong, because it divides the realty; it separates the buildings from the land. But it is not the Bill that does this; it is the leasehold contract itself.
Put very simply, this is how leasehold —this remarkable contract peculiar to English law—arises. The landowner puts this remarkable proposition. He says, "I will let you build a house on my land, but I will not sell you the land. What I will do is to lease you the land. I will give you a long lease and it will be at a ground rent—that is, a rent for the land alone."
Traditionally, we have a pattern of 99-year leases and we know that there is no difference—or at most only a nominal difference—between the price of the leasehold and the freehold, and, as the 1962 White Paper tells us, these contracts were entered intoin the belief that the buildings to be created would not last longer than a century and the property would then need to be redeveloped".But what the law says is that the house—the buildings—the bricks and mortar—become part of the land. So, at the end of the lease—at the end of the 99 years—the landowner gets back not 1275 only the land, which he has leased to allow someone else to build a house upon, but also the house itself, although it is still habitable and enjoyed as his home by the leaseholder. So the leaseholder and his successors who, at their own expense have built the house or bought it, and have maintained and improved it, lose it; and it is their family home. What we are saying in the Bill is that this is outrageously unfair, and we are altering the law.
The Bill provides qualified leaseholders with two basic rights. We say to the landowner, "You leased the land so that the leaseholder could build a house on your land and live in it and enjoy it as his home. As it turns out, at the end of the lease, the house is still habitable, still a comfortable home. Therefore, we think it right and proper that you should go on leasing the land to the owner-occupier of the house."
If we do this, what are fair terms?
§ Mr. Willey
Admittedly, not the original ground rent: it would be unfair to compel the landowner to continue it. But, equally, it is fair to extend the lease at a modern ground rent for the land—for the site—indeed, what it would fetch today.
We also say this. In the circumstances of this remarkable contract—in the circumstances of the leasehold arrangement —where the landowner allows someone to build a house on his land, renounces all interest in his land save that of "a long term fixed investment interest"—to use the words of the 1962 White Paper —surely then it is fair that the leaseholder — the owner-occupier — should have the opportunity to buy from the landowner the freehold of the land upon which his house has been built.
§ Mr. Speaker
Order. If the right hon. Gentleman does not give way, mere repetition will not make him do so.
§ Mr. Willey
If a property-owning democracy makes any sense, social justice requires that the owner-occupier should have the opportunity of obtaining 1276 the basic fundamental security which the owner-occupier prizes most, the freehold, with all the liberty and responsibility that goes with it.
The Bill, therefore, gives the qualified leaseholder two rights. First, for those who do not want to enfranchise or find it financially inconvenient, the right to a 50 years' extension of the current lease. This is provided in Clauses 14, 15 and 16 and affords the leaseholder security of tenure. Of course, in some cases, any extension of the lease must necessarily depreciate the value of the landowner's interest insofar as at present it reflects the vacant possession value of the house. But I would remind the hon. Member for Crosby (Mr. Graham Page) that when we debated the White Paper, speaking for the Opposition Front Bench in the shadow of the General Election, he said that the extension should be for "a substantial and definite term".
Because we regard the occupying leaseholder as continuing to own the building, the landlord is entitled to no more than a fair ground rent, a modern ground rent, reflecting the site value, subject to its use by the leaseholder, and after 25 years it will be reviewed and, if necessary, brought up to date.
Secondly, we provide—and it is now generally agreed that we should do so—for enfranchisement. This is dealt with in Clauses 8 to 13. Necessarily, these Clauses deal with incumbrances, rent charges, covenants and mortgages, but Clause 9, which provides for the price of enfranchisement, is the most important.
As we said in the White Paper, where there is no development valuethe fair price for enfranchisement will be the value of the freehold interest of the site, subject to the lease and its extension for 50 years.This will ensure that the value of the buildings on reversion is completely excluded.
As I said in the debate on the White Paper, the fairest solution is the most obvious.
In most cases consideration of development value will not arise and, of course, it is usually significant only towards the end of the lease. But if a site has any development value which would give it greater value than that of a site for the particular house, then the 1277 freeholder is entitled to that value—that is, its value subject to the lease, its value at the time the leaseholder negotiates the purchase of the freehold.
Not only does Clause 9 provide a fair solution; it provides also a simple solution. By dealing with the extension and enfranchisement together, the effect is to limit the landlord's reversionary interest to the value of the site only: the value of the buildings on reversion is completely excluded. But equally the provisions of the Bill will never expropriate from the landowner any of the reversionary value of the land.
In any particular case, it should not be difficult to work out what the price of enfranchisement will be. Usually, it will be negotiated by the parties without difficulty. But a variety of circumstances can affect any particular case, and it is not easy to give examples which can be taken as representative. However, with this reservation, it may be helpful, as my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) said, if I give the House a few examples to illustrate the effect of the Bill.
In South Wales, in the case of a house with vacant possession value of £1,500 with an unexpired term of five years at a low ground rent, the price of enfranchisement might be about £230. In the case of a house with vacant possession, value of £2,000, with 23 years to run at a ground rent of £2, I worked out the price of enfranchisement at £105. In the Midlands, a house with vacant posession value of £2,750, with 50 years unexpired at a ground rent of £10, might be enfranchised for about £200. In London, a house with vacant possession value of £7,500 with 21 years to run at a ground rent of £20, the cost of enfranchisement should be about £800.
In giving these examples, I emphasise, first, that the leaseholder may, of course, look to the building societies for assistance, and, secondly, that vacant possession value is very much affected by occupancy. Possession is not only nine-tenths of the law; it can also amount to a considerable slice of the vacant possession value.
I have mentioned qualified leaseholders. The qualifications are defined in the early Clauses of the Bill.
The leaseholder must hold a lease originally granted for more than 21 years 1278 at a ground rent. This is provided in Clauses 3 and 4. The leaseholder must be occupying the house, or part of it, as his residence and must have done so as a ground-rent paying leaseholder for the last five years. This is provided in Clauses 1 and 2.
The fact that a house is being used partly for business purposes or is partly sublet does not of itself take the house outside the Bill. The essential criterion is that the house is still capable of occupation as a single dwelling even though at the time it may be occupied separately. For instance, a son-in-law may be living in a house and occupying the top floor with a separate bathroom, but the owner-occupier will still benefit from these provisions unless he has blocked off the staircase and provided an outside staircase.
§ Sir John Langford-Holt (Shrewsbury)
The Minister used the words "the original lease". Does this apply to the original lease of the building or the original lease by the present occupant of the building?
§ Mr. S. C. Silkin (Dulwich)
My right hon. Friend has given examples of the likely cost in various circumstances of buying the freehold. I fully appreciate the difficulty of trying to do that in the abstract. Clause 9 imports into the calculation the term "the house and premises". Can my right hon. Friend explain this? Is the effect of this that what would otherwise be a speculative investment is transformed into a well-secured one and that the consequence is to add substantially to the number of years purchase—the multiplier—which would otherwise be the correct one?
§ Mr. Willey
I am not seized of the point made by my hon. and learned Friend. If he is fortunate enough to speak during the debate, that is a matter which might be dealt with when my right hon. Friend the Secretary of State replies.
§ Mr. Willey
I would rather not, because a large number of hon. Members wish to speak and my right hon. 1279 Friend will, I am sure, adequately and competently reply to the debate.
Clause 1 of the Bill expands the provision of continuous occupancy for five years to include a total of five years out of the last seven years. This is to avoid hardship to families who, for instance, may have been compelled to go abroad for a while. The house must be within the rateable limits of the Rent Act, and the Bill does not include flats and maisonettes. The purpose of the Bill is to rectify by legislation the leasehold contract where it causes the greatest hardship. Therefore, the Bill is limited to residential long leases. It is not concerned with leases for business purposes or leases held solely for investment.
The Bill is concerned with the person who holds the lease of the house in which he lives as his home and who has probably had little alternative but to live in a leasehold house. Within residential leases, therefore, we have drawn a line by reference to the value of the house so that the Bill identifies those in real need. We have accepted the limits recently adopted for rent control, and this is probably right. The Bill will exclude little more than 1 per cent. of the total number of houses, but I know that in some places—for example, Cambridge—the proportion of houses over the rateable limit is higher than elsewhere. No doubt this is something which we can pursue further, in Standing Committee.
Clause 2 excludes flats and maisonettes. Most flats are let at a rack rent and would not in any event fall within the scope of the Bill. We have, however, excluded flats for practical reasons—for example, the difficulties of flying freeholds. As the House knows, the Wilberforce Committee has reported; the Government are preparing legislation to implement the Report and this may well make it possible to bring flats within the scope of leasehold reform.
Clause 5 provides that the leaseholder exercises his right to enfranchise or extend his lease by service of a notice on his landlord. This Clause contains the useful provision that the benefit of such a notice is assignable with the lease. If, therefore, a leaseholder is selling his house because he has to move, perhaps to take employment elsewhere, he can sell his house and move without having to 1280 wait until he completes the whole transaction of enfranchisement and extension.
The Government's pledge to leaseholders whose leases expired before the Bill could be introduced is made effective by Clause 34. Leaseholders whose leases expired after 8th December, 1964, but who have remained in possession of their houses are given the same rights as present leaseholders under the Bill, provided that they exercise their rights within three months of the Bill being passed.
It may be that for one reason or another a lease may expire without any leaseholder having exercised his right to enfranchise or extend the lease. In such a case, Clause 39 provides that the leaseholder will have the benefit of the fair rent machinery under the Rent Act.
Having dealt with the leaseholder, I now turn to the rights of the freeholder. These are dealt with in Clauses 16, 17 and 18 of the Bill. Clause 16 provides that the 50-year extension is a once-and-for-all extension and enables the landlord to protect himself by having included in the extended lease a statement to this effect.
Where the leaseholder has not enfranchised, Clause 17 gives the landlord, provided he can show that he genuinely intends to redevelop the property, the right to get possession either at the start of the 50-year extension period or at any time during it. The Clause, however, provides for the leaseholder to be compensated for the loss of his extended lease. Consequentially, Clause 38 of the Bill takes away the landlord's present right under Part I of the Landlord and Tenant Act, 1954, to recover possession from the leaseholder for redevelopment without giving the leaseholder either compensation or alternative accommodation.
§ Mr. Graham Page (Crosby)
The Minister was very helpful earlier in giving examples and figures. Has he any examples of the compensation which a man would have to pay to buy back his own house in such a case as is dealt with in Clause 17?
§ Mr. Willey
The developer would buy back the house at the value of the house. That is plain and straightforward.
The landlord, if he acquired his interest before the publication of the White Paper, is also entitled, under Clause 18, 1281 in the last year of the lease—I have chosen this period solely on practical grounds—to resist enfranchisement or extension on the grounds that he wants the house for occupation by himself or his family when the lease expires and that he would be caused greater hardship by being refused possession than would the leaseholder.
If the county court decides in favour of the landlord, he, of course, will have to pay compensation for the value of the leasehold interest as it would have been if the 50-year extension had been granted—that is, in round terms, the bricks and mortar value.
As we said in the White Paper, the Bill makes special provision for well-managed estates where enlightened management often makes a real contribution to their distinctive character. It would be unfair to deny leaseholders on these estates the right to enfranchisement, but, equally, it would be unfortunate unnecessarily to disrupt the benefits of comprehensive estate management.
Clause 19 therefore provides machinery to ensure that the benefits of a well-managed estate are not lost even though individual leaseholders decide to buy their freeholds. After a certificate for a particular estate has been granted by the Minister, the Clause provides for a scheme of management being settled by the High Court. Although, in the first instance, the initiative must be with the present freeholder, the Clause provides for the responsibility for the scheme subsequently being taken over by a local authority or by a specially constituted body so that the scheme should not be prejudiced by a lack of interest by the freeholder following widespread enfranchisement.
The principle of a qualified lease-holder's right to enfranchise or extend his lease still holds good where the landowner is a local authority or any other public body. Special provision, however, is made for special cases.
By Clause 28, the Minister is empowered to veto enfranchisement or extension against a local authority or other public body, including universities and statutory undertakers, by certifying that the property will shortly be needed for 1282 redevelopment. It would be stupid to allow the leaseholder to enfranchise where he is shortly afterwards compulsorily to be bought out for redevelopment. The leaseholder, however, will, of course, receive compensation to the value of his leasehold interest with the 50-year extension; that is, bricks and mortar value.
Clause 39 allows a local authority, a new town authority and some other public authorities to retain, by restrictive covenant, any development rights on the land where the leaseholder exercises his right of enfranchise, and Clause 30 ensures that new town and expanding town authorities are able to attach preemption covenants in order to ensure that the houses continue to be occupied by people from the part of the country for whose overspill problems the new or expanded town is built.
Although the Bill does not bind the Crown, nevertheless the Crown Estates and Duchies and Government Departments who are freehold owners of houses let on long leases will act in accordance with its provisions, and Clause 33 contains provisions enabling the Crown to comply with the Bill and making it possible for a leaseholder to enfranchise for a landlord who has bought the freehold from the Crown. The Crown Estate, however, will retain control over houses of special architectural historical or amenity value, and Clause 32 preserves the inalienability of certain land held by the National Trust.
In one respect the Bill goes beyond the scope of the White Paper. Clause 39 stops a new racket by making long tenancies at rack rents—that is, ordinary tenancies—subject to the Rent Act, 1965. This is to protect the tenants against a growing and blatant evasion of the Rent Act. Some landlords, especially in London, but also elsewhere, usually landlords of cheaper and poorer property, ordinarily let on weekly or monthly tenancies, have discovered the device of letting the property for 22 years or more, often at high and sometimes escalating rents, and outside the protection of the Rent Act. They will no longer escape, but will be subject to the Rent Act. This provision will act retrospectively and will apply to long tenancies at rack rents whether they were granted before or after the Bill. 1283 The Bill is being criticised as bringing windfall profits to leaseholders, and a lot of offensive things are being said about owner-occupiers. But we are only dealing with residential long leases, and it seems to be forgotten that the family which sells its home will have to obtain another.
Again, the Bill is being criticised as prejudicing redevelopment. But we should not assume that the present leasehold system is wholly advantageous to development. Many of the leasehold areas are twilight areas marred by almost wanton neglect because the freeholders are not interested in development and the occupiers have not sufficient incentive to maintain their homes in good condition.
We must also recognise that often development has been carried out not where it was most desirable but where it could be carried out cheaply because, as the leases fell in, the landlord obtained free of charge properties which someone else had built. Good substantial, well-maintained buildings have often been pulled down long before it was necessary. But, admittedly, the provisions of the Bill may make redevelopment more difficult and less profitable for freeholders on some estates. This is the price of a social reform urgently needed.
The Bill is a measure of social justice and reform long overdue giving hundreds of thousands of people the security and pride of home ownership. It will bring relief to a quarter of a million leaseholders in Wales and a million leaseholders in England—of which, incidentally, I am one; although, as I have a 999 years' lease, I am not especially interested in enfranchisement and certainly not in an extension.
As I have said so often, one of the most striking features of British politics is the tenacious hold that landed interests have had on the Tory Party. Conservatives believe in a property-owning democracy, but only where real power rests with the property-owning company and the landowner. On the contrary, we believe that the first priority is with the home and the family. That is why the Bill redresses grievances long endured and brings security and fairness to the leaseholder who owns his house under the leasehold system.
§ 4.25 p.m.
§ Mr. Anthony Barber (Altrincham and Sale)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:this House, while accepting that ground leaseholders should be permitted to buy or rent their houses on fair terms except where the property is to be redeveloped, declines to give a Second Reading to a Bill which seeks to provide leasehold enfranchisement on confiscatory terms.At the last General Election, the Conservative Party, to which the Minister referred at the end of his speech, stated clearly and unequivocally its policy on leasehold enfranchisement, and I do not doubt that some hon. Gentlemen opposite will use every means to distort the proposals which we then made and distort the criticism of the Bill which I shall make today. Certainly, the Prime Minister will if he has anything to do with it. Therefore, it is right at the outset that I should place on record the proposals on which the Conservative Party fought the last election.
They were that a ground leaseholder of residential property holding a lease originally granted for more than 21 years and who has occupied the house as his residence for at least the last five years should have three choices towards the end of his lease. I should like to list the three alternatives which we proposed should be open to the ground leaseholder. The first was the right to a statutory tenancy. If the leaseholder so wished, he could opt to remain in the house as a statutory tenant under the provisions of the Landlord and Tenant Act, 1954, in which case he would pay a new full market rent.
The second alternative was the right to a new lease, and by that we meant that a leaseholder could choose to negotiate a new long lease for a fixed term and negotiate a new ground rent and premium. In such circumstances, the courts or the Lands Tribunal would have power to fix a fair price for both the ground rent and the premium in the event of disagreement between the parties.
The third alternative was the right to buy the freehold. But here we said, unlike this Bill, that the price to be paid should reflect the bricks and mortar value of the house as a house.
§ Mr. Barber
I shall come to that in a few moments.
Once again, the courts would be available in the case of disagreement about that price.
As this Amendment shows, we stand by those proposals, but, for reasons which I shall elaborate in a moment, I believe that those proposals were reasonable and fair and that the proposals in the Bill amount to nothing short of confiscation.
First, I should like to make a few general points. I am sure that the Prime Minister would agree that it is no longer true that a dog is a man's best friend. During the past few days, we have had a fascinating insight into the working of the Labour Party—
§ Mr. Speaker
Order. The right hon. Gentleman will relate his remarks to the Second Reading, I hope.
§ Mr. Barber
Mr. Speaker, I was going on to say that this is highly relevant to the confiscatory provisions of the Bill, for this reason. In purely party political terms, there was no need for the Government to do what they are doing in the Bill, which is to pander to the Left wing's pathological hostility to the landlord. I see right hon. Gentlemen shaking their heads in disagreement, but, after all, it was the Leader of the House who said when he was Minister of Housing and Local Government:I have a natural prejudice against landlords.This is precisely what comes out in the Bill. I hope that the right hon. Gentleman will laugh at a quotation I am now going to make, because there was a highly illuminating article in yesterday's Financial Times. It contained one paragraph which would have made, if I may say so with respect, even the most insensitive Minister wince. I will read the paragraph to the right hon. Gentleman and perhaps his right hon. Friend might like to comment on it when winding up the debate tonight.
The paragraph said:When the White Paper on Leasehold Reform first appeared, officials at the Ministry of Housing were privately apologetic. This, they would explain, was a fudged-up piece of electioneering: nothing so disastrously damag- 1286 ing would ever seriously appear as a piece of legislation.Then comes the punch-line:They misjudged their Ministers.Indeed they did.
§ Mr. Barber
The right hon. Gentleman, like myself, is a member of the Bar. I can only say that he will go down in history for two achievements, for having devised in the Land Commission Act legislation which is regarded by even the most erudite lawyers as gibberish, and for having, in this Bill, flouted the basic principles of equity as a political sop to his colleagues.
To give the ground leaseholder the legal right to buy the freehold is an arguable proposition, but there can be no argument at all in favour of leasehold enfranchisement on terms which are confiscatory as is the case in this Bill. After all, this is not merely my personal opinion or the opinion of a few Conservative Members of Parliament. It is the widely expressed view of one reputable commentator after another in the Press, as the right hon. Gentleman knows. That is true. One could quote a whole series of them. The Times said this:This is, bluntly, confiscation.That has been echoed by leader writers in every reputable newspaper. I know of no reputable commentator who has said that the compensation terms are fair.
I certainly agree that where the public interest is in conflict with private interest there are occasions when the public interest must predominate, and this may mean legislation. For example, ever since 1915 Rent Acts have been passed by Governments of all political opinion, National, Conservative, Labour and Coalition. The Conservative Party was also responsible for the Landlord and Tenant Acts of 1927 and 1954.
§ Mr. Winnick
Can the right hon. Gentleman tell us whether, if the Tories were returned to power, which is hardly likely, they would bring back provisions of the 1957 Rent Act?
§ Mr. Barber
The hon. Gentleman has not been listening to what I have been saying. The point I have made is that under successive Governments of varying political persuasion Rent Acts have been passed, some of which were palatable to some hon. Members and some to others.
But the blunt fact is that the Conservatives, just as did the Labour Government, the National Government and the Coalition Government, passed Acts which affected the level of rents and which also affected the sanctity of contracts. That is true. Indeed, as I went on to say, the Conservative Party was also responsible for the Landlord and Tenant Acts of 1927 and 1954. The right hon. Gentleman will find few people, who have had experience of the 1954 Act, who would agree with him that it has not been successful within the limited aims which it set out to achieve.
The House will recall that those Acts gave protection, first to business tenants with long leases and then to both business and residential tenants. And, of course, there are the various Measures which give local councils powers of compulsory purchase for redevelopment, and so on. But—and this is of vital importance—it is no light thing to interfere with contractual or private rights. There must be a clear case for doing so, and one which will stand up to examination and be capable of being defended on the most objective criteria.
It was precisely because we, on this side of the House, believe that the Land Commission Bill is a totally unnecessary and unjustified interference with individual rights that we opposed it at every stage, and intend to repeal it at the first opportunity.
How should we approach this question of leasehold? I accept that in some parts of the country, notably in South Wales, practically all house property is on a leasehold basis. There is no real freedom of choice for the prospective home buyer as between leasehold and freehold, and, therefore, there is probably not a great deal of difference between leasehold and freehold prices. In other parts of the country this is, of course, not so, and it is right that we should keep the problem in perspective.
1288 There is a second factor, which is the growing desire of people to own their own homes, and, what is even more important, their ability to do so. The right hon. Gentleman, in his concluding remarks, castigated the Conservatives for their views on property. He seemed to suggest that we were not interested in home ownership. That seems a strange sort of implication to come from the right hon. Gentleman because, under the Conservative Government between 1951 and 1964, the number of home owners was doubled to reach nearly 8 million.
That was a tremendous achievement. The right hon. Gentleman and his Friends in the Ministry of Housing and Local Government can sit there smiling, but I believe that it is one of the tragedies of Socialism that ever since the Labour Government took office, as a deliberate act of policy—and let us make no mistake about this—the number of homes built for sale has been falling each year—
§ Mr. Barber
The hon. Gentleman says "No", but let me give him the figures. In 1965, the number built was 4,000 down on 1964, and last year the number was nearly 13,000 down on 1964. Those are facts.
Taking those two factors together, the special problems in certain areas like South Wales and the growing desire for home ownership, we accepted at the last election that there is need for further legislation on the question of leashold. But in our view that legislation should be built on the principles of the 1954 Act. I will tell the House why.
That Act, as hon. Gentlemen who are familiar with it will recall, provides that when a long lease comes to an end the leaseholder should be entitled to a new tenancy at a market rent unless the ground landlord can satisfy the courts either that he genuinely proposes to redevelop or that his personal need for the property is greater than that of the leaseholder—in other words, the proof of greater hardship. Any proposal for leasehold enfranchisement should have been founded on an extension of that Act of Parliament.
§ Mr. Barber
I do not intend to continue to give way. I want to complete my speech.
Towards the end of his lease the long leaseholder would normally have an opportunity of buying the freehold. I have stated what I believe ought to have been done. Before I come to the compensation terms in the Bill, I want to say—I will give way to the hon. Gentleman.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
Under the 1957 Act a leaseholder, at the end of his lease, has to pay what the right hon. Gentleman calls a "market rent". Why should a man who has paid the ground rent of £5 a year for a considerable number of years, for his own house which he has maintained and improved, have to pay a market rent at the end of that period? Why?
§ Mr. Barber
I propose to deal, in a few moments, with the suggestion that the bricks and mortar belong to the leaseholder and that the land alone belongs to the landlord. This is basic to the whole of the right hon. Gentleman's Bill. That is something which I shall be dealing with in a few moments.
I would say to the party opposite that we all know that in the ideal—and I use that word in its best sense—Communist State virtually all property is shared and private ownership is forbidden. Whatever the merits may be of such an ideal society, it is a fact of life that in this country the ownership of property and the sanctity of contract are not features which can be lightly cast aside without very serious consequences.
I know that there are many hon. Gentlemen opposite who genuinely would like to see the country becoming a nation of council house tenants. This is a concept which we on these benches utterly reject, but the principles of the Government ale obvious from their action, and I have already given the figures.
§ Mr. Winnick
If what the right hon. Gentleman alleges is true, that we want this to become a nation of council tenants, can he explain why we are bringing in the mortgage subsidy scheme to help people to become owner-occupiers?
§ Mr. Barber
There is not much sign of the Government bringing in such legislation. I am basing my argument on 1290 the facts, and I shall give them to the hon. Gentleman.
I have already told the House that the number of houses built for sale in 1965 was 4,000 down on 1964, and that the number built last year was 13,000 down. That is the reality of the Labour Government's housing performance, and what I want to see are not only more homes for owner-occupiers, but also positive encouragement to make available all types of homes for renting. Council houses fulfil an essential need, but so does the private landlord, and we shall never encourage the private building of homes to rent if it is known that a Labour Government will come along with legislation which amounts to confiscation.
§ Mr. Barber
No. This is not some legal nicety, or the opinion of a latter-day Forsyte. It is a matter of great social consequence for all those citizens who are inadequately housed or who have no homes of their own. There is not one hon. Member in the House who does not want to increase the nation's stock of houses, but, equally, there is no one here, including the right hon. Gentleman the Minister of Housing and Local Government, who can deny that despite the fact that in October, 1964, there were 434,000 houses under construction, in 1965 and again in 1966 the Government failed to reach their stated target of 400,000 houses.
§ The Minister of Housing and Local Government (Mr. Anthony Greenwood)
§ Mr. Barber
The Minister indicates his dissent. Would he like to intervene? Obviously he does not, because he knows that that is true.
§ Mr. Abse
As the right hon. Gentleman is expressing his concern about the number of houses to let and those that are to be built for sale, will he explain why, with his interest in home ownership, he is putting forward a plan which in Wales will mean that 250,000 people will become tenants in their own homes? Is this his idea of increasing home ownership?
§ Mr. Barber
I am sorry, but the hon. Gentleman has got it all wrong. I said that under the Conservative Government the number of home owners doubled, whereas under the Labour Government it has been falling.
§ Mr. Hamling
On a point of order. Mr. Deputy Speaker, are we discussing the Leasehold Reform Bill or not?
§ Mr. Barber
I am grateful to you, Mr. Deputy Speaker. I was making the point to the right hon. Gentleman that in both years the Labour Government failed to reach their target. The right hon. Gentleman shook his head, but he refused to get up and intervene.
§ Mr. Greenwood
I was waiting for the right hon. Gentleman to deal with the matters contained in the Bill.
§ Mr. Barber
Now we know that the righ hon. Gentleman accepts what I said, and it is a good thing that we have that on the record.
One of the reasons for the length of the housing queue is the Labour Government's doctrinal hostility to the private landlord, which we have heard today from the interventions of hon. Gentlemen opposite. This results in a consequent discouragement of the building of houses to let other than by local authorities, and it is this deep and ingrained hostility to the private landlord which has led the right hon. Gentleman in this Bill to include provisions which amount to no less than confiscation, as has been said by many people outside the House.
The Bill is based on a White Paper which we debated on the very day when the General Election was announced, and I might mention, in passing, that it is not without significance that when it is necessary to publicise an election bribe the Government can afford one day's debate on the White Paper and one day on the Bill, but when the election is over and the whole House wants to do just that again on the issue of decimalisation, the Leader of the House condemns the proposal as a nonsense.
To return to the White Paper.—[HON. MEMBERS: "Hear, hear."]—I was going to ask hon. Gentlemen opposite to stop yapping as I thought that that might be 1292 more appropriate. It is an interesting reflection on hon. Gentlemen opposite that when I quote their appalling housing figures—[HON. MEMBERS: "Get on with it."] We are considering housing, and I have every right to give my views about the record of hon. Gentlemen opposite.
§ Mr. Abse
On a point of order. Mr. Deputy Speaker, is it not widely outside the whole question of the leasehold system to be discussing these irrelevant housing figures? May we have some direction to ensure that the issue which the right hon. Gentleman is so vehemently dodging is discussed, namely, the leaseholders who are now to have this great right to secure their own property?
Mr. Deputy Speaker
It is well known that the Second Reading of a Bill provides very wide scope for debate, and my view is that everything said by the right hon. Gentleman so far has been in order.
§ Mr. Barber
Once again, I am grateful to you, Mr. Deputy Speaker. It is significant that hon. Gentlemen opposite seem to think that these appalling housing figures are irrelevant to the nation's needs. We on these benches take a different view.
There are a number of references in the White Paper to equity, and I must say that with reference to the proposals in the Bill the term "equity" is really an abuse of the English language. It is becoming a growing habit of the Government, when they are doing something particularly obnoxious, to talk vaguely about fairness and the public interest, no doubt in the hope that the general public will accept what Ministers say at their face value, even if their back benchers do not. But what objective observer can seriously pretend that it is equitable that ground landlords should have their property confiscated in this way?
As I said earlier, I accept that leaseholders should have the chance to buy their freeholds, but it is precisely because this affects the ground landlord's rights that we consider it to be of the utmost importance that the price paid should be fair. Of course, one can see the political reasoning behind the Government's decision on compensation. Indeed, it is patently obvious. There are many more leaseholders than there are ground landlords, and so, says the right hon. Gentleman, "Let us bash the landlords and 1293 glean some cheap popularity with the leaseholders". Equity for the minority is irrelevant, on the simple Wilsonian thesis that the only thing that matters in politics is votes.
The right hon. Gentleman has admitted that under the Bill the landlord is to receive no compensation at all for the house which he owns. The right hon. Gentleman nods assent, so it is true that under the Bill, whether people agree with this or not, the landlord is to receive no compensation at all for the house which he owns. I believe that this is monstrously unfair, and that this is what I mean by confiscation. The right hon. Gentleman knows in his heart that this is what it is. He has attempted to wrap it up in a principle which simply does not bear examination.
The Government's case for basing the price of enfranchisement solely on site value rests on the wholly false argument that the house belongs to the leaseholder. What the leaseholder has bought is not the house itself, but the right to live in it for the period specified in the lease. Dr. Denman, Head of the Department of Land Economy at Cambridge University, has put the position succinctly. He says:Leaseholders buy leaseholds, interests in property limited in time, and have to pay for them accordingly. Land-owners who buy freeholds subject to leases pay prices which reflect the value of their expectations to enter into vacant possession of the premises (building and land) at the end of the lease.That is a factual statement of the present position.
I hope that the House will note the contrast between the confiscatory price that the ground landlord will receive on enfranchisement and the full market price which the landlord will have to pay if he successfully resists enfranchisement because he needs the house for his personal occupation—the "greater hardship" ground. My hon. Friend intervened to ask if the right hon. Gentleman would give some figures. If he can give figures on one side of the balance sheet he can give them on the other. We are entitled to have more details.
Whereas the leaseholder will be able to enfranchise for a few hundred pounds, if the landlord successfully resists enfranchisement he will have to pay 1294 thousands of pounds. [HON. MEMBERS: "Hear, hear."] That is the reaction of hon. Members opposite. They say, "Hear, hear." This system is utterly unfair. I do not know to what extent the Government and hon. Members opposite have realised that there is nothing to prevent the leaseholder, having obtained the house at a rock bottom price, from promptly selling it and making a quick profit.
§ Mr. Barber
I gave way to my hon. Friend only because he tried three times to intervene in the speech of the Minister and was refused.
§ Mr. Barber
As even the hon. Member for Woolwich, West (Mr. Hamling), in his ignorance, must know, many of the ground landlords concerned are charities, pension funds and small persons. Where is the justice in robbing them in this way? This is barefaced robbery. The Minister may contend that if the price of enfranchisement took account of the house as well as the site some leaseholders might have difficulty in finding the money. That may be the case.
§ Mr. Willey
The right hon. Gentleman will have heard the figures that I gave and the effect of the 1954 Act. Was that barefaced robbery?
§ Mr. Barber
The right hon. Gentleman has not stated the position under that Act, namely, that market price is the governing factor. This is all that we are asking to be inserted in the Bill. The Bill contains no market price; the bricks and mortar pass without any consideration. That is the difference between the right hon. Gentleman and myself. It is all very well for him and other hon. Members opposite to laugh when I refer to charities, but there are many charitable estates. That fact cannot be lightly brushed aside.
§ Mr. Willey
The figures that I gave were market prices. As a result of the 1954 Act the freehold of the market price of £4,000 became valued at no more than £2,000.
§ Mr. Barber
I am sure that the right hon. Gentleman will accept from me that all I want inserted in the Bill is a provision that market prices should be paid as in the 1954 Act for what belongs to the landlord—no more and no less. The right hon. Gentleman knows that the principle which he has enshrined in the Bill will not stand up to examination.
§ Mr. Emlyn Hooson (Montgomery)
The right hon. Gentleman is deploying his argument with care, but does not he agree that it would be unfair to call upon the leaseholder to pay for the bricks and mortar when his father may have built the house?
§ Mr. Barber
In many cases the house was originally built by the owner of the land, and in those cases the Bill will operate in a grossly unfair way.
The right hon. Gentleman may contend that if the price of enfranchisement took account of the house as well as the site some leaseholders might have difficulty in finding the money. I accept this. I therefore suggest two ways in which the Government could help the leaseholder to buy. First, the Government should bring in the mortgage option scheme now instead of waiting until April, 1968. The Government can afford large and indiscriminate subsidies for council house building but nothing to help home buyers until April, 1968. That is wrong.
Secondly, the Government should bring in right away a scheme to help with the initial deposit. We have always realised that this was an essential corrollary to any plan for easier mortgage payments. Those are the right ways to help leáseholders who find it difficult to pay. The compensation provisions are obviously inequitable, and the fact that the Bill adversely affects only a minority of citizens makes it even worse. To bully a class or group of people whom the Government regard with disfavour is the worst type of discrimination.
We shall wish to consider many matters of detail in Committee but I want to mention two of great importance. 1296 The first concerns the question of redevelopment, to which the right hon. Gentleman referred, and the second concerns good estate management. There are many excellent estates. Clearly, unless there are substantial safeguards, these estates will suffer. Clause 19 gives some cause for hope, but why should the Minister have complete discretion in the matter? What is required is more objective criteria than are at present laid down in the Bill.
Having laid down these objective criteria the Government should leave the decision to the High Court in each case. There is no need for the right hon. Gentleman or his successor to place himself in the position of deciding whether or not schemes for the retention of management powers should go forward to the High Court.
On the question of redevelopment the Bill enables the ground landlord to resist, through the courts, a 50-year extension of the lease on two grounds—either that he wants to occupy the house himself or that he genuinely intends to carry out redevelopment. But he can resist enfranchisement only on the ground that he intends to occupy the house; the general intention to redevelop is no defence against enfranchisement. This is illogical. Perhaps the right hon. Gentleman will explain why the defence of redevelopment is available in the case of the leaseholder who wishes to obtain a further lease but is not available to the landlord against the leaseholder's wish to purchase the freehold.
It would surely be more reasonable if the various options available to the leaseholder under the Bill were restricted to the latter part of the lease—say, the last seven or 10 years. I cannot see why, in equity, they should be available at any time during the lease, as the Bill provides. I say this because it is usually only when the lease is beginning to near its end that the ground landlord can be expected to contemplate the question of redevelopment, which we on this side—and I think the right hon. Gentleman himself—regard as of major importance.
There are many other matters which we shall wish to consider in Committee. I have spoken for rather longer than I intended, because of several interruptions from hon. Gentlemen opposite—
§ Mr. Barber
I was grateful for them. They gave me an opportunity of replying to hon. Gentlemen opposite.
I can sum up our attitude in two sentences. We stand by our declared policy of leasehold enfranchisement. We are opposed to confiscation.
§ 5.1 p.m.
§ Mr. E. Rowlands (Cardiff, North)
Many Bills which pass through this House affect the individual, the family and the community, but none so immediately as this Bill, which affects all three possibly more directly than anything else which we have put through the House since the General Election. I think, after listening to the right hon. Member for Altrincham and Sale (Mr. Barber), that I now know why there is only one Tory seat in South Wales. If the right hon. Gentleman, who spoke at a businessmen's club in Cardiff recently, had left the club and talked with some of the leaseholders in South Wales, he would have been wiser than he appeared to be this afternoon.
I must declare a direct personal interest. I am a leaseholder. I declare an interest, too, for nearly all my constituents and for South Wales. If I had been objectively listening to the right hon. Gentleman and had not been a Member for a South Wales constituency, I would not have understood the point of this reform. I should have known a lot about some bogus figures concerning housing, but nothing about the leasehold system or its effect on many thousands of people, particularly in South Wales—
§ Mr. Rowlands
The whole thing was bogus, because the right hon. Gentleman did not put it in perspective.
The Bill discusses this reform in the language of lawyers. I should like to discuss it in language which would be understood by my constituents and to explain the feelings and the anguish which many have expressed while waiting such a long time for this Bill. What does it mean in real terms to people in South Wales? The leasehold system has meant, increasingly, insecurity, uncertainty, worry and concern among leaseholders as 1298 to what they will do in 10 or 15 years when their houses—as a result of Tory Party policies anyway—revert to the landlords.
This is a householder's problem, the problem of almost every householder in South Wales and in my constituency. Such streets in my constituency as Merthyr Street and May Street are small streets of old terraced houses which are nevertheless firm and solid and worthwhile living in. They have been owned and occupied perhaps for generations by the same family. They were built during the housing boom 70 or 80 years ago as a direct result of the Industrial Revolution in South Wales.
Every year, these householders pay what seems a small and insignificant ground rent. No one denies that this rent is small. I have examples of rents as low as £ a year, sometimes £2 10s. and sometimes the astronomical figure of £5 a year on the older property. That sum is nothing. If that were all, we should have no leasehold problem in South Wales. If it meant that they could carry on paying a small ground rent for any length of time until the house was uninhabitable we should have no problem. But behind this small sum is a situation which has worried householders, and those in South Wales particularly.
As everybody knows, the leases have only a short term to run. The majority of leases in the central area of my constituency—and in the centre of most other South Wales urban areas—have only 10 or 15 years to run, and in many cases the time is down to five years. Some have already fallen in. Those are the few harsh examples of what could befall the rest of the community under the leasehold system.
As a result, many householders have felt deep concern. They have been covered in the sense that they are safeguarded and cannot be tossed immediately out of their own houses. Nevertheless, they have drawn mortgages on these houses which they have been paying off. Now they are told by the right hon. Member for Altrincham and Sale that they do not own the houses, the bricks and mortar, on which they have been paying mortgages. I have a mortgage and I was surprised when he told me that I did not own my house. I shall write to ask my 1299 landlord to pay my mortgage as well, because that will be a great relief to me, though I doubt to him.
Of course, not only is the problem a question of security of tenure of a householder who thought he owned his house. It is also a problem of buying and selling houses in central areas like that of Cardiff. Very few building societies or local authorities will give mortgages on these houses. As the right hon. Gentleman said, the leaseholder has a traditional way out which has existed for some time. It as been there for many years; he can always write to the ground landlord to ask to purchase the freehold.
My files are full of little notes returned by ground landlords in response to such leaseholders in South Wales. They are curt notes saying that it is not the policy of the company or the estate to sell the freehold. These notes dash the hopes of thousands of leaseholders. Even when an offer is made to what would be regarded in South Wales as a contradiction in terms, a generous landlord, the price is hefty.
The right hon. Gentleman did not mention the prices for some of the older properties at the moment. I know of some vacant property which is not worth more than £1,500 to £2,000 outright, for which leaseholders have been asked anything up to £800 for a lease with five years to run. I know of one price of £1,000. Is this the price which the right hon. Gentleman wants the average householder to pay? [An HON. MEMBER: "No."] I think that he does. He did not contradict me.
Even when the ground landlord has been, theoretically, generous in offering renewal to the leaseholder whose lease is running out, the leaseholder has not only had to pay a modern ground rent, which we all accept is reasonable, but also a heavy premium. Again, the right hon. Gentleman reaffirmed that if the Tory Party were in power they would still maintain the premium—
§ Mr. Barber
I said no such thing. I laid down three alternatives. One was leasehold enfranchisement. If the hon. Gentleman and his constituents will read tomorrow what I said, they will find that that is so.
§ Mr. Rowlands
I am sure that the right hon. Gentleman said this, and I shall send him a copy of HANSARD tomorrow to confirm it. He said that the leaseholder can either be a tenant in his own house, although he has bought it, or can renew the lease with a premium and a modern ground rent. The right hon. Gentleman definitely included premiums. Will the right hon. Gentleman get to his feet and repeat what he said?
§ Mr. Barber
I am sure that the hon. Gentleman does not want me to repeat everything I said, particularly since my remarks were set out in our policy at the last election. In my speech I set out three alternatives, one of which was leasehold enfranchisement—which, after all, is the purpose of the Bill.
§ Mr. Barber
No. I referred to leasehold enfranchisement and gave the details. My hon. Friends and I stand by the proposals which we made at the last election.
§ Mr. Rowlands
Being a fair-minded man, I will put another question to the right hon. Gentleman and will willingly give way if he wishes to reply. One of his alternatives was the renewal of the lease on a modern ground rent with a premium. Did he say that?
§ Mr. Rowlands
Obviously, the right hon. Gentleman does not wish to answer my question. Certainly, we would not be having any form of leasehold reform had the Conservatives been returned to power at the last election. One can thumb through OFFICIAL REPORTS from the 1880s and occasionally find reports of private hon. Members attempting to introduce a measure of leasehold reform. On three occasions during the recent 13-year period when the Conservatives were in power private hon. Members—including one hon. Gentleman opposite—tried to introduce a reform of the leasehold system. My right hon. Friend the Member for Cardiff, West (Mr. George Thomas), who is now a Minister, has campaigned 1301 in the past in Wales for this reform, and I pay tribute to him. I know that my right hon. Friend would have loved to have been here for this debate.
The Conservatives have not so much ignored the possibility of leasehold reform but have positively and bitterly opposed it, just as we have seen them doing this afternoon. They have opposed it in the most intemperate language. Indeed, when the House debated the White Paper—although I was not an hon. Member at that time—the right hon. Member for Altrincham and Sale spoke of it as a "moral outrage". Phrases such as "legalised theft" were used, and when I first read the remarks I thought that the right hon. Gentleman was speaking not about leasehold reform but about the leasehold system.
§ Mr. Hamling
Is my hon. Friend aware that hon. Gentlemen opposite are frightened to vote against this reform?
§ Mr. Rowlands
Perhaps the right hon. Member for Altrincham and Sale will confirm that. Certainly they back down at the last moment at the conclusion of the debate on the White Paper. Of one thing we can be certain; had the Conservatives won the last election we would not be getting this reform. There would have been no sign of it had they had their way. This is one reason why they have been unable to make a breakthrough in South Wales and why they lost one of their two remaining seats there at the last election. If they wish to make any headway in South Wales they will have to stop defending the system of ground landlordism which has existed for so long.
This is an all-important Bill for the future of South Wales, Wales generally and many parts of the country where this problem of leasehold has been of major concern. Clauses 1 and 9 give important rights. Clause 1 gives the leaseholder the right to purchase the freehold; and no longer will the ground landlord be able to return the sort of curt notes to leaseholders which I described earlier. Clause 9 establishes the important right of a fair price being asked. This will not be an exaggerated market price but a fair price. In South Wales one has little alternative than to purchase a leasehold property. This Clause ensures that the price makes a just distinction 1302 between the land on which the house is built and the house itself, the house probably being bought on a mortgage or having been paid for by the leaseholder.
Another important right makes it possible for a leaseholder who cannot afford to pay any price for the freehold to have his lease extended by 50 years. This is an important additional option and it is right and proper that it should be included in any system of leasehold reform. However, I hope that my right hon. Friend will explain why, once a person has chosen to extend his lease by 50 years, that rules out his successor having the opportunity of opting to purchase the freehold. Why must this be a once-and-for-all choice? Since an elderly person might choose to extend his lease by 50 years but may then pass the property to his son or might sell it, ought not his successor to be entitled to the same right of purchasing the freehold?
A large number of houses in Cardiff are old and are divided into three flats with a common staircase. The leaseholder might reside in the ground floor flat while his tenants live above. The rents and rateable value of the three flats together could exceed £200 a year. Does this rule out the possibility of the leaseholder who lives on the ground floor from enfranchising? If so, we will have to consider this £200 rateable value limit in detail in Committee.
Finally, I plead with the Government to persuade local authorities, banks and others to make available as much money as possible to ensure that as many people as possible are able to enjoy the rights conferred on them under the Bill. It is important that the vast majority of leaseholders, particularly in areas such as South Wales, have the opportunity of benefiting from the Bill. Many of these leaseholders are elderly and it will be difficult for them to raise even the quite smallish sums which will be required for enfranchisement. I trust, therefore, that the local authorities and banks will be generous.
We must ensure that the rights conferred by the Bill on leaseholders are used to the maximum advantage and as quickly as possible. Although I see no chance of the Tories being returned to power, we must ensure that there will be 1303 no possibility of them introducing amending legislation which would damage the rights contained in the Measure. Many thousands of leaseholders will wish to take immediate advantage of the Bill. It is an advantage which they deserve and I therefore wholeheartedly support the Measure.
§ 5.15 p.m.
§ Mr. John Boyd-Carpenter (Kingston-upon-Thames)
Like the hon. Member for Cardiff, North (Mr. E. Rowlands), I must, before taking part in the debate, declare my two somewhat conflicting interests. As the House knows, I am a director of a property company. I am also the holder of a long lease which, owing to the ineptitude of the Inland Revenue, is at the moment above the rateable value laid down in the Bill.
The hon. Member for Cardiff, North spoke with the feeling and emotion which one expects from a Welsh hon. Member on this subject. The trouble with the emotion which he and some of his hon. Friends have expressed is that it has confused what is actually being sought to be done by the Government in the Bill. As I understand it, the issue is not whether or not there should be measures of leasehold reform, but whether this is a fair and acceptable Measure. It is to that aspect that I propose to address my remarks.
In considering the principle of this Measure, I would ask the House, first of all, to reflect on some very wise words in the Jenkins Report. The Jenkins Committee was, as the House will remember—and I say it with the utmost respect to the right hon. Gentleman—the last independent outside body to review the approach to this subject. It stated:While freedom of contract should certainly be subject always to public policy, private property should only be taken for the benefit of the community as a whole—never for private advantage, and on terms of full compensation for the freeholder.The essence of this Bill, and this is why it seems to me to raise very serious questions of principle, is that—as The Times so rightly described it, when it was published, in an article headed "An Unfairly Drawn Bill"—it amounts to the expropriation of one citizen for the benefit of another. That seems to be an objectionable principle, and a principle none the 1304 better for the fact that the Prime Minister was able to gloat the other day about what he thought would be the favourable response of a million leaseholders.
The objection in principle is fortified by one practical point. Where one has had for a very long time both parties to a lease, and their successors in title, dealing with the matter on the basis that the lease is an interest in house and land for a definite period, coming to an end on a predetermined date—and we have in the case of most long leases a whole variety of transactions undertaken on the basis that this is an interest limited in time—and then later in the process we intervene by Statute and so wholly alter the relation of the parties, we create a whole mass of unfairnesses and anomalies.
This is where, I think, the right hon. Gentleman went wrong in his repeated references to the leaseholder having built the house. In many cases that is not true, as my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) has said. It is not so in most of the great London estates, but it is true in the case of some others. But even where it is so, the house was built by the original leaseholder knowing perfectly well the basis on which it was done, that basis being the possession of house and land for a precisely stated period to which he agreed.
But the right hon. Gentleman must accept that when we talk of these long leases, and the example of the 99-year lease is perhaps the one we are most discussing, this is not now the concern of the original leaseholder. The lease has changed hands many times, perhaps by inheritance—although I gather that some hon. Gentlemen opposite do not approve of that—but more often by purchase, with the purchase price reflecting the fact that a shorter and shorter interest was being bought.
The right hon. Gentleman tried to deal with this in the White Paper debate when he stated… but also to the house which has been built on his land, even though he has neither provided nor maintained it. That is legal confiscation. The leaseholder is expropriated. He is left with nothing, even if the house which he or his predecessors have paid for still has many years of useful life.1305 My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) then intervened to ask:Can the right hon. Gentleman explain how that amounts to confiscation in a case where the lessee has himself purchased the lease at a price which reflects the fact that it will come to an end at a certain date?".To that the Minister unbelievably replied:I would ask the hon. Gentleman to read the White Paper again. One has to take an historic view of both the freehold and leaseholds interests."—[OFFICIAL REPORT. 28th February, 1966; Vol. 725, c. 905.]The right hon. Gentleman was simply not applying his mind to the point put to him.
It is not only possible, but happens many times that people buy the fag-end of a lease—the last six or seven years at the end of a lease—at a very moderate price. In fact, part of the Minister's argument was that such a lease was very difficult to sell and could be bought very cheaply. Yet he comes here with a Bill, not to give to the mythical and long-since-dead builder of the house these rights, but to give them to someone who has bought, at a modest sum, that fag-end of a lease—
§ Mr. Boyd-Carpenter
It happens every day in London, and it will happen even more frequently if this Bill goes through.
The right hon. Gentleman must address himself to the fact that these transactions have gone on during the lifetime of the lease, again and again, everyone knowing the basis on which they were done, and it is really quite outrageous to say that the person who happens to have got a lease quite cheaply shall be presented with these valuable rights which, as my right hon. Friend so rightly said, having acquired under the Bill he will be able to sell on the free market the next day for the full price—
§ Mr. Willey
The right hon. Gentleman will remember that I said that it is not the White Paper or the Bill that provides the distinct interests, but the leasehold contract itself. This is a very real difficulty, because they are parallel interests. What happens on the leasehold side has nothing to do with what happens on the freehold side, although they are contemporaneous interests. If one is thinking of the leaseholder's interest one has only 1306 to look at the leasehold side, and the fact that one leaseholder sells to another leaseholder has nothing to do with the freeholder, just as a freeholder can sell to a freeholder without the leaseholder being aware of the transaction. Why I speak of the historic view is that one has to look at the whole interest and say, "Here is a leaseholder", and provided one takes the historic view, with the land being made available at a ground rent—it is only if one does that and accepts what the contract is—dividing the property in this way —that one can reach an equitable settlement.
§ Mr. Boyd-Carpenter
I do not think that that argument helps the Minister very much. If I understood his lengthy intervention aright, it is that he is more concerned to penalise the freeholder than to help the leaseholder. He must face this. What merit is there in presenting someone who bought the fag-end of a lease perhaps six years ago for a very modest sum—presenting him, at the cost of the freeholder—with a freehold that he can sell on the market tomorrow? Can the right hon. Gentleman say how he justifies that?
§ Mr. Willey
I certainly can. I gave the example of a leaseholder buying on a mortgage. It may well happen—though it will not happen in the future—that he has bought the lease mid-term, and when he comes to the end of his mortgage he has paid for the house, but he finds himself with something far less valuable. Perhaps someone buys it from him for less than he paid, but that has nothing to do with the freeholder who may be a freeholder who has held the lease for 50 years or who has held the lease for 5 years.
§ Mr. Boyd-Carpenter
The right hon. Gentleman makes matters worse. He is running away every time from my example of the fag-end of a lease, whether on mortgage or not What he is doing, and I do not think that he challenges it, is to say that someone who bought for a few hundred £s the fag-end of a lease in London is now to be presented with the right to sell it freehold on the market tomorrow if he likes.
§ Mr. Willey
What I have done is to define a genuine leaseholder occupying his house. If the right hon. Gentleman wants to challenge that, he can do so. The basis of the definition is the five 1307 years' continuous occupancy, or the five years out of seven years. That is the definition of the genuine home owner, and he is the person who will benefit from this legislation. If the right hon. Gentleman pursues his argument that person will be excluded from the benefits of the Bill.
§ Mr. Boyd-Carpenter
First, I would exclude this person at the fag-end of a lease. But the point goes not only to the exclusion of such a person; it goes to the fallacy of the whole principle of the Bill. The person with the fag-end is the most vivid illustration. I shall now finish that illustration, if I may.
Six years ago, this person bought the end of a lease of a valuable house in London for a few hundred pounds. Let us take the example of the house to which the right hon. Gentleman referred.
§ Mr. Boyd-Carpenter
I am engaged in an argument with the Minister. Although the hon. Gentleman may rightly think that his right hon. Friend is not doing very well—
§ Mr. Boyd-Carpenter
—I am still entitled to continue the argument with the right hon. Gentleman, to whom I have already given way twice. I am sure that the hon. Gentleman will understand that that is fair.
Let us take the right hon. Gentleman's example. Such a person can then sell that house on the market for £7,500, the price which the right hon. Gentleman himself said was its vacant possession value. How does he justify that?
This goes back through the chain of the lease, which has been bought in the 1308 knowledge that a thing of less and less value was being bought each time. This is the complaint against the right hon. Gentleman. He is at this stage intervening by what is, in effect, retrospective legislation in a whole series of transactions over many years solely to benefit the person who at present happens to be the owner of, perhaps, a few years of the lease. The right hon. Gentleman does not seem to understand the muddle into which he is putting everyone.
§ Mr. Willey
In fairness, perhaps the right hon. Gentleman will give the House a figure. He has used the example of a house with vacant possession value of £7,500, with 21 years to run. What does he put as the market value freehold interest?
§ Mr. Boyd-Carpenter
I thought that the right hon. Gentleman was giving vacant possession value. I am not prepared to make the calculation on my feet. It is a great deal more than the figure of £800 which the right hon. Gentleman gave. Does he challenge that? Is it a great deal more?
§ Mr. Boyd-Carpenter
The right hon. Gentleman says that he is giving market value for the freehold interest.
§ Mr. Willey
The right hon. Gentleman is a member of a property company. He can give us his estimate of the market value freehold interest.
§ Mr. Boyd-Carpenter
I shall gladly tell the right hon. Gentleman if he will undertake to accept my estimate and put it in the Bill.
Let the right hon. Gentleman consider another illustration of the muddle which will be created by this truly retrospective Bill. The owner of prospective reversions has died in recent years. For Estate Duty purposes, his estate has been assessed on the value of his prospective reversions. They have a value at the date of death which has been the value for Estate Duty purposes, on the assumption that the law continues as at present. If the Bill becomes law, however, that will turn out to be a wholly false basis because the larger part of the value, as the right hon. Gentleman says, will have been taken away. Are the Government prepared to reopen all those cases in 1309 which Estate Duty has been paid on that basis so as to repay to the heirs of that man the duty which has been paid on the basis of values which the Government have subsequently destroyed? This is another example of the difficulty in which the Government put themselves by a Measure of this kind.
It would be bad enough to deprive great property companies and great landlords of their rights by this sort of action —[Laughter.] I am sorry that hon. Members laugh. It is the mark of a civilised society that one does not transfer the rights of one citizen to another by expropriatory legislation. One relies on taxation, if one wishes so to do, to deal with disparities of wealth. One does not proceed on the Robin Hood principle of transferring one man's property to another.
It is very much worse morally when the people robbed are pension funds, including the funds—if hon. Members opposite care to inquire—of certain trade unions, of charities, educational charities—
§ Mr. Boyd-Carpenter
It is all very well for the hon. and learned Gentleman to sneer at widows and orphans—
§ Mr. Boyd-Carpenter
In a moment. If the hon. and learned Gentleman cares to sneer at widows and orphans, he should remember that this is just the kind of investment which is very often made for widows and orphans.
§ Mr. Weitzman
I hoped that, by making that remark, I would induce the right hon. Gentleman to give way, because I wanted to point out the fallacy of his argument. If the cases he has given show that it is wrong to adopt the course taken by my right hon. Friend, why did the Tory Party, in the 1954 Act, give statutory protection to a leaseholder whose lease comes to an end? If the right hon. Gentleman's argument is right, it is equally wrong to do that.
§ Mr. Boyd-Carpenter
I shall not be tempted to give way again to the hon. and learned Gentleman, since he has indicated that he obtained my concession by a 1310 trick. It does him little credit, but I shall answer him none the less.
The point which the hon. and learned Gentleman is, apparently, incapable of apprehending is that, under the 1954 Act what was given to the holder of a lease at the end was security of tenure—it was necessary in the conditions of housing shortage at that time, accentuated as they have been since then by the mismanagement of the present Government—given at a market rent, the full rent. If the hon. and learned Gentleman cannot understand the difference between expropriation of a capital asset and the grant of a tenancy at a market rent, he seems doubtfully qualified for the prefix "learned".
This is the objection. It is wrong in principle so to transfer to other citizens rights in property, whether the transfer be from property companies and great landlords or from pension funds, widows and orphans or any of the many admirable people who own reversions.
The hon. and learned Gentleman's intervention has induced me to go further and remind the House of another fairly common category of person, the person in our public service, for example, who knows that he is to retire at a certain date. He buys the freehold reversion of a long lease so that he will have the ground rent while he is still at work and possession of the house to retire to when his work comes to an end. There are a good many such examples in our South Coast towns. What is the right hon. Gentleman doing to that man? He says to him, "When you retire, if you are to obtain possession of the house to which you plan to retire, the rights in which you have bought from a certain date, you shall have it only if you first can persuade a court that your hardship is greater than that of the occupant, and, second, on payment of compensation for a 50-year lease which you have been compelled to give him". Does the right hon. Gentleman think that that is giving a square deal?
I want the House to realise what happens once one embarks on expropriatory and confiscatory legislation of this kind. One does a great deal of injustice.
The wrong principle of the Bill is shown up by the exceptions. If this is simple justice, if it is right, as the hon. 1311 Member for Woolwich, West suggests, to bash the landlords because they have bashed the tenants—
§ Mr. Boyd-Carpenter
—it is interesting to know that that is the hon. Gentleman's attitude—if that is right, why do we end this great principle at £200 a year in the country and £400 in London? Why is it not applied to flats? The right hon. Gentleman knows that the £400 and £200 are Rent Act figures.
§ Mr. Elystan Morgan (Cardigan)
Does the right hon. Gentleman appreciate that, at the date of the last debate, there were in Wales only 799 houses above the £200 and £400 limits and only 110,000 in the whole country? The number of houses leased in that category must be very small indeed.
§ Mr. Boyd-Carpenter
That seems a most curious reason. The Bill does not deal solely with Wales; it deals with England and Wales. I am trying to test the validity of the right hon. Gentleman's principle. If it is such a right principle as he suggests that if the leaseholder built the house and it is, to use his own phrase, "legalised confiscation", for the landlord to resume possession at the end of the period of rent, why is it not legalised confiscation if the annual value is £210 a year?
§ Mr. Willey
As I said, we are intervening by legislation to rectify a contract and doing it in the cases of greatest hardship. The right hon. Gentleman is persuading me that this is a matter we should look at again.
§ Mr. Boyd-Carpenter
I have long since abandoned any hope, during the Land Commission debates, of any capacity to persuade the right hon. Gentleman of anything, particularly anything that happened to make sense. He must realise that those questions test, I think decisively, the validity of his principle.
The Rent Act limits were genuinely designed—I think wrongly, for I think that they were placed too high—to cover the areas where there was shortage and where it was necessary to protect tenants, or would-be tenants, from the effects of the housing shortage. They had nothing to do with transfer of a capital asset, a 1312 capital asset which can be resold. Therefore, one is left in great doubt whether the right hon. Gentleman believes in this convenient principle, if he does not apply it right across the board.
Why is it that at £210 a year in the provinces that great principle that the present law provides for legalised confiscation comes abruptly to an end? Why does it not apply in the case of flats? The right hon. Gentleman said something about flats in his speech, and I hope that his right hon. Friend will clear it up in his reply. Did his indication that flats might be brought into this category because of other legislation dealing with the Wilberforce recommendations concern an Amendment to be introduced into the Bill or subsequent legislation?
§ Mr. Willey
I am obliged to the right hon. Gentleman for allowing me to continue the discussion. That would not be a matter for this legislation because we must await the legislation promised pursuant to the Wilberforce Committee's Report.
§ Mr. S. C. Silkin
I think that the right hon. Gentleman's point is the only one I have heard from him so far with which I entirely agree. May I take it that he and his right hon. and hon. Friends would join with hon. Members on this side of the House who put down an Amendment to remove the rateable value limits from the Bill and also to include flats?
§ Mr. Boyd-Carpenter
If the hon. and learned Gentleman agrees with me, I must be wrong, because no one has been more wrong than the hon and learned Gentleman in this matter. Because I thought that he was not in the House I did not mention earlier that he has written an article of which he knows that I am aware—and he is aware of mine on the same subject—in which he makes the flat-footed statement that the leaseholder built the house.
He knows that the purpose of what I am doing is to test the validity of the Government's principle and not to see whether anything can be patched up out of this hotch-potch of a Bill. I do not want to extend the mischief effected 1313 by the Bill an inch further than the Minister wishes. But I am entitled to point out—and I think that it is some embarrassment to the Minister—that his own principles are put in doubt by drawing that line of demarcation.
I am sorry to have detained the House for longer than I had expected, but it was because I gave way to many interventions. I hope that I did not incur the displeasure of the Chair. I must now come to the point of development and redevelopment.
I hope that the Minister realises the damage he is doing to redevelopment. As I understand the Bill, if when the leases fall in the freeholder wants to redevelop an estate, he must first grant a lease of 50 years to the leaseholder and then get back the lease and compensate the leaseholder for it. That means that on top of the high cost of building today —the right hon. Gentleman knows that it has never been higher—a redeveloper will have to pay a large fine for every house he takes in for redevelopment—the value of the 50-year lease. I hope that the right hon. Gentleman realises the damage he is doing to redevelopment in that way.
He is making it inevitable that redevelopment will not take place except where it is thought that colossal rents can be demanded for the redeveloped property. That is a recipe for the creation of slums. One can see in parts of London, such as Islington and Southwark, fine houses that have gone back to slums through not being redeveloped. The Bill is a further blow to redevelopment, and if he is remembered for nothing else the right hon. Gentleman will be remembered as the creator of slums.
§ Mr. Boyd Carpenter
I cannot give way again or I shall incur the grave displeasure of the Chair, and I want to finish.
The Bill seems to me to be designed for Party political purposes. As my right hon. Friend said, it has had a thoroughly bad reception. It has been unanimously condemned by the serious Press and the professional bodies. It flies flat in the face of the considered recommendations of the Jenkins Committee.
1314 The Prime Minister may be right, and it may be popular with the million leaseholders. It is easy to make oneself popular with people by handing over other people's property to them. But I wonder whether one does make oneself quite so popular in that way and whether the Prime Minister, not for the first time, has not underrated the quality of the people with whom he is dealing. There may be many among those million leaseholders who will regard it as a pretty shabby thing that another citizen, not necessarily better off than themselves, should have his property removed by legislation and handed over to the leaseholder.
I think that the citizens of this country do not like that kind of thing. To start removing the property of what may be thought to be an unpopular minority and transferring it to other citizens is a dangerous step for a Government to take. It is an unhappy precedent, recalling things that happened in other countries in our lifetime. It is a desperately unwise step, but it may serve its purpose in connection with the forthcoming elections. The Government may buy votes with it, but they will do so at a very high price and the price of their honour.
§ 5.48 p.m.
§ Sir Barnett Janner (Leicester, North-West)
This subject has been before the House for 30-odd years within my recollection. The speech of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has shown that the Tory Party stands where it has stood at all times on these issues. Did they really think that the pernicious—
§ Mr. F. A. Burden (Gillingham)
On a point of order, Mr. Deputy Speaker. Is it possible to get the hon. Member for Woolwich, West (Mr. Hamling) either to speak more quietly, or to rise if he wishes to intervene, rather than to continue a running conversation when an hon. Member is speaking?
§ Mr. Deputy Speaker (Sir Eric Fletcher)
It is desirable that all interventions should be made from a standing and not a sedentary position.
§ Sir Stephen McAdden (Southend, East)
Further to that point of order. Am I right in believing that no hon. Member is allowed more than one speech in 1315 a Second Reading debate? As the hon. Member for Woolwich, West (Mr. Hamling) has been talking incessantly, may I take it, Mr. Deputy Speaker, that you will not call him?
§ Mr. Hamling
Further to that point of order. I was replying to a question from my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman).
§ Sir B. Janner
After that interesting and enlightening set of interventions, may I resume my speech?
What hon. Members opposite have not yet realised is that their view of leasehold reform is not acceptable to the country. They should have learned that from the result of the General Election. Anybody in this country who is older than about 30 can remember the agitation carried on by the late Mr. Lloyd George. Everybody knew that people were beginning to reiterate "God gave the land to the people and not to the landlords".
Everybody began to talk about the fact that when large plots of lands and estates had been given away interests in them were created artificially. They said if anything belongs to the people it is the land on which they stand. The distinction between the land itself and what is built on the land is substantial. In other words, what a person puts into the land he is entitled to get a return for it, but what he does not put into the land is not his but is something created by somebody else.
What we are doing today is trying to put the position into its proper perspective. I do not deny that there is bound to be trouble and difficulty for some people. Every piece of legislation brings difficulties to somebody. But it is no good anyone suggesting that this proposal has not been on the cards for many years. It has been known that when a Labour Government came into power it would introduce leasehold reform of this nature.
Who can complain? The people who speculated on the fact that leasehold reform might not be introduced? Are they entitled to say that although a majority of the country were in favour of lease- 1316 hold reform, they did not believe that it would ever come about, took a chance on this and therefore are entitled to complain about the Bill? The right hon. Gentleman believes that the transactions which took place were based on the fact that leasehold reform would never come about, although even the Tories pretended that they would introduce it. I hope that he will remember that when considering the difficulties. We did not create the difficulties. The Tory Party created them. They have led people to believe that this would not happen. The country was not prepared at the last election to accept that belief. We debated this subject only a few days before the election. It was not pushed under the carpet. It was a live and important proposition which was put to the country, and the country accepted our view.
§ Mr. Burden
A great many propositions were put to the country at the last election on which the Labour Government have completely scuttled.
§ Sir B. Janner
I am talking about this subject. I know that hon. Members opposite are trying every device to avoid the issue, but they should not try that with me. I am too old a politician for that. It is like water off a duck's back. But I am far from being too old to argue my case.
Let us discuss this matter on its merits. There are difficulties, some people will suffer and some will lose. But after 60 years of the Rent Acts, to say to the country that the sanctity of contracts is such that it must under no circumstances be interfered with is sheer nonsense. We then have to deal with the position which was created because the social conscience of the country said that there are certain contracts relating to tenancies and occupation of land which are contrary to the public interest, and although some people will suffer by not getting higher rents, although they expected to get them, nevertheless, we must deal with the matter.
How can it be suggested that we must not alter the circumstances relating to property? Every piece of legislation alters something and almost invariably contracts, either written or unwritten, are in existence in regard to the subject matter. Are we to take the correct step, in spite of the difficulties which may arise, or shall we remain in the same 1317 bad condition in regard to land about which I, for my part, and many hundreds of thousands of people have been complaining year in and year out for many years?
§ Mr. Peter Hordern (Horsham)
Is it the hon. Member's proposition that any contract which is made, and which is subsequently found by a Government in their view not to be in the public interest, can be broken at any time?
§ Sir B. Janner
No. The hon. Member must not put words into my mouth. I have never said that and never would. I said that if it is in the interests of the community as a whole, if it has been put to the community, as this issue was put to the community, and if the community have returned a Government which included leasehold reform as a substantial part of its programme, particularly in Wales, then, irrespective of the harm which may be done to some individuals, the Government are right to introduce that reform. We are doing what we can to mitigate that harm as far as possible, and I will explain how.
This is an extremely interesting matter. I am President of the British Association of Leaseholders, and for 30 years I have felt that the leasehold system is a blot on the country. Men and women who have built houses, and established their homes in them, have subsequently lost them under the leasehold system. I could give illustrations from the Welsh valleys. What happened there? Often the land had no more value that that of agriculural land. [HON. MEMBERS: "Less."] I prefer not to exaggerate. Some of the land is worth something for agricultural purposes. But in the main they did not use that land. They occupied land which was not worth even that amount, and there they established villages and towns because people were building there and were creating values for that area. Consequently, the landlords are not only not entitled to the building, I am not sure that they are entitled to any increase in value which has accrued to the site as a consequence of the development.
§ Mr. Ednyfed Hudson Davies (Conway)
In many areas land was not only valueless but was land which had previously belonged to the whole society as common land but had been taken over 1318 by the ground landlord under the Enclosure Acts.
§ Sir B. Janner
I have a limited time at my disposal and I do not want to incur your rightful wrath, Mr. Speaker, by speaking for too long. This is a wide subject and perhaps another hon. Member will deal with the question of common land. I want to deal with another point. I would ask the right hon. Gentleman to look at this from that point of view. Sanctity of contract? Yes, as long as it does not interfere with public good. There must come a time when some change must be made which, in spite of contracts, must affect the tenants. Again, is it not reasonable for any one to say that it has not been in contemplation that the strict sanctity of contract in respect of land cannot be upheld since 1915 if against public interest. It has worked.
I know the position in South Wales very well. What nonsense it is for people to talk about this being a struggle to make profits out of it by the tenant. Do they understand what a home is? Do they not know how many tens of thousands of people have realised that this Act will come into force and have looked upon their houses as their homes? Do they not know that these people would regard it as robbery if these so-called market values are imposed? What is so wrong with a landlord being told:Look, you may have made a mistake and miscalculated; you did not think that leasehold reform would come in, but it has. What is your interest? Your interest is in the site.[Interruption.] Yes, I know the expression "de solum jusque ad caelum". That should not mean it is for God. The house is definitely different from the land.
I would like to raise a question of duress. If a man who has to find a home near his work and has to rent a piece of land and is told that he himself must build the house on it for the landlord to take possession of eventually, is it believed that he would want to do that? He was forced to do it, although the land was worth nothing, and the contract into which he was entering was a contract obtained by force.
Perhaps I have spoken with more emotion than I should, but I know the position and I know what these families are suffering from. I know that in the 1319 London area there is to a great extent the same problem. I would like the right hon. Gentleman to look at this again. For my part, I would tell the House that I am not happy as to whether we are not giving away more than we should. Let my right hon. Friend go down to South Wales and ask what the people there feel about it. This is a Measure which, when it protects people who come within, the same limits of the Rent Act, allows for some argument. Supposing that these people were allowed to stay on for 50 years, at a controlled rent, does the House not think that that might have been an alternative which could have been introduced so that the landlord would not have been any better off?
He would have been in just the same position as he is being put in now; possibly he is in a better position now than he would have been in those circumstances. He bought the land if he did not inherit it—which happened in many cases—because he thought that vacant possession would come and he would edge in on this. Perhaps some would say "Good luck" to him if he gets away with it, but he is being stopped, and if the landlord sits down and works it out he will find that the case for the Bill is a reasonable one. He suffers, but he does not really deserve to feel aggrieved, because he knew that the country would have leasehold reform whether he or anyone else was against it, since he knew that the Tories could not exist as a Government because of their inefficiency and the way in which they mishandled the country's affairs.
§ 6.5 p.m.
§ Mr. Hugh Rossi (Hornsey)
I find myself in substantial disagreement with a great deal that has been said on both sides of the House from both Front Benches. Before I develop my argument, I have to declare three interests. The first is a professional interest. A close concern over the years with the problems of landlord and tenant has led me very firmly to the view that the anomalies and inequities of our leasehold system can be cured only by compulsory enfranchisement.
My second interest is a personal interest. I am also a leaseholder, but like 1320 the Minister, my lease is of such a length that it is not of very immediate concern to me whether I acquire the freehold. Like my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the rateable value of my property is such that it could not concern me in any event under the Bill as it now stands.
The third interest that I have is a constituency one, and it is this interest which I desire to argue this evening. Hornsey is an inner area of London, which saw its greatest development between 1880 and 1900, at the turn of the century. This is the story of much of Greater London. The sudden expansion was due to the great industrial growth which took place, and to the increasing facilities of transport and commuting, brought about by our growing railway system.
The development to provide the accommodation for people flooding into the towns was brought about by the leasehold system. It was a system admirably suited to what was required in those days. It advantaged all the parties to the contract. The landowner was assured of an income over a period of 99 years, far greater than he would have received per acre if he had continued to use the land for arable or pastoral uses, without any of the vagaries of the season to take into account. The builder was able to set about his business of building and selling houses without the capital outlay that would have been involved in acquiring the land—
§ Sir B. Janner
The hon. Member should know, and should be good enough to say, that it would have cost him practically nothing to buy the land.
§ Mr. Rossi
In terms of present-day money, yes, but in terms of those days, it might have been a substantial amount. It also advantaged the house purchaser, because all that he was concerned to do was to pay the builder his profit for building property. He was not concerned with the capital payment for the land, spreading his ground rent over a great number of years into the future. For the purchaser there was this considerable advantage, which the hon. Member would surely recognise—he had a guarantee that the amenities of his property would be preserved by restrictive covenants 1321 imposed for the benefit of the whole estate. This was really important in days when town planning did not exist. Do not let us decry the leasehold system as something which has fulfilled no useful function in the history of the development of our cities.
If conditions had remained the same, if the parties to the original contract had remained the same, it would be extremely difficult to argue today in favour of enfranchisement. After all, the leaseholder paid his price willingly and openly—
§ Mr. Rossi
—for the use in those days of land and property over a period of years in the knowledge that ultimately that property would revert to the owner. But—and this is the big reservation, the big proviso—neither the parties to the contract nor social conditions have remained the same over the years. We must consider the leasehold system in the light of both those considerations. This requires an historical approach, as the Minister indicated.
I should like to take two aspects of the interests in property—the freehold and the leasehold. On the freehold interest, changes in family fortunes and the incidence of Estate Duty led to the break up of large estates. Between the two world wars large estates were sold to insurance companies and trust funds, and there was a recognised value for the freehold reversions. The price was normally calculated at between 20 and 25 times the ground rent. Therefore, a £10 a year ground rent would be purchased for about £250, which represented to the trust fund or insurance company a 4 per cent. return on its invested capital.
When those estates were coming on the market, the leaseholders were not, unfortunately, given the opportunity to buy at these prices, because it was far more convenient to the landowners to sell blocks of 20 or 50 leasehold properties rather than engage in 20 or 50 individual transactions. Therefore, the leaseholder was by-passed and he lost the opportunity to buy his freehold.
Then we come to post-war circumstances, when it became the policy of insurance companies and trust funds to move into equities—into stocks and 1322 shares. This was made much easier by legislation which widened the powers of investment of funds of this kind. In more recent years—and here I speak from what I have seen in my constituency—insurance companies and trust funds and the Church Commissioners have been selling to leaseholders at about 40 to 50 times. the ground rent. One might say that this was equitable and fair, because the jump from 20 to 40 times the ground rent represents the decline in the purchasing power of the £ and they were recouping to themselves their original capital.
However, they found that their market at these prices was limited, in the main, to the leaseholder, because as an investment a freehold reversion was not very attractive. There was a great flurry of activity in this matter 10 or 15 years ago. The freeholders sold as many freeholds as they could to the leaseholders. A residue of leaseholds was left in their hands because some leaseholders were not wise; they passed up this second opportunity. An option on the residue was given in the London auction market to the gentlemen who inhabit that institution. In the main, these gentlemen are speculators waiting to move in for the kill as soon as the leaseholder finds that he is forced to buy the freehold for one reason or another. That, as I see it, is the way in which freehold interests have devolved in my constituency since their creation about 99 years ago.
Similarly, the leasehold interest has changed hands a great number of times, but not as between investors, people looking for a safe deposit for their money and a reasonable return on their capital, but as between people looking for homes and roofs to put over their heads and the heads of their families. As the pressure of population grew on the centres of our towns, as the competition to buy these houses became more and more fierce, the wasting nature of the leasehold interest tended to be disregarded in the purchase price paid for the property. Because of the social conditions which have appertained in the post-war period, people have paid considerably more for their leasehold interest than it is worth in the nature of a wasting asset.
Surely our concern is to take note of these social conditions and to ameliorate the situation where we can by legislation. For this reason, I am wholeheartily in 1323 support of any Measure—I do not necessarily say this Measure—which would ensure to the leaseholder the ability to buy the freehold of his property.
There has been talk about the sanctity of the contract, and it has been said that to give the leaseholder the power to buy the freehold against the will of the freeholder is a breach of that principle. But what does this concept really mean? It means that when two adults have freely entered into a contract the law will ensure that the bargain between them is enforced. This principle must be right, because otherwise there would be complete chaos in every activity.
§ Sir B. Janner
I am listening with considerable interest to what the hon. Gentleman is saying, but he will remember the words in the 1915 Act to which I referred:any agreement to the contrary notwithstanding".
§ Mr. Rossi
I appreciate that. Perhaps the hon. Gentleman would let me develop my argument on this matter.
The common law recognises circumstances in which contracts apparently freely entered into can, nevertheless, be set aside, since it would be inequitable to enforce them becausee of the measure of agreement between the parties; they were not completely ad idem. There are elements of misrepresentation and duress. The courts cannot consider duress caused by social circumstances, but we as legislators can, and this is our function today as I see it.
However, while I believe wholeheartedly that relief must be given to the leaseholder and that he must be protected against the speculators who are waiting ready to move in for the kill, it would be wrong of us to propose that the terms of enfranchisement should be such that, in turn, we create an injustice against somebody else. It must be our function to try to hold the balance fairly and equitably between all the parties concerned.
As I see the problem, there are two points in time in the life of a lease when difficulties can arise. The first and most obvious is at the end of the lease. To some extent, the 1954 Act has mitigated the situation by enabling the leaseholder to claim a statutory tenancy. The 1324 initial repairs that the leaseholder is required to carry out following the covenants as to the condition in which he must keep his property have, however, in my view, broken down much of the value that would otherwise be contained in that right.
Time and time again I have seen schedules of dilapidations wielded as instruments of terror against leaseholders at the end of long leases, with the result that they have been dispossessed by the promise of the freeholder to tear up his schedule and forget about it. This situation is completely wrong and should not be allowed to continue. One way of curing this difficulty is to enable the leaseholder to buy in the interest that places him in this position.
The second point of time at which the speculator normally moves in for the kill is at the 30-year point, when there are about 30 years to run on the lease, and the owner of the leasehold property cannot sell because no buyer is able to obtain a mortgage for 15 or 20 years with only 30 years to run on the property. The leaseholder is, therefore, obliged to go cap in hand to his freeholder and say, "Sell me the freehold so that I can dispose of my house and move to another part of the country because my job compels me to do this." At this point in time, again great injustices arise because freeholders take advantage of this situation.
I recognise these injustices and I wish to see them cured, but not by another injustice being superimposed. I hope that the Government will be sufficiently fair about this matter not to mar what is otherwise an enlightened social Measure and have it dubbed as a cynical popularity-seeking Measure and to discard fair dealing and all morality in the process. I ask the Government to look again at the formula which they lay down for the purchase of the freehold interest.
We have had great talk today on who owns what, who owns the land and who owns the building. All the argument has revolved around these concepts. I would like to put forward a pair of alternatives. I do not regard the freehold interest in the same way as has been spoken of today, for the historical reasons which I have been at pains to give at length.
The ownership of a freehold interest in the circumstances of a 99-year lease 1325 is obviously no more than an investment. It is regarded as a safe place in which to put one's capital to give oneself a given return. Therefore, if one looks at the matter from that point of view, one of two things can he said. The first is that the freeholder should be paid such sum as, invested at a modern rate of return —say, 7 per cent.—would produce to him the ground rent that he is at present receiving, with some adjustments to provide for the fact that when he bought he did so with the view of a lease running out—something in the nature of a dated stock.
If one could combine a formula with both those factors, it would be possible to arrive at a fair price mechanism without becoming embroiled in arguments about who owns what, merely regarding it, as the freeholder has always regarded it, purely and simply as an investment for his capital.
The other way of dealing with the matter would be to look to the capital sum which the freeholder originally paid. This would require a disclosure on his part. One would then apply a multiplier to that sum based on the amount by which the purchasing power of the pound had fallen since he first invested his money in that type of investment.
That would result in the freeholder getting back his original capital at its present-day purchasing price. If he were to be given back his money in full, he could not be heard to complain that he had been expropriated; he would have been given back what he had originally put in. What the speculator would be losing would be the profit which he had hoped to make at the expense of the householder. To that extent, I weep no tears over him. We should, however, take away from the Bill any suggestion of expropriation and we should look to a formula that would produce a situation in which the freeholder cannot say that he has lost his money as a result of measures that this House intends to take.
§ Mr. S. C. Silkin
I agree 99 per cent. with everything that the hon. Member has said. On the first of his two alternatives, however—that of the lessor who has in mind that when the lease comes to end he will be able to realise an asset—would not the hon. Member agree that that is precisely what he would be getting as the result of the provisions of the Bill, because 1326 he would be getting the value of the land for redevelopment purposes?
§ Mr. Rossi
I had considered that aspect, but I was, with deference, putting forward my alternatives because they remove us at once from the argument of who owns what, a somewhat fruitless and pointless argument, and provide an alternative method of calculation which would bring about equity between the parties. Either of the methods which I have suggested has the virtue of simplicity.
On the proposals as put forward by the Government, the leaseholder and the freeholder cannot escape having to employ professional valuers to apportion the open-market vacant-possession price of the property between the leasehold interest and the freehold interest at any given point in time. Anyone who has had any dealings with this matter knows that valuers, like experts, often disagree. One sees it in compulsory purchase. There can be endless and tedious argument, calculations and, possibly, litigation about the value of a house and property.
Ultimately, the only answer is that the value is what someone at any given point in time is prepared to pay for it. There is no absolute criterion in valuation. This is why valuers fall out and disagree. It is like the fair rent basis under the new Rent Act. We know how much difficulty and heartache there is about this. People who think that they will get a very low rent find that a "fair rent" means something different. They are disadvantaged because they go before the rent officer or panel and find that the other side has a better valuer than their own. This kind of situation and the expense of employing these people will be inevitable in using the methods proposed by the Minister in the Bill.
If it is considered that the proposals which I have put forward are practical, fair and equitable, the Treasury can easily produce a table which can go into a Schedule in the Bill giving the multiplier to be applied to the price originally paid by the freeholder for his investment so that he gets back today's purchasing power of his original investment.
I put forward these suggestions seriously because I am unhappy with the proposals contained in the Bill. It will be seen that I have argued for the Bill, 1327 against the compensatory aspects of the matter and against some of the speeches which have come from this side, and, at this point in the debate, I do not feel able to support either side, having very strong and firm views of my own.
§ 6.30 p.m.
§ Mr. Robert Davies (Cambridge)
I hope to be reasonably brief, and my task is made a good deal easier by the fact that the hon. Member for Hornsey (Mr. Rossi) conceded at the outset of his speech that the anomalies and injustices of the leasehold system could in his view be cured only by compulsory enfranchisement, and also by reason of the fact that he did not follow his right hon. Friends the Member for Altrincham and Sale (Mr. Barber) and the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in their doctrinaire criticism of the principle upon which the Bill is based. So far as I can see, the alternative method of assessing compensation which he advanced is not very greatly different from the figure which would be derived from the appropriate Clause in the Bill as it now stands.
I welcome the Bill. It will be of great benefit to hundreds of thousands of families and will remove from them the very real fear of being dispossessed of their properties or, alternatively, the insult of remaining in their own homes as tenants, which was the effect of the 1954 Landlord and Tenant Act. It is a Bill for which the Government have a clear mandate and for which the Labour Party has argued for the past 15 years.
I welcome it in particular because it will be of considerable benefit to many of my own constituents. Something like 6 per cent. of the houses in Cambridge are leasehold, many of them recently built, and something like 10 to 12 pet cent. of all owner-occupied houses in Cambridge. The freeholds frequently are institutionally owned by colleges, though not always Cambridge colleges, and perhaps these are some of the charities to which the right hon. Member for Kingston-upon-Thames referred, because certainly they are charities. In the case of one very large area of land which is one of the remaining areas of building land in the city, the freehold is owned by a London teaching hospital.
I accept entirely the principle upon which the Bill is based. It was chal- 1328 lenged by the right hon. Member for Altrincham and Sale and by the right hon. Member for Kingston-upon-Thames that the freeholder owns the land and the occupying leaseholder is morally entitled to the ownership of the building which has been put and maintained on the land. In fact, those words appear in the White Paper, and I cannot understand the objections which have been raised to that principle or to its implementation. But I will refer to some of these matters in the course of what I have to say.
Reference has been made to the Report of the Jenkins Committee. As I understand it, one of the objections is that this change in the law would undermine the sanctity of contract in that the effect of the contract entered into originally will not be the same when the Bill becomes law. In my view, in many if not in most cases the parties to the original contract were not on an equal footing. It was not a free contract between equals, and it would not be inequitable to restore a balance which did not exist at that time. On the contrary, it would be inequitable not to restore the balance.
After all, the leaseholder, who put the house on the land originally, acquired it from his father or bought it, was activated by need. The freeholder was activated, if not by greed then by a sense of gain or because it was a wise investment. That puts the parties on a very different footing. Very often, the leaseholder seeking to acquire the lease was not free to choose to do otherwise if he wanted to build a house, because the landowner was frequently in a monopoly position, owning all or most of the land. At present, there is often no option whether or not to choose to buy a house built on freehold land, and that is largely the case in my constituency at the present time. There is a great shortage of building land in the City of Cambridge, and the most readily available modern houses are built on leasehold land the freehold of which belongs to St. Thomas's Hospital. That has not reduced their price. The price of those houses is as great as that of comparable freehold houses.
If it is suggested that the Bill would affect the original contract, would interfere with the terms of that contract and, therefore, affect the sanctity of contract, I would point out that it was also the 1329 case with regard to the 1954 Landlord and Tenant Act. I see that the right hon. Member for Altrincham and Sale accepts that.
It has also been suggested by the right hon. Member for Kingston-upon-Thames that this involves retrospective legislation in that it affects retrospectively the expectations of the parties to the terms of the original contract. That was a point which was made in the minority Report of the Jenkins Committee. But the Bill applies to the present and future, and not to the past. It refers to the past only in the sense that all legislation may refer to the past, but it does not follow that, because the present is partly determined by actions and agreements made in the past, the present and future ought to be unalterable.
It is like tax legislation. The incidence of a new tax may be affected by actions and agreements made by individuals in the past and, therefore, it will be different according to those past actions. It does not mean that a tax is retrospective because its incidence will be different according to the actions taken in the past. I do not accept the Amendment which has been tabled, which is based on the assumption—indeed, the terms make it quite explicit—that at the end of the lease the house should be regarded as the property of the landlord. In my view—and this is a clear choice of how one regards this matter—the principle on which the Bill is based is absolutely right and therefore is does not involve expropriating the landlord to pay him the full value—indeed, the market value—of the land on which the house is built. Therefore, I consider that the Bill is wholly fair and equitable to all parties, and that it would be most inequitable not to change the law as it now stands.
But I have considerable doubt whether it is fair or equitable to exclude from the right to enfranchisement the owner-occupiers of houses with a rateable value of over £400 in greater London or £200 elsewhere. The principle on which the Bill is based, that the land belongs in equity to the landowner and that the house belongs in equity to the occupying leaseholder, holds good equally in the case of houses with a rateable value of up to £200 and those with a rateable value over that amount. If it holds good in the one case, equally it holds good in the other. I see no reason why owner-occupiers of 1330 leasehold houses with a rateable value of over £200 outside London should be expropriated, if one accepts the principle that this is what will happen with this ceiling, without compensation at the end of their leases.
If, as I believe, the present law is inequitable in the case of a rateable value of under £200, it is no less inequitable in the case of a rateable value over that figure. Indeed, the expropriation in the case of houses of higher rateable value would be greater. I see no reason for any ceiling whatsoever, nor can I see anything special about the 1965 Rent Act limits when those limits are applied to leasehold enfranchisement or the right to extend a lease.
It is true that throughout the country as a whole only 1 per cent. of leaseholders will be excluded from enfranchisement or the right to extend their leases. I understand that the figure is 1½ per cent. in greater London. If it is argued that therefore this exclusion does not really matter, then, if it does not matter, why have any ceiling at all? It does matter, however, because although this may be the national average, as the Minister of State said when opening the debate, there are cases where the percentage is very much greater than 1 per cent., and indeed such is the case in my own constituency.
In Cambridge the effect of the £200 limit will be quite serious in many cases. This arises from the fact that the cost of renting accommodation and of buying houses in Cambridge is very high, perhaps due indirectly to the presence of the university and colleges. Consequently, rateable values are correspondingly high. As a result, about 17 per cent. of leasehold houses in Cambridge are over the ceiling of £200 rateable value. A higher proportion of leaseholders than the national average, and a higher proportion than in Greater London, will be denied enfranchisement or the right to extend their leases. Indeed, I understand that it is a higher proportion than in any other place in the country.
I would find it very hard to justify this to those of my constituents who occupy houses—not very big ones—with a rateable value of over £200. One good lady wrote to me. Her house, which is not particularly large, belongs to one of the colleges—I believe it is Trinity 1331 College—and has a rateable value of £202. I suppose that she could knock down the garage and reduce it to £200, but I cannot see why she should do that. There is no justice in it that I can see, and I hope the Minister will reconsider it.
Many of my constituents believe that they already suffer from the fact that the size of the city is restricted in the supposed interest of the university and colleges. One consequence of that is that there is a shortage of building land. The price of accommodation is very high, hence high rateable values and this exclusion. It would be regarded as double injustice if the houses of leaseholders were now to revert to the colleges, many of whom own the freeholds, since leaseholders are put in this position because of the alleged interest of the university and colleges. I hope that the Minister will be prepared to reconsider this in Committee and will enfranchise those leaseholders also.
Finally, I am concerned about the provision in Clause 28 enabling the university and colleges, and also boards of governors of teaching hospitals, to frustrate the wish of leaseholders to purchase the freehold of their houses or to extend their leases by obtaining a certificate from the Minister that the property will shortly be required for development. This would have most unfortunate effects in Cambridge if not properly applied, and would create a good deal of resentment. I hope I will be told, by either the Minister or the Parliamentary Secretary, what considerations the Minister will have in mind in deciding whether or not to give such a certificate.
More precisely, what does "shortly" mean in the Clause? In other words, how long before the end of a lease can such a certificate be given? Will it be at the end of the lease, or could it be some years before the original lease terminates? What does "development" mean? Does it mean any permitted development under town planning, even if it were only investment, or does it mean, as I hope it does, only development for some public purpose, for example in pursuance of the activities of the university, the colleges, or hospitals concerned?
If the leaseholder were frustrated in his wish merely to enable a university or col- 1332 lege to develop land for putting shops on it, then this would not go down at all well in my constituency, and I can see no justification for that. I hope that the interest of leaseholders will not be sacrificed to the university or colleges, as commercial developers, putting up shops or offices, and I hope that the Minister can give some reassurance on this point, which is of considerable concern to some of my constituents.
I should like to make a similar point in regard to Clause 29, which enables a college or university, when selling the freehold or extending the lease, to reserve the right of future development subject to the consent of the Minister. I should like to know whether this is development of any kind or development which is germane to the pursuance of the objectives of that institution?
Again, I hope very much that this right of veto, or retention of the right of future development, will only be exercised with the consent of the Minister if it is in the interest of the development of the university or college, and will not be exercised merely in the interest of future commercial development. I hope that the Minister will consider this point in committee.
§ 6.50 p.m.
§ Mr. Emlyn Hooson (Montgomery)
I follow the hon. Member for Cambridge (Mr. Robert Davies) in his argument that there is really no reason in principle for the exclusion of houses with a rateable value of £200 or over elsewhere, or £400 in London. The argument advanced in an intervention by the hon. Member for Cardigan (Mr. Elystan Morgan) that only 1 per cent. of the houses in the country will be affected by this exclusion is no reason whatsoever for their exclusion. If the principle of the Bill is right, and I am convinced it is, there is no reason whatever for importing a restriction which only has relevance to the Rent Acts.
I hope that if the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) did nothing else—and I hope he did nothing else—he at least convinced the Minister of the rightness of not maintaining this exclusion, and from the Minister's reaction I thought that I saw signs that he was prepared at least to reconsider the matter.
§ Mr. Roland Moyle (Lewisham, North)
I hope that the hon. and learned Gentleman will think that the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) also did something useful in urging the inclusion of flats and maisonettes in the Bill.
§ Mr. Hooson
I accept that, and I am glad that the hon. Gentleman mentioned it. I did not think that the right hon. Member for Kingston-upon-Thames actually advocated this. He brought it in as a sidewind, saying that because they had not been included this was a reason why the Bill as a whole should be thrown out.
I think that this is the third debate on leasehold reform in which I have taken part since I came into the House slightly less than five years ago, and I think I am right in saying that no fewer than 25 Bills have been introduced into this House since 1887 in an attempt to deal with this problem. Whenever such a Bill has been introduced, whether by the Government or by a private Member, it has provoked the most tremendous attacks. It is astonishing how the landed interests find means of attacking any Bill, whatever its nature, and however moderate, to reform the law on this subject. They always find a means of attacking it, and so far they have always attacked leasehold reform very successfully.
It is said that it is difficult to reform leasehold law. Of course it is. Whatever principle of reform one adopts when one starts interfering with our land law, one runs into difficulty, but this is no reason for running away from the problem. Basically we are dealing with an injustice which has been embodied in the law. Land law particularly is a reflection on the social structure of the time, and one finds that in the 19th century the law was manipulated, changed, and modified by the then ruling class to satisfy certain social aspirations and concepts.
§ Mr. Hooson
Of the Whigs, and of the Tories, and no doubt it will be changed in time to suit the purposes of the Socialists. It is said that the land law of a country reflects its social structure. When 1334 I hear the argument hat one must not touch leaseholds, that one must not have the emancipation, the enfranchisement, of leaseholds because of the sanctity of contract, I really wonder, as I hope an enlightened lawyer, what we are coming to.
This ghost was laid low many years ago. One has only to read the great judgments of Lord Wright or Lord Atkin in which they considered the circumstances in which the principle of sanctity of contract could be set aside or modified in the interests of the community at large. In these great judgments in the 'twenties those learned judges set out the principles to be considered when this kind of social amelioration was proposed by legislation and affected the sanctity of contracts.
What kind of equality of bargaining was there when some of these leases were entered into? At one stage during the speech of the right hon. Member for Altrincham and Sale I thought that he was almost arguing that there was a case for separate legislation for Wales. It seemed that at one stage he conceded that the position in South Wales was markedly different from that in London and elsewhere. It may be, I know not. All I do know is that my experience of leaseholds is confined to Wales, and certainly there no one could possibly suggest that in the nineteenth century there was anything like equality of bargaining power between the landlord and the leaseholder,
The truth is that the landlords owned a great deal of the land. People moved into the valleys and towns of South Wales in search of employment. They had to work or starve, and the only way in which they could obtain a house was to agree to take it on a lease. It was not that they entered into a bargain openly and freely. It was the only "bargain" open to them. They had to take it or go away and starve. There was a virtual monopoly in the holding of land. The monopolists called the tune, and there was nothing that the prospective leaseholder could do about it. In these circumstances, it is not only justifiable for this House to intervene; the House has a duty to do so to put the matter right.
Looking back on it, especially I think in South Wales and North Wales, in the 1335 Llandudno and Bethesda areas, it is equally true to say that our land law saw to it that the landlord had a permanent interest in the land and the ending of the lease was to his benefit because he took over the bricks and mortar as well. This was unjust. When the right hon. Member for Altrincham and Sale argued that the basis of the compensation proposed by the Government was unfair, he forgot to say that he could make that criticism only if the initial bargain was just and fair. What we are trying to do by this Bill is to put right a wrong which has persisted for decades.
I think that the right hon. Member for Kingston-upon-Thames is right to this extent; that when there is reform one cannot achieve complete fairness for everybody. Somebody is hurt to some degree or other. This is highly regrettable, but it occurs, and all that the House can do is to try to see that the hurt is as small as possible, and that it is distributed as fairly as possible. I think that the question we have to answer is which is the greater injustice—to prevent the enfranchisement of leases, or to allow the enfranchisement to take place on these terms knowing that some people will be hurt to some degree or other?
I thought that the speech of the hon. Member for Hornsey (Mr. Rossi) was in marked and enlightened contrast to the speech of the right hon. Member for Altrincham and Sale, and indeed that of the right hon. Member for Kingston-upon-Thames. It was one of the most interesting speeches that I had ever heard in this House in a debate on leasehold reform. His proposals as a basis for compensation are at least deserving of study. He did not convince me of their rightness, but he clearly had thought about them, and they deserve closer study in Committee.
The right hon. Member for Kingston-upon-Thames took the example of a man who had bought the fag-end of a lease and would therefore benefit from the Bill. But, the line has to be drawn somewhere. Wherever it is drawn, it can be argued that someone will benefit unfairly; that someone will get a windfall and benefit from a general principle although his individual circumstances are such that perhaps he ought not to derive that benefit. However, I think that even the 1336 right hon. Member for Kingston-upon-Thames will concede that the line has to to be drawn somewhere. Where would the Conservative Party draw that line? This really is a basic question.
§ Mr. Boyd-Carpenter
If the hon. and learned Gentleman had been here he would have heard my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) say where—at market price.
§ Mr. Hooson
With the greatest respect, I was here throughout that speech and I heard the three alternatives put forward by the right hon. Member for Altrincham and Sale. But he did not deal with the fact—and the right hon. Member for Kingston-upon-Thames has not dealt with it—that in Wales many leaseholders either built their houses or inherited them generally from parents who had built them. Is it to be said that the only fair basis for enfranchisement of their leaseholds is that they should buy what they built? That seems completely wrong.
The hon. Member for Hornsey was correct in saying that most landlords regard the purchase of ground rents as an investment. If they are decent landlords they regard them as a long-term investment. If they are speculators, of course, they regard them merely as matters of speculation. In Wales we have been more concerned with the original bargain.
I understand that the main burden of the argument of the Opposition is that it is difficult to reform. If we reform we are bound to cause some injustices. That is conceded, but that is no argument against reform. This reform has to be tackled; it is long overdue. There was a basic injustice in the original law. We do not want to perpetuate that injustice simply because various transactions have taken place in the meantime on the basis of the original legal position.
Many Bills concerning this subject have been given a Second Reading, but they have not become part of our statute law. I hope that the Government will ensure that this Bill—which may be amended considerably in Committee—does become law. It is vitally important that it should.
§ 7.2 p.m.
§ Mr. Roland Moyle (Lewisham, North)
It is a great pleasure to follow the hon. and learned Member for Montgomery (Mr. Hooson). Whatever criticisms we 1337 may sometimes have of the Liberal Party it is fair to say that it has a long tradition of embattlement against landed interests. I am glad to see that the light is still burning brightly, and that the hon. and learned Member is doing his best to keep it alive. I notice from the debates on leasehold reform that it is a tradition to declare one's interest. I have to tell the House that unless the Bill is passed there is some prospect that in 900 years from next 7th July I and my family will be facing eviction from our present establishment. I can bear the prospect with such fortitude that it is unlikely to cloud my judgment of the issues before the House. However, I am contemplating moving into another house shortly. That has only the fag-end of 80 years remaining of a 90-odd year lease. Perhaps I ought to declare that interest, too.
Before I entered the House I was employed in industrial relations. In those days I often thought that the relationship in our society which caused the greatest amount of tension was that of employer and employee. Since I became a candidate and subsequently a Member of Parliament and have held my advice service and surgery in my constituency, I have come across a more significant relationship which causes a much greater degree of tension, namely, the relationship of private landlord to private tenant—on all fronts—including the private tenant rack-renting a flat or the leaseholder renting from a freeholder, which is the main subject of our discussion this afternoon. When that relationship goes wrong, as it often does, it affects the whole warp and woof of life. It causes more unhappiness than the relationship between employer and employee, possibly because it affects women more than men, in the first instance, and women may not be so capable of subduing their feelings of injustice from which they suffer day by day in the permanent framework of their lives. In last Sunday's Press a book was being reviewed by a learned gentleman who indicated what he thought was the profound effect on human emotions and developments of the desire to acquire territory. It may be that the acquisition of a house in which to live is a reflection of this fundamental human instinct. If so, we are playing with a very dangerous element in human nature when we con- 1338 sider the supposedly humble problem of housing our population.
In the long run, therefore, we must try to get rid of the relationship between the private landlord and private tenant. We must cease to regard houses as things like ice creams, to be bought and sold, or taxi rides, and to treat them with a much greater degree of respect. I regard the Bill as a contribution to the removal of the private landlord-private tenant relationship. Many of my constituents have been waiting for this Bill to be introduced, and are waiting for it to be passed, rather like a parched man hopes to find water while crossing the desert. It is no exaggeration to describe their attitude in that way.
The agitation for leasehold reform is not of recent origin. As the hon. and learned Member for Montgomery reminded us, it goes back over many years. It must be admitted that hon. and right hon. Gentlemen opposite have played their part in pushing forward the pressure for reform that we have today. I want to be fair about this. It was their repeal of the Labour Government's planning legislation which caused the increasing inflationary rise in house prices throughout the 1950s and in the early 1960s. The average leaseholder likes to regard his house as does the average freeholder. The price he has paid for his property is probably the same as that paid by the average leaseholder. The average leaseholder wants to put into his house—at least in the early part of the lease—the same care as does the average freeholder. He wants to look after it and he takes a pride in it. If he wants to sell it he wants to get the same price as his freehold neighbour. The bitter experience of many of my constituents in this respect was that they were unable to partake of any advantage from the rising prices of houses for sale to the same extent as are their freehold neighbours.
It was this permanent factor in the situation that caused the immediate impact of the leasehold problem in my constituency. It is possible to take a high, moral tone in this matter. We all have our reservations about exploiting the inflationary rise of the market, but it was necessary in the 1950s and the early 1960s to keep up with that inflationary rise in house prices if we wanted to have a 1339 proper chance of buying another house when we moved from our existing one.
The general objections to the leasehold system are well known. There is the payment of ground rent, for which most landlords do nothing at all. On this point I find myself in some disagreement with the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). He tried to demonstrate that the passage of this Bill would increase the number of slums in our towns and cities, but I find that the existing law helps greatly to create slums in my constituency. Many tenants of what might technically be called "flats"—often rooms split into two by a piece of plywood with a cooker on the landing outside—come to me and say that the landlord or landlady is a leaseholder and refuses to do anything to improve the property because the lease will fall in in a few years, and they have no permanent interest.
These tenants have to suffer because of the iniquities of the leasehold system. This not only affects the relations between the freeholder and the leaseholder but carries on throughout society and affects the relationships of the tenants—
§ Mr. Hooson
Would the hon. Gentleman not concede that there might be something in the right hon. Gentleman's point about the extension of 50 years as opposed to the enfranchisement?
§ Mr. E. Rowlands
Would my hon. Friend also point out that, in many leases, there is a provision which makes the leaseholder pay money to the Crown landlord if he wants to improve, add to or alter his house? I know of cases in which a fee of £40 has to be paid before he can make this improvement.
§ Mr. Moyle
I am grateful to my hon. Friend. I know his constituency well and know that he is well versed in the leasehold law. This is a problem which I, too, have come across.
This is often not just a question of a lease affecting a house or a group of houses. In parts of my constituency, in Blackheath, there is a number of Regency houses, the leases of which would fall in at different times. However, on the other 1340 side of the constituency, where houses were developed in the 1920s or before the First World War, it is not only a case of one street in which the leases would fall in at one time but of whole groups of streets on one estate which were developed at the same time.
Here again, we face the question of the balance of the bargain between the freeholder and the leaseholder. Much has been said about the unfortunate circumstances in the nineteenth century, in which the leaseholder was forced into a bad bargain, but that is still going on, at least in my area. If a person wanted to buy a house in my constituency, there would be very little choice of the sort of house. If he went househunting at the right time and a freehold house was available, he could buy it, but if, on another occasion, only a leasehold house was available for sale, he would have to buy that.
A careful study of the property columns shows no difference at all in the purchase price asked for the two types of house. Here again, therefore, the iniquities of the situation in the nineteenth century are being carried into the buying situation of the twentieth century; the problems of the leasehold system and the injustices which people suffer will probably be carried into the twenty-first century, because 99-year leases are being created now under the same sort of commercial conditions as affected the bargains of the nineteenth century—
§ Mr. Hamling
Would not my hon. Friend also agree that, in the Blackheath part of his constituency, the fact that leases fall in at unequal times means that the development is piecemeal and haphazard?
§ Mr. Moyle
This occasionally happens, though there is great social pressure from the people in Blackheath to secure an overall and balanced development and to maintain their amenities. To digress, we have an excellent residents' association which looks after these matters.
There is a lack of security in the leasehold system, which especially affects the situation when the lease is nearing its end. There is also the question of the sanctity of contract, which is not one of those immutable scientific laws. This needs to be said, in view of some of the remarks made by hon. Gentlemen opposite. It is 1341 not like Boyle's law, which always operates at normal temperature and pressure; nor like Archimedes' principle—though I cannot quite remember what Archimedes' principle is at the moment—but the sanctity of contracts is not that sort of a principle. It is a legal principle which should apply in the circumstances for which it was made, in which two parties can come together in positions of relatively equal commercial strength. That is an entirely different position and one could have a different argument about it.
I am glad to see that, in my right hon. Friend's reform, the emphasis is not on houses. I have said that we ought to get away from the idea that houses are like ice cream or taxi rides, for buying and selling. The emphasis of this reform is on homes and this is the important thing. This is where it appeals to people's sense of justice.
This happens because the sub-tenant, who is actually resident in the house, has the right of enfranchisement, as opposed to the tenant, who is not resident. There are some attractive provisions in Clause 7 which would provide that, if the person who has the right of enfranchisement dies, that right passes to his next-of-kin who has lived in the house for a considerable time and becomes the tenant. This emphasises the principle of homes as opposed to buying and selling purely properties and commodities.
There are one or two defects which should be reformed. I should like to see the delimitation of the leases to be affected by this Bill, which at present relates to all those over 21 years, amended to read "21 years and over". This would marginally include a large number of leases which, at the moment, are just marginally excluded and are causing a great sense of injustice.
I lay myself open, in saying this, to the criticism that those just below 21 years may develop the sense of injustice, but I think that 21 years is a very popular length of time for a lease to be granted. That reform would please many people without doing much harm.
Like most hon. Members, I felt at one point that the right hon. Member for Kingston-upon-Thames was going to urge that flats and maisonettes should be included in the Bill and I was bitterly disappointed when he did not. I follow his 1342 general argument, but would give his logic a different twist, and say that the Bill ought to be extended to include flats and maisonettes.
I follow his logic in another respect, but take a different route. I believe that the Rent Act limits of rateable value ought to go and all leasehold houses should be included in the enfranchisement provisions.
I understand that it is very difficult, on principle, to bind the Crown Estates, but the Minister ought to think again and find a way in which the obligations which other freeholders are being asked to accept should be accepted by the Crown Commissioners as a matter of law and not just of convenience.
If it is left as a matter of convenience, there will always be a doubt in the mind of a purchaser of a leasehold house from the leaseholder of the Crown Commissioners that the latter would be able to step in and thwart the right of enfranchisement, and that this would affect the leasehold price. I should like the Minister to reconsider this matter thoroughly.
I have devoted very little time to a consideration of the speech of the right hon. Member for Altrincham and Sale (Mr. Barber), because I began to wonder during his speech whether he and I had lived in the same community all our lives and were fellow countrymen. I found no point of contact between his remarks and what I believe to be the feelings of the vast majority of people. He made great play with the fact that the law was being altered. It is, fundamentally so. But he cannot get it into his cranium that the ordinary people of Britain feel a deep-rooted sense of injustice about the existing law. That being so, the law must be altered to conform with what they believe to be a just situation.
This is not a Socialist or minority view. It is the view of the overwhelming number of my constituents, most of whom have had direct personal experience of the operation of the leasehold laws. This is a fact of life from which the right hon. Member for Altrincham and Sale appears to be completely cut off.
By far the most distinguished contribution from the benches opposite came from the hon. Member for Hornsey (Mr. Rossi), although my right hon. Friend 1343 should be wary of being distracted by his blandishments. After all, this is the best leasehold reform Measure we have and in view of the long history of frustration which movements to this end have undergone, my right hon. Friend should take his courage in both hands and drive straight through with the Bill—subject, of course, to accepting the suggestions which I have made for improving it.
I listened with distress to the confession of the hon. Member for Hornsey that his house was outside the rateable value limit for enfranchisement under the Bill. I heard the same information being given by the right hon. Member for Kingston-upon-Thames, although I regret that, in view of his contribution, I did not feel the same distress as I felt for his hon. Friend the Member for Hornsey.
§ Mr. Boyd-Carpenter
Does the hon. Gentleman mean that he would not support any Amendments such as his hon. Friends have been talking about to raise the limit?
§ 7.23 p.m.
§ Mr. Gwynfor Evans (Carmarthen)
I am glad to be speaking following the helpful speech made by the hon. Member for Lewisham, North (Mr. Moyle), and I was pleased to note that he has some connection with the country with which I am most concerned. In that country we have been waiting for a very long time indeed for the alleviation of an old injustice, and, bearing in mind the length of time during which this social injustice has been continuing, it is fair to say we should have had this legislation not this year or last year but 20 years ago.
It is some reflection on our constitutional position and political arrangements that this Measure was not introduced sooner. The injustices arising from the leasehold system have been more acutely felt in Wales than elsewhere in these islands. In Wales we have a widespread form of house-ownership. Over the years, our menfolk have built their own homes and the custom of owning one's own 1344 house is considered by everybody to be a good one. Home ownership strengthens family ties and it enables the home to be handed on to future generations and provides some independence in the face of the over-shadowing power of the State. The White Paper recognised, though not adequately, the injustice of the situation and stated that while the land belonged in equity to the landowner, the house belonged in equity to the occupying leaseholder.
Contrary to what some hon. Members have said, I believe that this principle is eminently fair and reasonable and, as far as the Bill goes in sticking to this principle, I welcome it warmly; and if there is a Division tonight I will vote with the Government. However, it is disappointing to note that this principle is not actually written into the Bill and I feel that the courts will be able to disregard it.
Even such provisions that are made in the Bill come too late for some of the areas where this injustice is felt most acutely; where contraction of old industries—something which has for long been foreseen—has been allowed to cause migration, unemployment and depopulation and where the Government have failed to secure condition to bring about alternative employment.
Many hon. Members have recently been to the Rhondda. One cannot help being depressed as one moves through the valley streets and sees the vast number of houses lying empty and for sale. This is an area which has 9.1 per cent. unemployment. The population has fallen to just over half what it used to be in a very short space of time and people are still leaving at the rate of 800 a year. One wonders how much this Measure will do for leaseholders in this area. What is the value of the Bill when assets like this are declining so sharply? How can it be valuable to people on the dole who wish to buy their freeholds?
We must recognise, however, that for those who are in a position to buy their freeholds the Bill will be of considerable help—but they will have to pay what is said to be a fair price and one must consider whether the basis of the compensation is fair. I gather that the price will be based on value of estate in fee simple, subject to a tenancy, but this 1345 appears to leave much to be desired because it follows that the longer the tenancy has to run the lower the price the tenant must pay for enfranchisement. Most of the leases in Wales were negotiated more than 40 years ago. In this situation, tenants will be at a grave disadvantage compared with newer areas which have been developed since the war, of which there are comparatively few in Wales.
Where a tenant cannot afford to buy the freehold, the only alternative is to apply to a 50-year lease. That being so, let us consider the position. At any time after the granting of this 50-year extension the landlord may, at any time during the extended period or within 12 months before it begins, apply to the court for an order to resume possession for purposes of redevelopment. Thus, these leases could be terminated at any time during the 50-year period for the benefit of landlords. The Conservatives do not appear to have much room for complaint since this is as much a landlords' charter as it is a tenants' charter.
§ Mr. E. Rowlands
The hon. Gentleman states that the lease could be terminated after it had been extended, the leaseholder having chosen to opt for the 50-year extension. Surely that extension is binding and cannot be terminated.
§ Mr. Evans
I would be glad if the Minister would confirm that to be the case. I understand that if the property is required for redevelopment the steps I outlined could be taken. That is why this provision defeats the whole purpose of the Bill and there seems nothing to prevent speculative landlords from taking advantage of it.
In areas where such large estates as Plymouth Estate and the places at which Western Ground Rents operate, one can at once see what a precarious provision the 50-year extended lease could be for the tenant. Perhaps even more important is the case of many estates where the price of the freehold of the properties, which are nearing the end of their terms of lease, will not be, say, five years plus 50 but, rather, five years with a likelihood that landlords will put in an application to the courts under Clause 17 to increase the price of the freehold. In that situation, therefore, I believe that the leaseholder may be unfairly expected to pay not only the price of the land 1346 but the development value also. As the Bill stands, all the landlord need do is to put in an application not more than 12 months before the end of the current lease and the value of the freehold to him will be virtually the value of the land with a lease of not more than 12 months left. That could be a way of getting more than a just price, yet the purpose of the Bill is to preserve the people's right to treat their house as their own.
The Bill could also be a licence for extortion. In view of the age of many of the properties in Wales, the provision could be self-defeating unless radically amended—
§ Mr. Hooson
There is substance in what the hon. Gentleman says, but would not his point be met if instead of having an option of enfranchisement or the extension to a 50 years lease there was a simple provision for enfranchisement of the leasehold?
§ Mr. Evans
That may be so; it is largely a matter of drafting to see how that end could be reached. I doubt very much whether it is in the mind of the Government to allow that situation to exist.
The Bill provides another way for big landlords to exploit tenants. Clause 9(3) provides that the interest of the landlord in neighbouring property shall be taken into account in assessing the price payable. The site value, if it is to be fair to tenants, should be its value for housing untrammelled by other considerations. Again, Clause 15(2) can cause widespread concern in Wales if its purport becomes known, because it is too favourable to ground landlords and the larger property companies. The new ground rent is to be the letting value of the site. In areas where the economy is declining that provision can have little meaning, but in areas where there is development of town centres—Cardiff, Newport, Barry, Swansea, Merthyr Tydfil, Llanelli, and others—will the leaseholders be charged a ground rent based on the site value for office, commercial or industrial development? If that is so, could not that rent be prohibitive? Consideration of this point in Committee may lead to some adequate amendment. 1347 If my interpretation is right, it seems possible that there is one law for the private landlord and another—
§ The Secretary of State for Wales (Mr. Cledwyn Hughes)
The hon. Member is wrong in what he has just said about Clause 15. I would ask him to look more carefully at subsection (2,a) of that Clause. He must study the Bill more carefully before making these sweeping statements.
§ Mr. Evans
The Minister will be able to reply later.
As I see it, there appears to be one law for the private landlord and another for the public landlord, and this question crops up in connection with the Bill's application to local authorities and new town corporations. The 21-year lease has been mentioned, and one knows that the wording of the Bill may possibly exclude local authorities because under the Local Government Act, 1933, a local authority is prohibited from granting a lease in excess of 21 years. Perhaps the Minister will comment on that side. I should be glad of an assurance that leases granted by local authorities since 1933 are not outside the purview of the Bill. It appears from the wording that they may be, but—
Mr. Alan Williams (Swansea, West)
To the best of my knowledge that is not so, because the authorities in Wales are at present, as ground landlords, giving leases for 99 years.
§ Mr. Evans
There is the point that even in the case of leases made since 1933 the right of enfranchisement is restricted by the power given to local authorities to say that the property will shortly be required for development. These are points to be looked at from the standpoint of the tenant to see whether this Measure can be so amended as to ensure adequate treatment of the present situation in Wales.
§ 7.35 p.m.
§ Mr. Ednyfed Hudson Davies (Conway)
We are considering the Second Reading of a Bill that will remove not only an injustice but an iniquity. This is a moral measure as well as a legislative one. The Government are fulfilling a pledge and this is a very proud day for many hon. Members who have for several decades 1348 been working hard to this end. I am delighted to see some of them on the Government Front Bench. They are to be congratulated on their work.
Leaseholds have to a very considerable extent been a Welsh problem and we should pay some tribute to the Western Mail and the Liverpool Daily Post for their very devoted efforts in agitating for reform.
§ The Minister of State for Commonwealth Affairs (Mr. George Thomas)
And the South Wales Echo.
§ Mr. Davies
Yes. I thank my hon. Friend for that addition.
It is most appropriate that my right hon. Friend the Secretary of State for Wales, who has been involved in the preparation of the Bill will wind up this debate.
I want to go back to a speech made by David Lloyd George part of whose constituency I now have the honour to represent. He made it several years before he was elected to Parliament in 1890, while addressing the Caernarvon County Council. He was advocating leasehold enfranchisement then and urged its adoption on the grounds that it was not a question that affected one political party but the community at large.
He said that Caernarvonshire is as badly affected as any part of Britain and he pointed out, to illustrate the urgency of the problem, that the whole of the town of Port Madoc was built on leases of only 60 years and that the majority of the houses had been built by workmen for themselves.Yet as a result of the present iniquitous system all the fruits of their initiative and enterprise will fall into the lap of the ground landlords who have not spent one penny piece on the property. The whole system is nothing short of legalised robbery.That speech was made nearly 80 years ago but it could equally appropriately have been made in this House today, because that condition of legalised robbery has continued up till now.
I do not want to go into details or examples, but when I intervened earlier, the hon. Member for Birmingham, Hall Green (Mr. Eyre) seemed to take objection to my mentioning that in some cases the land owners had in the first place acquired the land at no expense at all to 1349 themselves through Acts of Enclosure. I have one such example in my constituency, where almost half the whole town of Llandudno was built on such land. After an Act of Enclosure in 1843, 957 acres of common land were acquired by the freehold parishioners of the parishes of Eglwysrhos, Llandudno and Llangwstennin. What most of the parishioners did not recognise at the time was that the share of common land that they would get would he in proportion to the amount of land they owned within those parishes. As a result, the prime movers in the enclosure—and Lloyd Mostyn was Member of Parliament for Flint at that time—the Mostyn family, acquired 832 acres of the total 957 acres, since the Mostyns were the largest landowners.
§ Mr. Davies
They then had the problem of what to do with the land they had acquired. It was relatively valueless as it was then, a good deal of it being marsh ground. Eventually, of course, it became the land on which the town of Llandudno was built. This was the time of the development of seaside resorts. When the sale of the land first began in 1849, it was the intention initially that it should be sold outright, but the agent of the Mostyn family firmly advocated that the land should be disposed of leasehold and not freehold.
The researches of a journalist and local historian of Llandudno, Ivor Wynne Jones, have failed to reveal that there was at that time any intention to benefit from acquiring property at the end of the period of lease. There was a down payment and a rental over 75 years and it seems that the estate at that time would have been content with this. However, the estate was managed by a succession of shrewd agents, and the terms on which further leases were granted were tightened up considerably. In some cases, for example, it was stipulated that if there were to be any alterations to property built on the land the plans for such alterations should be drawn up by the estate and payment made to the estate for them. It was also stipulated that fire insurance should be taken out only with an insurance company for which the estate was agent. The owners were getting it every way.
1350 The leases were initially for 75 years, as I have said, and then for 99 years and in some cases 999 years. Many have been expiring in recent years, and outrageous sums have been asked for the freehold, with the result that householders have had to negotiate extensions of lease on terms which were most unjust and unfavourable for them.
There is an instance which should be mentioned and it will be well known to many hon. Members. It has nothing to specifically with domestic property, but it is an example which clearly shows the attitude of many landlords. There was a chapel, the English Baptist Chapel of Zion, in Llandudno built on leasehold land. The lease expired. The chapel trustees found it very easy—they were quite surprised—to renew their lease for a short period on apparently quite favourable terms. But, at the end of the short period of extension, there was no reprieve and they found that, by the short extension which they had accepted, they had disqualified themselves from certain protection which they would previously have had as trustees of a place of worship.
That extension of lease expired on Christmas Day 1965. The members of the chapel were not allowed to enter to conduct their Christmas or New Year services in the chapel. They were locked out and within a few days the benches were being taken out of the chapel so that it could be converted into office property.
That is the kind of thing which has been happening under the existing law based on the principle that when someone leases land for a period, at the end of the period he gets back not only the land but the property built on it as well. It is that principle which is attacked by the Bill, and that is why I welcome it. I welcome particularly that the Bill is retrospective to 8th December, 1964 the date on which it was first announced that a Bill would be introduced.
I am a little unhappy about some of the exclusions. I am not very happy that the Bill's provisions are confined to domestic properties. If we accept the principle that, at the end of the period of lease, the landowner has a right only to the land and not to the property built on the land, I do not see why the principle 1351 should vary according to the kind of property built on the land. I very much hope that the Minister will look carefully into the question again.
Like several of my hon. Friends, I am somewhat unhappy also about the rather arbitrary limits of £200 rateable value in the Provinces and £400 in London. If we accept the principle, I do not see why any limit should be set in that way. The same applies to flats. I take the point that there are difficulties in the case of flats and maisonettes which make it inconvenient to include these properties in the present Bill. This Bill is designed to tackle the most serious problem first, but it is important to bear in mind that the problem of flats and maisonettes will also have to be tackled. When the Government act on the Wilberforce Report on Positive Covenants, that will be an excellent opportunity for dealing with this other problem and I very much hope that this is done.
The Bill is perfectly fair to ground landlords. At the end of the period of lease, they will have a return on the current value of the land, not its original value but its value now, a value which may have become inflated not by any action of theirs but by the growth which has taken place in the area and by what society has added to it. Their just claims are fully taken into account in the Bill.
I remember having to speak on this issue several times during the last election campaign, and phrases which were used then, and which I attacked, were used again today by the right hon. Member for Altrincham and Sale (Mr. Barber) in his opening speech. It was said that the Conservative Party advocated reform based on the principle that people should be able to buy or rent their own houses for a fair price or at a fair rent. There is no such thing as a fair rent or a fair price for a house which is already one's own. That phrase is iniquitous, yet it is still used in the House, and hon. Members opposite unashamedly speak of a fair price or a fair rent for property which is already a man's own.
I very much hope that the Opposition will not have the effrontery to divide on the Bill tonight. If they do, they will most certainly lose face in the country in a way in which they have seldom done on any issue before.
§ 7.47 p.m.
§ Mr. Reginald Eyre (Birmingham, Hall Green)
The hon. Member for Conway (Mr. Ednyfed Hudson Davies) made a strong case with his historical description of the acquisition of common land near Llandudno. Perhaps one may point out that the leaseholders who subsequently came to occupy those lands and conducted prosperous boarding houses there provided very happy holidays for hundreds of people from Birmingham, and they succeeded in making quite a decent profit out of providing that service.
Almost everyone with a practical working knowledge of the leasehold system as operated in Birmingham and other areas about which we have heard favour a proper and responsible measure of enfranchisement. Here I should declare an interest as a solicitor and as a director of companies holding both leasehold and freehold properties.
The argument most strongly advanced against leasehold enfranchisement is that based on sanctity of contract. I have a good deal of respect for the principle of sanctity of contract, but I feel that it can be applied and imposed in pure and undiluted form only where the parties to the contract have had a full and free choice as to the nature and extent of the contract into which they have entered. It must be recognised that no such free choice has been available to thousands of leasehold home owners in the Birmingham area and elsewhere because in many such districts the would-be owner-occupier has had no practical choice but to buy a leasehold house in order to provide a home for his family.
That being the situation, we have to bear in mind the difficulties which have arisen in leasehold home ownership. Many of those difficulties have been mentioned in the debate today. The first is that leasehold homes begin to decline in value as the remaining period of lease falls below 60 years.
Secondly, when the unexpired portion of the lease comes down under 40 years, leasehold houses become very difficult to mortgage and sales and transfers are hampered. In industrial areas that considerably hinders the widespread acceptance of another very important principle, namely, the encouragement of home ownership. A serious problem is developing in parts of Birmingham and 1353 other industrial cities. In districts such as Small Heath and Alum Rock in Birmingham, houses that are good for many years of life are being neglected because the leases have fallen below 30 years unexpired. Therefore, there are falling standards of housing which could be avoided.
For all those reasons, I strongly favour reform. But in all cases the freeholder can and should be adequately and fairly compensated for the loss of his investment. It is precisely on that ground that I fall out with the terms of the Bill, because it cannot be right or honest to deprive a freeholder of his estate without proper compensation. I am compelled to deny the validity of the "bricks and mortar" argument of the Minister. It is a plausible theory, and it is certainly votewinning, but I am convinced that examined against the facts it is unjust.
To try to establish that, I want to quote just one example from my own knowledge. Some years ago a relative of mine in Birmingham bought a fairly substantial leasehold dwelling house which had a lease of 28 years unexpired. The price was pretty low because of the difficulty of sale which I have mentioned. It was the equivalent of about one-quarter of the cost of building a similar property at that time. Now the lease of the property has been reduced to about 12 years and under the Minister's formula the leaseholder will be entitled to buy the freehold quite cheaply, with the result that the present value of the house will immediately be trebled. That is a considerable bonus to be immediately handed to the enfranchising leaseholder. The owner-occupier will make a considerable profit at the expense of the freeholder.
Anxious as I am to see people fully owning their own houses, that principle is obviously not right or just. It cannot be right or equitable to use the power of the law in that way. With fag-end leases such as I have described, the Robin Hood bonus given to one citizen at the expense of another will be considerable.
In any event, in thousands of cases where the leases are longer, and the immediate bonus will not be so great, it will be as though the Government had taken £50 or £60 out of one man's pocket and transferred it to the pocket of another. That doctrine may be popular with some who benefit this time, but the 1354 principle is ugly and could later be used to undermine the rights of small individuals everywhere.
Looking ahead, I think that there are sound and practical reasons why the temptation of that aspect of the Bill should be resisted. Under the terms of the Bill, the Land Commission again rears its head. It is made clear that on the sale of the freehold the levy will be payable on the underlying development value of the site upon which the enfranchised house stands. Ministers and the population in general will be surprised by the number of transactions in which development value will exist and where the levy will be payable. The Minister has quoted 10 or sometimes 15 per cent. as the percentage of private house transactions that will be affected. But I think that he will find that the percentage where development value exists and levy will be chargeable is higher.
The freehold will be acquired by the occupying leaseholder on the basis of nominal compensation, but the payment of the levy will be calculated on the basis of the full market value of development relative to the freehold reversion at that date. There is immediately a conflict. There is nominal compensation for the freeholder, but a market value calculation of some kind in respect of the Land Commission.
Remembering the Land Commission's very wide powers of compulsory acquisition, we should insist on full compensation in all transactions where there is compulsory acquisition by the Land Commission or local authorities. If we think that that is right in principle in that kind of transaction, we should not accept a breach of the principle in this Bill. If we do not stick to principle, in time owner-occupiers may find themselves riding on a Land Commission tiger.
Fair compensation should always be payable in all land transactions, and the Bill fails to measure up to that standard. I was very attracted by the argument of my hon. Friend the Member for Hornsey (Mr. Rossi) in his second alternative, when he suggested that the price paid to the freeholder should be related to the price paid and should be examined and made good against the historical fall in the value of money because that would 1355 be a way of calculating compensation which, it could not be denied, would be fair. It would avoid the almost theological dispute as to the way in which we are to calculate the value of freehold reversions.
Despite what the hon. Member for Conway said, the present-day function of freeholders cannot be brushed aside. It is not a matter of just getting hold of marshland and making it available for development. One of the consequences of inadequate compensation to freeholders will be that no new housing development will be carried out on a leasehold basis. Therefore, new house prices are bound to increase in the Midlands by £200 or £300, or even more in certain circumstances. That consequence will be immediate, because no part of the land cost will be carried by the freeholder as in the past.
The proposals for future management of comprehensively managed estates put forward by the Minister are imaginative, but I fear that they will be unworkable. In those circumstances, the problems of the good quality estates will be better met by the 50-year extension only.
I hope that the Minister will seriously reconsider the limitation on the right to enfranchise. It seems an unnecessary restriction to limit it to £400 rateable value in London and £200 in the provinces. There will be some startling cases of hardship near the boundary of London where one house with a rateable value of £390 will be entitled to enfranchisement and just across the road another house with a rateable value of £210 will be deprived of the enfranchisement by that rather false ruling. False distinctions between neighbours should be avoided. I therefore hope that the Minister will wipe out that unjustifiable distinction and extend the Bill's operation without limitation by reference to rateable value.
§ 8.0 p.m.
§ Mr. Julius Silverman (Birmingham, Aston)
I am glad to follow the hon. Member for Birmingham, Hall Green (Mr. Eyre), because he began by outlining Birmingham's problem in franchise and leasehold reform. He recognises that there is a problem and in that respect I support his argument. In my 1356 constituency and in other parts of Birmingham there are many thousands of leasehold houses.
The problem arises, as the hon. Gentleman said, over the "fag-end" of a lease. As the hon. Member for Hornsey (Mr. Rossi) said, there are two aspects. The first is when the lease comes to an end. The second is when it reaches the 30-year stage—the period remaining. There are a large number of houses like that in Birmingham. I agree that not many of the leases in Birmingham are coming to an end, as is the position in Wales, but a large number have a residue of about 30 years to run.
The problem here is that such a house becomes unsaleable except at a very low figure. This is not because of the increased value of the reversion but because of the difficulty of getting a mortgage for such a limited period. The consequence is that the leaseholder finds himself in possession of a wasting asset which cannot be sold. That is not only bad for him but is bad for public policy as a whole, because, if houses are unsaleable, twin evils arise—we do not get the mobility of labour through the mobility of house occupiers and we tend to get a perpetuation of under-occupation because an owner often has to live in a house which is too large because there is no prospect of selling it.
The Bill will remedy both these evils to a very large extent and on behalf of thousands of Birmingham leaseholders I welcome it. I cannot agree with the hon. Member for Birmingham, Hall Green on the issue of compensation. I believe that the compensation provided for in the Bill is fair. But what is fair compensation? One will never get complete agreement between a freeholder and a leaseholder. No doubt the freeholder who is unable to exact everything that he could exact in a market that is entirely in his favour will consider that he is being deprived of his rights. This is where we get the word "confiscation" being used in the Amendment. But it is nothing of the sort.
Let us take the case mentioned by the hon. Member for Birmingham, Hall Green—that of a property bought at about one-quarter of its value. It means also that it was sold at one-quarter of its value. Why? It was not because the reversion was worth three-quarters of the 1357 value. The cause of the difficulty lay in getting a mortgage. The fact that the owner-occupier—the leaseholder—gets a windfall does not necessarily mean, however, that the landlord is being deprived of a similar amount of money or that he is being treated unjustly. Under the present system, when the 30-year period is reached, the leaseholder sees his asset wasting but it does not necessarily follow that the landowner's asset is appreciating to the same extent.
§ Mr. Eyre
The point I was trying to make was really in reply to the Minister of State's assertion that one should look historically at the course of the lease. One of the consequences of that is that the leaseholder—the purchaser—did get a bargain. This should be borne in mind in determining what is fair compensation at the end of the lease.
§ Mr. Silverman
I do not think the same applies to the historical argument. My right hon. Friend was dealing with long leases, such as those in South Wales, which are now expiring. There, one goes back to the history of how the property was built, the circumstances of the time, how it has probably been in the same family for generations, and so on. I do not think that one can always apply an historical basis to this subject. Therefore, we have to determine what is a fair value, and I believe that the basis for leasehold properties as set out by the Bill is fair. Bearing in mind that we do not wish a leaseholder to be deprived of his right to obtain a saleable property, the price is fair, assuming that both parties should be in an equal position to negotiate—which, unfortunately, they are not.
Certainly, as far as Birmingham leasehold properties are concerned, there is no element of confiscation here in the real sense, except, of course, always that the person who does not get his pound of flesh out of the market probably does not think that he is getting fair compensation. But I do not accept that. On the other hand, it can be a windfall to the tenant. But what about that? Not only is it a windfall to the tenant but I am sure that it is in the interests of public policy. It will benefit thousands of my constituents and many others in Birmingham and I therefore welcome the Bill and hope that the basis of compensation set out will be maintained.
§ 8.7 p.m.
§ Mr. Harold Gurden (Birmingham, Selly Oak)
It is appropriate that a number of Welsh and Birmingham hon. Members should be taking part in the debate. A very large number of properties in Birmingham are under leasehold, just as many properties in Wales are.
I am pleased that the Government have introduced this Bill. I had a fear at one stage that it might go the way of many other promises by the Labour Party, but I congratulate the Government on bringing in the Bill. I am delighted that it is here, although I disagree with some of the provisions. We have now reached the stage in this long-drawn-out argument over so many years that those of us who want to see this reform will accept almost anything in the form of a Bill in this direction.
Nevertheless, it is a fair criticism that the Bill is not right in many respects and ought to be adjusted in Standing Committee. The opponents of the Bill are worried by the breach of the sanctity of contract and the confiscatory provisions, as they have called them. Certainly, to some extent, these things worry me but I agree with those who have said that we cannot have this reform without some injustice. That is a fair view. It has been said from both sides. Nevertheless, it is worrying when one sees so much legislation being introduced which breaches fair contracts which have been made between people.
I certainly would not vote against the Bill, although I hope that some of these provisions will be put right. I would not vote against it because, ever since I came here, I have pledged my constituents that I would support leasehold reform, and I was glad to take part in discussions that led to my party giving the same pledge. I would also not vote against the Bill because, clearly, the Conservative Party is pledged to encourage home ownership and there certainly could not be proper home ownership without leasehold reform. Home ownership must mean freehold. How else in places like Wales and Birmingham could a person be a home owner unless such a Bill is brought in? It is unfortunate that there is a predominance of leasehold property in certain areas, particularly Birmingham.
If there were the opportunity for people to choose between freehold or leasehold, 1359 then the case for the Bill would be weakened. There is nothing wrong with the right to let, either weekly, monthly or yearly tenancies or by agreements for 99 years. What is wrong is that the would-be home owner has had no option but to take leaseholds in certain areas. What is questionable is the Socialist Party's intention to provide the opportunity for true freehold home ownership for all. The Birmingham City Council have followed this principle of giving everyone the opportunity, including municipal tenants, to become home owners in the real sense. At present the Socialist Party on Birmingham City Council are opposed to this and are trying to stop it.
§ Mr. Julius Silverman
The hon. Gentleman surely knows that the case of the Socialist Party on the City Council is that these sales will prejudice the position of people on the housing register and that the homeless "Cathy's" and others will have to wait for a much longer period for houses on the register if these houses are sold.
§ Mr. Gurden
The hon. Gentleman always puts up this case, but I do not accept it and the argument goes on. What is quite clear, and what he has not refuted is the fact that these people are prevented from becoming home owners in Birmingham, and I understand that this has the support of Socialist Members of Parliament. This cuts right across what has been said today, that the Socialist Party are trying to help people to become real home owners. I do not accept that this is what they want.
What causes this trouble about leasehold versus freehold is the shortage of houses. Here we shall have to recognise, sooner or later, that the shortage of houses is mainly caused by control. So long as we perpetuate the amount of controls that we have, and certainly rent control, we shall have this shortage. One does not have to show in detail how this works out, because one can see how controls of any sort affect supply and demand.
I want to turn to a Clause of the Bill which I think is very wrong. Several Members on both sides of the House have objected to this £200 and £400 limit on the rateable value. If I thought that the 1360 Government would adjust this I would be very happy, and even consider voting for the Bill, because this is a very serious point. This and another provision are extremely important. I cannot believe that the Government will give way on this. They have specifically put into this Bill this arbitrary figure bearing no relationship to the principle.
§ The Minister of State, Welsh Office (Mrs. Eirene White)
Perhaps the hon. Gentleman heard my right hon. Friend say that this was a matter which perhaps deserved further consideration?
§ Mr. Gurden
I am very pleased that the Minister has intervened, because those of us who watch the progress of Standing Committees must recognise that the Government do not give way. They make all sorts of pleasant noises, but when it comes to the crunch, they will not give way. Out comes the Whip to get the hounds into the pen.
§ Mr. Barber
The hon. Lady has made a very important statement which will affect the value of much property in this country. I should like to be absolutely clear. Is she saying that the Government are seriously considering extending the limits beyond £200 and £400? This is very important.
§ Mrs. White
My right hon. Friend said at an earlier stage of the debate that this was a matter which should be further examined. He gave no commitments. I want that to be clear.
§ Mr. Gurden
This is a purely political move. This Clause is inserted purely to suit the Socialist Party, the idea being that there must be more people living in houses which have a rateable value of £200 who would be more likely to vote for the Socialists. There cannot be any other intention, however one looks at this. There is no other logical explanation. I am sorry that the Government have put this in and it is one of the main reasons why I will not vote for the Bill tonight.
I want to deal with provision for the maintenance of a decent estate. How can covenants be properly enforced? Within my constituency, leaseholders have been allowed to buy the freehold, some of them many years ago. We see the difficulty, almost weekly, of people trying to enforce these covenants against their 1361 neighbours. It is practically impossible and often means expensive litigation, for which people are not prepared to pay. I see no provision in the Bill for the protection of an estate and its amenities.
I have only to give the example of the Bournville Estate to gain agreement on both sides of the House. Supposing that people in Bournville were allowed to buy their freeholds. We should soon see the beginning of the end, and the beginning of a slum area. There is a provision for the Minister to determine whether a wellmaintained estate may remain on a leasehold basis, but this does not go far enough.
There are many very small areas with probably a dozen or two houses or just a few streets, which need to be protected or else they would begin to be slums. This is another reason why I cannot vote for the Bill tonight, but I would certainly not vote against the Bill giving us leasehold reform. It is very desirable in Birmingham and I know that many of my hon. and right hon. Friends feel the same way.
§ 8.20 p.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
For many years leasehold reform has been an important plank in the Labour Party's electoral programme. In his statement on 8th December, 1964, the Leader of the House, then Minister of Housing and Local Government, announced the Government's intention to introduce legislation and, in particular, promised to protect leaseholders whose lease expired after 8th December that year. That promise is, I am glad to say, redeemed in the Bill.
The need for reform has been recognised for many years. In opening the discussion on 28th February, 1966, on the White Paper, which was the prelude to the Bill, the Minister reviewed the position over the years and he quoted from the supplementary Report of Cardinal Manning as long ago as 1884. It may he important to remember the words which were quoted:…legislation favourable to the acquisition on equitable terms of the freehold interest on the part of the leaseholder would conduce greatly to the improvement of the dwellings of the people of this country."—[OFFICIAL REPORT, 28th February, 1966; Vol. 725, c. 904.]I am sorry that my hon. Friend the Member for Birmingham, Small Heath 1362 (Mr. Denis Howell) has departed, because on 7th December, 1962, he introduced a Bill for leasehold reform and the then Conservative Government through the right hon. Member for Leeds, North-East (Sir K. Joseph), who was then Minister of Housing and Local Government, opposed it on the ground that there was sufficient portection for leaseholders on the expiration of their leases in the Landlord and Tenant Act, 1954. It is true that the right hon. Gentleman went on to say that compulsory enfranchisement could be considered only on the basis of market value and—I ask the House to note these words—only when the landlord did not want to develop.
We discussed the White Paper on 28th February, 1966, when the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who spoke today as a back bench Member, reiterated that policy. Today the right hon. Member for Altrincham and Sale (Mr. Barber) said that the Government's White Paper had been put forward before an election. I remind him that his party did not have the guts to go into the Lobby and vote against the White Paper, which was the prelude to the Bill. Was that because it was afraid that the electors might know what its attitude was?
That there is a necessity for some measure of reform is clearly beyond doubt. Even the hon. Member for Hornsey (Mr. Rossi) and other hon. Members on the side opposite have agreed with that. The debate has been monopolised by voices from Wales and Birmingham. The voice of London should also be heard, because the problem in London is acute. I know that the hon. Member for Hornsey put his side of the case.
§ Mr. Weitzman
I recognise that the hon. Gentleman represents a London constituency. With respect, I represent a much more important part of London.
§ Mr. Weitzman
In the area of Finsbury Park, which is very close to the hon. Member's constituency, there are many hundreds of houses, whose occupants hold the remainder of a 99-year lease, in which exactly the conditions described 1363 by the Minister exist. Houses have been built, maintained and improved by the lessee, and all the ground landlord has has done is to receive regularly his ground rent, and, but for legislation, he would be entitled at the end of the lease to turn out the lessee and his family of what is rightly regarded as the family home and to take possession.
It is manifestly unjust—and I do not think that anybody could disagree with this statement—that a landlord should be entitled, at the end of a lease, to assume possession, free of charge, of all the buildings and improvements created wholly by and at the cost of a succession of lessees irrespective of the value of those buildings and improvements. Obviously that was the state of affairs which provided a strong incentive to people to neglect the maintenance of the property, particularly over the last few years, and must inevitably lead to the creation of slum property.
Many attempts were made to remedy that situation. It is interesting to recall that in one of the debates on a Bill for leasehold enfranchisement it was argued by its supporters that enfranchisement would give small proprietors an interest in maintaining and improving their holdings, would encourage in them a sense of domestic and civic responsibility and—mark these words—would remove a powerful stimulus to Socialism and conditions likely to bring about revolution.
Perhaps that commends itself to right hon. and hon. Members opposite in support of the Bill. For the Conservative Party, the objection then was—and I hope that the right hon. Member for Altrincham and Sale will listen to this—that it was wrong in principle to interfere with the free exercise and development of capital and property. Even the Conservative Party has moved a long way from the enunciation of that principle. It recognised the obvious injustice and sought to allay it by the provisions of Part I of the 1954 Act.
But clearly that was no solution to the problem. When the right hon. Member for Kingston-upon-Thames was speaking, I made an intervention. He was talking about cases in which people obtained leases, together with buildings, and paid something for them. It was suggested that there was injustice. He said that this 1364 was wrong and that there was an element of confiscation in what we were doing. If what we are doing is wrong, what the Conservative Party did in 1954 was wrong on the same principle because in recognition of the injustice it attempted to allay it by the provisions of the 1954 Act.
My right hon. Friend the Minister has referred to what has happened to the value of properties and how their value has been reduced. The point is that there was no general security of tenure under the 1954 Act. The lessee who previously paid a small ground rent—£5 a year or a nominal sum—was called upon to pay for his own house, which he had maintained and improved, a market rent which often he could not afford to pay. He still remained liable for dilapidations. Even the Opposition now recognise that that is not good enough and they have moved from that position.
My hon. Friend the Member for Leicester, North-West (Sir B. Janner) said something about the attitude of the Tories being the same as it always was. It is not. Even the Tories changed—[An HON. MEMBER: "Not much."]—from their declaration by the passing of the 1954 Act that it was a question of the protection of capital and property. Now, they recognise that the 1954 Act is not sufficient.
The view of the Tories was expressed by the right hon. Member for Kingston-upon-Thames when he gave their policy on 28th February a year ago. This represents the advance which the Tories have made. The right hon. Gentleman said:We therefore think it right to build on these past policies of ours, and to go further.That shows movement.
We think that the ground leaseholders occupying residential property towards the end of his lease, where the landlord has no definite plans to redevelop or to occupy himself, should be given the option either of a lease at a rent fixed by the courts or to buy the property at a fair market price."—[OFFICIAL REPORT, 28th February, 1966; Vol. 725, c. 926.]That shows how the Opposition have advanced. They do not now attempt to set out the long-exploded argument about the sanctity of contract. That has clearly gone. It has gone in the legislation of the Rent Act and of the Moneylenders Act, which show that sanctity of contract is not a basis which can be put forward. The 1365 public good must override it. Nor do the Tories now put forward the last-ditch argument about sacred rights of capital and property. That has gone.
The Opposition agree that there should be a right to a lease or a right to enfranchisement. It is true that they would make it subject to the landlord having no definite plans to redevelop or to occupy the property himself. The Bill gives the landlord the right to resist a claim for enfranchisement or extension of lease on the ground that the house is for his own occupation and that he would suffer greater hardship if he did not have it. There are provisions in the Bill which preserve the benefits of comprehensive estate management.
What, therefore, is the objection by the Opposition on which they will divide against the Bill? It presumably relates to the terms of compensation. The Opposition say that enfranchisement should be at a fair market price. We agree. Certainly, it should be at a fair market price, but a fair market price for what? There have been many attempts to find a reasonable basis for the purchase of the freehold. I think that the Government have chosen a very good one.
As my right hon. Friend the Minister has said, clearly, in the way that leasehold property has developed, the land belongs in equity to the land owner and the house belongs to the occupying leaseholder, who has built the house and maintained and improved it. The landlord is entitled to a fair market price, but he is entitled to that fair market price for the land and for nothing more.
Similarly, if a lease is granted for 50 years, the landlord is entitled to a fair market ground rent for the land, disregarding the building upon it. It follows, therefore, that if a landlord defeats a claim for enfranchisement, he should pay compensation to the tenant by way of a fair market price for the building upon it. This is a simple, logical and fair way of doing it.
For the right hon. Member for Altrincham and Sale to sit there and grin about this and, after one has thought about the history of the Tory Party and the way that they have gone from stage to stage driven by the logic of events to give in, to talk now about confiscation is about the most ridiculous thing I have ever known.
§ Mr. Barber
The reason why I was laughing was because at that very moment I was reading the headlines from The Times,This is bluntly confiscation",and from the Financial Times,However much the Government dislikes private landlords, it cannot pretend that it is just to confiscate their property.[HON. MEMBERS: "Speech."] Be quiet. Stop yapping. This is not only my view. It is also the view of many people who try to look at the matter objectively.
§ Mr. Weitzman
The right hon. Gentleman is in very good company, having a couple of papers which support him. I could give a number which do not support him.
§ Mr. Weitzman
I could name a good many. Let not the right hon. Gentleman read out from newspapers paragraphs or headings. Let him face the logic of the matter. After all, he has been a prominent member of the Tory Party for many years, during which time I have had the pleasure of seeing him across the Floor of the House putting forward views with which I strongly disagree. He is a nice, reasonable, cheerful individual, but he must look at the position logically. To say that this is confiscation is ridiculous.
I have pointed out the logic of the matter and the way in which the Tory Party has moved step by step to a recognition of the fact that the injustices which the 1954 Act attempted to cure have not been removed. It has not allayed the position at all. Instead, it has made it worse. They themselves have recognised it and moved further from it.
As I understand it, they agree that there should be leasehold enfranchisement or the grant of a new lease. I agree entirely that it should be on the terms of a fair market price, but a fair market price for the land to the landlord in the case of enfranchisement, and a fair market ground rent to a lessee on the grant of a lease. Viewed from that standpoint, it is quite unanswerable.
There are two further points which I want to refer to shortly. As I read the Bill, if a leaseholder opts for a lease of 50 years, he has no right thereafter to 1367 claim enfranchisement. I do not understand that. I do not see why he should not have a claim thereafter.
Secondly, I note that, in accordance with their promise, the Government have given the right of enfranchisement in the case of a lease expiring after 8th December, 1964, where the lessee has remained in possession. I know that there must be some limit, but there are many leaseholders with leases which expired before that date who became statutory tenants under the 1954 Act. They have suffered an injustice, and I hope that perhaps in Committee further consideration will be given to their position.
I welcome the opportunity which the Government have taken in the Bill to close the gap where, by creating a tenancy of 22 years at a rack rent, a landlord was able to escape the provisions of the 1965 Rent Act. I am particularly pleased about that, because such tenancies were created in my constituency, and I was able to bring them to the attention of the Minister. I am glad that that position has been rectified.
I welcome the Bill and I hope that it will have a speedy passage on to the Statute Book.
§ 8.37 p.m.
§ Mr. Martin Maddan (Hove)
It may be welcome to hon. Members if I strike out over rather different territory and in a different direction from that followed by other right hon. and hon. Gentlemen who have spoken. However, before I do that, I should like to address a few comments to the major proposition in the Bill as a whole.
Perhaps I might start by saying that I am a leaseholder in London, and I find that considerable benefits arise from being a leaseholder in that the landlord who manages the estate requires every leaseholder to maintain very good standards. I recommended my hon. Friend the Member for Birmingham, Selly Oak (Mr. Gurden) to become a neighbour of mine—I told him I would refer to this—and I might not have done that had I known that he would be able to buy his own freehold and no longer be required to observe the regulations imposed by the landlord.
The fact is that there are well-managed estates where the leasehold system im- 1368 proves the quality and standard of the property. There are also badly managed estates where the leasehold system causes them to deteriorate and become slums. One of the problems which the right hon. Gentleman has had to face in drafting the Bill—and it is a problem which he has not solved—is how to differentiate effectively between different types of estate, though I appreciate that he has made an effort under Clause 19.
I now pass on to the new terrain which I promised, and I should like right hon. and hon. Members to consider a landlord who has always adhered to and perhaps pioneered the principle that the land belongs to the landlord and the bricks and mortar belong to the lessee. In cases of estates of that character, this Bill is really completely irrelevant, because they have always worked on the basis which the right hon. Gentleman says he now wants to impose on other leasehold estates.
§ Mr. Willey
In the case of Letchworth, which I believe the hon. Gentleman may have in mind, he ought not to use the word "always". It was necessary to intervene by legislation.
§ Mr. Maddan
The right hon. Gentleman is quite right that it was necessary to intervene by legislation in the case of Letchworth, but that legislation was timely and the principle was maintained, and has been maintained, since the inception of that garden city in 1903. It is not right that, without discrimination, all leasehold estates should be covered by the terms of the Bill.
The right hon. Gentleman mentioned Letchworth and, looking around the House, I see many hon. Members who were not here in 1962 when we dealt with the legislation to which he referred. I was at that time the hon. Member for Hitchin. I propose to read from the Letchworth Garden City Corporation Act, a handsomely bound volume which was presented to me by the Letchworth Urban District Council. In the purposes of the statutory Corporation which now manages the Letchworth estate, there is enshrined, in Section 11, the principles on which this estate has always been managed. It says that it is to be managedas an entity in accordance with the principles upon which the Letchworth Garden City was founded and has been managed until the end 1369 of the year nineteen hundred and sixty and, in particular, in the extension or renewal of ground leases, shall have regard only to the increased value of the land clear of the buildings (if any) situated on the land and of any improvements to the surface made by the lessee.That is a little better than the principle of the right hon. Gentleman, because it includes improvements to the surface of the land which, as someone said, should be taken into account. Therefore in such cases it seems inappropriate for the provisions of the present Bill to apply.
The founders of Letchworth Garden City were inspired by Ebenezer Howard who wrote a book called "Garden Cities of Tomorrow", which was published about 1894. What he wanted to do was to deal with some of the problems which hon. Members on both sides of the House at that time saw arising from abuses of the leasehold system, and his venture, which saw the light of day when a company was incorporated in 1903, was supported by many distinguished members of the Tory Party such as the then Lord Salisbury and A. J. Balfour, and Neville and the then Lord Leverhulme. At the heart of the whole intent was the principle that as the value of the ground—not the houses, but the ground, because that was what the company was interested in—increased as it developed, the increase in the value of the ground should go to the community as a whole for its benefit and not to individual lessees and not to a commercial company operating as a commercial landlord.
Section 32 of the Act provides thatany balance may in whole or in part be devoted to the provision of traffic facilities, lighting, drainage, markets, libraries, baths, or otherwise "—and this is a nice turn of phrase—for the embellishment of the undertaking of the Corporation, the provision of means of education, recreation or amusement for the people or for any other purpose which the Corporation may deem to be a requisite public service.In those circumstances, whereas the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) described how, as he saw it, the Tory Party had progressed up to a certain point, I am inviting him and his hon. Friends and his right hon. Friend to progress with me a little further. I hope that in Committee the right hon. 1370 Gentleman will find it possible—I know that there are difficulties, but I know that they can be got round—to maintain this more advanced position which is enshrined in the Statute from which I have been quoting, and which provides an example of the sort of estates about which I am talking.
The right hon. Gentleman mentioned Letchworth, and I think that it is a good example with which to continue. The effects of the Bill on the Corporation, which was set up by Statute to give effect to those principles, will be very deleterious, for several reasons. For example, when compensation was awarded by the Land Tribunal to the former commercial undertaking to which the right hon. Gentleman referred—and this compensation had to be paid by the Corporation, and was backed by the ratepayers of Letchworth—the Lands Tribunal took into account the fact that when the leases of houses with large gardens fell in the land might be redeveloped by the Corporation at rather higher densities, and therefore in the amount of money which the Letchworth Corporation had to pay to the old private company there was the assumption that in due course the Corporation would benefit from this redevelopment. Under the Bill, if nothing is done about it, that chance of reaping further revenue will be removed, and yet the Corporation will have the obligation to service with interest the money which it has had to borrow to pay the compensation to the old Garden City Company. This is the first bad effect which the Bill will have on Letchworth.
Secondly, there is the question of the extension of leases. At the moment many people who have leases of perhaps 40 or 50 years to run ask the Corporation for an extension and this is readily granted and, in computing the amount of ground rent for the remaining period, an average is taken of the existing ground rent and the ground rent for the future and it is this which becomes the ground rent throughout the period. This has the effect of bringing forward money into the Corporation's coffers at a time when the Corporation needs it. Under the provisions of the Bill people will no longer seek to extend their leases. They will wait until just before the last year of the lease and then decide what to do, and 1371 therefore that source of increased revenue to the Corporation is likely to dry up.
Another factor which will be hard on Letchworth arises from Clause 28(6) which is concerned with short-term development. If this provision is implemented the amount of compensation paid to individual householders, if there is a town centre redevelopment, will be considerably in excess of what would be paid to people under existing leases.
The Corporation has been in the habit of managing its leases so as to have similar termination dates for whole areas, as a matter of policy and good estate management, with a view to suitable redevelopment. Nothing in the Bill could possibly apply to give the Letchworth Corporation the opportunity to control future development as has been its practice in the past.
I think that I have shown that there will be many harmful effects, arising from the fact that Letchworth is already in a more advanced position than that which the right hon. Gentleman visualises arriving at by the Bill. It is worth adding that the residents of the town will individually suffer from the break-up of a unified estate.
I have already mentioned that in my view a good, well-run estate can benefit all residents. This has been the case with Letchworth. It is much better that a central body should decide what areas should be redeveloped at higher densities rather than that it should be done higgledy-piggledy and piecemeal by various people who acquire freeholds and decide, perhaps, to build bungalows in their gardens. The town will also suffer financially, because surplus funds of the Corporation were to be devoted to the benefit of the community as a whole.
If, under the provisions of Clause 19, Letchworth were to be regarded as a comprehensively-managed estate, a problem would still arise. As my hon. Friend the Member for Selly Oak said, the incentive to landlords to apply the provisions of this Clause will be very small when they no longer have an interest in the full reversion at the end of their leaseholds. My hon. Friend described how, if anything were to be done in respect of Birmingham, it would be by litigation between neighbours which is unlikely to be under- 1372 taken. Therefore, the whole concept of a unified estate goes.
Some people may object and say, "There is a town all in one leasehold ownership, and people should have a right to buy their freeholds." That is an attractive proposition, but it so happens that Letchworth is contiguous to two other towns—Hitchin and Baldock—so it has no monopoly position. It is worth recalling how, before the Letchworth Act was promoted, the town voted in a statutory town poll. There were 3,183 for the present system and 903 against, which is more than three to one. It is clear that the residents as a whole are strongly in favour of the present system.
When the provisions of the Bill reach the Statute Book, if they are in anything like their present form, Letchworth Garden City Corporation will find itself with a jumble of leases interspersed with residential freeholds. It will have industrial and commercial freeholds and the freehold of flats and maisonettes. There will also be some private houses, but the whole concept of a community, enshrined in the Statute from which I have quoted, will be broken. All the ratepayers of the town will be the losers, unless something is done to prevent it.
I want to refer to some statements which have been made, which I hope will help to convince the Minister that the problem of this type of estate must be dealt with. The Letchworth Garden Corporation Act had all-party support, not only in Letchworth but also in Parliament. The hon. Member for Hitchin (Mrs. Shirley Williams), whom I am glad to see present, as I said I would be referring to this matter, wrote in a letter which appeared on Friday 25th September, 1964, in the Hertfordshire Express:The Labour Party, which strongly supported the Letchworth Act, recognises the unique nature of the town and will preserve it.That was a statement about the Labour Party, so I am certain that the right hon. Gentleman will do everything possible and will not be too put off by procedural difficulties, which I know we can deal with, to preserve the position which I have mentioned.
The right hon. Member for Fulham (Mr. M. Stewart), who was then the 1373 Opposition spokesman for these matters, referred in the Second Reading debate on the Letchworth Bill to…the original principles, which I believe commend themselves to everybody in the House…"—OFFICIAL REPORT, 20th March. 1962; Vol. 656, c. 334.]I trust, therefore, that, if I am selected —as I hope I shall be—for the Committee on the Bill and move Amendments to this effect, they will not only receive sympathetic consideration but will be positively welcomed.
§ 8.56 p.m.
§ Mr. Evan Luard (Oxford)
I will be brief, as I do not want to enter into the great debate on the purposes and principles of the Bill, which have already been more than adequately defended by the Minister and other hon. Members on this side of the House. I want to raise mainly two detailed points of particular interest to my constituency. The first has been mentioned several times already—the limitation on the rateable value of those properties which will qualify for enfranchisement.
I can see no rhyme or reason for the distinction between these properties above rateable values of £400 in London and £200 in the provinces and those below. The simple point surely is that if it is right and just that certain leaseholders should be able to buy up their freeholds under the Bill, it is right and just that others should also be able to do so. Otherwise this will justifiably be regarded as a case of one law for the rich and another for the poor, or perhaps, more accurately in the present case, one law for the poor and another for the rich.
I am glad to see the Minister present, as I have had some correspondence with him on this point. Although he has put the argument in favour of this distinction most persuasively and informatively, I am afraid I have not been convinced. He basically used two arguments. The first was that the Bill simply incorporates the provisions of the Rent Act of 1965. This is not an argument at all. I can see no reason why the considerations which made a limitation necessary in that Act are relevant to this Bill on a totally different subject.
His second argument was simply that he is intervening to break a legal contract and that he can feel justified in doing so only if there is a strong ground 1374 in equity. But surely the grounds in equity are precisely the same for a leaseholder of a larger property as for a leaseholder of a smaller one. If both bought the building on the property over the years by payment of rent, this would be true in both cases. I seriously ask him to reconsider this whole provision, as he will otherwise leave many householders feeling themselves deprived of the right which has been granted to others.
This matter affects my constituency considerably because a large proportion of the property in the area is above the rateable value of £200 laid down in the Bill. Various estimates of the number of such properties have been made, the lowest being well over 200 out of probably 1,000 or more. This means that more than 20 per cent. of the properties will be adversely affected. Another estimate suggests that about 600 houses will be affected. Certainly the occupants of many properties in my constituency will feel a sense of injustice because of the £200 limit.
The next point is the distinction made in the Bill between London and the provinces in this matter of rateable values. It may be true that the average rateable value in London is twice that of certain other parts of the country, but it is not true of Oxford. As has been pointed out, the same can be said of Cambridge and a number of other constituencies where average rateable values are high. In parts of Oxford rateable values are higher than in parts of London and this emphasises the injustice of this provision.
One of the most unjust aspects is that the provision penalises precisely those leaseholders who have done the most by adequate care and attention to maintain the value of their property. They would have raised the rateable value of their property thereby and they are now to be penalised and deprived of their right of enfranchisement.
§ Mr. S. C. Silkin
Is my hon. Friend aware of a case in my constituency, where, by extending his garage, an occupier's property is above the £400 limit, he having made this improvement at his own expense?
§ Mr. Luard
That shows how unjust this provision can be in certain cases. Injustice 1375 will also be felt by people living just outside the borders of London whose property has a rateable value which puts them outside the benefit of the Bill, although they would benefit if they were in London.
The second point I wish to raise concerns Clause 28, which also affects most of my constituents in Oxford. That Clause is the provision by which public authorities will be exempted from the Bill, if they obtain a certificate from the Minister to the effect that the property is required for development. Subsection 5 states:This section applies …to any university body, that is to say, any university, university college or college of a university…In Oxford, by far the greater part, probably nine-tenths, of the leasehold property in the City is owned by the College and would come within that provision. Thus, it would be possible for that property to be exempted if it could be proved to the Minister that it was needed for "development" purposes.
I have raised this matter privately with the Minister and he has assured me that the provision applies only in respect of property required for the normal purposes of a particular institution or authority; that is, education in the case of colleges or universities. It is important that this should be made clear in the Bill because, as at present drafted, the provision is ambiguous—it might refer simply to development in the sense of property development by the authority concerned, and while my right hon. Friend may say that he personally would apply this to mean only for the purposes of education, in the years to come he will be succeeded by other Ministers who may give the provision a completely different interpretation. It is, therefore, of the utmost importance that this matter should be cleared up and made completely incontrovertible in the wording of the Bill.
At the very least, even if he is not ready to amend the Bill, I hope that he will make an explicit statement, either this evening, or in Committee, or subsequently, in order to make clear that the word "development" as it is used in the Clause refers only to development for the purposes of the particular authority concerned and specified in the Clause.
1376 We have heard argument from the benches opposite about confiscation being implicit in the Bill. I would like to have been able to take up this point which has not been sufficiently emphasised in this debate. This legislation is not perfect, it will cause certain injustices in certain cases. But it is not realistic to talk of confiscation. This seems to be based on the assumption that properties are to be given away from the existing freeholders to the leaseholders. The provisions of this Measure do not make that possible in any shape or form.
That argument totally ignores the very large appreciation in the land value of properties that has taken place over the 99 years, or whatever period it may be, that the leaseholders have been in occupation. In very many cases this appreciation is something that leaseholders have very much to bear in mind. They will not get these properties for a song. This is true in my constituency and in many others, because most are situated in large urban areas where great appreciation has taken place. In most cases the leaseholder will have to pay a considerable price to acquire the property, and that implements the fairest kind of principle—probably the fairest, though not perfect—that could be applied in the circumstances.
For these reasons I accept that this is a good Bill. But it could be much better still if the Minister would make the various changes I have suggested.
§ 9.7 p.m.
§ Mr. Graham Page (Crosby)
The Minister declared an interest when he said that he had a 999-year lease, but added that this was so remote that he probably was not affected by the Bill at all. I am not so sure. This Minister, whose office is dead, but he will not lie down, keeps popping up on the Government side with Bills that are far from welcome either to Members of the House or members of the public outside. We welcome him, but not the Bills he brings. Perhaps the understatement of the week was made by the hon. Member for Oxford (Mr. Luard) just now when he said that this Bill is not perfect. It certainly is not; there are many respects in which it is far from perfect.
As the right hon. Gentleman declared his interest, may I, too, in accordance 1377 with the traditions of the House, declare my interest in the subject matter of the Bill. I am a member of the committee of a housing association, a director of a building society and of a trust property company which owns no long leasehold houses, and in each I have no more than the necessary qualification shares for directorship. Perhaps, having regard to what my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) said, I should also declare my interest as a solicitor. We solicitors are reputed to make a lot of money out of the right hon. Gentleman's Bills when they become Acts. I can assure him that all we get are a lot of headaches. I should also perhaps declare an interest, having regard to what the hon. Member for Cambridge (Mr. Robert Davies) said, in that I am a governor of St. Thomas's Hospital.
I want first to make as sharp and clear as I can the dividing line between Government and Opposition. It is not now whether or not there should be leasehold enfranchisement; it is upon what terms there shall be leasehold enfranchisement.
We on this side believe in home ownership, but even in priority to that we believe in the home, that is to say, that no man shall be arbitrarily evicted from the house which he has made his home. In applying that principle, the Conservative Government in 1954 gave the occupying ground tenant at the end of a ground lease a controlled tenancy. I do not object now that such a tenant will become a regulated tenant under this Bill, if he takes no steps for enfranchisement. I think that that is probably the right course to take now. In effect, it is to give, as we did in 1954, a right of residence for an indefinite period. It is no great step to proceed, from that recognition of the right to a home, to the alternative—the right to home ownership, a right to buy out the ground landlord, to buy the right to live rent free and own one's home.
That is the sort of leasehold enfranchisement which we recognise on this side of the House, and on that basis we have tried to think out the correct scheme to give those rights to the ground tenant. My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) spelt out the Conservative policy. He said 1378 that, first, we recognise the desire and the ability of people to own their own homes. In following up that recognition, we say that the person who has made the long leasehould house his home shall have a right to choose in what capacity he remains there, whether as a regulated tenant at a fair market rent settled by rent officer or rent assessment committee, as a ground tenant at a modern ground rent, or as a freeholder. Those are the choices which we would give the ground tenant at the end of the ground lease.
The first, to remain as a tenant at a rack rent, contains an element of compensation in the fair market rent itself. If the tenant chooses the second or the third, to continue as a ground tenant or to become the freeholder, he deprives the present freeholder of an existing right to possession of the house at the end of the lease, and he should pay for what he takes or for what he is given by Statute.
Briefly, the proposal would be compulsory acquisition of existing rights at their existing value. The conditions of this would be that the right should not be exercised against a genuine need for development. It should not be exercised against a genuine need of the freeholder to use the house as his own residence or that of a member of his family if it would be a greater hardship for him to be kept out of possession than for the tenant to be turned out. The right should be exercisable only during the last few years of the lease and, as in the present Bill, by a person who has been in residence for a substantial period.
There are other corollaries, such as that the tenant should be credited with the cost of improvements and, as my hon. Friend the Member for Hornsey (Mr. Rossi) said, should not be penalised by dilapidation claims. There must be adequate building society loans, supported by the Government if necessary, as in the previous scheme for loans on older properties. There must be assistance with the deposit, namely, the Conservative scheme for grants towards savings made for the payment of that deposit. Those are the sort of conditions on which we would grant leasehold enfranchisement.
Leasehold enfranchisement is no new idea in proposals for property reform. Until I listened to the Minister today I would not have thought that anyone 1379 would really want to destroy leasehold tenure altogether. As my hon. Friend the Member for Hornsey said, development on a leasehold basis has been of the greatest advantage to the community in the past. There is no reason why we should destroy it. Yet the Minister said of leasehold: "This remarkable contract." He seemed to try to justify the Bill by railing at leasehold tenure as a whole. If he is expressing the Government's view on this, it is strange that he should leave leasehold for everyone other than what I call the "five-year residence" qualifying tenant. He leaves it also for those above a certain rateable value.
Let us have some certainty about that. Are the Government really dithering about the rateable value limit, or are they fixed on it? Dithering in this debate will have grave effects on the value of properties and transactions between parties at the present time. We should know definitely when the Minister replies whether the Government are wavering on the limit or whether it is firm.
I said that leasehold enfranchisement is no new idea. But two things in the Bill are new—first, the fiction that the bricks and mortar morally belong to the leaseholder, and secondly the complete disregard in the Bill of transactions which have taken place on the basis of existing law. Many hon. Members opposite have said that they think that the existing law is unjust. But people have acted upon it.
Until the publication of the White Paper which we debated last February, if anyone intended to disturb existing relationships and property rights which had been acquired with money, he would not have thought of doing so without compensation for the rights lost by one party to another. But the Bill disregards that and while hon. Members are entitled to hold the view that the present law is unjust, it is far more unjust not to recognise that people have acted upon it and acquired rights for money under the existing law.
Of course, any changes in the law of property are bound to produce anomalies and complications. We saw that in the Land Commission Bill, but this Bill also has its fair share of those anomalies and complications.
§ Mr. Page
Indeed, perhaps disasters, as my hon. Friend says. The reason is that it is based on the monstrous immorality that five years' residence in a house results in a compulsory gift of that house to the resident. [An HON. MEMBER: "He has paid for it."] The Government seek to give him something he did not purchase.
§ Mr. Page
The Minister tried to justify that sort of policy with the argument that the leaseholder originally built the house on the plot—whether it was the existing leaseholder or his predecessor in title I do not mind. That seems to be the argument on which the Minister bases his advocacy of the Bill, but it is not carried out in the Bill.
The Bill grants a right by compulsory acquisition in respect of leases of 21 years and one day. It is ridiculous to talk about a leaseholder building a house on land on which he has a lease for only 21 years and one day. No one would be as crazy as that. While that remains, the right hon. Gentleman cannot justify the confiscation of the freeholder's property in the house on the ground that the tenant built it. That is a false argument altogether.
I take as simple a case as I can. It is is a very ordinary case, of which there must be tens of thousands throughout the country. I will take the figures of examples which the right hon. Gentleman gave. He said that there were small houses in Wales at low ground rents and gave the example of one with five years to run with a present vacant possession value of £1,500. The value of the leasehold interest, I suppose, when paid a year or so ago, with only five or six years to run, would be only a matter of a few hundred pounds. So the existing ground tenant in a property of that sort would have paid, say, £200 or £300 to get into the house. He would now pay the enfranchisement price of £230 according to the right hon. Gentleman. The whole thing would have cost him about £500—and, when the Bill became an Act, he can serve notice on the landowner and flog the house the next day for £1,500.
§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington)
This is very interesting. Will the hon. Gentleman tell the House what would be the comparable figure for the scheme he was putting forward just now? Let us assume that there was no development and that the lessee could enfranchise.
§ Mr. Page
Indeed, the lessee would be entitled to the property at market value, subject, of course, to the length of the term which he still has in his lease. I cannot give figures unless I know the length of the term for the lease. [Interruption.] I will give round figures.
On the basis of 20 years to run, the freehold reversion in a lease would be worth about one-third of the vacant possession value. Therefore, the market value of the leasehold interest would be two-thirds. So, for a £2,000 house with a 20-year lease to run, one would expect it to be somewhere around £700 or £800 and the remainder would be the market value of the reversion. [HON. MEMBERS: "Now we know."]
§ Mr. Page
Let me enlarge on this. I take the second example, a lease with 23 years to run and vacant possession value now of £2,000. The right hon. Gentleman said that the enfranchisement price would be £105. So the qualifying tenant—the five-year resident—could acquire the house for £105 and, I repeat, next day could "flog" it for £2,000. So he acquires it for £105 and sells it next day for £2,000.
In a burst of morality and equity—words which have treacled through the White Paper and oozed into the debate—hon. Members opposite will probably say, indeed have almost said, "Good luck to him if he can do it. Let him take it off the wicked landlord for £105 and "flog" it for £2,000".
This will be called in future "flogging Freddy's freeholds" and if the freeholder is a large charity, or college, or teaching hospital or trust fund or insurance company, this is quite impersonal. It is voteless and it does not matter if the money is taken from that source. But perhaps any hon. Member who has a life policy with profits might think of the harm he is doing himself through depriv- 1382 ing insurance companies of some of their investments.
I ask hon. Members to pause to think how a freehold of that sort, in a house on a ground rent, has most probably been acquired by the person from who it is now to be taken. It is most likely, if it is a single owner, that the landowner will not be the same person as the original lessor, and the ground tenant will not be the same person as the original lessee. The freehold reversion may have been bought, say, ten years ago as an investment or possibly, as my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said, for the purpose of occupation by the purchaser.
If the owner bought it about ten years ago, he would have paid about £500 for the reversion. Taking into account interest lost over the 10 years on his £500 invested and the ground rent received, it might have cost him a total of £650. He receives £105 and, on the right hon. Gentleman's figures, he will therefore lose £550 while the tenant makes a handsome windfall of £1,900.
§ Mr. Hooson
The hon. Member has surely overlooked the fact that the landlord receives the ground rent in the meantime?
§ Mr. Page
I have not overlooked that fact at all. I have taken it fully into account if the hon. and learned Gentleman will look at my figures, in talking about the interest from the £500, and setting off a small ground rent against it. This windfall, which the right hon. Gentleman is inventing in this Bill, is most unfair to the Home Secretary who is trying to curb the immorality of gambling clubs. It is not right that the Minister should begin this sort of racket.
This is a disgraceful and cynical disregard of rights of property which have been acquired. The most extravagant point is that the bonus for the tenant and the robbery of the landowner occurs when the landowner is an individual who holds one freehold property. If he is a big estate owner the landlord can claim development value under Clause 9(3). He can claim:such addition as may be just to take account of any additional valuedue to his owning the additional land.
That is, he can claim from the tenant the development value due to his being able to marry a number of plots together. 1383 I am strongly advised that in South Wales this may bring the price to the tenant up to the price for plot and bricks and mortar. The plot vacant, when married with neighbouring plots, may be as valuable as a plot with a 99-year-old terraced house standing on it. The Government are kidding many leaseholders in this Bill. Some of the big estate owners will receive under Clause 9(3) fair compensation as they should. Why should the single owner be the one selected for expropriation in this way?
§ Mr. Elystan Morgan
Does the hon. Gentleman realise that under the Housing Act, 1957, valuers have had to make valuations of site value, and in South Wales and many other parts of Wales site value is sometimes valued at £50, £60, £70?
§ Mr. Page
Yes, but when one site can be married to a lot of others it becomes more valuable. This is what I am advised by valuers.
Furthermore, the landlord, in Clause 19 can obtain the approval of the Minister to a scheme to convert his ground rents into a management fee. It is the same thing, only I suppose that this is the method of the Government's buying off the opposition from large estates. Yet the single owner will have no such benefit. He loses his ground rent and his £2,000 house and gets only £105 for them—and the Minister talks about morality and equity.
If the landlord is a public body, it receives certain benefits denied to the individual. It can retain the development value of the land. Thus, throughout the Bill the Government have shown favouritism towards some lucky ground tenants and some large landowners, and gross unfairness to the ordinary individual ground landlord, robbing him of what is justly and legally his. The final insult comes in Clause 18. If the ground lessee wants the house, he gets it, land and building, for £105. If the true owner wants his own house for his own home, he has to pay £1,900 for it.
This is not justice, and it cannot be justified in any way. The Conservative plan holds the balance fairly between the parties concerned, taking care not to obstruct development so that we can produce modern dwellings. We would give the residential long leaseholder the 1384 right during the last few years of his ground lease to continue in his home as a long leaseholder or as a freeholder, as he may choose, upon paying compensation for the loss suffered. These are fair terms to both sides compared with the gross injustice of the Bill.
§ 9.31 p.m.
§ The Secretary of State for Wales (Mr. Cledwyn Hughes)
It was almost a year ago when my predecessor in office, my right hon. Friend the Member for Llanelly (Mr. James Griffiths), concluded the debate on the White Paper on Leasehold Reform, which we introduced at that time. Then, hon. Members opposite, although they described the White Paper variously as a "spiv's charter" and an "act of confiscation", did not vote against it. Tonight,' on a pretext, they are voting against the Bill, notwithstanding the fact that it reflects the White Paper almost in its entirety. The country must judge the motives of right hon. and hon. Members opposite. At a rough estimate, they have had nearly 20 opportunities since 1884 to take some practical action on leasehold reform, and this they have signally failed to do. Tonight, on a technicality, they try to take yet another step backwards.
The purpose of the Bill is to achieve a permanent and lasting reform of the leasehold system in that sector where history has shown that there has been much injustice and distress. It is not, therefore, concerned with leasehold interests held purely for business use, nor with those held purely for investment. It relates to the man who holds the leasehold interest in a house because he lives there and because it is his home. The Bill confers the benefit on the tenant, not on a company or a body of trustees.
In a very important respect—and this is a point worth making at this stage of the debate—the Bill improves on the White Paper because it allows the tenant to assign his rights in the property to an intending purchaser. This would allow a man, for example, living in London in a leasehold house to move to South Wales or to the north of England or elsewhere to take up a new job without having to wait for the process of transfer to take place. This is a considerable advance on the White Paper.
A number of points have been raised in the debate with which I should like 1385 to deal. If I leave anyone out, I hope that it will not be taken as a discourtesy it is a question of time.
The right hon. Member for Altrincham and Sale (Mr. Barber) raised the question of rateable value limits. In order to identify those who particularly need the protection of the Bill, and for no other reason, we have adopted a distinction based on the rateable value of a house. A little over 1 per cent. of the houses in England and Wales have a rateable value above these limits. In Wales there are estimated to be fewer than 800 houses excluded by these limits. My hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) asked whether the £200 limit would rule out a man whose house is above that limit because it is divided into flats. It would exclude such a house, although I should have thought that cases of this sort are likely to be very rare in Cardiff and confined to rather more expensive property. It is important to note that if the division into flats is such as to make it impracticable to use the property as a single dwelling, it will be outside the Bill on those grounds.
§ Mr. Barber
The point which I sought to make was that there had been one or two suggestions from the Government Front Bench during the debate to the effect that the £200 and £400 limit might be altered. This would obviously have a significant effect on the value of the property concerned. The House should therefore, be told specifically whether the Government will be prepared in Committee to consider arguments to alter these limits.
§ Mr. Hughes
The Government are always prepared to listen to arguments, but these are the limits which we have set and to which we adhere. Clearly, there will be considerable discussion about this, however, in Committee, which is where the detailed argument should take place.
My hon. Friend the Member for Lewisham, North (Mr. Moyle) asked whether 21-year leases should be included in the Bill. The answer is in the negative. Twenty-one year leases are often granted at rack rents. To apply the Bill to them would mean making rights under it available to people who can hardly be said to have paid for the value of the bricks and mortar in the house. 1386 The Bill's definition of a long lease is just about right. In any event, it is based on precedent.
During the debate we have heard a great deal from the Opposition about confiscation. That is the substance of their Amendment. Our view is that any talk of confiscation of the landlord's interest is nonsense. If anybody is having his property confiscated, it is the leaseholder and not the landlord. The Bill puts matters right. If anyone is concerned about the depression in the market value of freeholds as a result of the Bill, he should reflect on the effect which the 1954 Act, conceived by right hon. and hon. Members opposite, had on the value of reversionary interests. As my right hon. Friend the Minister said in opening the debate, that Act achieved the wonderful result of pleasing practically nobody.
The hon. Member for Hornsey (Mr. Rossi) made a thoughtful and constructive speech and put forward two interesting alternative suggestions about the price of enfranchisement. I have no doubt that he will develop those arguments in Committee.
My hon. and learned Friend the Member for Dulwich (Mr. S.C. Silkin) spoke about the premises going with the house and asked whether this affects the price as given in Clause 9. The answer is that the premises are merely the garden and garage let with the house and occupied with it. The price naturally covers those items as well as the house. The freehold interest has to be valued as secured by the presence of the building.
The right hon. Member for Altrincham and Sale asked why rights would be available to the leaseholder long before there is any question of the lease running out. The answer is that this would defeat one of the main objects of the Bill, which is to enable the leaseholder to escape from the leasehold system before it has had time to work its effect. In South Wales, for example, building societies are unwilling to lend money on leases with less than 40 years left to run. I regard the leasehold system in its present form as unjust and I can see no justification for postponing the leaseholder's remedy.
My hon. Friend the Member for Cardiff, North, asked why, once a leaseholder has chosen to extend the lease 1387 rather than enfranchise it is to be a once-and-for-all choice binding on his successors. There is nothing to prevent a leaseholder holding an extended lease from enfranchising under the Bill if he does it before the original term date, and he will have made up his mind well before then.
The hon. Member for Carmarthen (Mr. Gwynfor Evans) made what I thought was a rather carping speech. His knowledge of Welsh people is limited if he is not aware that the Bill has had a tremendous reception in the Principality. He asked how Clause 17 works. That Clause enables the landlord to recover possession of the property for redevelopment either on the original term date or during the 50-year extension period, but only if he compensates the leaseholder for the value of the extension or such part of it as is left.
Again, the right hon. Member for Altrincham and Sale asked in his opening speech why the Minister is allowed to decide whether a scheme of control for a well-managed estate should be put to the High Court. That is a reasonable question, and the answer is that it is because this is a limitation of the rights conferred by the Bill, and it is for a Minister to take the responsibility of deciding whether there is a prima facie case for doing it. In addition, it would be extremely difficult to draw up criteria on which a court could make a proper judgment.
My hon. Friends the Member for Oxford (Mr. Luard) and the Member for Cambridge (Mr. Robert Davies) asked about Clause 28. They wanted to know in what circumstances a certificate will be given under Clause 28 in relation to freeholds owned by universities and teaching hospitals. The Clause is concerned primarily to prevent nonsenses arising such as would happen if a leaseholder enfranchised and his house was purchased compulsorily shortly afterwards. Consequently, certificates will be given under the Clause in circumstances similar to those in which it would be proper to confirm a compulsory purchase order. "Shortly", in this context, means a few years at the most; the kind of period in which it would be appropriate to purchase land compulsorily in advance. Clauses 28 and 29 will operate only in 1388 the case of redevelopment for public purposes; that is, for university or hospital redevelopment in the cases with which my hon. Friends are concerned.
My hon. Friend the Member for Lewisham, North asked whether the Crown Commissioners should be bound by Statute. To put the Crown under legal obligations to part with a freehold interest in land at the instance of a subject would be a complete novelty in our law. This evening, I can give the House a complete assurance that the Crown will conform fully with the principles of the Bill.
I should like to say a word about the date of commencement. We have adopted the appointed day procedure for Part I, because it will be necessary for rules of court to be prescribed for county courts to follow in the exercise of their jurisdiction under the Bill. That procedure normally takes two or three months. In any case, a qualified leaseholder whose lease expires between Royal Assent and the appointed day will still be able to exercise his right under the transitional provisions of the Bill.
I must say something about the problem as it affects Wales. Over many decades, there has been a deep and bitter feeling in Wales about leaseholds. If it is such a good system as many right hon. and hon. Gentlemen opposite have tried to make out, why should there be that deep and bitter feeling in the Principality?
Let us look very briefly at the past. The hon. and learned Member for Montgomery (Mr. Hooson) in a very good, radical speech—one of the best which he has made in the House—spoke about the past. For Welshmen, this is an historic debate. The present leasehold situation in Wales is the creation of the second half of the last century. It took root in Wales, particularly in the industrial areas, because most of the land was held by large family estates which regarded it as a continuous source of investment income. These owners, not content to make fortune after fortune from the minerals underground, wished to profit also from the needs of the workers and the immense population explosion that was engendered by the coal and steel revolution in South Wales. In Glamorgan alone, where this is an acute problem today, the population increased from 318,000 in 1861—over 100 years 1389 ago—to 1,120,000 by 1911, an increase of 253 per cent.
These workers, who came from rural Wales and from many parts of England, had to have homes, and the landowners could not miss the opportunities which the leasehold system gave them of profiting from this need. We have heard this evening about well-managed estates. The landowners were not concerned to set up well-managed estates. To them the leasehold system offered opportunities of disposing of useless mountain-sides at tremendous profit. Ground rent of £2 a year was charged for building plots. This may not sound exorbitant, but over 99 years it produces far more than the landlord would dare ask in a lump sum, and at 20 houses to the acre, with a ground rent of £2 a year, total receipts of about £4,000 over 99 years did not represent a bad return. It was a very good return for nothing.
On top of that, they had their reversionary rights. If we look at the evidence given before the Select Committee on Towns and Dwellings in 1886, we see how the land, by no effort of the landlord, increased in value. My hon. Friend the Member for Conway (Mr. Ednyfed Hudson Davies) made a very good speech, and he will know, from his own experience, about such development in North Wales. The Rev. T.J. Weldon of Blaenau Ffestiniog told the Committee that in the village, and in surrounding villages, the owners of the land would not sell the freehold. Quarrymen and shopkeepers were obliged to build on leasehold land, and out of about 2,500 houses in Ffestiniog parish, the local quarrymen themselves built 1,500 on leasehold plots. The total ground rent for all the houses in the village during the 60 years of the average leases amounted to more than £175,000, which arose from about 77 acres of land which, before building took place, was worth less than 7s. 6d. an acre. [An HON. MEMBER: "Confiscation."] This is the Welsh background: This is what makes this Bill historic. [HON. MEMBERS: "Hear, hear."] It was under these conditions that owner-occupation grew in Wales, both in the industrial north and among the much greater populations of the industrial south.
In 1884 the Medical Officer of Health for Merthyr Tydvil, Mr. Thomas Jones- 1390 Dyke, told the Royal Commission on the Housing of Working Classes that the cottages of the Welsh mining population were generally built on 99-year leases. Mr. Dyke said that the new houses then being built had been put up by private individuals taking leases from the owners of the land.
Is it any wonder that there has been a growing sense of grievance against the leasehold system, and that, throughout Wales, there has been pressure for reform for many years? There is another instance, from the urban district council of Bethesda represented by my hon. Friend the Member for Conway. It is now nearly 60 years since the Bethesda Urban District Council passed a resolution championing the right of compulsory enfranchisement for leaseholders. It declared that the ground rents charged in almost all cases were much above the agricultural value of the land at the time the lease was granted, and that it was unjust that the hard earnings of the leaseholders and their improvements should lapse on the termination of the lease to the freeholder who had in many cases already benefited to the extent of hundreds per cent. on the original value of the land.
That this sense of grievance was not unjustified is clear from a number of independent investigations. In 1884 the Royal Commission on Housing of the Working Classes, while not recommending universal leasehold enfranchisement, admitted thatthe evidence laid before us shows that there is a widely spread sense of injustice among lessees. This feeling probably is particularly strong in cases where working men and others build their own houses and, where being unable to obtain land, they are practically compelled to build on leases for short terms.In 1921, the Report of the South Wales Regional Survey Committee which was set up to examine the housing situation in the coalfield area said:Owing to the very limited area of suitable building land, combined with the fact that the prevalent system of tenure is leasehold, and that the land belongs to a comparatively small number of large landowners, the land monopoly is a very close one, and the ground rents and purchase prices charged in past years have been exceedingly high. For land acquired for school purposes in Glamorgan and Monmouthshire, the local education authorities have had to pay sums ranging from £300 to £1,700 or more per acre, and for housing purposes ground rents on a 1391 similar scale have been charged to individuals, the land being let on lease for 99 years.I am sorry to have to say this, but very few landlords in Wales have shown any positive estate management. In recent years most of the estates have been crudely liquidating their property as they have had occasion to raise capital. There is little doubt that most of the companies now holding leases consider their property ownership in Wales as an investment and as a matter of financial management. On this question of estate management about which we have heard so much, there is no estate management company which will take the pride in its homes which the individual owner occupier will take, and this I know from my personal experience of the lessees of Wales.
The Labour Party has worked very hard for a very long time in this field, and so many of my colleagues have taken part in this fight that it is hard to single out any individual. To say that the Bill has anything to do with an election or a by-election is a grotesque distortion of the truth. This Government and this party have been working for this Bill throughout the whole of this century, but I am sure that it is right to mention the important part played by my predecessor the right hon. Member for Llanelly in getting the White Paper solution to the problem worked out, and perhaps I might also be allowed to pay a tribute to my former colleague at the Welsh Office, now the Minister of State for Commonwealth Affairs, who collected the petition which was signed by more than 40,000 people in Cardiff.
§ Mr. Hughes
My hon. Friend's arithmetic is always better than mine.
It is also appropriate this evening to refer to our late colleague, Mr. Iorwerth Thomas, the former Member for Rhondda, West, who worked so hard to draw attention to the hardships caused by this leasehold system in his own valley and in the valleys of South Wales. But, as I have said, so many of my hon. Friends from South Wales' constituencies have taken part in this fight that I can hardly mention them all.
Nor has the battle been fought by the Labour Party alone. There have been other just men associated with this 1392 reform, some of them associated with the party opposite, and I pay tribute to them. I recognise the contributions made by the hon. Member for Barry (Mr. Gower). I want to refer also to Alderman A.F. Dolman of Newport, who made a report to members of the Council of the Wales and Monmouthshire Conservative and Unionist Association. He made a very important contribution in his report.
The right hon. Member for Altrincham and Sale made great play of what the newspapers had said about the Bill—and especially what the Financial Times had said. My general impression is that the Bill has been welcomed by large sections of the Press, but I want to quote to the right hon. Gentleman what the The Times said when he was a Minister in the last Government, namely, that the Conservative Government had adopted as one of its objectives the theme of "a property owning democracy"—a slogan which today strikes one as more foolish than it was then. The Times went on to say thatit may not unfairly be said that if the Government's policy is truly a property owning democracy, then it must will the means to the full implementation of that policy. Not until the house-owner is free from the difficulties and hardships of the leasehold system can it be said that the Government has taken all the steps which it reasonably could take to implement its own policy.It is sheer political hypocrisy for the Opposition to say what they have been saying today, after 13 years of opportunity and Government.
It is interesting to take up the claim made by hon. Members opposite that they would be for the Bill if enfranchisement could be carried out at a fair price without compulsion. In 1961 a study was made of some of the prices asked for freeholds, or renewals of leases with about 10 years to run. The study revealed that many figures proposed by ground landlords were so high that they could not be regarded as minor differences of opinion about the economic future of the premises.
A householder in Tonypandy was asked by his landlord to pay £650 for his lease when the valuation officer of the Inland Revenue had put the "fair price" at £200. In Cardiff the asking price was six times the "fair price" and in Llandeilo it was five times the "fair 1393 price". In the case of a house with a nine-year lease to run at Porth, where the ground rent was 10s. a year, the freeholder refused an offer of £250 for the freehold.
The debate has demonstrated an important thing—the tremendous gulf that exists between the Tory Party and the Labour Party. We have heard more doctrinaire speeches from that side of the House today than for a long time. References have been made to the sanctity of contract. The party opposite is more interested in the sanctity of property than the sanctity of contract. Hon. Members on this side of the House are concerned with the sanctity of men and women.
Many measures of reform will come before the House during the life of this
§ Parliament. This is as it should be. We are a Government and a party of reform. But for Wales, where about one-third of all houses are leaseshold—a much higher proportion than in England—this Measure has a special significance. For Welshmen, this is a day of achievement, a day on which an ancient wrong is righted and an inveterate grievance removed. By a coincidence, it is almost 83 years since a similar Bill had its Second Reading in this House, on 20th March, 1884. It was defeated by 118 votes to 104. On this day, 83 years later, I have confidence that this House will give the Bill a Second Reading.
§ Question put, That the words proposed to be left out stand part of the Question:—
§ The House divided: Ayes 319, Noes 197.1397
|Division No. 283.]||AYES||[10.0 p.m.|
|Abse, Leo||Darling, Rt. Hn. George||Ginsburg, David|
|Allaun, Frank (Salford, E.)||Davidson, Arthur (Accrington)||Gordon Walker, Rt. Hn. P. G.|
|Alldritt, Walter||Davidson,Jamea(Aberdeenshire,W.)||Gower, Raymond|
|Allen, Scholefield||Davies, Dr. Ernest (Stretford)||Gray, Dr. Hugh (Yarmouth)|
|Anderson, Donald||Davies, G. Elfred (Rhondda, E.)||Greenwood, Rt. Hn. Anthony|
|Archer, Peter||Davies, Ednyfed Hudson (Conway)||Grimond, Rt. Hn. J.|
|Armstrong, Ernest||Davies, Harold (Leek)||Gunter, Rt. Hn. R. J.|
|Ashley, Jack||Davies, Ifor (Gower)||Hamilton, James (Bothwell)|
|Atkins, Ronald (Preston, N.)||Davies, Robert (Cambridge)||Hamling, William|
|Atkinson, Norman (Tottenham)||Davies, S. C. (Merthyr)||Harper, Joseph|
|Bacon, Rt. Hn. Alice||de Freitas, Rt. Hn. Sir Geoffrey||Harrison, Walter (Wakefield)|
|Bagier, Gordon A. T.||Dell, Edmond||Hart, Mrs. Judith|
|Barnes, Michael||Dempsey, James||Haseldine, Norman|
|Barnett, Joel||Dewar, Donald||Hattersley, Roy|
|Baxter, William||Diamond, Rt. Hn. John||Hazell, Bert|
|Bellenger, Rt. Hn. F. J.||Dickens, James||Healey, Rt. Hn. Denis|
|Benn, Rt. Hn. Anthony Wedgwood||Dobson, Ray||Heffer, Eric S.|
|Bessell, Peter||Doig, Peter||Henig, Stanley|
|Bidwell, Sydney||Donnelly, Desmond||Hooley, Frank|
|Binns, John||Driberg, Tom||Hooson, Emlyn|
|Bishop, E. S.||Dunn, James A.||Horner, John|
|Blackburn, F.||Dunnett, Jack||Houghton, Rt. Hn. Douglas|
|Blenkinsop, Arthur||Dunwoody, Mrs. Gwyneth (Exeter)||Howarth, Harry (Wellingborough)|
|Boardman, H.||Dunwoody, Dr. John (F'th & C'b'e)||Howell, Denis (Small Heath)|
|Booth, Albert||Eadie, Alex||Hoy, James|
|Boston, Terence||Edelman, Maurice||Hughes, Rt. Hn. Cledwyn (Anglesey)|
|Boyden, James||Edwards, Rt. Hn. Ness (Caerphilly)||Hughes, Emrys (Ayrshire, S.)|
|Braddock, Mrs. E. M.||Edwards, Robert (Bilston)||Hughes, Hector (Aberdeen, N.)|
|Bradley, Tom||Edwards, William (Merioneth)||Hughes, Roy (Newport)|
|Brooks, Edwin||Ellis, John||Hunter, Adam|
|Broughton, Dr. A. D. D.||English, Michael||Hynd, John|
|Brown,Bob(N'c'tle-upon-Tyne,W.)||Ennals, David||Irvine, A. J. (Edge Hill)|
|Brown, R. W. (Shoreditch & F'bury)||Evans, Albert (Islington, S.W.)||Jackson, Colin (B'h'se & Spenb'gh)|
|Buchan, Norman||Evans, Gwynfor (C'marthen)||Jackson, Peter M. (High Peak)|
|Buchanan, Richard (G'gow, Sp'burn)||Evans, Ioan L. (Birm'h'm. Yardley)||Janner, Sir Barnett|
|Butler, Mrs. Joyce (Wood Green)||Faulds, Andrew||Jay, Rt. Hn. Douglas|
|Callaghan, Rt. Hn. James||Fennyhough, E.||Jeger, George (Goole)|
|Cant, R. B.||Finch, Harold||Jenkins, Hugh (Putney)|
|Carter-Jones, Lewis||Fitch, Alan (Wigan)||Jenkins, Rt. Hn. Roy (Stechford)|
|Castle, Rt. Hn. Barbara||Fitt, Gerard (Belfast, W.)||Johnson, Carol (Lewisham, S.)|
|Chapman, Donald||Fletcher, Raymond (Ilkeston)||Johnson, James (K'ston-on-Hull, W.)|
|Cloe, Denis||Floud, Bernard||Jones, Dan (Burnley)|
|Coleman, Donald||Foley, Maurice||Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)|
|Concannon, J. D.||Foot, Sir Dingle (Ipswich)||Jones, J. Idwal (Wrexham)|
|Corbet, Mrs. Freda||Foot, Michael (Ebbw Vale)||Judd, Frank|
|Craddock, George (Bradford, S.)||Ford, Ben||Kelley, Richard|
|Crawshaw, Richard||Forrester, John||Kerr, Mrs. Anne (R'ter & Chatham)|
|Cronin, John||Fowler, Gerry||Kerr, Dr. David (W'worth, Central)|
|Crosland. Rt. Hn. Anthony||Fraser, John (Norwood)||Kerr, Russell (Feltham)|
|Grossman, Rt. Hn. Richard||Freeson, Reginald||Leadbitter, Ted|
|Cullen, Mrs. Alice||Gardner, Tony||Ledger, Ron|
|Dalyell, Tam||Garrett, W. E.||Lee, Rt. Hn. Frederick (Newton)|
|Lee, Rt. Hn. Jennie (Cannock)||Norwood, Christopher||Skeffington, Arthur|
|Lee, John (Reading)||Oakes, Gordon||Slater, Joseph|
|Lestor, Miss Joan||Ogden, Eric||Small, William|
|Lever, Harold (Cheatham)||O'Malley, Brian||Snow, Julian|
|Lever, L. M. (Ardwick)||Oram, Albert E.||Spriggs, Leslie|
|Lewis, Ron (Carlisle)||Orbach, Maurice||Steele, Thomas (Dunbartonshire, W.)|
|Lipton, Marcus||Orme, Stanley||Stewart, Rt. Hn. Michael|
|Lomas, Kenneth||Oswald, Thomas||Stonehouse, John|
|Loughlin, Charles||Owen, Dr. David (Plymouth, S'tn)||Strauss, Rt. Hn. G. R.|
|Luard, Evan||Padley, Walter||Summerekill, Hn. Dr. Shirley|
|Lubbock, Eric||Page, Derek (King's Lynn)||Swain, Thomas|
|Lyon, Alexander W. (York)||Palmer, Arthur||Swingler, Stephen|
|Lyons, Edward (Bradford, E.)||Pannell, Rt. Hn. Charles||Symonds, J. B.|
|McBride, Neil||Park, Trevor||Taverne, Dick|
|McCann, John||Parker, John (Dagenham)||Thomas, George (Cardiff, W.)|
|MacColl, James||Parkyn, Brian (Bedford)||Thomson, Rt. Hn. George|
|MacDermot, Niall||Pavitt, Laurence||Thornton, Ernest|
|Macdonald, A. H.||Pearson, Arthur (Pontypridd)||Tinn, James|
|McGuire, Michael||Peart, Rt. Hn. Fred||Tomney, Frank|
|McKay, Mrs. Margaret||Pentland, Norman||Tuck, Raphael|
|Mackenzie, Gregor (Rutherglen)||Perry, Ernest G. (Battersea, S.)||Urwin, T. W.|
|Mackie, John||Prentice, Rt. Hn. R. E.||Varley, Eric G.|
|Mackintosh, John P.||Price, Christopher (Perry Barr)||Wainwright, Edwin (Dearne Valley)|
|Maclennan, Robert||Price, Thomas (Westhoughton)||Wainwright, Richard (Colne Valley)|
|McNamara, J. Kevin||Price, William (Rugby)||Walden, Brian (All Saints)|
|MacPherson, Malcolm||Probert, Arthur||Walker, Harold (Doncaster)|
|Mahon, Peter (Preston, S.)||Pursey, Cmdr. Harry||Wallace, George|
|Mahon, Simon (Bootle)||Randall, Harry||Watkins, David (Consett)|
|Mallalieu, E. L. (Brigg)||Rankin, John||Watkins, Tudor (Brecon & Radnor)|
|Mallalieu,J.P.W.(Huddersfield,E.)||Redhead, Edward||Weitzman, David|
|Manuel, Archie||Reynolds, G. W.||Wellbeloved, James|
|Mapp, Charles||Rhodes, Geoffrey||Wells William (Walsall, N.)|
|Marquand, David||Richard, Ivor||Whitaker, Ben|
|Marsh, Rt. Hn. Richard||Roberts, Albert (Normanton)||White, Mrs. Eirene|
|Mason, Roy||Roberts, Goronwy (Caernarvon)||Whitlock, William|
|Maxwell, Robert||Roberts, Gwilym (Bedfordshire, S.)||Wigg, Rt. Hn. George|
|Mayhew, Christopher||Robertson, John (Paisley)||Wilkins, W. A.|
|Mellish, Robert||Robinson,Rt.Hn.Kenneth(St.P'c'as)||Willey, Rt. Hn. Frederick|
|Mendelson, J. J.||Robinson, W. 0. J. (Walth'stow, E.)||Williams, Alan (Swansea, W.)|
|Millan, Bruce||Rodgers, William (Stockton)||Williams, Alan Lee (Hornchurch)|
|Miller, Dr. M. S.||Roebuck, Roy||Williams, Clifford (Abertillery)|
|Milne, Edward (Blyth)||Rogers, George (Kensington, N.)||Williams, Mrs. Shirley (Hitchin)|
|Mitchell, R. C. (S'th'pton, Test)||Rose, Paul||Williams, W. T. (Warrington)|
|Molloy, William||Ross, Rt. Hn. William||Wilson, William (Coventry, S.)|
|Moonman, Eric||Rowland, Christopher (Meriden)||Winnick, David|
|Morgan, Elystan (Cardiganshire)||Rowlands, E. (Cardiff, N.)||Winstanley, Dr. M. P.|
|Morris, Alfred (Wythenshawe)||Ryan, John||Winterbottom, R. E.|
|Morris, Charles R. (Openshaw)||Shaw, Arnold (Ilford, S.)||Woodburn, Rt. Hn. A.|
|Morris, John (Aberavon)||Sheldon, Robert||Woof, Robert|
|Moyle, Roland||Shinwell, Rt. Hn. E.||Wyatt, Woodrow|
|Mulley, Rt. Hn. Frederick||Shore, Peter (Stepney)||Yates, Victor|
|Neal, Harold||Silkin, Rt. Hn. John (Deptford||TELLERS FOR THE AYES:|
|Newens, Stan||Silkin, Hn. S. C. (Dulwich)||Mr. Charles Grey and|
|Noel-Baker, Francis (Swindon)||Silverman, Julius (Aston)||Mr. George Lawson.|
|Noel-Baker,Rt.Hn.Philip(Derby,S.)||Silverman, Sydney (Nelson)|
|Alison, Michael (Barkston Ash)||Bryan, Paul||Deedes, Rt. Hn. W. F. (Ashford)|
|Allason, James (Hemel Hempstead)||Buchanan-Smith,Alick(Angue,N&M)||Dodds-Parker, Douglas|
|Astor, John||Buck, Antony (Colchester)||Doughty, Charles|
|Atkins, Humphrey (M't'n & M'd'n)||Bullus, Sir Eric||Douglas-Home Rt. Hn. Sir Alec|
|Awdry, Daniel||Burden, F. A.||Elliot, Capt. Walter (Carshalton)|
|Baker, W. H. K.||Campbell, Gordon||Errington, Sir Eric|
|Balniel, Lord||Carlisle, Mark||Farr, John|
|Barber, Rt. Hn. Anthony||Cary, Sir Robert||Fisher, Nigel|
|Batsford, Brian||Channon, H. P. G.||Fortescue, Tim|
|Bell, Ronald||Chichester-Clark, R.||Foster, Sir John|
|Bennett, Dr. Reginald (Gos. & Fhm)||Clark, Henry||Fraser,Rt.Hn.Hugh(St'fford & Stone)|
|Berry, Hn. Anthony||Clegg, Walter||Galbraith, Hn. T. G.|
|Biffen, John||Cooke, Robert||Gibson-Watt, David|
|Biggs-Davison, John||Cooper-Key, Sir Neill||Giles, Rear-Adm. Morgan|
|Birch, Rt. Hn. Nigel||Cordle, John||Gilmour, Ian (Norfolk, C.)|
|Black, Sir Cyril||Corfield, F. V.||Gilmour, Sir John (Fife, E.)|
|Body, Richard||Crawley, Aidan||Goodhart, Philip|
|Bossom, Sir Clive||Crosthwaite-Eyre, Sir Oliver||Goodhew, Victor|
|Boyd-Carpenter, Rt. Hn. John||Crouch, David||Grant, Anthony|
|Braine, Bernard||Crowder, F. P.||Grant-Ferris, R.|
|Brewis, John||Cunningham, Sir Knox||Hall, John (Wycombe)|
|Brinton, Sir Tatton||Dalkeith, Earl of||Hall-Davis, A. G. F.|
|Bromley-Davenport,Lt.-Col.SirWalter||Dance, James||Hamilton, Michael (Salisbury)|
|Brown, Sir Edward (Bath)||d'Avigdor-Goldsmid, Sir Henry||Harris, Frederic (Croydon, N.W.)|
|Bruce-Gardyne, J.||Dean, Paul (Somerset, N.)||Harris, Reader (Heston)|
|Harrison, Col. Sir Harwood (Eye)||Macmillan, Maurice (Farnham)||Rodgers, Sir John (Sevenoaks)|
|Harvey, Sir Arthur Vere||Madden, Martin||Roots, William|
|Harvie Anderson, Miss||Maginnis, John E.||Royle, Anthony|
|Hastings, Stephen||Marples, Rt. Hn. Ernest||Russell, Sir Ronald|
|Hay, John||Marten, Neil||St. John-Stevas, Norman|
|Heald, Rt. Hn. Sir Lionel||Maude, Angus||Sandys, Rt. Hn. D.|
|Heath, Rt. Hn. Edward||Maudling, Rt. Hn. Reginald||Scott, Nicholas|
|Heseltine, Michael||Maxwell-Hyslop, R. J.||Sharples, Richard|
|Higgins, Terence L.||Maydon, Lt.-Cmdr. S. L. C.||Shaw, Michael (Sc'b'gh & Whitby)|
|Hill, J. E. B.||Mills, Peter (Torrington)||Sinclair, Sir George|
|Hirst, Geoffrey||Mills, Stratton (Belfast, N.)||Smith, John|
|Hobson, Rt. Hn. Sir John||Miscampbell, Norman||Stodart, Anthony|
|Hogg, Rt. Hn. Quintin||Mitchell, David (Basingstoke)||Stoddart-Scott, Col. Sir M. (Ripon)|
|Holland, Philip||Monro, Hector||Tapsell, Peter|
|Hordern, Peter||Morgan, Geraint (Denbigh)||Taylor, Sir Charles (Eastbourne)|
|Hornby, Richard||Morrison, Charles (Devizes)||Taylor, Frank (Moss Side)|
|Howell, David (Guildford)||Mott-Radclyffe, Sir Charles||Teeling, Sir William|
|Hunt, John||Munro-Lucas-Tooth, Sir Hugh||Temple, John M.|
|Hutchison, Michael Clark||Murton, Oscar||Turton, Rt. Hn. R. H.|
|Iremonger, T. L.||Neave, Airey||van Straubenzee, W. R.|
|Irvine, Bryant Godman (Rye)||Nicholls, Sir Harmar||Vaughan-Morgan, Rt. Hn. Sir John|
|Jenkin, Patrick (Woodford)||Onslow, Cranley||Vickers, Dame Joan|
|Jennings, J. C. (Burton)||Orr, Capt. L. P. S.||Walker, Peter (Worcester)|
|Jones, Arthur (Northants, S.)||Osborn, John (Hallam)||Walker-Smith, Rt. Hn. Sir Derek|
|Jopling, Michael||Page, Graham (Crosby)||Wall, Patrick|
|Joseph, Rt. Hn. Sir Keith||Page, John (Harrow, W.)||Walters, Dennis|
|Kaberry, Sir Donald||Pearson, Sir Frank (Clitheroe)||Ward, Dame Irene|
|Kerby, Capt. Henry||Peel, John||Weatherill, Bernard|
|Kershaw, Anthony||Percival, Ian||Webster, David|
|Kimball, Marcus||Peyton, John||Wells, John (Maidstone)|
|King, Evelyn (Dorset, S.)||Pounder, Rafton||Whitelaw, Rt. Hn. William|
|Kirk, Peter||Powell, Rt. Hn. J. Enoch||Wills, Sir Gerald (Bridgwater)|
|Kitson, Timothy||Price, David (Eastleigh)||Wolrige-Gordon, Patrick|
|Lancaster, Col. C. G.||Prior, J. M. L.||Wood, Rt. Hn. Richard|
|Legge-Bourke, Sir Harry||Quennell, Miss J. M.||Woodnutt, Mark|
|Lewis, Kenneth (Rutland)||Ramsden, Rt. Hn. James||Worsley, Marcus|
|Longden, Gilbert||Rawlinson, Rt. Hn. Sir Peter||Wylie, N. R.|
|Loveys, W. H.||Rees-Davies, W. R.||Younger, Hn. George|
|McAdden, Sir Stephen||Renton, Rt. Hn. Sir David|
|MacArthur, Ian||Ridley, Hn. Nicholas||TELLERS FOR THE NOES:|
|Maclean, Sir Fitzroy||Ridsdale, Julian||Mr. Francis Pym and|
|McMaster, Stanley||Robson Brown, Sir William||Mr. Jasper More.|
§ Bill read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).