LEASEHOLD ENFRANCHISEMENT BILL. (Hansard, 1 May 1931)

§ Mr. HOPKIN

I beg to move, "That the Bill be now read a Second time."

I know of no subject which is of greater interest to thousands of shopkeepers and tenants of dwelling houses than the proposals contained in this Bill. Each year from 1900 to 1914 produced a Leasehold Enfranchisement Bill. In 1923 there were three such Bills, and in each of the years 1927, 1928 and 1929 there was a Leasehold Enfranchisement Bill. Most of them came only to the First Reading and two came to the Second Reading. Each of these Bills contained little more than the right of the tenant for compulsory purchase of the freehold reversion.

I would like to give one or two examples showing how the present Bill 1939 differs from those brought forward in the past. In 1901 a Bill was introduced largely by Conservative members to enable leaseholders to become freeholders. That Bill contained altogether 29 Clauses and Schedules, and it was introduced after the Royal Commission on the Housing of the Working Classes had reported in a supplementary report that legislation favourable to the acquisition on equitable terms of the freehold interest on the part of the leaseholder would conduce greatly to the improvement of the dwellings of the people of this country, on the ground that the prevailing system of building leases is conducive to bad building, and that the system of building on leasehold land is a great cause of the many evils connected with overcrowding insanitary buildings, and excessive rents. My submission is that the present state of things is even worse. In 1928 a Bill was introduced which was backed by a number of Liberal and Labour Members and the operative Clause in that Bill, Clause 3, provided: From and after the commencement of this Act every lessee of any house or premises whose original lease was granted for a period of not less than thirty years on giving six months' notice in writing to the lessor or his agent shall have the right to acquire the freehold reversion of the said lease. That was the operative Clause which was inserted in nearly the whole of the previous Bills, and all those Bills were rejected or had no chance of being passed. We have thought that it would be better in this Bill to bring forward a compromise, and the first two Clauses of this Bill extend the provision which the Conservative Government proposed in the Landlord and Tenant Act of 1927. I heard with astonishment that the rejection of this Bill is to be moved by an hon. Member opposite, seeing that in 1929 a Bill much more revolutionary than the present Bill was introduced with Conservative backers. In those circumstances I am surprised that this Bill is going to be opposed by any Member of the Opposition.

1.0 p.m.

What are the injustices which we desire to remove under this Bill? There are thousands of shopkeepers and many more thousands of tenants of dwelling houses who are greatly interested in the leases which are about to fall in. This is a matter of very great concern to those 1940 people because they do not know what their fate is going to be. In many places around London leases have been bought up and the purchasers are now sending in bills for dilapidations to the tenants. This is certainly a form of legal blackmail that this House ought to put an end to. The main reason for this Bill is to be found in the fact that hundreds of thousands of people have bought bare land at a price with a ground rent and on this land they have built their houses. After the lease on that land had fallen in the whole of the property erected upon it goes back to the landlord. Hon. Members will recollect a case which was brought before the House by a Welsh Member in 1927 of a piece of land in Wales which was bought and which brought the landowner no return whatsoever, and upon which houses have been built, and at the end of 40 years the whole of the property and accrued profits from all sources on that, land came to the landlord. I know the wording of the Bill is not perfect; for instance, in sub-Section (2 q) Section 2 the word "premises" should read "trade" and in Section 5 "Leasehold Enfranchisement Acts, 1927 to 1930," should be deleted. I hope that we shall have the blessing of the Solicitor-General for the principle which this Bill contains. Clause 1 gives the right to a new lease of business premises at the termination of the existing tenancy. Under the Act of 1927 in Section 1, compensation only is given for improvements and only in regard to business premises. Under Clause 1 of this Bill the right is given for a new lease for business premises if the tenant can show either improvements or if he has created a goodwill. As the House is well aware under Clause 4 of the 1927 Act, compensation is given for the creation of goodwill and it is only under certain conditions, namely, where the compensation is considered to be inadequate that a new lease can be claimed. Under this Bill under any circumstances when the tenant of business premises has created either improvements or goodwill at the end of the lease the tenant will have the right to a new lease. Even this small concession of a new lease under the 1927 Act cannot be given if it can be shown that the premises are required by the landlord himself or his son or his daughter or that he intends to erect 1941 some other premises or that he intends to carry through a scheme of development, or if the lease be inconsistent with estate management.

We have introduced in Sub-section (3) of Clause 1 the principle of "greater hardship" caused to the tenant by refusing to grant a new lease, and despite the present statutory obligations, the court would have power to decide the principle of greater hardship either on the part of the tenant or the landlord, and the court would have discretion either to grant a lease or to withhold it on this principle alone. Clause 2 simply follows out and extends the principle which was adopted in the Act of 1927 towards business premises and gives the tenant the right to claim compensation for improvements carried out to a dwelling-house at the termination of the existing tenancy. That right is already given to the tenant of building premises under Section 1 of the Act of 1927, and I do not see any logical reason why that same principle should not be extended to the tenant of a dwelling-house. It seems that the sequence is this: A tenant wishes to carry out certain improvements. He then gives notice to his landlord, who gives him permission to carry out the improvements. As a result, the letting value of the premises will go up. At the end of the tenancy he sends in a notice, and then the landlord may either pay compensation for the improvements or arbitrate, or, under Sub-section (2) of Clause 2 of this Bill, the landlord may then have the right to say to the tenant, "Here is a new lease," and in that new tenancy the right must be given to the tenant to sublet. Sub-section (3) of Clause 2 enables the tribunal to determine the terms of the new lease.

1942 Clause 3, in my judgment, is the core and centre of the Bill, because it gives a right to a new lease at the expiration of a lease of 35 years or more at a ground rent. That is to say, if a leaseholder has a lease of 35 years or more, and the lease comes to an end, he can then at the expiration go to his landlord and demand a new lease, the terms of which will be settled by the Court. Clause 4 is put into the Bill to cover houses which are protected by the Rent Restrictions Acts. The law at present, I understand, is not clear, and this Clause is put in to make it perfectly clear that the Bill will cover premises, and houses particularly, which are already protected by the Rent Restrictions Acts.

This, therefore, is what the Bill does. In the first place, it provides that tenants of business premises who can show improvements, or can show that they have created goodwill, are entitled to a new lease; secondly, the tenants of dwelling houses will receive compensation for improvements; thirdly, a new lease is to be granted to a leaseholder holding for 35 years or more; and, lastly, the Bill covers houses which are protected by the Rent Restrictions Acts. The Bill is merely an act of justice which is long overdue. That the case of leaseholders is a very hard one is, I think, well known to Members in every quarter of the House, and I ask the House to give the Bill a Second Reading.