§ 3.30 p.m.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin)
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
§ Moved, that the House do now again resolve itself into Committee.—(Lord Bell win.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD ABERDARE in the Chair.]
§ Clause 61 [Cancellation of registration of rent]:
§ [Amendment No. 138B not moved.]
§ Clause 61 agreed to.
§ Clause 62 agreed to.
§ Clause 63 [Conversion of controlled tenancies into regulated tenancies]:
§ [Amendments Nos. 139 to 139E not moved.]
§ On Question, Whether Clause 63 shall stand part of the Bill?
§ Lord GOODMAN
Perhaps I ought to explain that the self-sacrificing abstinence of the noble Baronesses on the previous amendments was owing to the fact that, logically, if the two amendments that they have put down had been discussed, and subsequently, as I hope, my own amend- 521 ment is passed by the Committee, those two amendments would become irrelevant. So I expect that the probability is that they have not dispatched their amendments into limbo, but intend to reinstate them on Report stage in the event of my unhappy failure to persuade the Committee that this clause should be removed from the Bill altogether.
Since we have all been urged to brevity —quite rightly, in view of the elaborate nature of the discussions in which we have to be involved—I hope that I may be permitted to make a few preliminary observations about my reason for wanting to remove this clause. I was, many years ago, one of the unofficial advisers to the late Richard Crossman when this matter arose in a very prominent and important context. I, and the noble Lord, Lord Lloyd of Hampstead, whom I am happy to see today, worked with him on these matters.
One of the most important questions that arose for discussion was whether the principle of the fair rent, qualified by the introduction of the shortage element, as explained last evening by the Minister, who gave an admirable and exemplary explanation of what a fair rent is, should he introduced to all controlled lettings, or whether the controlled lettings of the poorer element, or the worst element, of the housing stock should be left out, for the reason that their inclusion would bring great hardship, discomfort, anxiety and concern to a number of people living in the most deprived fashion in this country under the rent restriction legislation. After anxious discussion, it was decided by the then Minister that the old controls should remain.
I would invite the co-operation of the noble Lord, Lord Bellwin, to whom I should like to pay tribute, if I may venture to do so without appearin patronising, for the exceptional courtesy and mastery which he has shown over this thoroughly difficult and complicated Bill. I should like to ask him whether he would be kind enough, if he disagrees with the statistics that I am proposing to furnish, to tell me so, because my statistics are secondary evidence based on hearsay, I have not been around to count the number of secondary controls that still remain. I do not know how many there were, 522 authoritatively, at the time when Richard Crossman's decision was made, but my understanding is that at that time there were 4 million such tenancies, and they have abated since then, by the normal processes of attrition and wastage, to 200,000. So it is perfectly clear that, on that principle alone, this wastage is effectively removing them from the housing scene, and that it cannot be very long before, in the ordinary process of attrition, they will disappear altogether.
The process has been hastened by the introduction of a principle in, I think, the 1977 Act, whereby the second transmission of a tenancy, without the tenancy becoming automatically a regulated tenancy, ceased to arise. That is to say—to explain to those who are not entirely familiar with the matter—under the present provisions, where there is a controlled tenancy and the tenant dies, there is a right of transmission to the spouse of that tenant, but there was previously a second right of transmission to other members of the family of that tenant. That second right of transmission has been abolished, so there is already a process whereby curtailment or reduction of those tenancies is brought about by that method as well. So we have a situation where we are dealing with 200,000 tenancies out of a previous number of 4 million tenancies, which it is now considered necessary to remove by this clause in the Bill.
I wonder whether I may make this general observation, which may not be entirely acceptable to either side, but will possibly be to the Cross-Benches. I think that this Bill contains a number of very valuable features, and reflects a considerable degree of credit on the draftsmen and others who devised it. It has, obviously—as any Bill as complex and difficult as this must have—a number of difficulties and a number of shortcomings and the noble Lord has expressed a willingness, in several instances, to consider an improvement in the Bill, since he has uttered the admirable sentiment that he wants the best Bill he can have. I am sure that that view is shared by every Member of the House, of whatever political complexion.
However, there are two serious shortcomings in this Bill, both of which have given rise to very great public anxiety. 523 The first we discussed yesterday. That was the question of the shortholding, because, in my view, everything which is required to encourage the availability of additional premises for letting, either furnished or unfurnished, would be provided by a safeguard that the landlord of the premises could be sure, where he had stipulated that he would want them back at the end of a short tenancy, that they would be restored to him. That is the important requirement that would bring about the availability of a great deal more furnished letting.
I can see—and I do not want to talk on a different amendment, but as I have started on the point I will go on—no sense at all in allowing a landlord to change one tenant at a registered rent to another tenant at the same registered rent. It creates anxiety on the part of the incumbent tenant, adds nothing whatever to the availability of the housing stock and is not a sensible provision.
That is not, however, the point we are on at the moment. The point we are dealing with at the moment is the deep public anxiety that has been caused, as reflected in my own mail—and no doubt it is reflected in the mail of most Members of this Housex2014;by the removal of those 200,000 tenancies, quite unnecessarily, since, as I have said already, they are going to disappear by a process of normal wastage.
I invite the Government to consider that this Motion on my part is in no way motivated by any political considerations. I think I have said enough already to satisfy them on that point. It is animated by this consideration. The rent officer, about whom I shall have a word to say in a moment, will now have to consider and assess a rent for 200,000 premises, where previously he need not have done it. The noble Lord can possibly tell me—yesterday he was, if I may say so, a little coy on the subject—what it costs to assess a rent in either let or unlet premises. My guess would be that an assessment of £100 is a very modest one indeed.
I have no mathematical skills, but aided by several experts at Oxford I have been told that 200,000 times £100 makes £20 million. We are going to spend £20 million to indulge a political whim 524 and a belief that consistency should be the god which we serve in this regard. That £20 million is going to be spent to no purpose at all. That is an important consideration, but it is not the most important consideration. The most important consideration is that 200,000 tenants—and my statistical experts tell me that 65 per cent. of them are pensioners and 85 per cent. are over 60 or 65—are going to have visits from the rent officer. They are people who are least equipped to deal with the situation, in whom anxieties, concerns and fears will be aroused by the mere arrival of this official.
I shall have a word to say about the rent officer in a moment—it will be a word of approbationx2014;but why should it be necessary for 200,000 people to be mildly persecuted, and some even tormented, to secure a result that is going to come about by the process of time? It does not make any sense. It is devoid of reason. It is out of character with the deep thought and anxiety that is clearly reflected in most of this Bill.
I have a further point and it is this. As I rather proudly announced yesterday, I am, in a way, the creator of the rent officer. I can claim in part to have invented him, and I am glad to see that that claim is being conceded. I do not say this in any boastful spirit, but the appointment in which I take the greatest pride is President of the Institute of Rent Officers and I am concerned for their welfare.
The rent officers will now become engaged in a situation of the utmost difficulty, delicacy and embarrassment. They will have to search out the people who are less able to deal with these things, and who are the people who will respond worst to their approach, and it will be to no point. The poor wretches will have inflicted upon them the invidious duty of telling these old people that there are going to be changes in their rent. It will not be the slightest use telling them that they can get a rent subsidy. They will not know where to get it and they will not be reassured.
Nearly 50 years ago I used to sit with two other close friends of mine, one of them the noble Lord, Lord Lloyd of Hampstead, as a poor man's lawyer in the East End of London. About half 525 of the cases which came to us on Tuesday evenings—we sat from six until nearly midnight—were landlord and tenant cases. About half of those cases were elderly people, mostly old ladies, wanting to be reassured that they could stay in the slum quarters that they occupied and that they would not be institutionalised. They wanted to feel that they had a home, whatever it was, and however inadequate.
It is for that reason that I feel so strongly about the matter this afternoon, and I invite the Committee, regardless of political affiliations, if necessary to go with me into the Division Lobby to ensure that this clause is removed. It will show great grace, wisdom, generosity and kindness on the part of the Government and earn them much esteem if they respond to this appeal.
May I say one word about the rent officer. Yesterday, the noble Lord, Lord Shinwell, raised a question about how the rent officer operated and about whether people were concerned about the way in which he operated. I think that one of the innovations in relation to landlord and tenant—my small part in it is unimportant—has been the enormous success of the institution of the rent officer. I was told by a senior rent officer when I addressed 600 of them—it is a matter of great pride to a bachelor like myself to find that he has fathered a family of that size—that since his appointment he had dealt with 10,000 applications, from which there had been 40 appeals. Imagine the amount of public and judicial time and expenditure which has been saved by that institution. It becomes an absolutely legendary sum. It seems to me to be a great folly to endanger his standing and position and to endanger his status by giving the rent officer a job that he must find distasteful.
I have said all I need to say. I invite your Lordships to consider very carefully indeed whether or not this clause should be removed from the Bill—whether or not this particular kind of tenancy should be allowed to remain and to waste away during the short time that is needed for it to waste away. I beg to move.
§ Lord HYLTON
Before my noble friend on the Front Bench replies, may I put a point to him? The noble Lord, Lord Goodman, has made a very moving 526 plea on behalf of controlled tenants and a lesser plea on behalf of rent officers. May I ask whether my noble friend has received any pleas on behalf of landlords, often of only one or two properties, who in some cases find themselves to be poorer and less well off than their tenants? I have received some pleas and I have no doubt that other Members of your Lordships' House have received similar pleas. This is a factor to be weighed in the balance.
§ Lord GOODMAN
With the leave of the Committee, I should like to answer that question. There are situations where the continuation of a controlled tenancy must bring some injustice to a landlord, particularly if he is conscientious. It would be thoroughly bogus and hypocritical to pretend otherwise. If, however, one considers the matter on a question of balance, there is an overwhelming balance in favour of retaining controlled tenancies.
§ 3.44 p.m.
§ Lord BELLWIN
May I begin by saying that Clause 63 removes what is probably one of the biggest iniquities in all the Rent Acts—namely, the continued existence of these controlled tenancies with rents still basically fixed at 1956 levels. They average between £1 and £1.50 per week.
I shall refer briefly to the history of these tenancies; it is right that I should. When rent regulation was introduced by the 1965 Rent Act it was applied only to tenancies of properties above certain rateable value limits. The reason was not that the Labour Government felt that these dwellings were intrinsically not suitable for the fair rent system but simply a question of the workload for rent officers. This was made quite clear by Mr. Crossman during the Second Reading of the Rent Act in April 1965 when he apologised for not providing for the decontrol of all properties at once. I will quote what he said on that occasion:I am aware that this means carrying on for some time with the old rigid control, but that is because the first call on our new machinery of flexible rent regulation must obviously be a review of the exorbitant rents which the most exploited of the decontrolled tenants are now paying".
He went on to say:
When the bulk of this work is out of the way in any particular area, we are going to transfer the old tenancies"—
those are the tenancies about which we are talking—
now under the old rent control into our new system of rent regulation and from that moment tenants and landlords will each have the right to put their case to the rent officers and the rent assessment committees ".—[Official Report, Commons; 5/4/65: col. 36.]
§ That was in 1965.
§ The noble Lord, Lord Goodman, will hardly need reminding of that history. The Crossman Diaries described how he played a major part in developing the fair rent system to which he has just referred. I have no hesitation at all in paying tribute to him and to the consequences which flowed from it. Yet now we have the noble Lord, 15 years later, trying—no, not trying, but very ably suggesting to us that the original 1965 intention of applying fair rents to controlled tenancies should be further delayed.
§ The next part of the saga comes with the introduction of the Conservative Government's 1972 Housing Finance Act, which introduced a phased programme of decontrol whereby controlled tenancies were divided into six rateable value bands, with properties within each band being converted in turn into regulation. Again, the only reason we did not decontrol all bands at once was fear of the workload consequences for rent officers. Sadly, our phased decontrol programme was halted half way through on the change of Government in 1974. That meant that tenancies which have existed since 1957 in properties with a rateable value of less than £35 outside London and less than £70 in London remain caught in the controlled sector. That is the position which we aim to rectify. Our best estimate is that there are some 200,000 such controlled tenancies in existence. I think that the figures which the noble Lord gave were very nearly correct. I would not for one moment suggest otherwise.
§ I said a moment ago, and repeat again, that the average controlled rent is probably between £1 and £1.50 per week and it has remained pegged to the rateable value of the property in 1956. Since 528 then the retail price index has risen by over 375 per cent., council rents by over 650 per cent., and old age pensions by over 1,000 per cent., yet controlled rents remain the same and are now little more than the rental on a telephone and rather less than that on a colour television. These stark figures speak for themselves.
§ When they stopped our decontrol programme in 1974, the policy of the last Labour Government was only to allow conversion from control to regulation after improvement of the dwelling up to a strict qualifying standard. Failure by a controlled landlord to improve up to that standard was to attract the penalty of staying on controlled rents. The figures show what an utter failure that policy has been. In 1975, only about 5,000 controlled tenancies passed into regulation after the issue of a qualification certificate; in 1976, it was 4,000; in 1977, 3,000; in 1978, 2,000; and in 1979, a grand total of 1,260 properties qualified for decontrol out of a total sector of about 200,000 tenancies. At that rate we should have controlled tenancies, still no doubt at 1956 rents, well into the 21st century. I think, if I may say so with respect, that that is the answer I would give to the noble Lord, Lord Goodman, on the point of allowing this to happen by itself.
§ Is it any wonder that controlled landlords cannot afford to improve or sometimes even to maintain their property? The point that my noble friend Lord Hylton made was very relevant; I was going to make it myself in any case. No wonder that we receive despairing letters from controlled landlords who are often worse off than their tenants and who are faced with bills they cannot pay for a property they cannot afford to maintain. It is estimated that about 80 per cent. of controlled landlords are individuals, as opposed to property companies.
§ I think that is a very significant figure. I say it again: some 80 per cent. of controlled landlords are individuals. We have no firm information about their incomes, but in 1976, among all nonresident individual landlords, about half were over 60 and about half had incomes below £60 a week. Controlled landlords are likely to be older and poorer than the rest. We are not talking about the rich or about property companies. Con- 529 trolled landlords are mostly individuals of below average means, who, because of the grossly unfair controlled rent regime—some would say because of the iniquity of it—are suffering real hardship.
§ Controlled tenants, too, are mainly of below average means, as the noble Lord very properly said. We recognise that. About 85 per cent. of controlled tenants are 60 or older. About half the controlled sector are elderly, single person households, and another one-third are small, elderly households. These tenants are old and poor, on average, and we are certainly not forgetting that they are living in low-standard accommodation which either lacks standard amenities or is in poor condition, or both. It would be fair to ask whether we could really expect that the condition of these premises should be other than the state in which they now are if, since 1956, the landlords have not been allowed to charge more than £1 or £1.50 per week as rent. Where would the money to upgrade them come from if those landlords are people, as I have just illustrated, who do not have means at all? If we are concerned about the lack of amenities and the poor standard of this accommodation we should not be so surprised.
§ On decontrol there will be rent in-creases, but let us put that in perspective. The average fair rent on decontrol in 1979 for dwellings lacking at least one amenity was about £7.20. By definition, those rents were for dwellings with higher rateable values than currently controlled dwellings. These were landlords whose property was decontrolled under the 1972 programme but who have not until 1979 applied for registration. Our best estimate, therefore, of the average fair rent likely to be assessed for the lower rateable value dwellings now in control is between £5 and £6 per week. The increase in the old controlled rent will be phased, so a typical progression following enactment might be an increase from £1 to £3.50 in the first year after registration, rising to £6 in the second year. Obviously each fair rent must reflect the quality and condition of the dwelling, but on average we are talking about an increase in rent of the order of £4 or £5 spread over two years.
§ As with other private tenants who have difficulty in paying their rent, rent allow- 530 ances and supplementary benefit will be available. I take the point the noble Lord, Lord Goodman, made about the fact that this is the very part of the community who have most difficulty in knowing what their rights are. I believe it was the noble Baroness, Lady Birk, who said yesterday that some 55 per cent. of tenants claim allowances to which they are due. I said that this was a matter of grave concern to Government, not just concerning this category of tenant, and that we intend to launch yet another publicity campaign, we hope this time a better one than before.
§ We will do everything in our power to bring to the notice of people exactly what their rights are in this regard. I suggest that with this opportunity of decontrolled rents we have a special chance, because each person concerned will be contacted, will be involved, and it will be discussed with them. I give an assurance that it will be made absolutely clear to every tenant concerned exactly what his or her position will be in relation to the allowances which are available. As with other private tenants who have difficulty, this is the position with which they will be faced.
§ I have already mentioned that 85 per cent. of controlled tenants are over 60 years old. Many of them, therefore, will be on supplementary benefit, which means that their rent increase will usually be met in full. As I have just said, we will give the widest publicity to the availability of rent allowances, and in particular to the tenants affected by decontrol. As a safeguard for tenants we are providing, in Clause 66, that private agreements increasing the rent on decontrol are void. The only means of increasing a controlled rent after the commencement of Clause 63 will be by application to the rent officer for registration of a fair rent. The rent officer will ensure that the tenant is properly informed about the implications of decontrol. That was the point I made a moment ago.
§ In summary, Clause 63 brings controlled tenants at last into the fair rent system. This was what was always intended. The fair rent system itself exists to provide protection for tenants, and that is the protection that controlled tenants will now get. The clause at last allows controlled landlords a fair rent for their 531 property. In my view there is absolutely nothing unfair or unreasonable about that. I reject altogether any accusation that the clause will cause hardship for tenants. It could cause hardship for tenants, but, as I have just mentioned, we will do everything we can—I am sure it will be most effective—to ensure that it does not. On balance, it must be the weight of the argument.
§ I think I should try to refer to one or two of the specific points which the noble Lord, Lord Goodman, made and which perhaps I have not touched upon. In particular, he was concerned about the cost of each rent assessment. With great respect, I suggest that the noble Lord was wrong in saying that it would cost in the region of £20 million. The general total estimate of what it will cost—if the noble Lord would like the basis on which I make the assertion I will endeavour to give it to him in greater detail, perhaps in another form, at another time—is about £1 million. The other point the noble Lord made was that rent officers would find the job distasteful.
§ Lord MISHCON
Before the Minister continues, I wonder whether he would elucidate, for the benefit of us all, how he estimates £5, as I make it, per rent officer charge for 200,000 dwellings? To me this is completely and absolutely absurd, but it may be that I have misunderstood the Minister.
§ Lord BELLWIN
I am advised that paragraph 27 of the financial memorandum to the Bill puts the cost of the extra work to the rent officer service as being £1 million. If the noble Lord, Lord Mishcon, would like me to do so, I will gladly undertake to send him, as I propose to do with the noble Lord, Lord Goodman, information to explain where this figure comes from. I cannot give that as I stand at the Dispatch Box. Clearly it is a figure which is given to me, but I have no reason to think it is extremely out.
§ Lord MISHCON
As always, the noble Lord is most courteous, but the Committee is trying to make up its mind on an argument. The argument on one side is that it would cost £20 million. That may or may not be right. The argument 532 on the other side is £1 million. For the life of me, I cannot understand it. It may be that I am wrong, but I cannot understand how 200,000 tenancies can be dealt with for a cost of £1 million unless it be on the basis of £5 per dwelling.
§ Lord BELLWIN
I think I must say, first of all, that one should not be talking about the difference between £1 million and £20 million. The noble Lord, Lord Goodman, said that maybe it would cost £100. He did not say it would cost £100. I am sure he has not done any calculations to enable him to assume it would be so. I said the extra cost of the measures could be £1 million, and this is still the figure. There will be a very great increase in the procedures. Yesterday, when the noble Lord, Lord Goodman, was talking generally about the rent officer service, I said there had been considerable discussions with the Institute of Rent Officers, as a result of which whole new procedures are about to be introduced. I understand these are entirely with their approbation and, I hope may say, their enthusiasm.
Therefore, the procedures and costs in the past will not pertain, whatever they might have been—and I could not accept, any more than I think the noble Lord, Lord Goodman, would want me to—that £100 was the figure. It may be that I did not make it clear that the £1 million, to which I am referring, is the extra cost of the work that will be involved, but that will not be a cost to the tenants in any way. It is the extra cost. It is not necessarily the basic cost, but it is the extra cost of what will be involved. In any case, even if I were wrong—and I certainly do not accept that I am—in no way, to my mind, does that detract from the basis of the argument.
The basis of the argument is that in 1965, when the fair rents procedure was brought in, it was said—and I have quoted from the Minister at that time and I think the noble Lord, Lord Goodman, himself would confirm it—that the object of the exercise was to take these controlled tenancies, which were then some 4 million or 5 million (I thought it was the latter figure) and to bring them into regulation. All that has caused that to be delayed have been the problems attendant upon 533 the administration, the rent officer, procedure and so on.
I can quote from my own experience by saying that one of the recommendations of the Francis Committee in 1971 was that all those controlled tenancies should at once be brought out of control and into regulation. So I think I should have to base my argument upon the thesis of whether it was right that landlords of the kind that have been described should continue to have to receive their £1 or £1.50 a week, that the tenants should have to go on at the rate of some 1,250 a year becoming decontrolled. There are 200,000 of them. I think the whole case is unanswerable. I respect very deeply the points made by the noble Lord, Lord Goodman, and his motivation in raising them, but I feel that the great strength of the argument lies with us and that is why we resist this amendment.
§ Baroness BIRK
As the noble Lord knows, I had tabled an amendment to this clause in which I was trying to find a way to minimise the effects on the tenant if rents were decontrolled. It was extremely difficult to do this, but I think my amendment went some way towards it. However, I thought on balance that leaving out the clause, as suggested by the noble Lord, Lord Goodman, was a much better way of dealing with this situation, which he rightly said is really such a small part of all the housing problems in this country.
We are dealing here with the most vulnerable people and the Minister quoted Richard Crossman speaking over 15 years ago. But I would remind him that 15 years ago conditions were rather different from what they are today. We were not in a period of high inflation, the cost of living was not as high as it is today and, in spite of the increase (which I acknowledge) in pensions, a great deal of which was done under the last Government, nevertheless we are speaking about some of the most vulnerable people in the community in respect of their poverty, their age and the conditions in which they live. One of the reasons why I prefer the option of leaving out the clause to either the amendment standing in the name of the noble Baroness, Lady Vickers, or my own amendment, is that I can see no way in our amendments by which the tenants would not be subjected to a fairly 534 high increase if they came under the fair rents system. Certainly under the proposals in the Bill there would be no requirement that the property should be in good repair, with the basic amenities, prior to a fair rent being fixed. So there is a very big hole in the Government's proposals, even if one accepts that it is right in principle, which I do not.
If these properties are decontrolled, it means that the rents will be increased, ostensibly if repairs are carried out, but bad landlords, and some of these poorer landlords to whom the Minister has referred, will not carry out repairs for a long time—if ever. In previous clauses in this Bill we have seen that rents are now going to be reviewed every two years rather than every three years, and the phasing is also going to be cut down. This again means an increase in rents, or certainly a high potential, and I should have thought actual, raising of rents.
The noble Lord the Minister referred to the Conservative Housing Finance Act of 1972 and I would remind him that in that Act the wording of the relevant subsection (5), which is in my amendment, is taken straight from that Act; that the Government clearly recognise the need to pay regard to the wishes of frail and elderly tenants. So all we are asking this afternoon is that the Government should pay attention to the needs of frail and elderly tenants. I agree with the noble Lord, Lord Goodman, that in the interests of consistency it seems a pity for the Government to stand out on something like this which is a matter for compassion as well, and there is a business involved in it. I am sure the Minister will have seen the notice of an auction sale of controlled tenancies which in fact is going to be held next Thursday in London, where these controlled tenancies are bought up by speculators as investments and immediately, even with the low rents that are being charged at the moment, they are a very good investment. So there is another unhappy side to it as well, and I hope that the Committee will support the noble Lord, Lord Goodman. Certainly my noble friends and I will be doing so.
§ Lord LEVER of MANCHESTER
I must say that the Minister has made an absolutely unanswerable case for the 535 abolition of rent control. The only difficulty I have is that nobody is urging permanent continuance of rent control, so that most of his speech of compelling logic was very far away from the narrow issue that we are now discussing; not whether rent control should be brought to an end on these houses, but at what pace and in what way.
For many years I have been sceptical, from practical experience, of the effectiveness of those benign intentions which led to the complex of rent control. It was not a view popular on our side of the House; nevertheless that battle has been won. What we have got to is the same system of fair rents which goes absolutely and inevitably with any concept of giving tenants protection from eviction. What we all have to judge is whether the noble Lord, Lord Goodman, is right in thinking that it is for the country to decide—having acquiesed with a considerable degree of illogicality for one reason or another with different Governments of different political complexions—as to whether the right way of ending rent control for these 200,000 houses, mostly in bad condition, mostly occupied by old and poverty-stricken people, is the abrupt, pedantic one which will come into force if the Minister has his way or the rather more benign process of gradualism proposed by the noble Lord, Lord Goodman. I think for a hard-headed Government we ought to have something better in the way of an estimate of the costs. These benefits must be weighed against the social cost. For example, if we heard that it would cost £200 million—and I am not suggesting that figure—the noble Lord could hardly say that the cost is irrelevant.
§ Lord LEVER of MANCHESTER
No, of course it is tv,t £200 million, but equally it is exceedingly unlikely that it is £1 million. It is a figure which on the face of it sounds incredible, and not merely incredible in the sense that it is inadequate but that it is hopelessly wrong. These houses cannot be looked at street by street; they must be looked at individually, their condition assessed and examined and argued about. The notion that that can be undertaken in present-day conditions at £5 a house is so absurd 536 that I share Lord Mishcon's excitement that brought him to his feet on the matter.
I do not think the Minister is entitled to come here and ask for a blank cheque. He has argued the benefit of decontrol. Nobody is challenging that there has to be decontrol; it is going to take place and it is taking place every day. Many of these houses, thanks to the policies of Governments, misguided as he probably thinks and as I think in the past, are now in a condition where they cannot be put into proper order structurally at any kind of reasonable expense.
What he is really doing is applying rigid logicality to a situation in which everybody has acquiesced, in a major degree, to illogicality for a long period of time. So I ask the noble Lord, who has shown great perspicacity in handling this Bill, to have some regard to the arguments of the noble Lord, Lord Goodman, who is not speaking against decontrol of these houses but merely against the helter-skelter of immediate decontrol. It is no good saying people can afford to pay £4 or £5 and they ought to be paying that by now; certainly they ought, but it would have been better for everybody concerned if this had been organised over a long period of time. To inflict these changes abruptly, because of some kind of legalistic pedantry, on the kind of people who occupy these houses and on the kind of houses we are dealing with seems to me far away from the pragmatic reality that we require.
May I add a word about landlords? I feel that landlords are entitled to justice too. The noble Lord who argued that point is absolutely right. But I have to say that here the balance is overwhelmingly for protection of the tenant, to allow these tenancies to flux over a period of time. The landlord has many uncovenanted benefits arising out of inflation. When a house becomes free he realises a price quite out of line with his wildest expectations in the past. I think the Committee could make this concession to these 200,000 old and poor tenants and feel fairly confidently the comforting assurance that their landlords will continue to remain among the less spectacular examples of malnutrition in our land.
§ Lord SANDFORD
The noble Lord, Lord Goodman, is recognised in all 537 circles, inside the House and outside, as being a great authority in the field of housing, and we are all indebted to him for a number of things besides that of fathering the rent officers. Of course, we listen to his arguments in this field with all the more respect because of that, and also because he adds always to the cogency and substance of what he has to say all the skills and arts of advocacy which are such a pleasure and joy to listen to.
But I have to say that in respect of the proposal included in this clause all the housing associations, 300 of them, embraced by the Association of District Councils are now in favour of the change proposed in this clause, the change from controlled to regulated tenancies. And the reason they are all in favour of this is that the situation, which was inequitable from the point of view of the landlord 20 years ago, has become quite intolerable now, now that inflation is added on top of the inequity that already existed before the inflation began.
The noble Lord, Lord Lever, argued strongly that in thinking about the landlord and the tenant it is the tenant who is frail and old and vulnerable and the landlord who can stand on his own feet and look after himself. My noble friend Lord Bellwin has sketched out a profile of the landlords we are talking about in this case, and they are by no means capable of carrying out the duties one would expect of landlords, because they simply have not had the means and they have been deprived of the means for some 20 years.
On the other hand, the tenants, for whom, of course, we must show proper concern and care and compassion, in this respect have all the benefits of being able to apply for rent rebates and rent allowances; this protects them very largely against any of the increases that would arise from making the change from controlled to regulated rents. For this reason I myself, and I think most of my noble friends on this side, feel that the Government are absolutely right to take the occasion of this Bill to bring to an end a situation which has for so long been intolerable and cannot be allowed to drift on for years and years further.
§ Lord EVANS of CLAUGHTON
If I may very briefly speak in warm support of Lord Goodman's proposal, I would say, as other noble Lords have said, that very many of the landlords involved are small landlords owning two or three houses, elderly people themselves with problems of their own. But what we must not forget—and this has not been mentioned yet in the discussion—is that, almost by definition, the houses under this kind of control are houses that were built many years ago; they were houses built at a very low price by today's standards, perhaps an average cost of £200, £300, £400. Even if the landlord today is not getting the kind of return that will enable him to spend his holidays in the South of France, he really has had, either directly or indirectly, his money back on the original investment. It is only latterly that the cost of repair and so on has cost him money, and there are provisions for increases for the cost of repair. So we should not forget that we are dealing with houses that are fairly old, houses that were erected at low cost in most cases, and we are dealing with a position that is not quite as heartrending as the noble Lord, Lord Bellwin, made it out to be from the landlords' point of view.
We must remember, as the noble Baroness, Lady Birk, said, that in spite of the disadvantages to the landlord which Lord Bellwin pointed out, these houses under this kind of control are still saleable as an investment. It is interesting that very often when a sitting tenant wants to buy one of these houses the price the landlord puts on this wasting asset that is of no use to him at all is often a very high price and well beyond the pocket of the tenant who wishes to buy. Very often it is a tenant who wishes to buy who has himself or herself—and I can think of a lot of cases in the area I represent as a councillor—done all the repairs, externally and internally, all the painting, has produced all the amenities, added inside lavatory, inside bathroom and introduced hot water, at no cost to the landlord. For in spite of the fact that, according to the noble Lord, the house is a total dead loss, the landlord still thinks that it is worth £4,000, £5,000, £6,000, £7,000.
So it seems to me that while one has sympathy with the landlord, the balance 539 of sympathy, the balance of concern, must be with the tenant who has, perhaps himself and his family, lived in the house for many years, has paid a rent earlier which was a substantial rent and is now, because of inflation, not so substantial, and has spent a lot of his own money in keeping the repair and condition of the premises up to a reasonable standard. It is on those grounds that from these Benches I hope your Lordships will give support to the proposal by the noble Lord, Lord Goodman, that this clause should be left out.
§ Lord BELLWIN
Perhaps I can briefly comment on one or two of the observations made, because we have spent a long time on this clause and there is so much to do. I will comment briefly before the noble Lord himself winds up. The points made by the noble Lord, Lord Evans, I really cannot possibly accept at all. He talks about the fact that the tenants themselves have done repairs. My hat!, if I were a landlord receiving £1 a week how could I get the money to do the repairs, especially if I were in the category of the people I have described who really do not have resources? With £1 a week coming in and with premises to maintain, how on earth could I afford to do the repairs? The fact is that they cannot afford to do the repairs. This is not something that has just happened in the last few years: it has been going on for a long time now, and I mentioned a committee which nine years ago said that all of these tenancies should come out of this form of control. This is not something that has just taken place.
The noble Lord also said that the landlord has had his money back over the years. Noble Lords can do some calculations, but at £1 or £1.50 a week, less certain repairs which would have to be done—well, I do not know how much money he could have had back. In any case, I am not making the case at all for the landlords; I am making the case on behalf of the tenants. For every one who has had to do something himself or who has had to have the landlord do something, how many more have been unable to do so? Is that a contribution that will add to the quality of the stock of houses in this country?
540 Are we really prepared to say that, because of any of the points that have been made, we shall continue to allow people to live in houses for which they pay £1 or £1.50 a week?—people who are in the category that we have been told about and whom I have mentioned. They are also entitled to something and we are proposing to give them the protection of the Rent Acts—the very Rent Acts (if I may give the noble Lord credit again) which were partly the brainchild of the noble Lord, Lord Goodman, himself.
Do not the regulations give protection? If they do not, what does? Why should there be this difference between those 200,000 people and all the others? Some 800,000 tenants have in recent years come out of that form of control into the existing form of regulation and there has not been the trauma that we have been told will take place. They have fitted into the scene and they have been absorbed. They are paying rent, if they can afford it, and if they cannot they are receiving rent allowances, and I hope that more of them will get them. That is the nub of it. I cannot for the life of me see how we can want to go on condemning these people at the rate of some 1,250 a year—if last year's figures are any guide—to go on living in the conditions that they must be living in with tenancies of this kind. I hope that certainly enough of your Lordships will accept this case in which I believe very, very deeply.
§ 4.24 p.m.
§ Lord GOODMAN
With the leave of your Lordships, I should like to make two very brief points. The first point concerns the question of the period of time over which the wastage will take place. I do not think that it is of great importance if this situation continues for a great many years and if there are a few wretched tenants continuing to survive in these circumstances year after year. I cannot think that that will cause the country to be profoundly disturbed or injure our economy in any way.
Further, there is the point which I made when I spoke originally; namely, that the degree of wastage is now much influenced by the removal of the second transmission and we would have to see what effect that might have over the years. I think that it would greatly increase the 541 rate of wastage, but if it does not, I do not think that it is of great importance.
Another matter is that I should like, with the deepest love and affection, to dissociate myself from the views that have been expressed about the adventitious profits that tenants, proprietors, may make by purchasing these premises. I am not remotely concerned with that aspect. In fact, it is an argument which I wish to use to my own advantage. We live in a society where adventitious advantages are available to a great many people. I should be very sorry indeed if the day comes when, in this country, the chance of making money by a bit of luck disappears altogether. Hence, if a few landlords contrive to make a profit to which they are not entirely justified by the views of the bar of Heaven, that leaves me totally unconcerned. Therefore, if a few tenants are enjoying the side benefit because of a chance that some legislation was not earlier repealed, I think that it is a benefit to which they, too, are entitled. I hope that the Committee will take a wise and benevolent view in that regard and will consider that that sort of chance is the chance that makes a democratic society the sort of world in which we wish to live.
I beg of your Lordships to have a sense of proportion. There were, according to the Minister—who generously conceded this—5 million of these tenancies. There are, if I may say so, 200,000 left and that represents 4 per cent. The remainder, 4,800,000, have vanished; they have disappeared. He said that it was the intention of Richard Crossman and the Government to decontrol them 15 years ago. That may well have been so, but they were not decontrolled 15 years ago, 14 years ago, or even 13 years ago. There was no decontrol—until the attempt which is being made at this moment. I should imagine that some conscientious official in the Department of the Environment suddenly reached into a pigeonhole and said, "My heavens we promised to decontrol these 15 years ago and we have
§ not done so. We had better hurry up or there won't be any left "!
§ In my view it is a total absurdity to make an issue about this, but it is also an act of gratuitous cruelty. The Minister has spoken about the suffering of the landlord and the discomfort of the landlord. I would invite him to attend at a neighbourhood law centre at any time to see the anxiety and concern of these 200,000 people about any attempt to change the conditions of their tenancy, which they will never understand. We shall inflict a totally unnecessary and gratuitous cruelty on people for no benefit whatever.
§ Perhaps I may venture to quote some of the few words of Latin that I know. Cui bono—to whom is there any benefit by this decontrol? The notion that the landlord will benefit, the idea that he will now secure sufficient money in order to convert these hovels into palaces, is Gilbertian; it is farcical in the extreme. These people will continue to live under the same slum conditions and in the same state of disrepair as they have alway lived. The only change will be that 200,000 tenants will have to be visited by the rent officers, which will cause them trouble and anxiety quite unnecessarily.
§ I venture to ask the Committee to display compassion and sympathy in this regard and not to be carried away by a bureaucratic concern for consistency in the belief that 15 years ago somebody said that something would happen that has not happened. It would redound greatly to the credit of the Committee and the Government if they could be persuaded to leave these controlled tenancies until they disappear by the effluxion of time.
§ 4.27 p.m.
§ On Question, Whether Clause 63 shall stand part of the Bill?
§ Their Lordships divided: Contents, 100; Not-Contents, 90.543
|Adcane, L.||Belstead, L.||Braye, L.|
|Airey of Abingdon, B.||Berkeley, B.||Brentford, V.|
|Allerton, L.||Bessborough, E.||Cathcart, E.|
|Alport, L.||Blake, L.||Chelwood, L|
|Amory, V.||Boyd-Carpenter, L.||Clitheroe, L.|
|Bellwin, L.||Bradford, E.||Clwyd, L.|
|Cork and Orrery, E.||Hawke, L.||Nugent of Guildford, L.|
|Craigavon, V.||Henley, L.||Orr-Ewing, L.|
|Cullen of Ashbourne, L.||Hood, V.||Redmayne, L.|
|Davidson, V.||Hornsby-Smith, B.||Reigate, L.|
|de Clifford, L.||Hylton, L.||Renton, L.|
|De Freyne, L.||Killearn, L.||Richardson, L.|
|Denham, L. [Teller.]||Kimberley, E.||Rochdale, V.|
|Digby, L.||Lindsey and Abingdon, E.||Romney, E.|
|Drumalbyn, L.||Long, V.||Saint Oswald, L.|
|Duncan-Sandys, L.||Lucas of Chilworth, L.||Sandford, L.|
|Ebbisham, L.||McFadzean, L.||Sandys, L. [Teller.]|
|Effingham, E.||Macleod of Borve, B.||Selkirk, E.|
|Ellenborough, L.||Macpherson of Drumochter, L.||Sempill, Ly.|
|Elles, B.||Malmesbury, E.||Skelmersdale, L.|
|Elliot of Harwood, B.||Margadale, L.||Soames, L. (L. President.)|
|Elton, L.||Marley, L.||Spens, L.|
|Faithfull, B.||Monckton of Brenchley, V.||Strathcarron, L.|
|Ferrers, E.||Monk Bretton, L.||Strathclyde, L.|
|Ferrier, L.||Morris, L.||Strathspey, L.|
|Fortescue, E.||Mountgarret, V.||Swansea, L.|
|Gainford, L.||Mowbray and Stourton, L.||Swinfen, L.|
|Gisborough, L.||Moyne, L.||Trumpington, B.|
|Glenkinglas, L.||Murton of Lindisfarne, L.||Vaux of Harrowden, L.|
|Godber of Willington, L.||Newall, L.||Vickers, B.|
|Gore-Booth, L.||Norfolk, D.||Vivian, L.|
|Gowrie, E.||Northchurch, B.||Ward of Witley, V.|
|Gridley, L.||Norwich, Bp.||Young, B.|
|Ampthill, L.||Goodman, L. [Teller.]||Mishcon, L.|
|Ardwick, L.||Gordon-Walker, L.||Oram, L.|
|Avebury, L.||Goronwy-Roberts, L.||Pargiter, L.|
|Aylestone, L.||Greenway, L.||Peart, L.|
|Banks, L.||Greenwood of Rossendale, L.||Pitt of Hampstead, L.|
|Barrington, V.||Grey, E.||Ponsonby of Shulbrede, L.|
|Beaumont of Whitley, L.||Hale, L.||Porritt, L.|
|Beswick, L.||Hampton, L.||Ritchie-Calder, L.|
|Birk, B.||Hanworth, V.||Rochester, L.|
|Blease, L.||Hatch of Lusby, L.||Ross of Marnock, L.|
|Blyton, L.||Henderson, L.||Rugby, L.|
|Boston of Faversham, L.||Hooson, L.||Sainsbury, L.|
|Bowden, L.||Houghton of Sowerby, L.||Segal, L.|
|Brockway, L.||Hunt, L.||Somers, L.|
|Bruce of Donington, L.||Hylton-Foster, B.||Southwark, Bp.|
|Bvers L.||Ilchester, E.||Stedman, B.|
|Collison, L.||Irving of Dartford, L.||Stewart of Alvechurch, B.|
|Cudlipp, L.||Jacques, L.||Stewart of Fulham, L.|
|David B.||Janner, L.||Stone, L.|
|Davies of Leek, L.||Jeger, B.||Strabolgi, L.|
|Denington, B. Diamond, L.||Kissin, L. Lee of Newton, L.||Strauss, L. Taylor of Mansfield, L.|
|Donaldson of Kingsbridge, L.||Lever of Manchester, L.||Underhill, L.|
|Elwyn-Jones, L.||Listowel, E.||Wallace of Coslany, L.|
|Evans of Claughton, L.||Llewelyn-Davies of Hastoe, B. [Teller.]||Wells-Pestell, L.|
|Fisher of Rednal, B.||White, B.|
|Fraser of Kilmorack, L.||Lloyd of Hampstead, L.||Willis, L.|
|Gaitskell, B.||Lovell-Davis, L.||Winterbottom, L.|
|Gifford, L.||McGregor of Durris, L.||Wootton of Abinger, B.|
|Gladwyn, L.||McNair, L.||Wynne-Jones, L.|
On Question, amendment agreed to.
§ Resolved in the affirmative, and Clause 63 agreed to accordingly.
§ Clause 64 [Resident landlords]:
§ [Amendments Nos. 140 to 143 not moved.]
§ Clause 64 agreed to.544
§ Clause 65 [Amendment of Cases 11 and 12 of Schedule 15 to Rent Act 1977]:
§ 4.36 p.m.
§ Lord BELLWIN moved Amendment No. 144:
Page 46, line 5, at end insert—
(" (3A) In Case 12 for the words from the
beginning to" employment let "there are substituted the words" Where the landlord (in this Case referred to as "the owner") intends to occupy the dwelling-house as his residence at such time as he might retire from regular employment and has let"").
§ The noble Lord said: This is a minor amendment to Case 12 of Schedule 15 to the Rent Act 1977, which deals with retirement homes. Case 12 provides that a landlord who acquires a house with a view to retiring there may let it with a clear right to repossession when he retires. As Case 12 is drafted, it could not be used to let a house that the landlord inherited. This is because "acquiring with a view to occupying" is an active concept whereas "inheriting" is a passive one.
§ This seems to us to be wrong. It seems to us quite possible that someone who, for example, inherits his parents' house, may wish to let it until he retires there. Indeed we have had representations to this effect. There seems no reason why he should not be able to use Case 12 in those circumstances.
§ That is what this amendment will allow for. It will remove the requirement for the use of Case 12 that the landlord acquired the house with a view to retiring there. The criterion will be that the landlord intended to retire to the house at the time the letting was made. I beg to move.
Baroness BIRK moved Amendment No. 145:
After Clause 65, insert the following new clause:
§ " Amendment of 1977 Act
§ (" . For section 9 of the 1977 Act (holiday lettings) there is substituted the following section—
§ 9.—(1) A tenancy is not a protected tenancy if the purpose of the tenancy is to confer on the tenant the right to occupy the dwelling-house for a bona fide holiday.
§ (2) For the purposes of this section, a letting shall not be taken to be for the purpose of a bona fide holiday unless the landlord had reason to believe that the tenant proposed to use the dwelling-house for a holiday.
§ (4) For the purpose of this section, "holiday" means a period of cessation of work, or recreation, and does not include a working holiday.")
§ The noble Baroness said: In moving Amendment No. 145 I should, with the leave of the Committee, like to speak to Amendments Nos. 146 and 147. These three amendments are designed to close three of the most notorious loopholes in the 1977 Rent Act under which some unscrupulous landlords have been able to charge extortionate rents and evict the tenants at will.
§ In the absence of any security of tenure, tenants who take such lettings, usually because they are desperate for accommodation and have nowhere else to go, are in these instances at the mercy of the landlord whenever he wishes to charge a higher rent. They do not have their rents registered by the rent officer as normal secure tenants do, and if they challenge their landlord's rent charges as excessive they are, not unnaturally, likely to find themselves evicted and homeless.
§ The tenants who are the victims of these devices are living under legal conditions which no Member of your Lordships' House would accept for one moment for himself, or even for other people, as equitable or reasonable. By passing these amendments we can make a significant contribution to easing some of the anxieties and distress caused by these abuses.
§ I know that the noble Lord the Minister will point out that the rent review started under the last Government and went on for a long time. He would be quite right. Nevertheless, we were aware of these problems and were hopefully seeking to do something about them. It is not a point that I am just raising with this Government but something which had been going on before.
§ The first amendment deals with holiday lettings. These are increasingly being used in the most improbable places for holidays. There are advertisements in London's evening papers every day offering a series of supposed holiday lettings in areas as unlikely as Kilburn, Hackney, and Brixton. This is not to cast any aspersion on these places, but I am not 547 sure that people will go to them for a holiday.
§ By calling a tenancy a holiday letting, the landlord is able to evade the current framework of the Rent Acts, which were really designed to exclude accommodation genuinely used for authentic holiday lettings. Unfortunately, the wording of the current legislation is open to abuse and has been exploited for purposes far removed from the original intentions of Parliament. It is only fair to say that if an Act of Parliament permits abuses, people will take advantage of that because they are acting within the framework, if not within the spirit, of the law.
§ Amendment No. 145 is designed to clarify the issue by making it clear that the letting must be used for bona fide holiday purposes that fall outside the normal provisions applying to the security of tenants. This would enable landlords who are genuinely letting accommodation for holiday purposes to continue to do so, but would stop those who are abusing the framework of the law and using it for continuous unregistered lettings at any price they wish to charge.
§ Amendment No. 146 deals with the bogus bed and breakfast arrangement, what was referred to in another place by Mr. Geoffrey Finsberg as "the cornflakes syndrome." Under this, landlords can again deny the security of the Rent Acts to tenants by claiming they are providing bed and breakfast, even if the breakfast consists of no more than a weekly supply of packets of cornflakes. The amendment is designed to close this loophole by deleting the word "board" from the relevant section of the Rent Act 1977. It will still leave the landlord who is providing genuine attendance, as occurs in bona fide bed and breakfast hotels and lodgings, free to let without the tenant enjoying security.
§ Amendment No. 147 deals with licences, the third of the commonly exploited loopholes in the 1977 Act, which enables landlords to deny security to tenants by requiring them to sign an agreement under which they do not enjoy the right to exclusive occupation of their room or rooms and gives the landlord the right to share the accommodation. By this shared accommodation, the occupant 548 becomes a licensee rather than a tenant, even if, as is often the practice, the landlord has no intention of sharing the accommodation, but simply uses this legal device to deny security to the tenant. This amendment covers that loophole by providing that in such circumstances the occupants shall be deemed to be joint tenants.
§ These three amendments will together have the effect of closing the door on some of the most flagrant abuses, which have increased—this applies particularly to holiday lets—in the last two years. However, they will not restrict the reputable landlord who genuinely offers holiday lettings or bed and breakfast. Given the acute shortage of accommodation in many housing stress areas, people who are desperate for accommodation do not really have a choice to refuse lettings, even when they are made on such clearly inequitable terms as those I have outlined.
§ I should have thought the Government would welcome this series of amendments, for there is no doubt that if these loopholes are allowed to continue they will be used in preference to the shorthold tenancy if the option still remains open. I therefore hope the Minister will see the amendments as a way of strengthening the shorthold plans of the Government. As the Government have reiterated their concern for the interests of tenants, they must accept the logic of this series of amendments and I therefore hope we shall receive a favourable reply from the Minister.
§ The Earl of KINNOULL
Before my noble friend replies, may I ask the noble Baroness, Lady Birk, to explain precisely how the loophole she dealt with will in practice be stopped by the amendment? She said that the onus as to whether or not it is a holiday letting will lie on the landlord, and I presume the landlord will have to produce a form and invite the tenant or occupant of the holiday letting to sign that form. Surely it is a little tough on any landlord, however proper he is or however genuine the cause, other than for him to accept some undertaking from the tenant that it is actually a holiday letting. I therefore wonder whether what the noble Baroness is proposing would ever work in practice; in other words, whether the amendment would hold tight in a practical market.
§ Baroness BIRK
At present the whole thing is completely wide open, and by restricting it to a bona fide holiday letting, the landlord would have to show that it was his practice to let for holidays. It would not be a holiday letting in some of the cases with which I had not intended to weary the Committee. For example, consider the case of a woman who took a furnished bedsitter for £18 a week and signed a four-month agreement which had a clause stating that the accommodation was a holiday letting. She then signed at least one more four-month agreement, and then continued to pay the rent weekly, getting ordinary receipts. She had been in this holiday let for about 20 months, in the meantime having married. She then became pregnant and was seeking other accommodation, but could not find alternative housing. The landlord agreed to extend their stay if they paid a higher rent. I do not think that by any stretch of the imagination one could call that a holiday letting. I am not saying that anything one does by way of legislation will necessarily be entirely foolproof, but surely we can tighten the law to the extent that I have explained. The case I have described could not, I think, happen if the amendment were accepted.
§ Lord DIGBY
Surely one of the results of this measure will be that landlords will no longer have to look for such loopholes because there will be shorthold tenancies. I believe that putting the onus on the landlord to ensure that what the tenant says is correct is adding to the complications. We know how difficult holiday lettings are anyway, and I should have thought that what the noble Baroness proposes is unnecessary at this stage so far as holiday lettings are concerned.
§ Baroness BIRK
Holiday lettings are not registered. As we have discussed during the passage of the Bill, the rent of shorthold lettings are registered, so there is that difference and there would still be a big advantage in having a holiday letting licence.
I support the amendment. Those of us who have been connected with the question of lettings and protection are, first, appalled by the actions which the Government are taking, and I do not entirely agree with my noble 550 friend Lady Birk when she talks about helping shortholds. Personally, I believe that shortholds will prove a damned nuisance and will be an awful business. Many landlords have twisted and twirled the law in such a way that houses have become decontrolled and consequently put on the market, and I shall have more to say about that at a later stage, particularly when we come to the question of flats and so on.
We must have human hearts about this whole issue. If you decontrol a place, you are really taking out of the hands of the public as a whole opportunities of letting. It is all very well talking about what has prevented lettings, but there are methods by which the existing provisions can be avoided. Indeed, they have been avoided by very many unscrupulous landlords, and I am not talking about the whole lot of them. There are some with human hearts, just as there are on this side of the Committee and a few on the Benches opposite. Problems arise because of the twisting of possibilities in such a way as to produce decontrol and thereby to produce fewer opportunities for people, simply because some can and do exercise—to put it in plain language—the sort of gimmicks that have been described in order to avoid the Act as it stands. I hope that the noble Lord, even if he is not prepared to consider these amendments, will at least consider meeting the situation to which my noble friend and I have referred.
§ 4.50 p.m.
§ Lord BELLWIN
I should like to deal with Amendment No. 145 first. It relates to the first of three proposed new clauses designed to close Rent Act loopholes. This one is concerned with the problem of so-called bogus holiday lets. Of course I do not condone attempts to evade the provisions of the Rent Acts by pretending that a letting is for a holiday, when it clearly is not; nor as I understand it do the courts. But I think that the main reason that some landlords have resorted to devices of this kind is that the terms of the existing legislation have discouraged them from letting on fully protected tenancies. Heaven knows!, one does not condone attempts to evade the provisions, but it does no harm to look at some of the causes behind these matters.
551 The way that this amendment seeks to deal with the problem of bogus holiday lets is to replace the present Section 9 of the Rent Act 1977, which states that a letting is not a protected tenancy if the purpose of the tenancy is to confer on the tenant the right to occupy the dwelling-house for a holiday, with a more complicated provision, so that a tenancy is excluded from Rent Act protection only if the tenant is on a bona fide holiday. It would he for the landlord to prove that a letting was for the purpose of a holiday, and a holiday would have to be a period of recreation. A working holiday would he excluded.
I am afraid that I am not convinced that this would he satisfactory. First, is there really a difference between a holiday and a "bona fide" holiday? Secondly, how can a landlord prove that someone who claimed to be taking a holiday really was? Flow is the landlord to tell whether the tenant means what he says? Is it fair that someone who took a holiday cottage for a fortnight, pretending that it was for a holiday, should become a fully protected tenant, with life-long security and the right to apply for a fair rent, because he never in fact intended to have a holiday at all? Then there is the fact that a working holiday is not to count as a holiday at all. I am sure that many noble Lords are all too familiar with the idea of a working holiday. I think that they would find it difficult to rent a holiday cottage if this amendment were accepted. If I were a landlord I should not be prepared to let my holiday cottage—if I had one—to someone who could claim lifelong security and the right to a fair rent by writing an article or doing some academic research quite unbeknown to me.
I hope that I have said enough to convince the Committee that this clause would not be workable, or fair. It is not practicable, although of course I sympathise with the sentiments behind it. There is no reason why a tenant who considers that he has a bogus holiday letting should not go to the rent officer to apply for a fair rent to be registered. As I have said, it is the Government's view that the solution to the problem of attempts to evade the Rent Acts by devices such as bogus holiday lets is to encourage landlords to let within the 552 Rent Acts. That is why we are introducing shorthold.
I turn now to Amendment No. 146. This new clause seeks to close the so-called "bed and breakfast" loophole in the Rent Acts. It seeks to do so by the means that the noble Baroness, Lady Birk, mentioned, and which in the interests of saving time I shall not repeat. What the amendment proposes does not seem to me to be right. If a landlord comes to a genuine agreement with a tenant that he will supply him with accommodation including board, it does not seem to me to be fair that the landlord could thereby find himself obliged to supply not only the tenant with board for the rest of the tenant's life, but also the statutory successors of the tenant as allowed by the Rent Act. I think that noble Lords will agree that arrangements where board is provided are different from the kind of lettings where Rent Act protection is appropriate. It is important to maintain this distinction, even if there have been attempts to circumvent the Rent Acts by claiming that hoard was provided as the result of a minimal provision of food requiring no preparation.
As I said in discussing the last amendment, it does not follow that a letting is not a protected tenancy because the landlord says that it is not. It is always open to the tenant to challenge this by going to the rent officer or rent tribunal for a rent to be fixed; and in the last analysis only the court can determine if a letting is a protected tenancy. Basically the whole problem arises because in some places there is a shortage of accommodation to let. However, we are trying to reverse that trend and, if we succeed, there will be little scope for loophole lettings. I do not think that it would be right to bring within the Rent Acts a whole host of letting arrangements, where the Rent Acts may be totally inappropriate, in order to close this loophole. That would be rather like throwing out the baby with the bathwater.
Finally, I come to Amendment No. 147, which seeks to close another so-called Rent Act loophole: the non-exclusive sharing agreement. This loophole depends on the fact that one of the conditions for full Rent Act protection is that there must be a tenancy. The distinction between a licence and a tenancy derives 553 from common law, and is a fundamental feature of the law of landlord and tenant. I do not think it is necessary to go into this complex area in detail. The important point is that, for there to be a tenancy, the tenant must have what is called "exclusive possession"; that means the right to occupy on his own, and to exclude anyone he does not want. If the agreement allows the landlord himself to share with the tenant, or to nominate that someone else can share with the tenant, that is prima facie evidence that the agreement is a licence rather than a tenancy, because there is no exclusive possession.
However, I must stress that it does not follow that someone does not have Rent Act protection because the landlord makes him sign a purported licence agreement. This is something that can be settled definitively only in the courts, and the courts will consider the intention of the parties at the time that the agreement was made. There have been four cases in the Court of Appeal on the question of whether a licence agreement was genuine or sham. Two were decided in favour of the landlord, and two in favour of the tenants. It is therefore always open to someone to go to court if he does not accept his landlord's claim that he is a licensee rather than a tenant.
I do not intend to go into the details of those cases, although I have the details of them before me. For the reasons given I am not convinced that this clause would in fact work in practice. In my view there are two ways of tackling the use of licences to evade the Rent Acts. First, it is important to remember that because an agreement says that it is a licence, and so is outside the Rent Acts, it does not follow that the courts will accept this. Secondly, it seems to me that the initiatives that we are taking in this Bill to encourage landlords to go on letting and to make more accommodation available should mean that landlords will be encouraged to let within the Rent Acts, rather than try to resort to uncertain devices of this kind. I ask the noble Baroness whether in the light of what I have said, she feels able to withdraw the amendment.
§ 4.58 p.m.
§ Lord GIFFORD
The noble Lord began his reply by saying that he did not 554 condone Rent Act evasions or attempts to get round the Rent Acts, and that he sympathised with the intention behind the amendments. I am grateful for that, and I shall come back to it. However, in view of the rest of his remarks on the amendments, and his lack of any kind of constructive comment, I began to feel that he really has not understood what is happening both in the big cities when these agreements are negotiated, and indeed in the courts when these agreements are challenged.
The person who answers an advertisement for what appears to be a letting may be confronted with having to sign a document which appears to be all very official and proper, and has fine Gothic printing at the top, stating "This licenceߪ" such a person has no idea whatsoever of what is some archaic difference in the law between a licence and a tenancy. Why should he? If two or more people take a letting, and they sign one agreement jointly to pay one rent, they will be joint tenants and will be protected, but if they sign two agreements agreeing to share with each other, with each paying half the rent, they are licensed and are not protected. There is no sense at all in that kind of distinction.
The same goes for holiday letting. People who are in no way on holiday go along to what appears to be a normal bona fide letting. They are presented with an agreement—I have a stack of these agreements with me—which appears to be a perfectly normal bona fide agreement, headed "Tenancy agreement". It has at the side, tucked away, the words, "This is a holiday letting only", which either they may not see or, if they see it, they may be in no position to question.
Your Lordships may say that there is no justice in people who sign agreements in those circumstances not having the normal protection of the Rent Acts, and the noble Lord said that they can always challenge it in court. The trouble when they challenge it in court is that common law has an age-old principle that you are bound by what you agree to; that if you put your name to a contract with all sorts of clauses in it, whether you have read them or not, you are hound by each and every one of those clauses.
Because that is what the common law says, we have in some fields of the law 555 introduced legislation—the Hire-Purchase Act, the Unfair Contract Terms Act and matters of that kind—to get round the rigidity of that kind of legal interpretation. In the case of both holiday lets and licences, what the courts have said is, "If they have signed their name to this and if they have not been deceived or 'conned' by any words which deny what is in the document, if it is a perfectly open agreement and the landlord has not actually used any deceit but has just extended it for signature, then such an agreement prevails"; and that is the real problem which these amendments are designed to meet.
May I answer some of the points which have been made—and I take the liberty of answering because I take some responsibility for the drafting of the amendments. The noble Earl, Lord Kinnoull, and I think the noble Lord, Lord Bellwin, as well, asked the question: How does a landlord prove that someone is on holiday? It is not very difficult to ask that person what is his normal address, for instance; and if he has not got a normal address, as a lot of the people who sign these holiday lets have not, then it is obvious that this person is not on a holiday at all. So far as board is concerned—I deal with it very shortly—the normal bed and breakfast, which provides board, is not a tenancy arrangement at all; it is a true licence arrangement which the courts would never call a tenancy and with which they would never interfere.
I come back to the noble Lord's statement that he does not condone evasions of the Rent Act and would seek to close loopholes if he reasonably could. Let me assure him, first of all, that they are going to continue, because at the moment there are two incentives, security and rent control. The shortholds deal with security, but they also impose rent control. Therefore, those who wish to get more money from property than the fair rents will allow—and there are many—can go to solicitors and will be quite legally and properly advised that they can use this form of agreement and, bingo!, you can get double or whatever the market, with all its scarcity elements, will bear.
Since the noble Lord said that that was not something of which he would approve, not something he would wish to see proliferate, will he sit down, between 556 now and Report, with those of us who have had experience of these problems, and try to work out a way to combat these abuses? I do not hold to any particular wording, but I do think that this is something which needs to be seriously discussed in a spirit of good will.
§ Lord BELLWIN
I think that what the noble Lord suggests has merit. Whether that is the best way to go about it, I do not know. I still feel that what I said about the holiday let is absolutely right by itself. As to whether there is more which goes beyond that, which I think is what the noble Lord, Lord Gifford, is saying, I think he is entitled to argue in the light of his considerable experience in this field. I would say to him just what I said yesterday—and it seems so long ago—that I think we should study very carefully what the noble Lord has said. I will speak to those who should be expert in these matters, and if it is felt that it would be helpful to act as the noble Lord suggests, then of course we will do so, because I say again, and will go on saying until the end of this thing, that we want the best Bill we can get.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 146 and 147 not moved.]
§ 5.5 p.m.
The Earl of SELKIRK moved Amendment No. 148:
After Clause 65, insert the following new clause:
Amendment to Schedule 15 to Rent Act 1977
( . The following Case shall be added to the Cases in Part 11 of Schedule 15 to the 1977 Act (mandatory orders for possession)—
§ "Case 20
§ Where a person acquired the dwelling-house or any interest therein (he then being a member of the regular armed forces of the Crown) and without occupying it let it on a regulated tenancy and—
- (a) not later than the relevant date the landlord gave notice in writing (he still being such a member at the date of the notice) to the tenant that possession might be recovered under this Case, and
- (b) the dwelling-house has not, since the commencement date for this provision
557 appointed under the Housing Act 1980, been let by the landlord on a protected tenancy with respect to which the condition mentioned in paragraph (a) was not satisfied, and
- (c) the court is of the opinion that one of the following conditions is satisfied—
- (i) the dwelling-house is required as a residence for the owner or the spouse of the owner;
- (ii) one of those in sub-paragraphs (b) to (f) in paragraph 2 of Part V to this Schedule, paragraph 1 where relevant having effect for interpreting those sub-paragraphs.
§ The noble Earl said: The purpose of this amendment is to enable members of the armed forces to acquire their own houses. This is not a privilege; this is doing no more than putting them on an even keel with other young people. It is, I think, broadly known that at least 80 per cent. of the young people in this country want to own their own houses, and intend to do so. A recent phone-in television programme, conducted from Cologne to the British Army of the Rhine, showed that this was the incessant demand: that they were virtually excluded from the possibility of buying their own houses, except by some outside chance, and that this is what they wanted. This amendment has to do with mortgage, and I am president of the Building Societies' Association, which I must formally declare. I do not speak for them, but I know that they are in favour of the general lines on which this amendment is couched.
Why cannot servicemen buy their own houses? What are the proposals which we make to enable them to do so? And why is this, as I believe, important? The problem arises from the famous section, Section 98 of the 1977 Act, in which it is said, quite simply,
a court shall not make an order for possession of a dwelling-house which is … let on a protected tenancy… unless…".
§ Unless what? This is the point. What must you achieve in order to get round this point? In the 1977 Act there are 558 18 cases in which the "unless" (if I may put it in that way) applies. They cover a number of different subjects, and they, so to speak, make a circle round service personnel. They refer to people who occupy houses. Service personnel, by definition, do not occupy houses, because they are provided by the Ministry of Defence. It refers to people who are retired. Service people do not retire. When they have finished their work in the armed forces they go on to do other work, for many years, I hope, very usefully. It refers to ministers of religion. That does not apply, either. None of them fits. But the broad purposes, I must say, are the same in these 18 cases.
§ The distinctive feature of service personnel is that they live in property provided by the Government, at least practically the whole time, either in barracks or in married quarters, or whatever it may be. Secondly, they are subject to discipline, which means they may have to move anywhere at any time for an indefinite length of time. In this sphere, they are unique members of the body politic of this country. If they want to buy a house, they must first get vacant possession. They must then get a mortgage, and inevitably they must let the house in order to pay the mortgage. In the ordinary way, if they let a house now they would never get it back under section 98, which I have quoted. Not only that, but as a matter of stern and honest fact, with a regulated rent without a break they would never get a mortgage. That is the position they are in. They cannot get vacant possession and hold it unless they give it; and they do not fall under any of the existing cases in Schedule 17 of the 1977 Act.
§ What we suggest is that there should be broadly the same principle as exists in the other cases, and that when a man serving in the armed forces buys a house with vacant possession he should give notice under what I call Case 20 (as we have here) that he will want it back after he has left the armed forces. This is very similar to the rules in Cases 11, 12 and 15 which we see here. I think it really a ridiculous suggestion that service personnel would turn into haunting ghosts of Mr. Rachman. This is very improbable and is something that we can discard at an early stage.559
§ The reason why the new clause is important is this: the noble Lord, Lord Bellwin, has spoken of the unique service of the armed forces—people who are committed to this vital task and who do so under certain restricted conditions. I believe that this would be of value in recruiting but, what is more important, that it would be valuable in stimulating re-engagement. It is a long time since I had anything to do with the armed forces; but married life is a bane in some ways to many in the armed forces. It presents problems and social difficulties of one sort or another, but the assurance that you have a house to go back to is of enormous importance. Perhaps I may give an example. When a young man talks to a young girl and says those things that a young man says to a young girl, he may then add, "Moreover, I have a house in which we can live together" That is an argument which cannot be used at the present time by the young men in the armed forces. Anyone else can say that, but service people cannot. That is why I say that this new clause is fair, right and, I believe, in the national interest. I beg to move.
§ Lord GREENWOOD of ROSSENDALE
Having joined with the noble Earl in tabling this amendment, I should like to support it very warmly indeed. The noble Earl declared his interest as President of the Building Societies' Association. I think it will be convenient if I complete my own declaration of interests at this time. I have been declaring them ad hoc as various organisations have come into the discussion but, with a long list of discussions on housing and local government to come over the few months ahead, it will save me a lot of tedium and the Committee a certain amount of time if I complete my declarations today. I am President of the United Kingdom Housing Association, of which I was a co-founder. I am chairman of Greenwood Homes Limited and its associated companies, deputy-chairman of Municipal Mutual Insurance and its subsidiaries, and chairman of a recently-formed company which is engaged in local government research and information. I do a certain amount of consultancy in the planning and housing field; I am a director of the Britannia Building Society and also vice-president of the Building Societies' Association.
560 I believe that the logic behind this amendment is absolutely irrefutable. I shall emphasise a little of what the noble Earl, Lord Selkirk, has said. This new clause does not apply solely to servicemen but to servicewomen also. If, for example, a serviceman buys a house during his period of service it is an extremely sensible thing to do. It is sensible provision for the future, it is the sort of duty that he owes his spouse and also a very prudent hedge against inflation. But, supposing that he does so, then, until he returns home or leaves the forces, he has to let it. This is not always an easy thing to do and it is often very inconvenient. for the serviceman or servicewoman Not to put too line a point on it, they do not always know their precise movements in the immediate future; and the difficulty is that if they return to the United Kingdom before the time that they would normally expect to do so then the tenant has the protection of the Rent Acts and the serviceman cannot get possession of the house.
We are proposing that the serviceman should get that possession but at the same time we are providing protection for the tenant because the new clause provides that, before the tenancy is granted, the serviceman should serve notice on the prospective tenant that possession may be recovered under this new clause. That helps the serviceman. I think it helps the tenant for it gives him some protection and it further helps the serviceman by making the proposition more attractive to building societies. They know that if the borrower defaults they can sell with vacant possession at the end of the contractual term of the tenancy. That seems to me to be good justice, I think it makes good sense and I hope that the Minister will feel able to accept the new clause. I have some slight reservations over the drafting. It may not be absolutely perfect, but if the noble Lord could accept the principle I think that the whole Committee would be delighted.
The Earl of BESSBOROUGH
May I, as President of the South-Eastern Association of Building Societies—and I cannot declare quite so many interests as the noble Lord, Lord Greenwood—briefly support my noble friend Lord Selkirk and the noble Lord, Lord Greenwood, 561 in what they have said. I feel that there is sympathy for this amendment in all parts of the Committee; even, I guess, on the Front Benches and, I hope, on the Liberal Benches, too. It seems to me that the clause meets the needs of the serviceman and indeed those members of the regular women's services abroad (including, I think, in Northern Ireland) and even in Britain itself. I am glad that the clause is not exclusive and does not only apply to those serving overseas.
The law as it now stands makes it impossible for the serviceman to get possession of the property when he returns home. Under the new clause, he would be able to get vacant possession at the end of the contractual term of the tenancy so that he, his wife and family could then have a permanent home at their disposal. I cannot help thinking that my noble friend Lord Bellwin, who is a very sympathetic man, cannot fail to be sympathetic to this amendment in view of the fact that it appears to have support in so many parts of the Committee. Even if the new clause may need some redrafting, I hope that he will be able to accept the principle and perhaps produce a new draft at Report.
§ Baroness BIRK
Speaking as a spokesman for Her Majesty's Opposition in your Lordships' House, I certainly would not oppose the new clause which has been moved by the noble Earl. I was touched by his romantic story of love and property which added to his persuasive powers in support of this clause.
§ Lord HILL-NORTON
May I add a few words in support of the noble Earl, Lord Selkirk. I have no interest in building societies. If it is necessary to declare any interest, I may say that I am still on the active list of the Royal Navy. I should like to say to the Committee, from my own long and indeed current experience, that there is no question that anything which helps service people, male or female, to own houses is good news. It is good news for them; good news for the people running the services, and, therefore, good news for the country. It has been said, although not said in this Committee today, that other people may have to move about—young executives, members of the foreign service and so on. But I maintain that service people deserve 562 special protection because of their unique conditions of service, which often compel them to move without the chance, which is usually available to civilians, of refusing to move or changing their job so that they do not have to move.
There is no question about it. As the noble Earl, Lord Selkirk, said, the knowledge that one has a secure base to return to in the end enhances the stability and happiness of service families. That above all greatly increases the retention factor which is so important. The cadre and corps of the services are the trained men, the married men, and they are the people whom we want to keep. They are the people to whom this amendment will be particularly attractive.
§ 5.21 p.m.
§ Lord BELLWIN
I need hardly say that noble Lords on all sides of the Committee are very much pushing at an open door with this amendment. I have great sympathy with it and what noble Lords have said about it. Service in the armed forces of the Crown imposes very special obligations on people. The Government accept that there may be a case for singling out servicemen serving overseas who may have particular difficulties in obtaining a house of their own in the way that this new clause proposes.
I gladly undertake, first of all, to give this matter careful consideration and I shall draw the attention of my right honourable and honourable friends to what noble Lords have said. As the noble Lord, Lord Greenwood, intimated, I am afraid that I could not accept the clause as it stands because of technical drafting reasons. It is only right that my right honourable and honourable friends and I should consider carefully the exact scope of such a provision. That there is sympathy, that there is a wish to have something along these lines, is unquestioned. It is with considerable pleasure that I confirm that we will take this away for consideration. In those circumstances, perhaps the noble Earl may feel able to withdraw the amendment.
The Earl of SELKIRK
I should like to thank the noble Lord very much for what he has said. He had certain restrictions but I hope that he will not restrict this only to persons serving overseas. 563 This is necessary just as much for people in this country. They are provided with Government accommodation and they are working under discipline. They may go overseas at any time. So I hope that this will not be a restriction. I should like to thank those who have supported this amendment. I am glad to have drawn the noble and gallant Lord, Lord Hill-Norton, into the Committee stage. I think it is the first time he has taken part in it. I am glad to know that the noble Baroness, Lady Birk, is sensitive to romantic arguments. I will always bear that in mind in future, if I may do so. I beg leave to withdraw this amendment.
§ Amendment, by leave, withdrawn.
§ Schedule 7 [Amendment of Schedule 15 to 1977 Act]:
§ 5.23 p.m.
Lord EVANS of CLAUGHTON moved Amendment No. 149:
Page 109, leave out lines 32 to 49 and insert—
(" In any case where the owner, or his successors in title, wish to rely on (a), (b) or (c) above they shall give notice to the tenant and to the local authority in whose area the dwelling house lies, not less than 12 months before the date at which they wish to assume or resume occupancy.").
§ The noble Lord said: It seems to me that while I do not have the distinction of other noble Lords who have spoken about their presidencies and vice-presidencies, I have had a very rude letter from the noble Earl's Building Societies Association telling me how wrong I am about this one. I had better declare that kind of interest. They are writing to me about paragraph (e) which I seek to exclude from the Schedule.
§ I welcome the general exceptions (a),(b) and (c). As I have said in my amendment, I should like the tenant who confronts the problem of being required to leave the house to have some warning and protection. That is why I seek to add the words in my amendment so that he will have at least 12 months' notice of the intention of the owner to reoccupy the property. It is clear to all of us that if one is a tenant of a house it is not very easy at short notice to make other arrangements. That is why I have added the words to my amendment. The reason I 564 seek to delete lines 32 to 49 is that, while I welcome the general changes in the conditions, the Government, for once, have been too liberal in their attitude to an owner.
§ It is perfectly proper that if the owner wants to return, if the owner has retired or his family want to come back to the property, that is fair enough. They should be allowed to reclaim possession. It is stretching it a little far if the successor in title, who by the definition of this schedule is not the family of the owner, but possibly some other relative, should be allowed to take advantage of this amendment.
§ Leaping rapidly over paragraph (e) to paragraph (f), it seems to me too generous if the landlord could make the reason for requiring the dwelling-house that it is not reasonably suitable to the needs of the owner, having regard to his place of work, and he requires it for the purpose of disposing of it with vacant possession and of using the proceeds of that disposal to buy another house. That seems an enormously elastic exception which almost creates the right of an owner to return to the property almost at will.
§ I should like to mention briefly paragraph (e) which has put me in trouble with the noble Earl's association. I take the point which they make in their letter to me. The new paragraph (e) will assist building societies in making mortgages available to absent owners. The point I originally would have made was that if you give me a choice between causing discomfort or difficulty to a mortgagee as against difficulty to a tenant, I would rather that the mortgagee suffered the difficulties. I take very much to heart the remarks made by the Building Societies Association that inclusion of paragraph (e) facilitates the granting of mortgages to absent owners.
§ Therefore, I should like to try and persuade the Government to consider whether they have not gone too far in their wishes to accommodate absent owners or the successors of absent owners, or absent owners who find it inconvenient to live in the house to which they return, to carry out that function. My concern is that it is driving a carriage and pair through the regulations. It is for that reason that I have sought to move the 565 amendment and try and persuade the Government to limit the liberality of their extension to the rights of returning owners. I beg to move.
§ Lord BELLWIN
Unless the noble Lord, Lord Evans, presses me to do so, I will not go into the arguments on the detailed individual conditions in the order that he enumerated them. None of the changes we are proposing represent a fundamental change of principle. They are all designed to prevent a landlord or his successors from being penalised by a change or circumstances that could not have been foreseen at the time the letting was made. None of them will remove from the tenant any security he would have expected at the start of the letting, because in none of these cases would the changes we are proposing enable the landlord or his successors to regain possession from the tenant any earlier than the original contract made between the landlord and the tenant would have allowed.
I hope therefore that the Committee will agree that conditions (d), (e), and (f) in Schedule 7 should be retained in the Bill. There is however a further restriction on the use of Case 11 and Case 12 proposed in this amendment. This would require the landlord to give the tenant of a local authority at least 12 months' notice of his intention to require repossession.
I fear this would not be acceptable. There may be many circumstances in which the landlord would not be in a position to give a tenant 12 months' notice; for example, if he had to return suddenly from an overseas posting and if the tenant would have known throughout the letting that the landlord might seek to recover possession. I cannot accept these amendments but, if the noble Lord wishes, we could go into greater detail on the individual points he made.
§ Lord EVANS of CLAUGHTON
Your Lordships will be delighted to hear that I do not wish to go into further details on the various points. I anticipate it would be the case that in the circumstances outlined in the paragraphs to which I have referred, if the tenant had to leave in less than a year the local authority would be required, under the Homeless Persons Act, to rehouse him in any event. As I said, I feel that the Government are 566 being a little too generous in their proposals; but, having listened to what the noble Lord the Minister has said, and being absolutely terrified of getting on the wrong side of the Building Societies Association—as a solicitor they could drive me out of business—in the circumstances, seriously, and in the light of what the noble Lord has said, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Schedule 7 agreed to.
§ Clause 66 agreed to.
§ Clause 67 [Restricted contracts: security of tenure]:
§ 5.32 p.m.
§ Baroness BIRK moved Amendment No. 149A:
§ Page 48, leave out lines 9 to 10 and insert ("granted for a term of years certain.").
§ The noble Baroness said: In moving Amendment No. 149A, I should like to speak to Amendment No. 149B and to do so as briefly as I can. I have a long and very interesting history of the rent tribunals with me but I will spare or, alternatively, deprive your Lordships of that information unless you insist on hearing it. These amendments will in fact do two things. First, they will continue the operation of rent tribunals for all periodic, restricted contracts. Secondly, they will modify the proposals with respect to fixed term restrictive contracts that currently fall outside the jurisdiction of rent tribunals.
§ The reasons for supporting these amendments, I suggest, are that, in the first place, the rent tribunals are a better forum for dealing with the sensitive balance of issues involved than county courts. There are no costs and neither party is obliged to hire a solicitor to represent him. I realise, of course, that that is unfortunate for the noble Lord, Lord Evans! Secondly, the county courts will face an increased work-load as a result of other changes in the Bill, and particularly in Chapter 2 of Part I. At the moment, many cases where a period of security is granted by the rent tribunals are not subsequently followed by court hearings. The tenant leaves before the tribunal security expires 567 This change will therefore mean more court hearings and more delays. Thirdly, a three-month maximum period of security as envisaged by the Government is, I believe, totally inadequate, as this will probably mean that on average the tenant might get a week or two more than the existing standard period of four weeks for a possession order. Fourthly, it is unnecessarily complex to provide, as the Government plan to do, two separate procedures to deal with a single type of tenancy. The proposal will raise again all the difficulties of determining when a tenancy commences—a problem more difficult than the often informal relationship between a resident landlord and his tenant.
§ Although rent tribunals have inevitably attracted some criticism on occasions, I believe that, by and large, they are the most respected and least criticised of all the institutions involved in the regulation of private renting; and so I really wonder why the Government now seek effectively to abolish the tribunals. I know the Government argue that the very limited protection of the tribunals is a disincentive to resident landlords to let rooms, but where is there any evidence of this? This particular sector of the rented market is not declining—that is, where there is a resident landlord. It is turning over normally and, if anything, is growing as owner-occupation itself grows. The Centre for Environmental Studies, in their Review No. 5 of January 1979, expand on that very point.
§ In another place the Minister referred to the tribunal's powers to give up to six months' security or even longer. But what must be remembered is that the tribunals still deal with a range of some more domestic or some more or entirely commercial lettings. It therefore needs a suitable power to meet that range of circumstances. Even so, on average the tribunals give a period of less than three months' security, not six months. It is only in a very small number of cases that they give security of six months or longer. Equally, in a number of cases the tribunals, quite properly, give little or no security at all. I hope that the Minister will accep tthese amendments.
§ Lord BELLWIN
These amendments are designed to reverse the changes to 568 the régime for lettings by resident landlords that we are proposing for new lettings in Clause 67. I must confess that I am somewhat surprised to see these amendments tabled by the noble Baroness. I had believed there was widespread support for the measures that the Government are taking to make it easier for resident landlords to regain possession of the part of their house that they have let. I say I am surprised, because I have looked at the housing policy Green Paper produced by the party opposite when they were in government and indeed when the noble Baroness was herself, I understand, a very distinguished Minister in the Department of the Environment, no less. Perhaps it should he made known that I occupy the office that she previously occupied, I hope with at least partially equal distinction—but perhaps I should not say that.
In case they have not read it themselves or do not remember what it says, I should like to draw attention to part of what it says. I shall do this briefly, although I have it in front of me at length. This is what it says about lettings by resident landlords in chapter 8:8.21 It would certainly be too far-reaching to abolish the need for a court order altogether, but there is a strong case for ending the role of the rent tribunal and for improving the procedure for obtaining a possession order".
§ This Government aeree with what that says, and that is why we are introducing the changes in Clause 67 which this amendment seeks to reverse. I do not want to make a great meal of this, but I do urge the Committee not to accept these amendments and I hope that the noble Baroness may feel able to withdraw them. I believe our proposals for letting by resident landlords in Clause 67 will in fact encourage more people to make available spare accommodation in their houses and, as such, I hope they will be welcomed on all sides by your Lordships.
§ Baroness BIRK
I should like to look very carefully at what the Minister has said and also to refresh myself as to what we did when in Government. Therefore I will withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 149B not moved.]
§ Clause 67 agreed to.569
§ Clause 68 [Reconsideration of registered rents under Part V of Rent Act 1977]:
§ [Amendment No. 151 not moved.]
§ Clause 68 agreed to.
§ Clauses 69 and 70 agreed to.
§ 5.39 p.m.
Lord BELLWIN moved Amendment No. 152:
After Clause 70, insert the following new clause:
§ "Dwellings forming part of Crown Estate or belonging to Duchies
§ (.—(1) The following section is substituted for section 13 of the 1977 Act:
§ "13.—(1) Except as provided by subsection (2) below—
- (a) a tenancy shall not be a protected tenancy at any time when the interest of the landlord under the tenancy belongs to Her Majesty in right of the Crown or to a government department or is held in trust for Her Majesty for the purposes of a government department; and
- (b) a person shall not at any time be a statutory tenant of a dwelling-house if the interest of his immediate landlord would at that time belong or be held as mentioned in paragraph (a) above.
§ (2) An interest belonging to Her Majesty in right of the Crown shall not prevent a tenancy from being a protected tenancy or a person from being a statutory tenant if the interest is under the management of the Crown Estate Commissioners.".
§ (2) In subsection (5) of section 19 of the 1977 Act the words (in paragraph (b))"or of the Duchy of Lancaster or to the Duchy of Cornwall" are omitted and at the end of the subsection there are inserted the words "except that an interest belonging to Her Majesty in right of the Crown does not prevent a contract from being a restricted contract if the interest is under the management of the Crown Estate Commissioners".
§ "(1) A person shall not at any time be a statutory tenant of a dwelling-house if the interest of his immediate landlord would, at that time—
- (a) belong to Her Majesty in right of the Crown or to a government department, or
- (b) be held in trust for Her Majesty for the purposes of a government department; except that an interest belonging to Her Majesty in right of the Crown shall not prevent a person from being a statutory tenant if the interest is under the management of the Crown Estate Commissioners.".
§ (a) the following is inserted at the end of section 56:
§ "(7) Part I of this Act shall apply where—
- (a) there is an interest belonging to Her Majesty in right of the Crown and that interest is under the management of the Crown Estate Commissioners; or
- (b) there is an interest belonging to Her Majesty in right of the Duchy of Lancaster or belonging to the Duchy of Cornwall;
§ (b) in section 21(6) the following is substituted for the definition of "interest not bound by this Part of this Act":
§ " In this subsection interest not bound by this Part of this Act' means an interest which belongs to Her Majesty in right of the Crown and is not under the management of the Crown Estate Commissioners or an interest belonging to a government department or held on behalf of Her Majesty for the purposes of a government department.".
§ (5) Schedule 7A to this Act has effect for making certain provisions consequential on this section.").
§ The noble Lord said: With this, I speak also to the new Schedule (150), which concerns the Crown Estate and the Duchies of Cornwall and Lancaster. It may he convenient to your Lordships if I also speak, as I am doing, on this new clause, as they are so closely interrelated. Later in the Bill there are minor consequential amendments in Clause 77— Amendments Nos. 158 and 159—and also on Schedule 14, Amendment 191, and Schedule 24, Amendment 290, which I shall mention separately when we reach them. Those amendments will give Rent Act protection to short-lease tenants of the Crown Estate Commission, the Duchy of Cornwall and the Duchy of Lancaster.
§ We estimate that there are respectively 2,000, 1,000 and 200 such tenants, mostly in London. They will, in future, benefit from full security of tenure and they, or their landlords, will be able to apply to the rent officer for the registration of a fair rent. By virtue of being protected tenants, they will also be eligible for improvement grants and be given the right to improve under the new provisions dealing with these matters in the Housing Bill. The provisions of the Rent (Agriculture) Act 1976 and Part I of the Landlord and Tenant Act 1954 will also be applied.571
§ The new clause and schedule were tabled in similar form on the Report stage of the Bill in another place. We had the benefit there of several Members themselves being Crown Estate tenants, and the Secretary of State agreed to withdraw the amendments to allow time for further consultation on the points they raised. This consultation has now taken place. A group of tenants and Members of another place has met with the Crown Estate Commissioners and subsequently with my right honourable friend the Secretary of State. It might be helpful to the Committee if I dealt with some of the points which have been raised and explained why we are proceeding with the amendments, and in what way they have now been revised.
§ There is, I think, general agreement that there is a need to remove present doubts about the rights and status of Crown Estate and Duchy tenants. It has been the practice of the Crown and Estate Commissioners and Duchies to apply the Rent Acts administratively, but the tenants feel they do not have the certainty which statutory protection provides. The Government's amendments, by formally applying the Rent Acts, will for the first time provide this certainty.
§ In the light of the representations which have been made, however, we accept that some special provision is needed to modify the normal Rent Act provisions for premiums, to reflect the particular circumstances of the Crown Estate where undertakings were given in relation to current leases. We have, therefore, revised our amendments so that tenants of the Crown Estate and Duchies—unlike previous tenants brought within the Rent Acts—will be able to charge full market premiums on the outstanding term of existing fixed-term assignable leases. For future leases, the Rent Acts will apply in the same way as for other tenancies.
§ I am also aware of representations to the effect that the Crown Estate Commissioners should be regarded as a public body, and therefore brought within the scope of the tenants' charter provisions in Part I of the Housing Bill, including the right to buy at a discount. I see little merit in entering a legal debate about the precise status of the Crown Estate. The important point is that Part I of the Bill 572 does not, anyway, concern all public bodies, only those—such as local housing authorities—which are statutorily charged with providing housing out of public funds to meet need. The Crown Estate Commissioners are not such a body, and the right to buy provisions are quite inappropriate.
§ I understand, however, that the Commissioners have agreed that they will implement on an informal basis certain tenants' charter provisions not involving the right to buy; for example, giving tenants information about their rights and obligations. The Government have also been discussing with the Commissioners their policy on the sale of long leases once the Rent Acts have formally been applied. The Commissioners have said that they will be prepared in principle to sell assignable but non-enfranchisable long leases to sitting tenants.
§ It will be clear from what I have said that this subject is one to which both the Government and the Crown Estate Commissioners have given the fullest consideration. The formal application of the Rent Acts will remove uncertainty about the legal rights of the Crown Estate and Duchy tenants. And the revised provisions on premiums, together with the management undertakings given by the Commissioners, will provide additional benefits over and above those enjoyed by other Rent Act tenants. I beg to move.
§ Baroness BIRK
I should like to thank the Minister for that explanation, because it was very difficult, just reading the amendment without any explanatory notes, to understand the very important content of it. Subject to my not finding anything displeasing when I read in Hansard the report of what the Minister has said, I can see nothing against the clause.
§ Baroness FISHER of REDNAL
I, too, found it extremely hard to follow and had difficulty in understanding the noble Lord the Minister, although I appreciate that he is trying to save as much time as possible. Is it correct to understand that there will be no option for them to buy, but that there will be an option for them to sell their leases?
§ Lord BELLWIN
Yes, that is the position as I understand it. I am glad I that the noble Baroness. Lady Birk, said 573 that it is not a straightforward matter, and the answer that I gave was in good faith. I believe that to be the position.
§ Clause 71, as amended, agreed to.
Lord BELLWIN moved Amendment No. 150:
Before Schedule 8, insert the following new schedule:
§ (" SCHEDULE 7A
§ CROWN ESTATE AND DUCHIES—
§ CONSEQUENTIAL PROVISIONS
§ PART I
§ 1. Where a tenancy granted before the commencement of section 70A of this Act becomes, or would but for its low rent become, a protected tenancy by virtue of that section, section 5 of the 1977 Act applies as if in relation to the dwelling-house the appropriate day were the commencement of that section.
§ 2. In Part I of Schedule 15 to the 1977 Act the following is inserted after paragraph (b) of Case 6:
§ 3. In Part II of Schedule 15 to the 1977 Act any reference to the relevant date shall (notwithstanding paragraph 2 of Part III of that Schedule) be construed, in the case of a tenancy which becomes a regulated tenancy by virtue of section 70A of this Act as meaning the date falling six months after the passing of this Act.
§ 4.—(I) Part II of Schedule 18 to the 1977 Act applies to a tenancy which becomes a regulated tenancy by virtue of section 70A of this Act (unless it is a tenancy falling within subparagraph (2) below).
§ (2) Nothing in Part IX of the 1977 Act applies to a tenancy which falls within this sub-paragraph; and a tenancy granted before the commencement of section 70A of this Act falls within this sub-paragraph if—
- (a) it becomes a regulated tenancy by virtue of that section; and
- (b) it was granted for a term certain and its terms do not inhibit both the assignment and the underletting of the whole of the premises comprised in the tenancy.
§ (3) For the purposes of sub-paragraph (2) above the terms of a tenancy inhibit an assignment or underletting if they—
- (a) preclude it; or
- (b) permit it subject to a consent but exclude section 144 of the Law of Property Act 1925 (no payment in nature of fine); or
- (c) permit it subject to a consent but require in connection with a request for consent the making of an offer to surrender the tenancy.
§ PART II
§ Rent (Agriculture) Act 1976
§ 5. Where the question whether a person is a qualifying worker for the purposes of the Rent (Agriculture) Act 1976 arises by virtue of section 70A of this Act, Part II of Schedule 3 to that Act applies as if the date of operation for forestry workers were the commencement of that section.
§ 6. Where a protected occupancy or statutory tenancy within the meaning of the Rent (Agriculture) Act 1976 arises at the commencement of section 70A of this Act, Cases VIII and X in Schedule 4 to that Act apply in relation to it as if the operative date were that commencement.
§ 7. For the purpose of determining whether, at the commencement of section 70A of this Act a person becomes a statutory tenant for the purposes of the Rent (Agriculture) Act 1976 and of applying that Act to him if he does, paragraph 3 of Schedule 9 to that Act applies as if the operative date were that commencement.
§ PART III
§ 9. Where an interest belongs to Her Majesty in right of the Duchy of Lancaster, then, for the purposes of Part I of the Landlord and Tenant Act 1954, the Rent (Agriculture) Act 1976 or the 1977 Act, the Chancellor of the Duchy of Lancaster shall be deemed to he the owner of the interest.
§ 10. Where an interest belongs to the Duchy of Cornwall, then, for the purposes of Part I of the Landlord and Tenant Act 1954, the Rent (Agriculture) Act 1976 or the 1977 Act, the Secretary of the Duchy of Cornwall shall be deemed to be the owner of the interest.").
§ The noble Lord said: I spoke to this amendment with the last one. I beg to move.
§ Schedule 8 agreed to.
§ Clauses 72 to 74 agreed to.
§ Schedule 9 agreed to.
§ Clause 75 [Allowable premiums in relation to certain long tenancies]:
§ 5.45 p.m.
Lord EVANS of CLAUGHTON moved Amendment No. 153:
Page 53, line 41, at end insert—
("4. In section 127(2)(b) of the 1977 Act leave out from "the sums" to end and insert "either
§ The noble Lord said: Unfortunately, the noble Lord, Lord Mishcon, is not well so he has asked me to speak on this amendment for him. It is one on which I understand the noble Lord's department is trying to help the Law Society, who are the group who have fathered these proposals. The concept of the amendment is to permit lessees, who have leases with rents which are subject to review within 21 years and can be increased by reference to some index of price or wage inflation, or by reference to the ratio of premiums on assignments to the original premium or to the increase in the rack rental value, and who cannot therefore lawfully charge premiums on the assignment of leases, to be able to do so, if the potential increase is less than the rise in value.
§ As I have said, I gather that attempts have been made to meet this point, because the department of the noble Lord's right honourable friend the Secretary of State has found that landlords are seeking to relate ground rent increase to the annual increase, by reference to the value of gold. So it seems to me, and to the Law Society, that tenants in this position which I am outlining, which is a complex and technical position, are very often forced to sell at a loss.
§ What is happening in the legal profession is that many people are wittingly breaking the law, in order that they can benefit from the sale of their properties, which they would otherwise be able to do 576 legally if it were not for this technical problem. I am sure that nobody would want people to be forced into the position of making a technical breach in the law, in order to make a modest profit on the sale of property of this kind. I know that methods have been sought to meet this point, and I wonder whether the noble Lord is in a position to assist on this very difficult and complex matter. I beg to move.
May I take a moment or two (I realise that there is a pressure of time) to endorse what has been said by the noble Lord, Lord Evans, and to point out that this matter has been very carefully considered by the Law Society, which of course has unlimited experience—or if its experience is at all limited, it is limited less than any other organisation's—in respect of these matters. I do not think the point needs elaboration, and I hope that the Minister can accept this amendment.
§ Lord BELLWIN
I fully acknowledge that the problem which this amendment is designed to solve is a very real one. It is also a very difficult one to solve as the relevant provisions in the Rent Acts are extremely complex. As Professor Prichard has pointed out in the article in the New Law Journal in March, in which he proposed a rather similar amendment to this one, it is certainly quite wrong that in bona fide cases an increase in the ground rent to above two-thirds of the rateable value on the appropriate day should have the effect of preventing people from charging a full market price when they sell their house or flat. Bringing long tenancies of this kind within the scope of Rent Act protection makes no sense at all, and was obviously never intended.
The situation has arisen only because recent levels of inflation have meant that any provision for ground rents to be increased more or less in line with inflation is likely to bring the rent above two-thirds of the rateable value within the foreseeable future. When this happens, the tenancy becomes a fully protected tenancy, and Part IX of the 1977 Act applies. This generally prevents a premium from being charged for the grant or assignment of a protected tenancy.
The Government fully accept that there is a need for an amendment to deal with 577 this problem, both for leases where the ground rent has already gone above two-thirds of the rateable value and for those where it is likely to do so at some future review. Any amendment that deals with this problem must do three things. First, it must help long leaseholders who are or may be in this position, and enable them to charge a full market price when they want to dispose of their lease. Secondly, it must ensure that it does not change the rules in such a way as to open up a loophole in the Rent Acts which would enable landlords to make ordinary rack-renting lettings totally outside the Rent Acts because the rent at the very start of the tenancy was below two-thirds of the rateable value, but with provision in the lease to increase the rent rapidly to a fair rent level or above. Thirdly, it must ensure that existing tenants who need the protection of the Rent Acts, but who may be paving less than fair rent levels, do not lose that protection.
This is not an easy task, and I accept that this amendment seems to he along the right lines. However, I am not fully convinced that it would solve the problem in all cases, for the following reasons. First, I think there could be difficulties in applying the criteria proposed in the amendment for assessing by how much a ground rent should be allowed to rise without coming into the Rent Acts. One of these would allow increases in the ground rent that did not exceedany officially published index in respect of average earnings or prices".
§ I am not clear how this should be interpreted. It seems to me that it could lead to disputes about what indices of prices and earnings are "official", and so what increases in ground rents would be allowable in particular cases. Secondly, I am advised that the way the amendment is drafted could cause uncertainty about whether all or only one of the criteria mentioned needed to be satisfied.
§ But, more important than this, many of the cases in which difficulties are likely to arise relate to agreements that have already been made, in some cases a good many years ago. The level of the ground rent may have been pegged to a whole host of different criteria. Some of them may have risen faster than the general level of inflation and would thus 578 not satisfy the criteria in the amendment. For example, I am aware of one case where the ground rent is linked, as the noble Lord himself said, to the price of gold and is revised annually. Now at the time of the original lease this might have seemed perfectly reasonable, and the price of gold might have seemed to be something that could be relied on more or less to keep in line with other prices. Today, one might take a different view. But is it fair that the unfortunate tenants in this case should find not only that their ground rents increase at a much faster rate than inflation, but that this very fact prevents them from disposing of their house or flat at a market price? The amendment in its present form would not help them.
§ For these reasons, I cannot accept this amendment. As I have already said these are extremely complex provisions. Indeed, the noble Lord, Lord Evans of Claughton, himself said so when moving the amendment. However, I hope that we shall be in a position at Report stage to come forward with a solution to this difficult and technical problem in a way that should help most of those who are likely to be affected by it, but also in such a way as to ensure that those people who are genuine rack renting tenants with existing Rent Act protection do not lose it. My officials are having helpful discussions with the Law Society about this problem. I am grateful to the noble Lord, Lord Evans of Claughton, for raising it in the form of this amendment. I am sure that he will appreciate the difficulties which exist, and in view of what I have said I hope that he may feel able to withdraw the amendment.
§ Lord EVANS of CLAUGHTON
I am very grateful indeed to the noble Lord for this full reply, and I have great pleasure in withdrawing the amendment on the terms which he suggests.
§ Amendment, by leave, withdrawn.
§ Clause 75 agreed to.
§ Clause 76 [Meaning of "premium" in Part IX of Rent Act 19771]:
§ Baroness DAVID moved Amendment No. 154:579
§ Page 54, line 10, leave out ("one-sixth") and insert ("one-twelfth").
§ The noble Baroness said: Clause 76 would enable a landlord to charge an incoming tenant a sum equal to two months' rent by way of deposit without that deposit constituting an illegal premium. This is unacceptable on several counts. It is too high. It would quickly become the standard amount, as landlords' advisers would latch on to the chance offered by the statute. And as it would apply to shortholds as well as to fully protected tenancies, in practice the landlord might well stand to gain every year the equivalent of two months' rent as a "perk", as tenants leave and others come.
§ There is no guarantee of the refunding of a deposit, but even if it were to be refunded it would still be sitting in a bank for a long time, gathering interest for the landlord. The size of deposits could be astronomical, effectively barring many poor tenants from entry to the sector. Moving house is a very expensive time. A prospective tenant frequently has to find a deposit—a month's rent in advance—and agency fees for the finding of the accommodation. Assuming a rent of £25 a week, the deposit could come to £200 in addition to the other costs which I have mentioned. The aim of the amendment is to make the deposit half what it is in the Bill—still quite a substantial sum. I beg to move.
§ Lord BELLWIN
This amendment is designed to limit the amount of any deposit which a landlord may charge as a condition of granting a tenancy to one month's rent. The purpose of Clause 76 is to make clear that the common and perfectly acceptable practice of landlords
§ charging a returnable deposit at the start of the letting in respect of possible damage or unpaid bills is not illegal. We are also trying to protect tenants from being required to find excessive deposits.
§ The reason we have made two months' rent the maximum deposit that a landlord can charge is that we believe there are tenancies where such a deposit would not be unreasonable—for example, a furnished tenancy where the landlord was responsible for the bills for heating, lighting and the telephone and where the tenant might damage the furniture. However, I accept also that there may be tenancies where a deposit of two months' rent might be excessive. That is why we have provided that a deposit must be reasonable in relation to the potential liability in respect of which it is paid. I think that our proposals are fair and reasonable and, I hope, sufficiently flexible to apply to the very different circumstances that can apply in different cases. In view of what I have said, I wonder whether the noble Baroness may feel able to withdraw her amendment.
§ Baroness DAVID
I thank the Minister for his reply. If the landlord has the chance of charging a two months' deposit, I do not think that he is very likely to charge less. This amendment is reasonable and, in relation to the potential liability, is not going to make much difference. Some tenants will be able to afford to pay the deposit, but a great many will find it very difficult to do so at the point of moving house. Therefore I shall press the amendment.
§ 5.58 p.m.
§ On Question, Whether the said amendment (No. 154) shall be agreed to?
§ Their Lordships divided: Contents, 70; Not-Contents, 98.581
|Airedale, L.||Crowther-Hunt, L.||Hale, L.|
|Ardwick, L.||Cudlipp, L.||Hatch of Lusby, L.|
|Aylestone, L.||David B.||Henderson, L.|
|Banks, L.||Davies of Leek, L.||Hooson, L.|
|Barrington, V.||Denington, B.||Houghton of Sowerby, L.|
|Beaumont of Whitley, L.||Diamond, L.||Irving of Dartford, L.|
|Beswick, L.||Elwyn-Jones, L.||Jacques, L.|
|Birk, B.||Evans of Claughton, L.||Janner, L.|
|Blyton, L.||Fisher of Rednal, B.||Jeger, B.|
|Boston of Faversham, L.||Gaitskell, B.||Kaldor, L.|
|Brockway, L.||Gifford, L.||Lee of Newton, L.|
|Brooks of Tremorfa, L.||Gordon-Walker, L.||Llewelyn-Davies of Hastoe, B.|
|Bruce of Donington. L.||Goronwy-Roberts, L.||Lloyd of Hampstead, L.|
|Collison, L.||Greenwood of Rossendale, L.||Longford, E.|
|Lovell-Davis, L.||Segal, L.||Wallace of Coslany, L. [Teller.]|
|McNair, L.||Shinwell, L.|
|Oram, L.||Stedman, B.||Wells-Pestell, L. [Teller.]|
|Peart, L.||Stewart of Alvechurch, B.||White, B.|
|Pitt of Hampstead, L.||Stewart of Fulham, L.||Wigoder, L.|
|Ritchic-Calder, L.||Stone, L.||Willis, L.|
|Rochester, L.||Strabolgi, L.||Winterbottom, L.|
|Ross of Marnock, L.||Strauss, L.||Wootton of Abinger, B.|
|Sainsbury, L.||Taylor of Mansfield, L.||Wynne-Jones, L.|
|Sefton of Garston, L.||Underhill, L.|
|Airey of Abingdon, B.||Ferrier, L.||Norfolk, D.|
|Allerton, L.||Fortescue, E.||Northchurch, B.|
|Alport, L.||Fraser of Kilmorack, L.||Nugent of Guildford, L.|
|Amory, V.||Gisborough, L.||Orkney, E.|
|Ampthill, L.||Glenkinglas, L.||Orr-Ewing, L.|
|Auckland, L.||Godber of Willington, L.||Pender, L.|
|Balfour of Inchrye, L.||Gowrie, E.||Rawlinson of Ewell, L.|
|Bellwin, L.||Greenway, L.||Redmayne, L.|
|Belstead, L.||Gridley, L.||Reigate, L.|
|Berkeley, B.||Hailsham of Saint Marylebone, L. (L. Chancellor.)||Rochdale, V.|
|Bessborough, E.||Romney, E.|
|Blake, L.||Hawke, L.||Rugby, L.|
|Bradford, E.||Henley, L.||St. Aldwyn, E.|
|Brougham and Vaux, L.||Hornsby-Smith, B.||Sandford, L.|
|Caccia, L.||Hylton-Fostet, B.||Sandys, L. [Teller.]|
|Campbell of Croy, L.||Killearn, L.||Selkirk, E.|
|Chartcris of Amisfield, L.||Lindsey and Abingdon, E.||Sempill, Ly.|
|CoKvyn, L.||Long, V.||Skelmersdale, L.|
|Craigavon, V.||McFadzean, L.||Soames, L. (L. President.)|
|Craigmyle, L.||Macleod of Borve, B.||Spens, L.|
|Croft, L.||Mancroft, L.||Strathclyde, L.|
|Cullen of Ashbourne, L.||Margadale, L.||Strathspey, L.|
|Davidson, V.||Marley, L.||Swansea, L.|
|de Clifford, L.||Merrivale.L.||Swinfen, L.|
|De Frcyne, L.||Monckton of Brenchley, V.||Teviot, L.|
|Denham, L. [Teller.]||Monk Bretton, L.||Trefgarne, L.|
|Digby, L.||Monson, L.||Trumpington, B.|
|Drumalbyn, L.||Morris, L.||Vaux of Harrowden, L.|
|Ellen borough, L.||Mowbray and Stourton, L.||Vickers, B.|
|Elles, B.||Moyne, L.||Vivian, L.|
|Elton, L.||Murton of Lindisfarne, L.||Ward of Witley, V.|
|Faithfull, B.||Nathan, L.||Westbury, L.|
|Ferrers, E.||Newall, L.||Young, B.|
On Question, amendment agreed to.
§ 6.6 p.m.
Lord EVANS of CLAUGHTON moved Amendment No. 156:
Page 54, line 12, at end insert ("such sum being deposited with the rent officer with the relevant sum being returned to the tenant at the end of the tenancy with interest").
§ The noble Lord said: I beg to move this amendment. It seems to me quite an ingenious way of ensuring, now that sums deposited are larger amounts than if the previous amendment has been passed, two things—first, that the money is in the safe hands of the rent officer; and, secondly, that at the end of the period, when the deposit is returned, it would have gained interest, because there would be a requirement on the rent officer to depositthe money 582 and the interest on it would then be returnable to the tenant. It seems to me that this might be useful in a small way towards making the lot of the tenant safer and easier.
§ Lord BELLWIN
This amendment would give to rent officers an additional responsibility. It would require them to hold deposits that landlords had charged in accordance with Clause 76, on behalf of landlords. It would also require the rent officer to return such deposits with interest to tenants at the end of the tenancy. I do not regard this as an acceptable extension of the role of the rent officer. The function of the rent officer is to assess fair rents in accordance with the statutory provisions. It is no part of his function to hold deposits on behalf of landlords. Nor is the rent officer in 583 any position to adjudicate between the landlord and tenant as to how much of the deposit should be returned to the tenant at the end of the tenancy. At the moment, any dispute between the landlord and the tenant about the repayment of a deposit would be a matter for the courts. This, rather than the rent officer, seems to me to be the right forum for resolving such disputes.
§ Lord EVANS of CLAUGHTON
I am sorry that the noble Lord, Lord Goodman, is not in his place, because he tells us that he was the father of the rent officers. I take the point the noble Lord, Lord Bellwin, has made. I should have thought, as I said, that this was an ingenious and useful additional clause, hut, since the Government do not want the advantage of useful additional clauses, in sorrow rather than in anger I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord EVANS of CLAUGHTON moved Amendment No. 157:
Leave out Clause 76 and insert the following new clause:
§ ("Amendment of s. 128 of 1977 Act
§ In section 128 of the 1977 Act (interpretation of Part IX, which prohibits premiums etc.) for subsection (2) there is substituted the following subsection:—
§ "(2) For the avoidance of doubt it is hereby declared that:—
- (a) nothing in this Part of this Act shall render any amount recoverable more than once;
- (b) a deposit returnable at the termination of a tenancy or of a restricted contract and given as security for the payment of accounts for supplies of gas, electricity, telephone or other domestic supplies or for damage to the dwelling-house or contents is not a premium for the purpose of this Part of this Act provided that it does not exceed the amount of two months rent payable under the tenancy or restricted contract;
- (c) "premium" includes any payment by the tenant in respect of costs incurred by the landlord in connection with the grant, renewal or continuance of the tenancy."").
§ The noble Lord said: I beg to move the amendment standing in the name of the noble Lord, Lord Mishcon, and myself. The clause which it seeks to amend —Clause 76—is generally warmly welcomed by the legal profession. The amend- 584 ment seeks merely to give a clearer definition of what deposits may be taken from tenants and to prevent landlords from passing on solicitors' or estate agents' charges to the tenant. I gather, again, that the Minister's department are anxious to meet this point and that in another place they moved an amendment which dealt with some of the criticisms the Law Society made, but not with all of them.
§ What I think would be valuable would be to know whether the noble Lord the Minister can say definitively whether what is believed to be the case is in fact so; that is, that the requirement to pay costs—solicitors', estate agents' or any costs—is a premium and therefore unenforceable. It would be useful for the profession and for many people to have that answer and I hope the Minister can be helpful in his reply about meeting the reasonable requests of the legal profession. I beg to move.
I should like to support with just a few words the amendment that has been proposed by the noble Lord, Lord Evans. I think from another point of view that it is important that the law with regard to any circumstances should be made as clear as possible, and the idea behind this amendment is to see to it that not only the legal profession but laymen shall be in a position to know what it is all about. I think the whole idea of the amendment is to clarify the position in such a way as to make it possible for anyone concerned to have a real knowledge—or at least some kind of knowledge —of what in fact the law is, and I hope the noble Lord, the Minister, will consider this proposal.
§ Lord BELLWIN
I think the noble Lord, Lord Evans, will agree in putting forward this amendment that it has a similar intention to Clause 76 as it stands. It is concerned to ensure that landlords may charge deposits as security against unpaid bills or damage. It would change the clause in three ways. First, it would spell out precisely what a deposit could be charged for. I must tell the noble Lord that I do not regard this as necessary, as it seems to me undesirable that the clause should seek to anticipate all the items for which a landlord might quite reasonably seek to charge a deposit.
585 Secondly, it would specify that payments by tenants in respect of costs incurred by the landlord in connection with the grant of the tenancy are premiums. I do not regard this as necessary. The clause already states that "any other pecuniary consideration in addition to rent" is a premium. It seems to me that there would be little doubt that such charges are included in this definition. No further clarification seems necessary.
Thirdly, it would remove the requirement that a deposit must be reasonable in relation to the tenant's liability. I think it is important that this should be retained because I consider that there could he circumstances in which two months' rent might be an excessive premium. I do not know whether what have said is the clarification that the noble Lord, Lord Evans, is seeking, but I hope he will at least find it helpful.
§ Lord EVANS of CLAUGHTON
Looking at my brief, I see that it says, "Government lawyers take the view that the requirement that tenants should pay the landlord's costs is clearly a premium within the definition. If the Government spokesman can state this categorically I do not think we need press our points". I think the Government spokesman has stated this reasonably categorically and therefore I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 76 agreed to.
§ Clause 77 [Repairing obligations in short leases]:
§ Lord BELLWIN moved Amendment No. 158:
§ Page 54, line 23, leave out("or").
§ The noble Lord said: For the convenience of the Committee I should like to speak to Amendments Nos. 158 and 159 together. These are minor consequential amendments to the Government's earlier Amendments Nos. 150 and 152 applying the Rent Acts to the Crown Estate and Duchies.
§ Clause 77 of the Bill enables landlords letting to certain specified bodies such as local authorities to transfer to them the repairing obligations under Section 32 586 of the Housing Act 1961 without the leave of the court. The bodies are all those to which the Rent Acts do not apply and cannot create protected tenancies. Thus, therefore, they are able to sub-let to private tenants on a flexible short-term basis. These arrangements are known as North Wiltshire schemes. The Crown Estate and Duchies are currently listed among them, and this is no longer appropriate now that they are to be within the Rent Acts and thus can only let on protected tenancies. The amendment therefore deletes them. I beg to move.
§ Lord BELLWIN moved Amendment No. 159:
Page 54, line 24, leave out from ("Crown") to ("a") in line 25 and insert ("unless the lease is under the management of the Crown Estate Commissioners; or
§ The noble Lord said: I have already spoken to this amendment. I beg to move.
§ 6.16 p.m.
§ Lord MONSON moved Amendment No. 160:
Page 54, line 34, at end insert—
("(4) To section 32(2) of the Housing Act 1961 there shall be added the following—
(d) in respect of any of the installations listed in subsection (1)(b) of this section, to undertake repairs the cost of which, if undertaken by a contractor, would not exceed £30 per item, or such other sum as the Secretary of State may by order prescribe.")
§ The noble Lord said: This amendment was inspired by a request from the Association of District Councils, who felt that the burden imposed upon councils by minor repairs was really rather excessive. I have to declare an interest, in that if the amendment were passed it would also apply to private tenancies—but I do not think that in practice it would make much effective difference, as in my view most private tenants do carry out small repairs themselves. The Association of District Councils suggested a limit of £50. I have reduced that figure to £30, but I should like to make the point that this does not mean that the tenant himself or herself would have to expend as much 587 as £30; £30 represents the price that an outside contractor would charge and, if one deducts the cost of transport and labour, it would mean, generally speaking, that the tenant would be involved in an expenditure of no more than £5 or £10 for materials. I think this would relieve local authorities of an immense burden in overheads on very minor repairs and I hope the Government will give this sympathetic consideration. I beg to move.
§ Lord BELLWIN
The noble Lord, Lord Monson has referred to the difficulties of landlords, especially local authorities who have to carry out minor repairs. But we should also be concerned about the effect on many tenants on low incomes. They may find the cost of a £30 repair job very difficult to bear, especially if they are unemployed, or elderly. And let us remember that such groups tend to be over-represented among council tenants and they are the least able to tackle such jobs themselves. I think this amendment could cause many old people a great deal of worry. On the other hand I am well aware, that, as a recent survey bore out, many tenants who are perfectly capable of doing minor repairs themselves already do so. This seems to me to be entirely sensible and in itself casts doubt on the need for the amendment.
We should also be concerned about the eventual impact of such a change as this on the nation's housing stock. Even with the limit set at £30 an accumulation of minor repairs could build up in dwellings across the country. Tenants might be unable to undertake them, or they might do them badly. In a few years' time, landlords, and especially local authorities, might find themselves faced with what would be by then a heavy load of major repairs.
The amendment also seems to be capable of different interpretations and liable to abuse. No definition is included of what constitutes an "item of repair". The phrase could cover fitting an individual spare part, say, to a heating system; or it could cover installation of several parts, cleaning, adjusting and generally making the heating system serviceable again. It seems to me to depend very much on how you look at it—or more important perhaps, how the tenant and the contractor would choose to look at it. The amend- 588 ment would also, I believe, lead to considerable practical difficulties for tenants in seeking estimates from contractors; it would mean a large number of inspections of very small items when the contractor might reasonably wonder whether there was in any case much likelihood of his firm getting the job.
I can see why the noble Lord has introduced this amendment. If I may say so, I have discussed it with former colleagues in local government who are on the Association of District Councils. I am aware that some local authorities would favour a change in Section 32, but we must remember that what we are concerned with here is the basic repairing obligation of landlords involving both the public and private sector. It is certainly not something we should consider changing lightly. The amendment would, I am sure, be a source of worry and concern for many tenants of slender means. None of us would want to give tenants the impression that we are taking away with one hand what the tenants' charter, which has a wide measure of support on all sides, gives with the other. I wonder, in view of that, whether the noble Lord, Lord Monson, will feel able to withdraw the amendment.
§ Lord SANDFORD
Before the noble Lord responds, I wonder whether I may make this point to my noble friend. It may well be that the particular formula which the noble Lord, Lord Monson, has moved, is not the right one, but I should have thought that the time had come and that the opportunity was presented by this Bill to have a look at this charter and see whether it is sensibly divided between the landlord and tenant at the moment. When one looks at the feats of repair work and maintenance which council tenants are quite capable of exercising in respect of their own motor cars, for instance, one wonders whether it is really necessary to involve local authority landlords in such things as changing tap washers.
I think the time has come when it is reasonable to expect tenants as a whole to carry out some of these jobs for themselves. It would make it much easier to achieve some of the cuts in local authority expenditure which are being rightly urged on authorities from all sides. Perhaps my noble friend would agree to have a 589 look at this and see if there is any other way of revising this formula, if the one proposed by this amendment is not acceptable, and come back with his own amendment on Report stage.
§ Lord BELLWIN
I am very seized of this particular point because it is something with which I was for many years involved at great length. I am very pleased to note that in fact there is an obvious increase in the extent to which tenants are doing minor repairs themselves. I think, so long as it is nothing that is fundamental to the house that could lead to the kind of problem I mentioned a moment ago, there must be much merit in it. Often they do not want to wait anyhow, and are only too glad to get the job done and do it the easiest way.
However, the point is whether or not we should be trying to exclude things from what we are proposing in this tenants' charter. There has been much discussion with the association; my noble friend will know that. Indeed, it started a long time ago with the proposals in the Green Paper that the Labour Government put out, I think in 1977. We talked in those days at great length, for hours, as to what ought and what ought not to go into the tenants' charter. Whether we got the right answers then at the end of the day, only time will tell.
I do not know whether there is scope at this stage to look further in the way my noble friend Lord Sandford suggests. He knows how sympathetic I would be to trying, because of the great sympathy I have with the local authorities as well as the tenants. But I just have a feeling that if I were to say, rather easily, "Yes we will do that" I might be giving him a wrong impression. All I can say to him, as I have said to noble Lords opposite on one or two matters of this kind where we have got into specialised areas, and as I said to the noble Lord, Lord Gifford, in particular, we certainly could not accept the amendment and I cannot give a promise to take it away and bring back something in its place. But I will undertake that we will look very carefully to see if there is any room on this at all, and if there is we will talk to the ADC once again; but I hope the noble Lord will not hold me to it if I am not able to do that at the end of the day.
§ Baroness DENINGTON
I cannot miss the opportunity of saying to the Committee and to my friend the Minister that, if only the Government would give a lot of encouragement to the establishment of management co-ops in local authority dwellings, there is here a vast field where they would manage their own affairs. We are trying this now in the Greater London Council area on Greater London Council estates. The council makes a grant to a management co-op to do their own cleaning and repairs, collect their own rents and so on. We are breaking down a very big estate into small units and making people responsible for their own affairs, which includes the taps and all the other things. I do really think this is the way forward, and it would solve these niggling little problems.
§ Lord SANDFORD
I am most grateful to the noble Baroness. She has opened up another possibility and that is another very good way forward. But the fact is that if this formula—which has been discussed a great deal, but not, I think, debated during the passage of this Bill in the other place, and therefore perhaps does deserve a little consideration now— were looked at and the framework altered to encourage the kind of developments the noble Baroness talks about, we would make some progress. It is not right to let the opportunity pass and make no changes at all in an area which everybody recognises needs to be modified in some way or another.
§ Lord MONSON
I am most grateful to the noble Lord, Lord Sandford, for his support. I must agree with the noble Lord, Lord Bellwin, that the amendment is no doubt imperfectly drafted. The Association of District Councils and I had some considerable difficulty in finding the right formula. I do want to emphasise that there is no question of getting the tenant to undertake repairs that would cost him as much as £30; that was the price the contractor would have charged. The main element, as most noble Lords will know, is the labour cost and the transport cost; it costs £15 for people to come for five minutes in the normal way. My object was to try to confine the tenant's liability to those repairs not costing more than £5 or so, mainly material costs, which could normally be done by the averagely competent person in half 591 an hour at the weekend. We have all heard stories, some of them perhaps apocryphal about the well-known profligate London local authorities who send people round to change light bulbs and that sort of thing which tenants could quite easily do themselves. However, I am glad the noble Lord, Lord Bellwin, is going to have a look at this. I quite appreciate that he cannot give any promises, but with that assurance I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 77, as amended, agreed to.
§ Clause 78 [Tenant's improvements]:
§ On Question, Whether Clause 78 shall stand part of the Bill?
§ 6.28 p.m.
§ Lord MONSON
I would like to intervene to ask the noble Lord, Lord Bellwin, to say a few words about Clause 78. It does seem to me a little bit worrying that the tenant is going to be given a right to make quite major alterations to somebody else's property and the consent of the landlord is virtually implied in that it could not reasonably be withheld. I am not thinking of the large impersonal landlords, large remote companies; they are a different matter. I am thinking of small landlords who may well be letting a property which is adjacent to their own house, or even part of their own house converted and formed into a self-contained unit. I am not thinking so much of internal alterations, but external decoration, for instance. Is it right, really, that somebody who owns a semi-detached pair of houses and lives in one should be required to allow the tenant to repaint the exterior of the adjoining one any colour he likes? It may seem a trivial point, but it seems to me to weaken the whole concept of private property rights.
§ I wonder whether the noble Lord could say anything about it. I might come back to it again at the next stage. I wonder whether he could give some consideration to the matter because I should like to know whether this is really intended by the Government.
§ Lord BELLWIN
I do not know that I am able to help the noble Lord on this 592 matter. It is rather like a number of other matters that come up from time to time—one has a view on them and, indeed, one could only be sympathetic to the point which the noble Lord has mentioned. I should like to refer to what my noble friend Lord Sandford said a moment ago. There are so many aspects of this whole area that require far more investigation and far more consideration than may have been given in the past. I suppose that I had better qualify that, because when one bears in mind all the discussions that have taken place in the past, one realises that there are so many aspects of the matter which are still far less than ideal. There could never be a point where one could say, "That is it".
That is all that I can say to the noble Lord, Lord Monson. Yes, there has to be a case for further discussion. I hope that when the Bill has gone through and when everything has settled down and we have time to think and breathe, we shall be able to look in the longer term at all the aspects of repairs, maintenance and so on as regards all sectors of the country's housing.
§ Lord MONSON
I am grateful to the noble Lord for what he has said. I think that the Government probably had the large landlord in mind when framing this particular clause. Although the landlord who lets his own private house and who wishes to return to it is protected by the provisions of the clause, he is not protected if it is the house next door to the one in which he lives. That, I think, is a gap which quite understandably—in a complex Bill like this—may have been overlooked. I should like to reserve the right possibly to introduce an amendment at the next stage to cover this point.
§ Clause 78 agreed to.
§ Clauses 79 to 84 agreed to.
Lord MOWBRAY and STOURTON moved Amendment No.161:
After Clause 84, insert the following new clause:
("Discretion of court in certain proceedings for possession
.—(1) Where, under the terms of a rental purchase agreement, a person has been let into possession of a dwelling-house and, on the
termination of the agreement or of his right to possession under it, proceedings are brought for the possession of the dwelling-house, the court may—
(2) On any such adjournment, stay, suspension or postponement the court may impose such conditions with regard to payments by the person in possession in respect of his continued occupation of the dwelling-house and such other conditions as the court thinks fit.
(3) The court may revoke or from time to time vary any condition imposed by virtue of this section.
(4) In this section "rental purchase agreement" means an agreement for the purchase of a dwelling-house (whether freehold or leasehold property) under which the whole or part of the purchase price is to be paid by instalments and the completion of the purchase is deferred until the whole or a specified part of the purchase price has been paid.
(5) This section extends to proceedings for the possession of a dwelling-house which were begun before the commencement of this section unless an order for the possession of the dwelling-house was made in the proceedings and executed before the commencment of this section.").
§ The noble Lord said: I beg to move Amendment No. 161. The purpose of this clause is to implement an undertaking given by the Minister for Housing and Construction in another place. That undertaking was to introduce an amendment to the Bill which would extend to rental purchasers who fall into arrears a statutory protection from immediate eviction similar to that possessed by mortgagors who default. The draft clause is an adaptation of Section 36 of the Administration of Justice Act 1970, which is the source of protection for mortgagors who default.
§ It may be of assistance to the Committee if I indicate what is meant by rental purchase. It is a form of house purchase where an intending purchaser occupies a property, and agrees to make regular instalment payments to the owner, but does not become the owner of the property until the full purchase price is paid. The agreement to purchase may stipulate any deposit or interest to be paid by the purchaser, and the right of the vendor to terminate the agreement if the purchaser should default on his payments. Rental purchase is perhaps most common in 594 cities in the North-West of England, but is not unknown elsewhere. Rental purchasers tend to be people who would not meet the lending criteria of institutional sources of funds; and they tend to buy property which likewise may not be attractive to institutions.
§ At present, because of the nature of rental purchase agreements, a rental purchaser who falls into arrears on his payments may become liable to eviction as a trespasser. This is because he is neither a mortgagor nor a tenant, and cannot therefore obtain the assistance of the courts under the Administration of Justice Act 1970 or the Rent Acts. The proposed amendment will enable those purchasers who fall into arrears to seek an adjournment of court proceedings, or to ask the court to suspend or postpone any order for possession the court grants. The Court will be able to impose conditions —for example, that the occupier pays off the arrears and pays something for his occupation of the property, or pays the amount required by the original agreement should the owner waive the breach. Without this clause rental purchasers will be left in an exposed and anomalous position, without any protection from eviction similar to that which the law provides to mortgagors and tenants. Accordingly, I invite the Committee to accept this amendment.
§ Baroness BIRK
I should like to thank the Minister and the Government very much for introducing this clause, which both we on this side of the House and my honourable friends in another place very much wanted to have inserted in the Bill.
§ Clause 85 [Restriction on discretion of court in making orders for possession of land]:
§ Lord MOWBRAY and STOURTON moved Amendment No. 162:
Page 58, line 26, at end insert—
(e) the order is made in proceedings brought as mentioned in section (Discretion of court in certain proceedings for possession) (1) above.").
§ The noble Lord said: I beg to move Amendment No. 162. This is a small amendment that is consequential on the 595 Government's new clause we have just been considering designed to help those purchasing under rental purchase agreements. All that it does is to provide that the more rapid repossession procedures that Clause 85 introduces for mandatory possession cases, cannot be used against someone who has been occupying under a rental purchase agreement. The clause already provides that they do not apply to an action by a mortgagee for possession, or to an action for forfeiture of a lease. An action against someone who has been occupying under a rental purchase agreement is similar to these, and the extended discretion the new clause gives to the courts would be virtually taken away again, if Clause 85 were to apply to actions against rental purchasers. I therefore ask your Lordships' Committee to accept this amendment.
§ On Question, Whether Clause 85, as amended, shall stand part of the Bill?
§ Baroness DAVID
In speaking against this clause standing part of the Bill, I want to say that there is no reason for giving quicker court hearings on possession orders on the basis of whether or not the case for possession is mandatory or discretionary. That possession is mandatory does not mean that the outcome of the hearing is in any way certain. Possession only follows if the case is proved. In many cases, say, for instance, an alleged holiday letting, as my noble friend said perhaps in Hackney or Brixton, there may be very reasonable doubt as to whether the case will be proved. Neither is there any consistent relationship between the urgency of the landlord's claim for possession and whether or not possession is mandatory or discretionary. Indeed, it could be argued that the landlord, facing substantial rent arrears or a tenant damaging his property, might more urgently need possession than many of the landlords bringing mandatory cases for possession.
The important point for landlords, particularly in London, is the delay in obtaining a court hearing because of the pressures on the courts. In that respect the Housing Bill overall could well mean even greater delays in obtaining possession. It is the delays in the courts, not the 596 periods of notification of court hearings and operation of possession orders, that should be reduced. The procedural period should be retained unchanged. The reduction from three weeks to one week of the period of notice of the court hearing is being considered, again for mandatory cases, by the County Court Rules Committee.
This proposal, which is clearly related to the proposal contained in Clause 85, will leave tenants with an inadequate period to seek advice and representation. It is particularly likely to lead to an increase in kite-flying claims for possession by less scrupulous landlords. Currently there is more time and a better chance of tenants getting proper advice and for their solicitors or advisers to contact the landlords who then invariably will withdraw such a claim for possession. The reduction from four weeks to two weeks in most cases of the period after the grant of the possession order—that is the only period when the tenant definitely knows he will have to leave—must lead to an increase in homelessness. It will also lead to more applications being made to local authorities for housing, as tenants will have less time to seek alternative accommodation themselves.
The Royal Commission on Legal Services recommended that there should be a review of the operation of the courts and tribunals, including those in the area of housing. A wide range of responsible organisations, including the London Boroughs Association and the Royal Institution of Chartered Surveyors, have suggested that a single housing court should be established to replace the current complex structure of courts, committees, and tribunals dealing with housing law. Mr. Finsberg supported this idea when he was in Opposition. He of course is now a Minister in the Department. Mr. Rossi, then the spokesman for the Conservative Party in the other place, also supported this.
We suggest that the Government should drop these ill-considered and petty procedural proposals which will satisfy no one, and that they should face up to the need for a more fundamental review of this area.
§ 6.42 p.m.
§ Lord BELLWIN
I regard this as an important clause in the Bill. Its purpose 597 is to limit judges' discretion to postpone possession in cases where the landlord has a right to possession, once certain facts are established. This is because we are concerned about the time that it can take landlords to regain possession, even in cases where there can be no question of the tenant having any right to remain in occupation. At present, the courts' power to postpone the date of possession in these cases is a common law power, and enables them to postpone possession for up to four to six weeks in a typical case. This clause reduces this period to 14 days unless it appears to the court that this would cause exceptional hardship, in which case possession may be postponed for up to six weeks. I think these changes are fair and reasonable. I totally reject that they will mean that tenants will be liable to eviction from their home at short notice.
Before a landlord with a mandatory right to repossession can apply to the court for possession, the tenant will know that his rights of occupation have come to an end, either, for example, because the landlord has served a notice to quit (or a notice to terminate in the case of a secure tenancy), or, if the tenancy was for a fixed term, because the term has expired. Let me take the example of shorthold. Under the shorthold proposals in the Bill, the landlord must always give the tenant at least three months' notice of his intention to apply to the court for possession. The tenant should be in no doubt that he has no right to remain in occupation. At the beginning of his tenancy, he will have been served with a notice explaining his position as a shorthold tenant. The same applies to the "Case 11" tenant—the tenant of the temporarily absent owner-occupier. He too will have been served with a notice at the start of the tenancy.
So, in none of these cases can there be any question of the tenant being completely unaware of the landlord's right to repossession. It seems to me quite reasonable that landlords should be entitled to more rapid repossession in these cases. I therefore move that this clause stand part of the Bill.
§ Lord GIFFORD
I do not find that explanation or that reply acceptable at all. First, it does not deal with one of the 598 points made by my noble friend. We should look again to see how this works in practice. A great number of the types of case where this 14-day order will be imposed are the types of case which can be brought to the court by the very streamlined short notice Order 26 procedure, as it is known in the county court—that is to say, the procedure which is used against alleged squatters or other occupiers whose time of occupation has come to an end. That gives a seven-day period between the commencement of the proceedings and the hearing in the courts. With 14 days you have a total of three weeks from start to finish.
There are people who will not get notice of such a hearing. They may not be there. There are people who may get notice but who take time to get to the right place to get advice. By the time they come to get advice, the bailiffs may be either knocking on the door or have actually obtained possession. The noble Lord seems to assume that these cases will only be cases where the tenant's-occupant's right has come to an end in any case. That is not always the case. There are many instances where proceedings are brought to the court alleging that the person is a squatter, or a tenant of a resident landlord, or something of the kind, when that is in fact not the case at all. If the tenant does not appear at the hearing, or does not get advice for two or three weeks about the perfectly good defence he has, then this axe will fall upon him and it will be too late once someone tried to intervene.
What is the necessity for this? At the moment the judges have a limited discretion which is usually not more than 28 days, though sometimes they give six weeks, and if a landlord presents a case for needing urgent possession, as he often does in a squatting case or some other case, that period can be cut down to eviction forthwith, or within seven days. There is no need for a 14-day period because the period is not much greater than that in any event, and I think has in fact been limited by the courts to something like 28 days. It is an unnecessary clause, and a clause which will work great hardship in a number of cases.
§ Baroness DAVID
I have listened to what the Minister has said. I am not 599 convinced by his defence of the clause. It will do more harm than good. Therefore, we shall be voting against the clause.
§ Resolved in the affirmative, and clause agreed to accordingly.
§ Clause 86 agreed to.600
§ 6.47 p.m.
§ On Question, Whether Clause 85, as amended, shall stand part of the Bill?
§ Their Lordships divided: Contents, 91: Not-contents,60.599
|Airey of Abingdon, B.||Fraser of Kilmorack, L.||Norwich, Bp.|
|Allerton, L.||Gisborough, L.||Nugent of Guildford, L.|
|Amory, V.||Godber of Willington, L.||Orkney, E.|
|Auckland, L.||Gowrie, E.||Orr-Ewing, L.|
|Balfour of Inchrye, L.||Greenway, L.||Pender, L.|
|Bellwin, L.||Gridley, L.||Rawlinson of Ewell, L.|
|Belstead, L.||Hailsham of Saint Marylebone, L. (chancellor.)||Redmayne, L.|
|Bessborough, E.||Reigate, L.|
|Blake, L.||Harmar-Nicholls, L.||Renton, L.|
|Bradford, E.||Hawke, L.||Rochdale, V.|
|Clitheroe, L.||Henley, L.||Romney, E.|
|Colwyn, L.||Hornsby-Smith, B.||St. Aldwyn, E.|
|Cork and Orrery, E.||Hylton-Foster, B.||Sandford, L.|
|Craigavon, V.||Killearn, L.||Sandys, L. [Teller.]|
|Craigmyle, L.||Kinnoull, E.||Selkirk, E.|
|Croft, L.||Lindsey and Abingdon, E.||Selsdon, L.|
|Cullen of Ashbourne, L.||Long, V.||Spens, L.|
|Davidson, V.||McFadzean, L.||Strathclyde, L.|
|de Clifford, L.||Macleod of Borve, B.||Strathspey, L.|
|De Freyne, L.||Mancroft, L.||Swansea, L.|
|Denham, L. [Teller.]||Margadale, L.||Swinfen, L.|
|Digby, L.||Marley, L.||Teviot, L.|
|Drumalbyn, L.||Monckton of Brenchley, V.||Trefgarne, L.|
|Ellenborough, L.||Monk Bretton, L.||Trumpington, B.|
|Elles, B.||Monson, L.||Vaux of Harrowden, L.|
|Elliot of Harwood, B.||Morris, L.||Vickers, B.|
|Elton, L.||Mowbray and Stourton, L.||Vivian, L.|
|Faithfull, B.||Moyne, L.||Ward of Witley, V.|
|Ferrers, F.||Murton of Lindisfarne, L.||Westbury, L.|
|Ferrier, L.||Norfolk, D.||Young, B.|
|Fortescue, E.||Northchurch, B.|
|Airedale, L.||Goronwy-Roberts, L.||Ritchie-Calder, L.|
|Ardwick, L.||Greenwood of Rossendale, L.||Rochester, L.|
|Aylestone, L.||Hale, L.||Ross of Marnock, L.|
|Banks, L.||Hatch of Lusby, L.||Sainsbury, L.|
|Beaumont of Whitley, L.||Hooson, L.||Sefton of Garston, L.|
|Beswick, L.||Houghton of Sowerby, L.||Segal, L.|
|Birk, B.||Irving of Dartford, L.||Stedman, B.|
|Blyton, L.||Jacques, L.||Stewart of Alvechurch, B.|
|Boston of Faversham, L.||Janner, L.||Stewart of Fulham, L.|
|Brockway, L.||Jeger, B.||Stone, L.|
|Brooks of Tremorfa, L.||Lee of Newton, L.||Strabolgi, L.|
|Collison, L.||Llewelyn-Davies of Hastoe, B. [Teller.]||Strauss, L.|
|David, B.||Taylor of Mansfield, L.|
|Davies of Leek, L.||Longford, E.||Underhill, L.|
|Denington, B.||Lovell-Davis L.||Wallace of Coslanv, L.|
|Diamond, L.||McNair, L.||White, B.|
|Evans of Claughton, L.||Oram, L.||Wigoder, L.|
|Fisher of Rednal, B.||Peart, L.||Winterbottom, L.|
|Foot, L.||Pitt of Hampstead, L.||Wootton of Abinger, B.|
|Gaitskell, B.||Ponsonby of Shulbrede, L. [Teller.]||Wynne-Jones, L.|
§ dinner, and I therefore beg to move that the House do now resume.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.