§ For the purposes of the Rent Act 1968, properties having a rateable value on 31st March 1973 of £600 in the Greater London area or £300 in the rest of the country shall be treated as if those rateable values were £400 and £200, respectively.—[Mr. Tugendhat.]
§ Brought up, and read the First time.
§ Mr. Christopher Tugendhat (Cities of London and Westminster)
I beg to move, That the Clause be read a Second time.
I will not delay the House by making a protracted speech. Unlike many other right hon. and hon. Members in the Chamber, I was a member of the Standing Committee, and I feel that it is desirable that others should have the opportunity to make a contribution to the debate.
The object of the new clause is to improve the Bill. It is not to bring about a radical change in the way the Bill is set out or in the way it applies but simply to bring about an improvement covering one sector of the economy. I hope that the Government will understand that social justice and a severe problem in the London housing market require action and that they will give an assurance that they are prepared to take action.
I am not suggesting that the way in which the new clause is framed is necessarily the ideal way of meeting the problem. We have put forward a proposal which we think will be workable and helpful, but our object is to draw the Government's attention to the problem and to get them to act. If the Government can find another way of dealing with the 1315 problem, we shall approach their ideas with a completely open mind.
The problem to which I drew attention mainly affects London, although it has some effect on a number of towns and cities outside. It is about London that I will speak because that is the place I know best. In London, as in the rest of the country, most of the housing market is subject to controls and restraints, but the unregulated tenants are excluded from the housing legislation—and, as the Bill is drafted, will be left entirely unprotected from staggering rent increases after the freeze ends. I appreciate that rents are a delicate subject, and I have no intention of reopening debates which range much wider than this Bill. I hope that the House will agree that the position of the tenants I am talking about is exceptional.
I have brought to the House several letters from constituents which show that the increases range substantially over 100 per cent. and sometimes over 200 per cent. I have here two examples of rents which are expected to go up as soon as the freeze ends from £850 to £3,000 and from £700 to £2,800. I do not advocate that special privileges or protections should be accorded to these tenants. I am not suggesting that they should be given any protection which is not available to other sections of the community. But some shield is necessary to protect them against immediate, sudden and absolute increases of that kind.
The main argument that is used against the extension of control into this area is that it would dry up the market. Those of us who are familiar with the situation in Central London do not find it easy to accept that argument. The market is already drying up rapidly and it has diminished significantly in recent years. One has only to look at any of the blocks in neighbourhoods around the Palace of Westminster to see the number of flats which were on the rented market a few years ago and which have now been withdrawn. Some companies have made very substantial sums of money out of this break-up activity, as is well known.
There is still a rented market in this sector but it is much less vital to the health of our society than it sometimes 1316 appears. The situation in the rented market is not anything like as beneficial to the people living in London as is sometimes alleged. Increasingly, flats of the kind of which I am speaking go not to people who live and make their life in London in the real sense of those words. They go to diplomats and business executives, either foreign or British, people who are not really living in London, but who regard their accommodation here as a pied-à-terre, where they stay during the week, returning at the weekend to the place where they have their real home. Alternatively these flats are going to people who regard London as a post in which they stay for a year or two, or three, four or five years, and then return to the place where they have their main home and main career.
Of course, a great commercial centre like London must provide accommodation for people of that kind. We need the diplomatic and international business community, and executives from companies outside London who have to have accommodation within London. We recognise that, and nothing that I am saying should be taken as in any sense attacking those persons. But there are serious implications when a community of people who live their lives in London, in the sense that they bring up their children and participate in the life of the community, staying here for many years and feeling themselves a part of the city, find it impossible to secure rented accommodation and are pushed out of the middle of the city.
It may be said that they ought to buy. It may be asked, why do they not buy? That is not always possible. The price of the kind of flat we are talking about has risen astronomically in recent years. Many are priced at anything from £30,000 to £60,000 or more. In this pile of letters I have the example of a flat for which the occupant is at present paying an annual rent of £950 and for which the landlord is asking a purchase price of £55,000.
It simply is not possible for a great many people to raise mortgages of that kind, and even if they strain themselves to the uttermost to do so, they may well find that they are mortgaging themselves to the point of foolishness, beyond the point to which they can afford to go. The people most affected by this development 1317 are often the old and people past the peak of their earnings who have given a lifetime to the community, people whose roots are deeply embedded in it but who have no possibility of either increasing their income or raising the kind of money that would be needed to pay a mortgage of that kind. Another group who are seriously affected are the young, people bringing up families, who are hoping to be able to play a large part in the community.
It is a matter of sorrow to me, as I am sure it is to those of my hon. Friends who represent central London constituencies, when we find that increasingly people move out of our areas as soon as they begin to have families, because they can no longer afford to remain. When a city reaches the point where the old and the people bringing up a family can no longer afford to live in it, the life and heart goes out of it and it becomes in many ways almost a desert of buildings. There are, therefore, important social implications in the movement about which I am speaking.
As I have said, I am not suggesting that the particular proposals we are putting forward are necessarily the ideal way of tackling the problem, but they draw the attention of the Government to a serious problem and one which I would hope the Government will feel able to tackle. I recognise, too, that many of the difficulties I am talking of arise because the pool of rented accommodation in London at all levels has diminished in recent years, and it is essential to increase that pool of rented accommodation and to build more homes, both for rent and for sale, in London. It is also important to attract into the market more landlords so as to reverse the situation where we have a diminishing pool of accommodation falling into the hands of a diminishing number of landlords.
That, of course, is a bigger problem, outside the scope of this Bill. Here we are talking of a specific, identifiable problem of people having at present no shield against very heavy increases. We ask that they should be given the same rights and privileges as other tenants. I hope that the Government will see their way to meet our wishes, if not here, then in another place.
§ Mr. Geoffrey Finsberg (Hampstead)
I should like to support my hon. Friend 1318 the Member for the Cities of London and Westminster (Mr. Tugendhat) in his argument. It is clear that there is a growing shortage of this type of property in inner London. Since the break-up and disappearance of probably one of the largest landlords, Key Flats, one has seen the disappearance of what I would call a broad social idea of landlordism which was practised by London County Freehold and the growth of certain characteristics which, frankly are alien, I believe, to everyone in this House.
In the new clause which we are asking the House to accept we are saying that there should he an increase in fairness. At the moment one has the situation that in one block there are some flats with a rateable value of £390 and other flats with a rateable value of £410. The first flats have all the protection of the Rent Acts in respect of rent allowances and security of tenure, while the person unlucky enough to have a flat with a rateable value of £410 has no protection of any kind.
It is right to point out that the figures which we have put in this new clause relate to the rateable value as at 31st March this year and take no recognition of the rateable values which will come into effect on 1st April under the new clause. Because there is a wide amount of confusion on this, it is right to say again that there is no alteration at all in the existing values of £400 or £200 so far as the rateable value limits are concerned.
Having said that, I want to develop one of the arguments put forward by my hon. Friend the Member for the Cities of London and Westminster, that there are certain characteristics which are wrong and which are driving out of London the kind of social mix we want to see. I feel it is right that I should again give to the House details of a case which I have already given, that of a tenant who lives in my constituency whose lease had come to an end. He was negotiating with his landlords, the Freshwater Group. This current rent was £850. His lease being up he was negotiating by letter with the area manager of Freshwater. Finally, they had a meeting and after a fair amount of discussion there was virtual agreement that the new rent should be £1,350. Just as the Freshwater area manager was leaving my constituent he asked, "Your rateable 1319 value is below £400, is not it?" My constituent replied, "No. It is £410." The Freshwater man then said, "I am sorry. I withdraw that figure." A few days later an offer in writing came through of £2,000 per annum. It is alleged to have been a mistake in that Freshwater did not know that they were covered by the freeze. But that is not so important. What is important is that in the same block of flats there were people whose rateable value was just under £400 who had the full protection. That is why my hon. Friends and I feel it right to try to extend the protective figure for greater London from £400 to £600.
Although this is mainly a problem in greater London it is also occurring in some cases in other parts of the country where the rateable value is £200. We say that the same proportionate increase should be applied to bring it up to £300.
As my hon. Friends and I have said before, there are other issues which still operate such as the phoney service charges, and I hope very soon that my hon. Friend the Minister for Housing and Construction will be able to tell us that he has received the report on this subject which he commissioned some time ago.
I hope that the Government will find it possible to accept this clause. I know that all Governments say that they cannot accept any new clause which is drafted by anyone other than a parliamentary draftsman. Even a clause drafted by one of my hon. and learned Friends—even my right hon. and learned Friend the Minister for Trade and Consumer Affairs—still would not be acceptable to a parliamentary draftsman. It may be that we shall have to accept a request from the Government not to press the clause and instead to allow a "properly" drafted clause to be inserted at a later stage.
However I hope that my hon. Friend the Minister for Housing and Construction will appreciate that there is great strength of feeling on this issue in greater London and that it is an issue of fair play and social justice. That is precisely why we have picked this figure. We feel that it operates at a reasonable level.
The House will recall that the tenants whom we are discussing are covered under phase 1 in that their rents cannot be 1320 increased and they cannot be evicted if their leases come to an end under phase 1. I hope that my hon. Friend will agree that what we are asking the House to accept is right even though the detailed wording of the clause may not be wholly acceptable. In any event, if the wording is not acceptable and my hon. Friend asks to be allowed to produce parliamentary language at a later stage, any tenant who is affected should not tamely accept any notice to quit and leave his property. He should go to the courts and say to the landlord who is trying to get him out, "I want a court hearing to give me the protection of the law while phase 1 is in operation".
I hope that my hon. Friend will have found a way of accepting this principle so that tenants receive the protection of the 1968 Act which means the security of tenure which they deserve and the protection of the fair rents system and rent allowances to which I contend they are entitled.
§ 5.15 p.m.
§ Sir Brandon Rhys Williams (Kensington, South)
I want to speak briefly to congratulate my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat) and my hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg). In central London we have our own special kind of inflationary problem in that too many people are chasing too few rooms.
Although it has been said in the past that above the £400 limit there is a free market and that buyers and sellers can work out a reasonable balance between them, that is no longer true and it is especially untrue in South Kensington where there are a large number of retired and professional people who are quite unable to compete at the prices that they are asked.
The reason why I say that there is no longer a free market is partly that the incomes of such people are fixed. It is also that people who are seeking accommodation have special reasons why they are willing to pay almost any price. It may be that they come from abroad and have the backing of multi-national companies or embassies which feel for prestige reasons that they need accommodation in central London of a particular quality.
1321 Very often the developer has in mind a change of user and is hoping to turn his accommodation into hotel or short-stay furnished accommodation which for a time can be very lucrative. It may be that there are potential purchasers who are willing to offer lump sums. These may be people who lose little of their net income whatever they pay but who have every reason at present to expect capital gains when eventually they dispose of their properties.
Over the years, the effect of controls in central London has been to freeze the redevelopment of property and to prevent the natural improvement of much of the area. This has created an artificial shortage which is felt especially in South Kensington.
Furnished tenants will shortly get the help of the new rent allowances. I congratulate the Government on the speed with which they have brought in the rent allowances for furnished tenants. But something must be done for people who have no protection left when their present leases expire. There is a great deal of anxiety in my constituency about this matter, and it is partly occasioned by the Counter-Inflation Bill. We need a new policy for Central London. But for the present we must have an interim measure of protection for people in accommodation above the £400 limit. I do not know whether the wording of the clause is ideal, but I am certain that the intention of my hon. Friend the Member for Cities of London and Westminster is right and I hope that the Government will pay attention.
I should like to be able to say from today that people whose leases are expiring in properties which are not subject to any kind of control need have no more anxiety and that they should stay put when their leases end, counting on the Government to take appropriate action as part of their counter-inflation measures.
§ Mr. Kenneth Warren (Hastings)
As a Member representing a constituency outside London which has many similar problems to those mentioned by my hon. Friends, I wish to support the clause. There is need for an up-grading of these scales. We have cases in Hastings where there are not only revaluations going from £210 down below £200 and still not qualifying for the protection of the 1968 Act because they were not operative 1322 on the qualifying date of the 1968 Act, but many just over £200 where people should have the protection warranted by the extension proposed by my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat).
In speaking of one town on the south coast, I hope that I am perhaps speaking of many which have the same component as that mentioned by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) of a large concentration of retired people who need the protection that this extension can give them.
§ Mr. Reg Prentice (East Ham, North)
So far this Report stage has been fascinating in that it has consisted mainly of an exhibition of the private griefs of right hon. and hon. Members on the Government benches, with right hon. and hon. Gentlemen on the Treasury Bench making the Government case and their supporters on the back benches making the Conservative Party case. I can promise—
§ Mr. Warren
It ought to be made clear that this is not a private grief. It is a matter of considerable importance to thousands of our constituents.
§ Mr. Prentice
If the hon. Gentleman had contained himself a little longer, he would have heard me agree. The Opposition will be discriminating and will look at each case on its merits. In some cases we may find ourselves supporting the Government as the lesser of two evils.
Hon. Gentlemen who have spoken have made out a sound case. It was slightly nauseating for some of us to listen to their arguments on behalf of the tenants concerned, because many tenants are suffering hardship, and the prospect of greater hardship, besides those in the relatively high rents bracket whom we are discussing on the new clause. Any serious counter-inflation policy should include the suspension of rent increases due under the Housing Finance Act. There will be a real problem of hardship and unfairness to thousands of people when the temporary provisions come in. Therefore, the new clause deserves support. But we should look at the new clause not only from the point of view of protecting the tenants affected, but because high rents of this kind generate high incomes.
1323 According to the hon. Member for Cities of London and Westminster (Mr. Tugendhat), if people own the right properties in the right place at the right time they are able to secure higher rents of the scale mentioned by him. Clearly this makes a complete nonsense of the income limits which are an essential feature of other parts of the policy.
For those and many other reasons which can be given, I suggest that the new clause deserves support.
§ The Minister for Housing and Construction (Mr. Paul Channon)
I know that the House is anxious to make progress with the Bill today. Therefore, I will not detain it long. I am sure that everyone in the House has great sympathy with the speeches by my hon. Friends the Members for the Cities of London and Westminster (Mr. Tugendhat), Hampstead (Mr. Geoffrey Finsberg), Hastings (Mr. Warren) and Kensington, South (Sir B. Rhys Williams) on what is obviously to them an important and deeply felt issue. I also note what was said by the right hon. Member for East Ham, North (Mr. Prentice).
As a preliminary, I should like to deal with one point in the speech by my hon. Friend the Member for Hampstead. He is not in his usual place. I had better not say that he has gone to another place as that has not yet happened. He asked about service charges and whether I had had a report. I am engaged in looking at the report on service charges, which has only recently arrived. I note what my hon. Friend said about the issue, and I recall the argument that he and others pressed last year.
I discussed the problem of this section of tenants with my hon. Friends on a number of occasions. They are concerned about it, and I think that everyone will agree that they have acted in the best traditions of constituency Members in bringing this matter to the attention of the House.
The House might be interested to know the figures involved. I estimate that there are about 20,000 tenants of unfurnished property above the rateable value limit. About half of these are in inner London. The other half are largely alongside the South Coast, which no doubt caused the interest of my hon. Friend the Member 1324 for Hastings. I know that my hon. Friend the Member for Hove (Mr. Maddan) is also deeply concerned about the problem.
About 80 per cent. of these properties in London appear to come within the bracket chosen by my hon. Friends in the new clause. Typically these properties are let on three, five or seven-year leases and the rents are market rents. It will be within the recollection of hon. Members that the rateable value limits were fixed in 1965 at £400 in London because it was felt that there was no shortage of rented accommodation above that level and that therefore there could be a market above it. I should emphasise that we are talking about constant levels. The rateable values do not increase until the end of next month.
I accept that that situation no longer seems to apply today and that there is a shortage of accommodation in the lower rateable value bracket with which my hon. Friends have dealt. I am aware of their concern because of this new situation. My hon. Friend the Member for the Cities of London and Westminster discussed this matter in Committee. I know his views well and have discussed them with him on many occasions. I also know the views of my hon. Friend the Member for Kensington, South and other hon. Members who have not spoken today.
My hon. Friends are worried about steeply increasing rents and the distress that can be caused to some tenants. They are worried, as we all are, about frequent changes of landlord and insensitivity towards the personal needs of tenants to which such changes have given rise. They are worried about the plight of tenants who have to look for new accommodation because they cannot afford the new high rents being asked. I accept to a considerable degree my hon. Friend's diagnosis of the problem.
I recognise that this is a serious issue. My hon. Friends suggest that the answer is to raise the rateable value limit to a level which I calculate would bring 80 per cent. of unregulated tenancies within the Rent Acts. This would give tenants full security of tenure and access to the fair rents system and they would become protected regulated tenancies in the same mould as existing regulated tenancies. This is a possible course of action.
1325 The House will appreciate that we are dealing with counter-inflation measures which have a limited life. This is an important problem, but it has not been central to the main issues confronting us in the Bill.
Therefore, in view of the views that have been expressed, the Government are considering what measures might be appropriate to meet the problems which have been described. If necessary, we are prepared to propose amendments to the Bill in another place to give effect to our conclusions on this issue. I could not go further than that in telling the House what the outcome might be. However, my hon. Friends having drawn attention to a serious and difficult issue, I assure them that I am sympathetic and the Government will, if necessary, propose amendments to the Bill to give effect to our final conclusions. I hope therefore, especially as one of my hon. Friends pointed out the difficulty imposed on private Members of drafting a clause and the essential nature of getting whatever measures are proposed right and watertight, that in view of the assurance that I have given my hon. Friends will not press the new clause.
§ Mr. Tugendhat
My hon. Friend's speech was the most helpful and sensitive that we have heard from the Treasury Bench regarding this problem which has worried us for a long time. We are delighted that the Government should now appreciate the nature of the problem and are prepared, if necessary, to bring forward amendments in another place to deal with it. On the basis of the assurance that we have received, I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.