§ Order for Second Reading read.
§ 3.40 p.m.
§ The Attorney-General (Sir Hartley Shawcross)
I beg to move, "That the Bill be now read a Second time."
I should like on behalf of my right hon. Friend the Lord President of the Council to convey his apologies to the House that he is not himself moving the Second Reading. The Lord President has from the earliest stages taken an active part in the Bill. Until quite late last night he expected to be moving its Second Reading himself, but owing to the many heavy and additional duties which have arisen in the last few days in connection with the absence of the Prime Minister in Washington, he finds himself unable to be here sufficiently long to do that. He has asked me to make his apologies, and I appear as his very inadequate substitute. On the other hand, we are fortunate in having back with us my right hon. and learned Friend the Solicitor-General, who took an important part in the planning stages of the Bill, and who is now back from his labours at Lake Success.
The question of leasehold reform and of leasehold enfranchisement, as one aspect of it is called, is one which for very many years has agitated political discussion, and not necessarily on party political lines at all. The Radicals in the old days used to make great play with it, and their Bill, I think in 1920, made an important contribution to the thought on this subject; and only last October the Conference of the Conservative Party at Blackpool passed a resolution, at the instance, I think, of the hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who has made a particular study of this matter and who we are all delighted to see sitting, on this occasion at least, on the Front Bench—a substantial shadow, I am sure, of more permanent things to come.
One of the great advantages of being able to sit upon the Front Bench—and I say one of them only—is that one is able 369 to adopt without impropriety the position now occupied by the right hon. Member for Warwick and Leamington (Mr. Eden) and the hon. and learned Member for Northants, South (Mr. Manningham-Buller). I commend the same position to the hon. and learned Member for Wirral in view of the excessively lengthy and very tedious speech which I am about to make upon this very technical Bill.
I said that the matter was one which had aroused much political interest amongst all parties, and I referred to the resolution passed only a month or two ago at the Blackpool conference. That resolution did not go as far in some respects as we would seek to go in the Bill. I think that it proposed protection for premises of the size within the Rent Acts limits only, whereas we propose to go further and to give protection to the larger middle-class houses as well.
I do not suggest that, although the matter has been the subject of active consideration amongst all parties, there is any unity of view about it. Many on the benches opposite, for instance, believe in one form or another of leasehold enfranchisement. Some on the benches on this side, on the other hand, do not think that that is desirable. I have found few subjects in which there is more enthusiasm for doing something and less agreement as to what that something should be or how it should be done. We are told from all sides to do this or to do that, but the practical difficulties are such that there is a great deal of variety in the advice which we get as to how to do it.
It was in those circumstances that the Speech of His Majesty at the opening of this Session of Parliament gave the following undertaking, which we now seek to implement:My Ministers have under consideration the reform of the law relating to leaseholds and meanwhile measures will be introduced to provide for the continuation for a short period of ground leases relating to residential premises, so as to prevent some of the hardships which would otherwise arise on the termination of tenancies. Provision will also be made for facilitating the renewal of certain business tenancies."—[OFFICIAL REPORT, 31st October, 1950; Vol. 480, c. 8.]It is the Bill which implements that undertaking to which I now ask the House to give a Second Reading.
370 I cannot pretend that the Bill provides either fascinating or easy reading, even for a lawyer—its nature necessarily prevents that; nor do I suggest that it will bring clarity to a branch of the law which is already complex and complicated in the extreme. That must be left to more permanent legislation later, and I shall say something about that. Nor do I deny that in the case of many landlords it may cause inconvenience, and, in the case of some, hardship. But I do suggest and assert that the Bill provides the most practicable method available of preserving a standstill, and so avoiding the much greater volume of hardship and suffering which would otherwise have occurred if the increasing number of long leases—the result of building development after the Industrial Revolution and in the middle of the last century—which are now beginning to fall in, were allowed to fall in during the next few years without anything being done in regard to the matter.
I say that this temporary Bill provides "the most practicable method," and I want to add this. We wanted what was done now in the Bill as a temporary expedient to be without prejudice to the permanent or long-term solution that Parliament might adopt. We wanted it, for that reason, to be as non-controversial—as non-controversial, I mean, in a party sense—as we were able to make anything which dealt with this matter. We therefore canvassed all sorts of different methods of dealing with the problem. Some of them we had actually translated into the form of draft Bills so that we could see how they would work out in legislation. Here I must pay a tribute to the Parliamentary draftsman, who has worked hard and long on these proposals, like all Parliamentary Counsel who bring their tremendous knowledge and experience loyally to carry out the varying instructions of whatever Government may happen to be in power at the time.
After canvassing all sorts of different proposals and methods, we came at the end of the day to the conclusion that on the whole the Bill in its present form provided the most practicable solution. The Bill applies to England and Wales; a Bill for Scotland, following the general principles of the present Bill but with such modifications as are necessitated by the differences in circumstances in that country and the differences in the law, 371 will be presented by my right hon. Friend the Secretary of State for Scotland, I think, almost immediately.
The present Bill, applying to England and Wales, is simply a first-aid, or a standstill, measure which is designed to provide a kind of moratorium in regard to the most urgent of the problems which arise, so as to give the Government time to prepare permanent legislation covering the whole of this field of law. It will maintain the status quo so that tenants now occupying their homes but liable to eviction at an early date, or perhaps already liable to eviction because their tenancies have expired, will not be caused immediate hardship, or be deprived of such benefits, whatever they may be, as it may be impossible to accord to tenants generally by the permanent legislation which, in due course, we shall introduce.
I should add in regard to these permanent benefits, and emphasise as strongly as I can, that this Bill is entirely without prejudice to what the final solution may be, and no conclusion whatever ought to be drawn from this Bill as to lines on which we shall in due course invite the House to enact long-term legislation. Indeed, we have deliberately tried in this Bill to avoid putting in anything—for instance, anything with regard to the question of rents, the selection of one tribunal or another and so on—which might in practice prejudice the long-term solution. This Bill, whichever way it is looked at, either in benefits or hardships, or scope, or the nature of the remedy and so on, does not indicate in any way at all the shape of things to come in regard to these problems.
§ Mr. Leslie Hale (Oldham, West)
My right hon. and learned Friend said a few minutes ago—and I heard it, not with enthusiasm—that in preparing this Bill the Government have set out to be as non-controversial as possible. Can we have an assurance that when the permanent legislation is brought in, that will not be the objective, but that the objective will be social reform?
§ The Attorney-General
I am going to deal with the proposed permanent legislation and my hon. Friend will then see whether he disagrees with what I say. I suspect he will not, but there is no point in introducing controversial matters in 372 regard to a temporary problem in which controversy is not necessary, and we hope with regard to this Bill that controversy will not be necessary.
I want now to turn to some of the background of this matter. As the House knows, over the last two or three years there has been long and detailed examination of the problems of the leasehold system by a Committee which was set up in the early part of 1948 under the then chairmanship of Lord Uthwatt and, when that great public servant died, unhappily and in the full plenitude of his powers, Lord Justice Jenkins was good enough to take over the chairmanship and brought his great knowledge and ability to bear on the problems. The Committee included a number of people eminent in this branch of the law and, indeed, several Members of Parliament as well, of whom my hon. Friend the Member for Oldham, West (Mr. Leslie Hale) was one and the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) was another. The reports of the Committee are very learned and important documents, and I think the House would wish me to express their gratitude and the gratitude of the Government for the reports that have been made.
In its various reports the Committee made a number of very interesting recommendations on technical questions arising in connection with leasehold, such as repairing covenants, improvements, restrictive covenants and so forth, and the Government, of course, are giving those recommendations and others very careful consideration in connection with the whole problem and its long-term solution. But, on the main question of principle with which the Committee was concerned no one can accuse the Committee of attempting to lay down the law in this matter to the Government. Neither the interim Report, which covers business premises, nor the final Report on the whole problem was unanimous. There were—and I do not say this in any critical spirit at all—majority and minority reports and reservations. That, I think, was inevitable in the nature of things and arose in part, as my hon. Friend has just indicated, from the fact that there is a real difference of approach, social and political, to the problems which have to be solved. I shall come to that later.
The Committee had to deal with problems which on any view were highly diffi- 373 cult and controversial, whether tenants should have the right compulsorily to acquire the freehold of their premises, leasehold enfranchisement, whether business rents should be controlled, whether protection should be given to business premises on the same lines as under the present Rent Restriction Acts, and things of that kind, and even the technical questions about the covenants and so on were not lacking in material for controversy.
But whilst it was inevitable in the nature of things that there should be considerable diversity of opinion, the Government and the House must be most grateful to the Committee for the way in which they have analysed the difficulties of the problems involved and for the great mass of heavy work which was done by the able and busy people who formed the Committee; work of very great value in providing the material on which our further examination must now proceed. But, at the end of the day, responsibility for recommending legislation must, of course, rest with the Government.
The majority Report recommended that a business tenant should have the right, on certain conditions, to a renewal of his tenancy, but no corresponding security of tenure was recommended in respect of residential tenants outside the limits of the Rent Restriction Acts. Although methods of protection may differ, we agree with the supplementary Report that we cannot accept this distinction between the businessman or his premises and the ordinary tenant in his home.
If we are taken to task for not accepting the Committee's recommendations in one regard or another, I must also point this out, that the Committee's recommendations related to the long-term solution of this problem; this Bill is a temporary standstill. For the long term we have rejected nothing the Committee have recommended. We shall take into consideration all the recommendations, both majority and minority, in making up our minds, but, in view of the differences of opinion, we must re-examine the arguments by which the various sections of the Committee reached their final views and we must, as the Government, accept the responsibility for whatever recommendations we put forward to the House on these major matters of policy.
Already we have set up a Committee of officials under the chairmanship of a 374 Minister of Cabinet rank to study the matter and to prepare legislative proposals for consideration first and introduction in due course. I must say at once—and this will not be controversial, if anything I say is controversial—that everyone will agree that there is a lot of tidying up of the existing law to be done and I hope. perhaps also, of codification of it, which might also be possible. No one familiar with this branch of the law will expect it to be anything but a very substantial and difficult task, one which would—
§ Mr. Molson (The High Peak)
Is this Committee considering the whole scope of the existing Rent Restriction Acts?
§ The Attorney-General
No, I am coming to that in a minute. This Committee is dealing with the whole field of leasehold reform. The position under the rent restriction legislation is a different one and also a difficult one. I shall say a word about that in a moment. I should not like to say which is the most difficult of the problems. This problem of leasehold reform, certainly, will provide a very difficult task, one which would tax to the limit—if there were any limit, which I am beginning to doubt—the skill and ingenuity of the Parliamentary draftsmen.
It is to tide over that work by this Committee that this Bill introduces a standstill for two years. The Bill is to last for two years and it is not intended that it should be renewable from year to year after that period. Some people may think that the period is too short, because already pressure is being put upon many tenants to renew leases on onerous terms although the leases will not expire for three, four or five years hence. Naturally, the tenants are in doubt as to what they ought to do in the circumstances. But we thought it right to choose a period of two years for this standstill Measure, because we felt that the period of uncertainty and of inconvenience, or perhaps even hardship, ought to be reduced to a minimum, and because we believe that by the end of the two years we should be reasonably sure of having permanent legislation ready to take the place of this interim moratorium Measure.
I indicated that there were many matters on which there has been considerable difference both on principle and on method, but there has at least 375 been considerable agreement about two matters. It was agreed that in the case of ground leases and the leases of certain business premises falling in now or in the immediate future, something ought to be done. We agree with the members of the Committee, both in the minority and the majority reports, who took that view.
The first class of case is that of the ground lease of residential properties coming to an end after a long period of years. As, of course, hon. Members know, building development in this country has taken two broad forms, apart from the case of the man who has bought his freehold piece of land and then built his own house upon it. Apart from that, there have been the cases where the speculative builder—and I do not use the term in any derogatory sense—has bought a large freehold estate, built a number of houses upon it and then let those houses at whatever rent he could get—a rack-rent as it is called. That case we do not deal with.
The alternative method, which was very much adopted in the last century was for the owner of the land to let off plots of it for a long term of years—60, 70 or generally, I think, 99 years—at a rent for the ground only. Usually it was a small rent of a comparatively few pounds, but it was subject to a condition that the lessee would not only pay the ground rent but would built a house upon it. Under such a lease, when the 99 years, or whatever the term was, comes to an end, both the land and the house upon it revert to the freeholder the owner of the reversion.
That, of course, is when trouble begins for the ground lessee who happens to be occupying the house at the time—not the original tenant, but very often some family descendant or someone to whom he has passed on the property—and he has to consider his position. He has no protection if the ground landlord decides to turn him out or to hold him to ransom for an increased rent, or if he decides not even to give him that opportunity but to sell the house to somebody else. Of course, at the end of the 99 years there may be grounds for some increase in rent, although there is more than one view about that. That is why I said that when we come to the long-term solution we may find ourselves involved in controversy. I 376 mention that as one of the matters on which controversy may arise.
In the end, all this legislation for security of tenure and for control of rents that we have had over the last 30 or 40 years, has largely been due to scarcity values. Under present conditions the rents which can be demanded by landlords who seek so to do—and I do not say that all landlords do seek to—can be very exorbitant indeed. Rightly or wrongly—I am not talking about the law now; there is no doubt about the law—but, rightly or wrongly, from an ethical point of view, many of these people living in houses built by their forebears look upon the houses as their homes and as their own.
The position in regard to that was very well described in a passage in the majority Report, although it is fair to say that it was not wholly accepted by the members of the Committee as being an accurate description. In paragraph 60 this is what they said they were told:… we are told that there are still many working men, especially in the mining valleys, who own the ground leases of the houses in which they live. It is alleged that, when these leases were originally granted during the middle years of the nineteenth century, workers who took them—in many cases the fathers and grandfathers of the present occupiers—were obliged to accept the terms offered by one or other of the few landlords who owned all the land in the desired locality, and often did so without any real understanding of the limited character of the interest they were acquiring or of the obligations which it involved. It is claimed that many of these leases are now due to expire and the present occupants are thus threatened with grave hardship through the loss of their homes and the probability of heavy claims for dilapidations.
§ Mr. Derek Walker-Smith (Hertford)
Will the right hon. and learned Gentleman read the next sentence?
§ The Attorney-General
I wish the hon. Gentleman would give me a chance. I was just about to go on to summarise the effect of the next sentence, but what he asks me to do is to read the next sentence in the next paragraph. I have read the whole of paragraph 60. The next sentence of paragraph 61 says:At this distance of time it is obviously impossible to adjudicate upon the charges of unfair conduct on the part of the original landlords in the granting of leases 80 or 90 years ago.That is why I began my quotation, if the hon. Gentleman had done me the 377 courtesy of listening to me, by saying that this description was not accepted by some of the members of the Committee. That is why, if the hon. Member had had the patience to listen to what I am now going to say, he would have heard that it is true that the majority of the Leasehold Committee did not consider the problem which had been thus described to them to be a large problem. On the other hand, contrary to the view implicit in one of the leading articles in "The Times," they did think it a large enough problem to merit legislation in order to bring these premises within the protection of the rent restriction legislation.
I have referred to two leading articles in "The Times"—
§ Mr. Walker-Smith
Since the right hon. and learned Gentleman has chosen to pray in aid the leading article in "The Times," will he say whether or not that leading article gives any support to the suggestion that "The Times" thought that this Bill was an appropriate solution?
§ The Attorney-General
The hon. Gentleman is seeking to make my speech for me. I am afraid that it will be a very long speech. It will be made much longer if the hon. Gentleman seeks to anticipate the very next point that I wish to make.
I was saying—and perhaps the hon. Gentleman heard me—that I had referred to two leading articles in "The Times" and that as I went on with my speech I should have occasion to refer to them again. Let me say this about them. "The Times" has devoted two leading articles to this question, and from time to time I shall comment on them. They were, as one would expect, reasoned and careful articles, but I rather thought—if one may be permitted to say this about such a great British institution—that they were not quite so accurate and not quite so well informed as their leaders usually are when, for instance, they are criticising the policy of His Majesty's Opposition. But I should come to some of the points in which we do not accept either the accuracy of the comments in "The Times" or the conclusions which they seek to draw.
Whether the problem is a large one or not is a matter about which hon. Members will be very well able to judge. Hon. Members particularly from constituencies in South Wales and on the North-East Coast will all have their views about this 378 matter, and will no doubt express them. If any hon. Member considers that this is a negligible problem and we ought not to have any legislation about it, which I think is the view of "The Times" although quite contrary to the view of the Committee, no doubt he will get up and say so.
We are dealing in this Bill in the main with small houses, although many middle-class homes are also involved. In the main these are small houses, which, in the ordinary way, would be controlled under the existing rent restriction legislation, and in which the tenants have been living for long periods of time. Yet, because these houses happen to be let on ground leases to occupying tenants, there is no protection when the ground leases come to an end. It is not surprising that the members of the Committee, however differently the leader-writer of "The Times" may think, whilst differing on the merits of the argument that these leaseholders had a moral right to the ownership of their property, were all agreed, at least in the cases of houses within the Rent Restriction Acts limits, that as much security should be given to the ground lessee as to the tenant of a similar house on a full rack rent. That is the first answer which I venture to make to the leading articles in "The Times."
The Committee also made a recommendation on a related point, which I take up in passing. I am afraid that this is a rather technical point, but this Bill is full of technicalities. Sometimes A, a ground landlord, lets on a long lease some premises to B, and B in turn lets the premises to C at a full rent or rack rent. Until recently it was thought that on the termination of B's intermediate lease C, who was the tenant in actual occupation, would be protected under the Rent Restriction Acts as against A, the superior landlord if he had been so protected against B, his immediate landlord. But earlier this year in a case called The Knightsbridge Estates v. Deeley, the Court of Appeal held that C, the occupying tenant, had no such protection.
That decision is likely to affect quite a large number of sub-tenants who hold from intermediate landlords, the intermediate landlords themselves being ground lessees. The occupying tenants believed themselves to be protected by the rent 379 restriction legislation, and I think it has already caused hardship in a number of cases. There has been a considerable demand for legislation to deal with the matter and the Committee recommended it. Part I of the Bill is, therefore, designed to deal with the position both of the occupying ground lessee and the subtenant at the expiration of the ground lease, although we intend to deal with the matter in a rather different way from that proposed by the Committee.
We differ from the Committee in this temporary legislation for two reasons. Firstly, we do not know what rights the occupying ground lessee may enjoy under the new permanent legislation. All sorts of things have been suggested in regard to him. Some think he should go on as before; some that he should have the right to a new lease but still at a rent for the ground alone, although at a rent which reflects the present value of the ground, which would be higher than the value 90 years ago.
Another view is that, failing agreement between the lessee and the landlord, the lessee should be brought within the protection of the Rent Restriction Acts and have a new rent for both the ground and the house rent fixed by some tribunal. That is a suggestion worthy of consideration in the long-term solution, but it is greatly complicated, as the majority Report points out, by the covenants and the problem of repairs, about which I shall say something later on. It really involves re-writing the whole lease. I might add that I am not rejecting it as a long-term proposal, but am pointing out one of the difficulties. Other people think the lessee should have the right to buy the freehold—enfranchisement.
All these proposals have merits and demerits as permanent solutions, but it would take time to bring them into effective operation. The legislation would be much more complex than people realise. It would take time to set up the judicial and administrative machinery, and it would be difficult to introduce any of these proposals as merely temporary expedients. They are long-term solutions, and to introduce them now as temporary expedients would very much prejudice the question of the long-term solution.
In the meantime, something has got to be done, and the long-term solution may 380 be very much easier if, when the time for it comes, it is dealing with a tenant who is still occupying the house as the ground lessee, and it is not necessary to go back to revive a status which the temporary legislation has terminated. Indeed, some of these proposals would involve fundamental alteration, in the existing position without providing the permanent solution. That is why we do not feel at this stage that we should adopt the proposals suggested.
The second reason is that the Committee was thinking, mainly at all events, of houses within the rateable value of the Rent Restriction Acts. We must not assume that the permanent legislation dealing with ground lessees will be limited to the small properties of that kind. Indeed, there was a significant body of opinion in the Committee in favour of giving security of tenure to all classes of residential tenants, and it happens that all the letters I have received on this subject from individuals have been from occupiers of houses above the Rent Restriction Act limits, middle-class people, who tell me that they are suffering considerable hardship. They ought to have the protection the Tory proposals deny them. We think it right, in view of the long-term measure, to maintain the status quo for all ground lessees whatever the rateable value of their houses might happen to be and give them all, whether they happen to occupy a large or a small house, equal chance to benefit or not from the permanent legislation, whatever the legislation may be.
What the Bill provides, therefore, is that when a ground lease comes to an end during the two years after the Bill becomes law and the lessee or a member of his family is living in the property at the time, he will continue to hold the ground lease at its existing rent, terms and conditions—subject to one matter which I shall come to—until the end of the two-year period. He does so automatically unless the tenant waives his right and gives notice to terminate the tenancy. I said that the tenant or some other member of the family must be living in the premises at that time. We do not define by statute what is meant by "family." That problem has already arisen under the Rent Restriction Acts, and the ground is fully covered by judicial decision.
381 We considered whether in giving that right we should make it subject to a condition that the tenant must have been in prior occupation for some stated period, five years, ten years or whatever the time was. Some of the arguments to that end were not unattractive, but we rejected them on various grounds. Whatever the qualifying period which was selected, it was bound to he arbitrary, there would be anomalous cases on both sides of the borderline, and it would encourage litigation as to who was living in the house at some particular period.
On the other hand, I do not attempt to conceal from the House that the Bill as framed now will give the same protection to the man who has become a ground lessee recently as to the man who for many years has lived in the house as his permanent home. We thought that that anomaly was better than the complications which would otherwise be introduced into the operation of what is a very short and temporary Measure. Moreover, of course, from the point of view of the landlord, it does not much matter as a rule whether the tenant who gets the extra two years has been in occupation for 10 years previously or only 10 days. So far as he is concerned, it is usually fortuitous, who is the tenant for the time being. Whoever the tenant in occupation is, he gets protection by the provisions of the Bill.
So much for ground leases which actually terminate within the two-year period. There are also cases, and it is right that I should draw attention to them, where, for one reason or another, the lease has already expired before the Bill comes into actual operation and the tenant is still in occupation, "holding over," as it is technically called. We cannot, of course, interfere with the cases where the position resulting from the termination of the lease has already been dealt with and has been accepted by the tenant, who, perhaps, has got out or has agreed to a fresh tenancy on new terms, or when, although still paying the same ground rent, he has paid a premium for being allowed to stay in possession and occupy for a further period.
These cases will be outside the Bill, and I only mention that because the effect of this premium provision has been quite misunderstood. "The Times" did not appreciate that this favoured the landlord. Where a premium has been paid as a con- 382 sideration for staying on after the expiration of the lease, we regard that as a closed transaction, and do not attempt to disinter the old bones. Where the tenant is still in occupation, and is either paying the same ground rent or no rent at all, we shall assume that, for one reason or another, both landlord and tenant have been marking time, possibly to see what the new legislation would do, and the Bill will cover those cases. If, on the other hand, a new bargain has been made, the Bill will not affect it.
I have been talking all this time about ground leases, building leases. It is very difficult to define them, and the Bill, as a matter of fact, uses the expression "long leases granted for more than 21 years." In practice, such leases are almost invariably, if not invariably, building leases. We shall cover by this method of definition everything we intend to protect, and it is most unlikely that we shall cover anything else. Leases of houses already built are generally for three, five, seven, 14 or, occasionally, 21 years. Although I have not heard of such a case, there may be exceptional ones where leases of already existing houses extend for more than 21 years. If we did protect an occasional house of that kind, it would be most exceptional and no great harm would be done.
On the contrary, there were very weighty opinions behind the minority Report which recommended that all these leases of residential premises, whatever their period, whether they were building leases or not and whatever the size of the houses, should have protection, and that is certainly a matter to which we shall give most careful consideration in connection with the permanent legislation to which I am going to refer. I have said that leases of over 21 years will continue for two years on the same rent, terms and conditions, and that brings me to what I think may be the one matter of some controversy in this Bill.
It will be said—indeed, it has already been said—that the fact that the rent continues at the same rate will cause unjustifiable hardship to the landlord, who has, perhaps, been waiting patiently for the reversion to fall in so that he might re-let the house for something like a modern rent, or who, perhaps, has mortgaged the property or wants to dispose of it in some other way, or, occasionally—for most of 383 these reversions are really held as investments—has obtained the reversion in order to get the house for himself. It may be said that it is bad enough, when the lease falls in, that the landlord should be prevented from getting possession, for a certain number of years, but it is worse still that he has to allow the tenant to remain in occupation at an out-of-date rental.
One need not deny that there is some force in that argument, and that there may be cases of hardship. I am not suggesting for a moment that all reversioners—ground landlords—are either earls or estate companies. I am quite prepared to hear from the opposite side of the House of the case of the widow or orphan who has invested all her savings in buying a reversion. It is a legitimate investment, and if these cases exist they are hard cases. But hard cases no more make good policy than they make good law.
It seemed to us that there were weighty reasons why these hard cases, if they exist, should not lead us into the establishment, for this purely temporary period, of any elaborate machinery for increasing the rent. This is a moratorium, a standstill Measure, designed to hold the position until we get the permanent legislation. Even from the landlord's point of view, there seems to be something to be said for not increasing the rent during that period. If we added an increase, no doubt it would have been valuable to them so far as it went, but, when we came to the later stage of permanent legislation, we might have been faced with something which was considered as in the nature of a vested interest—a rent which had already been settled and decided.
That might prejudice the position of the landlord. And then there are administrative difficulties. It would be necessary either to adopt some arbitrary standard like a proportion of the rateable value or an increased proportion or a percentage increase of the existing ground rent, which would result in very wide anomalies and not satisfy either party. If that were not done, we would have to set up a tribunal—and there would be disputes about what tribunal—to fix the rent at a particular figure, and there are many objections to that.
Moreover, and this point has, I think, been quite lost sight of, by people who 384 take the view that rents ought to be increased even in a temporary measure, if we raise the rent to a reasonable market rent, or a rack rent, we would have to look at the covenants, particularly the repairing covenants, which, of course, are all the more onerous upon the tenant because they are drawn on the basis that the tenant will be paying a very low rent for the ground alone.
The majority of the Committee referred to that matter in paragraph 108 of the final Report. What is sauce for the landlord in this matter would have to be sauce for the tenant as well, and we should be involved in rewriting the whole lease. It seems to us quite inappropriate to do that for a purely temporary period, and we thought, balancing things as far as we could—the hardships that might be inflicted on the landlords on the one hand, and, on the other, the volume of hardship and suffering which might be inflicted on the average tenant—that, on the whole, the better plan would be to maintain the moratorium or the status quo principle.
There are many precedents for doing that. I do not mean simply any general moratorium, such as one may get in wartime but, in this particular field of property law. There are in the field of rent restriction legislation 11 Statutes now, I think. There is, in another field, another code of law covering property, and the principle upon which all these Acts, passed by Conservative Parliaments for the last 30 or 40 years, has been based is that they do interfere, and may properly interfere, sometimes retrospectively, with a landlord's contractual rights, may restrict and even reduce the rents to which the landlord might otherwise be entitled and may deny him possession which he might otherwise get. I do not want to draw too close an analogy between the two classes of legislation, but we are certainly applying in this temporary expedient a principle which has been recognised for a long period of years in property legislation. And we are applying it in a case where everybody agrees that something must be done.
As for the other terms and conditions of the lease, with one exception they will remain the same. The exception is that the lessee will be protected against forfeiture for breach of covenant except for non-payment of rent or for failure to insure. I say except for those two things. 385 There may, of course, be other covenants in special cases which ought also to be made exceptions to this general principle. We do not want Clause 4 to become, as someone has suggested it might become, a sort of brothels' charter. We are very glad to know that some landlords are waking up to their responsibilities in this regard.
Then there may be restrictive covenants in regard to user which have been broken. These covenants are not, I think, of wide importance in regard to the class of case we are dealing with here, but we shall certainly consider in Committee any such cases as may arise. But the most difficult case is the covenant in regard to repairs. That is the chief practical problem which faces the ground lessee at the end of his lease, especially the small man who comes to the end of the term and finds himself under a very heavy penalty under the repairing covenant. Very often he has not recognised the extent or nature of his liability at all, and in the past there have been many cases where leaseholders were subjected to forfeiture by landlords enforcing the letter of these repairing covenants, or who were induced to surrender their leases before the end of the term in order to get out of their liability under the covenants.
There are now a number of statutes which give a considerable measure of protection against the full operation of the right of re-entry on the breach of repairing covenants, and it is also true and fair to say that many landlords, if not most, nowadays do not seek to enforce the onerous repairing covenants under the long building leases because they know that the tenant simply cannot comply with them. As a matter of fact, "The Times," in its leading article today, says that the problem of repairs is quite separate from that of security, and ought not to have been dealt with in a single Bill. The Committee thought exactly the opposite; the Committee thought that these two problems were intimately connected, and obviously, the two years' moratorium would be completely illusory if, as "The Times" seems to suggest, we did not provide protection against the risk of forfeiture. You cannot provide security of tenure, especially if the rent is to go up, unless you deal with the covenants. But the practical inroad that we make on the rights of the landlord in this connection is not very great.
386 The majority Report points out in paragraph 64 that proceedings for forfeiture are often of very little practical value, and I believe from what I have been able to gather that in practice they are rarely resorted to. It may be that we are dealing here with something which is often more theoretical than real, but it is still possible for a landlord who stands on his rights in the last five years of these long tenancies either to force the lessee into the position of having to accept the forfeiture or to pay a ruinous bill for repairs. It is little use giving the lessee two years' extension of his lease if during that time his landlord has the opportunity of terminating the lease by forfeiture. Therefore, we provide the occupying lessee with a protection against the risk of forfeiture or surrender on those grounds.
Now I come to a rather different problem, that of the sub-tenant of the rent-controlled house who is paying a full rent, who holds from an intermediate landlord and who does not continue to get protection under the Rent Restriction Acts if the intermediate landlord drops out. That is the Knightsbridge case to which I have already referred. Under Clause 5 of the Bill, the sub-tenant will be given for the balance of the two years for which the Bill operates, the same rights and duties in relation to the superior landlord as he previously had against the intermediate landlord. The position of the intermediate landlord holding at a ground rent and sub-letting at a rack rent was simply that he was there making a profit. It was perfectly legitimate for him to do that, but there is no reason why we should enable him to continue in that position at the expense of the superior landlord.
Therefore, when the intermediate landlord's lease comes to an end, he drops out of the picture altogether, he disappears, and there is a kind of notional assignment of the rights and liabilities which he had against the sub-tenant to the superior landlord. The lease goes on, but now the occupying tenant is in direct relationship with the superior landlord on the same terms as before. If it was a rent-restricted tenancy it would still be a rent-restricted tenancy, and if it was a contractual tenancy it would be on the same contractual term, whatever that may be. It may be asked, and some reference—
§ Mr. Manningham-Buller (Northants, South)
Does the right hon. and learned Gentleman mean that so far as the subtenant is concerned he will be paying neither a greater nor a lesser rent than he was paying to his immediate landlord?
§ The Attorney-General
Yes. During the two years' period of the Bill, it is as if his liabilities under the lease to the intermediate landlord had been assigned to the superior landlord, and he will be paying exactly the same rent and on the same conditions as before.
That is how we deal, in the case of long building leases, with the problem which arose in the Knightsbridge case. It may be asked, why have we not undertaken a straight and permanent amendment of the Rent Restriction Acts in regard to this matter, which arose under these Acts? The answer to that question is quite simple, but it is right that it should be given. This Bill is intended to deal only with the problems which arise on the termination of ground leases. It only deals with questions which arise under the Rent Restriction Acts incidentally and in so far as they relate to long ground leases. This is not a Bill to amend the rent restriction legislation; this is not the occasion for doing that. On the other hand, we all know that the rent restriction legislation is very complicated. As I said, there are now 11 statutes and a very large number of judicial decisions interpreting the statutes, and no doubt intended to make them clearer than they were before.
The amendment and the codification of this branch of the law presents many difficulties, but the matter is at present being studied with a view to the introduction of comprehensive legislation to cover that field. I cannot, of course, hold out any prospect of an early Bill, but this Bill certainly is not the occasion to attempt further amendment outside the field of the ground leases. Piecemeal amendment of the rent restriction legislation would only increase the existing confusion.
§ Mr. Molson
Will the right hon. and learned Gentleman tell us exactly what form that study is taking? Has a committee been set up similar to the one to which he referred before, or is it a sort of desultory talk going on in the Ministry of Health?
§ The Attorney-General
I hope that no studies in the Ministry of Health are desultory, but the matter is, of course, the responsibility of my right hon. Friend the Minister of Health. As far as I know, no committee of the same nature has been set up, but I am assured that it is the subject of active study. It is, of course, a very difficult subject, but, in a sense, it is a narrower one—it deals with the codification and amendment of existing legislation.
With regard to the leasehold law generally we are dealing with problems which have not hitherto been covered by legislation. That is the explanation of the different method of study.
I am sure that the House will be glad to know that I am getting to the end of what I have to say. I now pass to Part II of the Bill. Even if I do not—as I had hoped—receive the unrestrained and enthusiastic support of the hon. and learned Member for Wirral for Part I of the Bill, I am sure that at least, I shall receive his ungrudging approbation of Part II, because in Part II we are doing precisely what the hon. and learn Gentleman recommended in his independent report. He said:Therefore while I accept and recommend a measure of temporary control in an abnormal situation (such as for example has been tried with what appears to have been considerable success in the Tenancy of Shops (Scotland) Act, 1949), I feel the time is not yet ripe"—and I pause there to say that that is why we are introducing interim legislation—for deciding what permanent changes in the law are necessary. Holding this view, I regret that I find myself unable to agree with Chapter V of the Final Report.We find ourselves in complete agreement with that, and that is the view we have in effect adopted in this Bill.
§ Mr. Leslie Hale
That is not really what has been said up to now, and I hope that is not what is meant. I understood the Government to say there had not been time to formulate the very complex statute which would be necessary. I hope it is not going out from the Front Bench that the time is not ripe to do it. In fact, I hope a statement will go out of a decision that it is going to be done as soon as possible.
§ The Attorney-General
I am obliged to my hon. Friend. That is a more accurate way of putting it. I think the hon. 389 and learned Member for Wirral, when he said the time was not ripe, really meant that there had not been time to state exactly what the long-term solution ought to be. That is the position which His Majesty's Government, at all events, take up with regard to the matter. It would have been very nice to have introduced permanent legislation if we could have done it. We thought it would take too long to introduce permanent legislation and, in the meantime, many people would have to suffer hardship.
In fact we are re-enacting the Scottish Act, and this Bill will give shopkeepers the right to apply for a short new tenancy if the existing tenancy comes to an end within the two-year period. There is no doubt that there is a necessity for that. There is no doubt that during the years since the war businessmen have been prejudiced in the conduct of their business through inability to renew the tenancy of their premises. "The Times" lavishes praise on the Landlord and Tenant Act that is surprising. The Landlord and Tenant Act, 1927, was very much criticised by the Leasehold Committee and, as far as the security of tenure of business premises in particular is concerned, it is quite ineffective. In those circumstances it is said by some that protection should be given to all business occupiers—tenants of offices, factories as well as shops. That may be so but in this temporary Bill we do not propose to go quite so far.
The extension of protection to all types of business premises—factories, however large, and all the rest of it—might have very wide implications and repercussions. On the other hand, within a narrower field there is the great difficulty of definition. Moreover, we think it is also true that security of tenure is probably more necessary in the case of a shop than in the case of other business premises. The goodwill of a shopkeeper is very much attached to the shop. If somebody else puts a different name on the outside that may not matter greatly. People will still go to that shop to buy their bread.
That is not so, as a rule, with other business and professional premises. The solicitor wishing to obtain wise counsel might sensibly go, in the temporary absence from the Bar of my right hon. and learned Friend the Solicitor-General, from the Bar—modesty forbids me to 390 mention myself—to the chambers of the hon. and learned Member for Wirral. I am sure that if that solicitor found that the hon. and learned Member had left his chambers and had moved to a new address he would not be satisfied with anybody else in those chambers but would go and find out the hon. and learned Member's new address. I do not think that by any means would be so in the case of a shopkeeper. And so we propose at this stage in this temporary Measure, to follow the precedent of the Tenancy of Shops (Scotland) Act, 1949, which, as the hon. and learned Member for Wirral said. seems to have worked very well in practice, and to apply that to deal temporarily at least with what we think to be the worst cases.
I come finally to a general matter relating to the Crown. With the exception of the two Duchies, to which special constitutional circumstances apply and which, in any event, will give effect to the principles of the Bill in practice, this Bill binds the Crown. We have thought it right that Government Departments should not be exempted from the effects of a Measure which, in protecting tenants from undoubted hardships, may cause inconvenience to many landlords. But there are two ways in which the Crown and local authorities are in a special position. They arise under Part II of the Bill in relation to shops. Firstly, under Clause 14 of the Bill, a Government Department may resist a claim for renewal of a lease. And the House will remember that the scheme of the Bill, as of the Scottish Act, is that applications have to be made to the county court for renewal, and the county court, subject to certain guidance, has a discretion whether to renew or not and, if it renews, to renew on reasonable. terms.
Government Departments may resist a claim for the renewal of a tenancy in the county court on the ground that it would be contrary to the public interest for the renewal to be granted, and the court will decide the matter. Secondly, the court will not grant a new lease if a Minister of the Crown certifies that another use of the premises is necessary on security grounds. I expect that the House will accept that that very limited protection is appropriate in the existing circumstances. My right hon. and learned Friend the Solicitor-General 391 also reminds me that the matter is covered by Clauses 10 and 14, and not only by Clause 14 as I indicated in passing. These are the only ways in which the Crown is exempted from the general provisions.
§ Mr. Manningham - Buller
The Attorney-General referred to the two Duchies. Are we to understand that the Duchies object to being included
§ The Attorney-General
I think that the proper way for me to put the matter is that we thought, as I am sure the hon. and learned Member will no doubt agree, that from the point of view of the obvious constitutional distinction between the Duchies and the private estates on the one hand and the Lands Commissioners and the Government Departments on the other, what was appropriate in one case was not appropriate in the other. We have had it from the Duchies that, in fact, they will implement the provisions of the Bill.
And so, I come back to where I began. I have tried to put the matter objectively, and in addressing the House about this interim Measure I have deliberately avoided any reference to differences of political or social outlook—whether greater emphasis should be placed on the legal rights of the landlord or the social rights of the tenants, which may divide us when we come to deal with the permanent legislation and which, of course, did divide the members of the Leasehold Committee. There are those who will agree with me that the concept of the absolute ownership of the landlord should be replaced nowadays by what Lord Uthwatt called the dual ownership of landlord and tenant. There are others who will stick to the old legal concept and the enforcement of the rights of the landlord as they have been understood hitherto. In due time we shall have to argue all these things out.
This Bill is intended to protect the unfortunate tenant in the interim period while we on both sides of the House are preparing to deploy our arguments and to marshall our permanent proposals. Everybody agrees that something must be done now for the ground lessee and the shopkeeper whose tenancies are about to fall in. We cannot allow their position to be prejudiced merely because we must, on 392 both sides of the House, take further time before formulating our own permanent proposals.
There are many matters relating to this Bill which we shall obviously have to examine in detail on the Committee stage, and I have no doubt that in Committee a good time will be had, if not by all, at any rate, by all the lawyers, with the exception of the miserable Law Officers. We hope to receive assistance from hon. Members in all quarters of the House on drafting matters, and we already have a number of ideas in our own minds by which we hope to be able to improve the drafting of the Bill. If there are Amendments of substance which do not conflict with the principles of this interim legislation, of course we shall be ready to give very full and fair consideration to them.
I hope the House will consider that on the whole, dealing as it does simply with an interim situation and intended to maintain the status quo, this is a good Bill. I hope the House will regard it as a good Bill, and will resist the strong temptation we all always have of making the better the enemy of the good. We have devoted a great deal of time and study to this problem, and we believe that in view of the great complexity and difficulty of all these matters, this is the most practicable temporary solution and that it should secure general support. Therefore, apologising for the great length of time which I am afraid I have taken, I trust that this Bill will receive a Second Reading.
§ Mr. Hector Hughes (Aberdeen, North)
May I ask my right hon. and learned Friend a question about a matter to which he has already referred? He said that it was intended to introduce a similar Bill to deal with Scotland. Will that Bill be on all fours with this Bill, and will it deal with the feuing system of tenure which is peculiar to Scottish law?
§ The Attorney-General
I should be very unwise indeed if I embarked on any discussion about Scottish law. I am nervous enough when embarking on any discussion about English law. I did say that the Scottish Bill would follow the principle of this Bill, with necessary changes owing to differences in the circumstances and facts and the difference in Scottish law.
§ 4.53 p.m.
§ Mr. Selwyn Lloyd (Wirral)
In rising from this unaccustomed place on the Front Bench, I ask for the sympathy and understanding of the whole House. I have been wondering whether the physical prop which I now have in front of me, and which I find both convenient and at the moment necessary, is really adequate compensation for the closer view than usual that I get of the master race on the Government Front Bench. I think the whole House will feel that it is not perhaps inappropriate that on a Bill which has the words "Temporary Provisions" writ large in its title, the first speaker from the Opposition Front Bench should also have the word "temporary" in large letters after his name.
I also ask for the sympathy of the House on another ground—one to which the Attorney-General has already referred. I find sufficient difficulty in making my meaning clear to the House at any time even on simple little subjects like double taxation or the European Payments Union, but to attempt a clear exposition on the law of landlord and tenant is indeed a task sufficient to daunt anyone. The Attorney-General, at the beginning of his speech, referred to the absence of the Lord President of the Council, and of course we accept the reason for that. Personally I had a sort of sneaking feeling that it might be that he had read the Report of the Leasehold Committee, or even the Bill, and that that was the reason he had not come here.
The Attorney-General paid a compliment to the members of the Leasehold Committee. I think we all regarded it as a misfortune to be a member of that Committee because it was two and a half years of really hard labour. The interim Report had two minority Reports. The final Report had a note from the new Chairman differing from the majority interim Report, a supplementary note on residential premises signed by five of the members, a minority Report signed by two, and my own minority Report as far as business premises were concerned. I do not think that throughout the whole of those painful proceedings there was a single issue of principle or matter of detail upon which that Committee was not deeply divided; and the Committee, on the whole, did not consist altogether of 394 unreasonable people. This gives some indication of the complexity and difficulty of the problem.
I entirely echo what the Attorney-General said about sympathy with the draftsmen, and I should very much like to know how many drafts of this Bill were produced before this one eventually saw the light of day. I should very much like to know a little bit more about the birth pains of the Bill. The Attorney-General dealt with some of the wide matters contained in the Committee's Report, and he said something about permanent legislation. I am not going to attempt to embark upon those matters today, because I think there are other more appropriate occasions for debating general matters like leasehold enfranchisement and the question of permanent legislation.
Before looking at the Bill in detail and stating our attitude, I want to make one or two general observations which I consider relevant to the Bill. The first—and I expect this will be regarded as controversial—relates to the general tendency to attack landlords and leaseholds as evil in themselves. The landlord has always been a convenient target. I speak as one who has always been a tenant, and I know that the landlord is a very easy person on whom to vent either one's personal ill-feeling or one's political dislike. It is rather like the weather, or the Government of the day, or the National Coal Board, or even certain Ministers. They are very convenient receptacles for what one feels generally under the impulse of the moment. It is just about the same with landlords and the leasehold system. People are apt to talk about the system as if it were radically wrong in itself. I was glad that the Attorney-General did not go that far in his speech this afternoon.
It seems to be forgotten by a great many people that it is of real benefit to a tenant that someone else should risk his capital in providing a house or business premises for the tenant. In the case of the shopkeeper, instead of tying up his savings in the purchase of premises, it enables him to use those savings as working capital for carrying on his business. Even the building lease for 99 years has in many cases undoubtedly enabled development to take place under proper control and proper planning, and 395 there are outstanding examples of that in London itself. As for the theory of it, it seems to me that there is much to be said for the idea that the land and the buildings should revert at the end of a period of 99 years.
§ Mr. Lloyd
I am dealing for the moment with the theory. To begin with, the rent is calculated on that basis. Secondly, 99 years is probably a proper life for the type of building to be constructed. After that time it probably needs either rebuilding or a substantial capital sum to be spent upon it to recondition it or modernise it. It may well be that the whole estate may need to be redeveloped.
§ Mr. Hale rose—
§ Mr. Lloyd
I will give way in a moment. I want to finish this part of my argument; I am dealing with the theory at the moment. The theory was that when the property reverted the landlord would spend the necessary capital sum, or someone else holding a new ground lease would spend the necessary sum, in modernising the premises or in redevelopment, and that modernisation or redevelopment certainly was of benefit to society.
On that basis many intermediate contracts have been entered into—and the right hon. and learned Gentleman has spoken of this—and the value of the residue of the lease would be exactly calculated in accordance with the number of years it had to run. In fact, that system is very much the system, it appears to me, envisaged in Section 5 of the 1946 New Towns Act. It is very much the system which is envisaged in what is called comprehensive development of blitzed sites. In theory, I submit that there is a great deal to be said for the system. Of course, the trouble is that, owing to two world wars and the consequent housing shortage, in some cases the leases are falling in when there is an acute shortage of alternative accommodation.
§ Mr. Leslie Hale
The hon. and learned Gentleman, who disagreed with me so courteously for two-and-a-half years on the Committee, made two propositions about building leases upon which I wanted to challenge him. First, he said there was 396 evidence that the rental charged for the land 99 years ago bore no particular relation to the economic value of the land and was necessarily cheaper. The second proposition, with which I found even more difficulty in agreeing, was that on the whole it was rather a good thing that the house should revert at the end of 99 years to the landlord because, he said, that was about its normal economic life. If so, how does the hon. and learned Gentleman justify the proposition that the tenant has to put the property into repair before it reverts?
§ Mr. Lloyd
As far as the first point is concerned, there are many cases in which plots of land were let on building leases for sums like £1 or £2 a year. I suggest that those plots of land would certainly not have been let for those sums had it not been envisaged that there would be a building lease and at the end of 99 years the land and the property would revert. As far as the second point is concerned, it is quite true that there were repairing covenants in those building leases, but my point was that owing to the change in fashion, if you like, in structural methods, it is very likely—and I think this has been proved to be the case—that after a life of 99 years, even where the property has been kept in good repair, it needs reconstruction and modernisation.
§ Mr. Janner (Leicester, North-West)
May I ask a question on that? If that is the case, will the hon. and learned Gentleman say why so many notices of dilapidations have been served by landlords upon lessees?
§ Mr. Lloyd
Notices of breaches of contract have probably been served because there have been breaches of contract. I have been dealing with the theory, and I am prepared to admit that, owing to shortages, the theory has not worked out as it should have done. I will deal with that further point in a few moments, but I must point out that the difficulty over the system has been caused by two world wars and, to some extent, by too much legislation.
So far as the landlords themselves are concerned, the evidence before the Committee was to the effect that the majority of landlords maintain high standards and that the problem has been how to make 397 the few bad landlords conform to the code of the vast majority. I think I am accurate in that, and I am certainly saying what I believe to be true. I do not think the right hon. and learned Gentleman would dispute that proposition.
The second general observation I want to make is that changes in the law which impose alterations in the terms of a contract are highly undesirable, because one contract may be the basis for many others, and a reversion—that is to say, the right to possession at the end of a lease—is property just as much as a motor car or some Defence Bonds, are property. It can be valued, it can be bought and sold, loans can be made using it as security; and to start monkeying about with the terms of that contract causes uncertainty and hardship in the short run and in the long run causes diminished regard for the sanctity of contract, which is the basic necessity for any civilised community.
§ The Attorney-General
Is that not exactly what was done by the rent restriction legislation introduced by Conservative Governments over a period of years, quite apart from the other legislation to which I referred?
§ Mr. Lloyd
The right hon. and learned Gentleman is very touchy when we emphasise the sanctity of contracts. Of course, that was one of the great disadvantages of the rent restriction laws and all other legislation which has sought to regulate relations between landlord and tenant. It is only exceptional circumstances caused by the war which has made it necessary. This business of seeking, as far as possible, to maintain the sanctity of contract is in the interests of society, which is not an irrelevant consideration.
The third general observation I wish to make is in regard to a matter mentioned by the right hon. and learned Gentleman—the fact that the law of landlord and tenant is in a hopelessly unsatisfactory condition. The right hon. and learned Gentleman referred, not altogether with approval, to one leading article in "The Times." I want to quote to the House the opening paragraph of the leading article which appeared on 22nd November, because I think it puts the 398 case very fairly from the point of view of both the tenant and the landlord:The present century has witnessed a steady stream of enactments altering the rights and duties of landlord and tenant, almost always in the tenant's favour. Housing and planning legislation, land and agricultural Acts, rent restriction, amendments of the law of property and of landlord and tenant, to which must he added the effects of property taxation and of requisitioning and other official action under emergency powers—all these have sharply tilted the scales, formerly well weighed down on the owner's side. These reforms have not been systematic. Quite apart from the jungle of laws governing the control of rents, there is a tangle of measures regulating other aspects of contracts of tenancy which needs to be judiciously pruned and set in order. There are still matters in which the law might he further modified to the tenant's advantage, many others in which the landlord deserves fairer treatment.I think that is a very fair statement of the situation at present. It is very easy to forget that laws designed to benefit very often have the opposite effect. I do not think anything is doing more to produce slums today than the Rent Restriction Acts, necessary though they are at the present time. Laws which make the ownership of houses for occupation or for investment, and the keeping of them in repair, unattractive and uncertain and impossible, however well meant those laws may be, will ultimately defeat their object of improving social conditions.
This Bill does nothing to clear that jungle or to untie that tangle. It is a moratorium. I think we might call it a "house freeze," in order to be consistent with climatic conditions, the fuel situation and Government planning; it is likely to add further complications to an already complicated situation and to make confusion worse confounded. The opportunity has been lost for giving immediate effect to some of the non-controversial matters suggested in the Report of the Leasehold Committee.
The fourth general observation I want to make is with regard to the real cause of bad relations between some landlords and their tenants; it is the shortage of alternative accommodation, because the system must depend upon a certain amount of freedom of choice to the tenant, and it cannot be disputed that that does not exist in certain areas at the present time. As I said, the cause is two world wars, the interruption of house building and the redistribution of population.
I see that the Attorney-General agrees, but I do not expect him to nod his head 399 when I say that, added to those causes, is the Government's failure to do as much as they could for the provision of houses—the mess, muddle and maladministration of the present Minister of Health. [HON. MEMBERS: "Oh."] I do not want to be controversial, and I do not admit that that last phrase enters into the field of controversy, because it is so readily admitted; but I do maintain that the real and the best contribution to a solution of these difficulties is more houses and more shops, not more Acts of Parliament making still more unattractive the building and the owning of property. I ask for the forgiveness of the House for delaying particular consideration of the Bill by those general observations, but I maintain that they are vital to a proper appreciation of the value of the Bill.
Now, the Bill itself is divided into several parts. I shall deal first with the second part. The right hon. and learned Gentleman was so kind as to seek to attribute to me some of the paternity of Part II of the Bill. Well, we agree that in these exceptional times some additional statutory protection is required for the tenants of certain business premises, and that view, which is held on these benches, is based on the Scottish precedent. Part II of the Bill appears to be based also on that precedent, and if we are to accept the final Report of the Guthrie Committee, then the Scottish precedent does appear to have been a success. Therefore, we welcome Part II of the Bill.
There was some argument about the Attorney-General's reference to something in my minority Report. Let me make my own position perfectly clear. During times of exceptional scarcity, I think that there is a case for a temporary Measure such as this which is being suggested. I also think that there are certain smaller matters in relation to the tenancy of business premises which do require permanent legislation. My feeling is that it is wiser to postpone important permanent legislation on this matter, should permanent legislation be necessary—which I doubt—until we have seen how the interim scheme works out. That was my interpretation of the word "ripe," and that is what I have always said throughout the deliberations of the Committee.
§ Mr. Turner-Samuels (Gloucester)
May I ask the hon. and learned Gentleman whether he agrees with the exclusion from this Bill of premises where wholesale businesses are carried on, and offices and lock-up garages, and things of that kind?
§ Mr. Lloyd
The hon. and learned Gentleman has really anticipated what I was just going to say. Although we welcome this part of the Bill, there are one or two comments that I wish to make on matters of detail. As the Attorney-General has said, the Government have excluded from their purview premises other than shops. Speaking for myself, two or three years ago I do not think that I would have agreed with that view; but my present view is that I think the Government are probably right. I put it no higher than that.
Secondly, with regard to a qualifying period of occupation, I should have thought that it was at least arguable that there should have been a qualifying period of occupation before the tenant got protection. After all, the theory of this is that a man who has built up a business should not be turned out, there being no alternative accommodation. It seems to me that before a business is protected, there should be a business to protect and a qualifying period. However, that is a point which can be further ventilated on the Committee stage.
§ Mr. Lloyd
I think it would depend on the nature of the business and the circumstances under which he acquired it.
My next point on Part II is Clause 10. That, I understand, is based on the Scottish precedent, and it gives to the court a very wide discretion as to the terms on which renewal should be granted. In Scotland—I speak with great diffidence about Scottish matters—I understand that there is more chance of uniform action by the courts because most of the shop premises in Scotland are on annual tenancies, and they all fall in at the same time of year, and because, too, the country is considerably smaller.
In this country, however, I wonder whether we shall not get completely different treatment in the county courts in one part of the country and in the county 401 courts in another. I should think, therefore, that we might have the Bill interpreted differently in different parts of the country, and that in one place the interpretation might be very much in the tenant's interests and in another place in the landlord's interests, and that it would be a matter of chance which county court one came before.
I think it is arguable whether one should not seek to put something in the Bill in the way of a formula for a fair rental, which we sought to define in the final Report in paragraphs 178 to 185. That is a matter worthy of consideration during the Committee stage. I think I heard one hon. and learned Gentleman asking how we should determine what a fair market rental is. If he will read those paragraphs to which I have referred, he will see—
§ Mr. Turner-Samuels
Is that not impossible? During times of acute shortage, how can one determine a fair rental?
§ Mr. Lloyd
It would be better if the hon. and learned Gentleman would follow my advice, because this is one of the difficulties we sought to deal with, and it is covered in the paragraphs to which I have referred. As the hon. Member for Oldham, West (Mr. Leslie Hale) pointed out, a previous attempt had been made to deal with the matter in the interim Report.
§ Mr. Lloyd
"Scarcity value" is a technical term, and I think that this is a Committee point, and that we had better discuss it in greater detail when we have the opportunity on the Committee stage; but there is, according to my recollection, a difference between the definition in the interim Report and that in the final Report. The one I was putting forward was the one in the final Report. [An HON. MEMBER: "In which paragraphs?"] Paragraphs 178 to 185.
The fourth point on Part II is with regard to Clause 13, which excludes the right of appeal. Again, I should have thought that that was very questionable wisdom. I understand that the argument for excluding the right of appeal is that it is anticipated that the Act will last only a very short time. Of course, from a 402 county court in any case there is no appeal on a matter of fact, and therefore I should have thought it would have been wiser to have left in a right of appeal on a matter of law. Once again, however, that is a matter which should be fully ventilated during the Committee stage.
So as far as Part II is concerned, we give it a welcome from these benches, subject to those points of detail, and subject to this comment, in which I hope I shall have the support of the hon. Member for Oldham, West—that the majority interim Report was dated 9th March, 1943, and the Government have been a very long time in doing anything about it.
§ Mr. Lloyd
So much for Part II. Part I is a very different proposition. Having been almost completely uncontroversial so far, I doubt whether I shall succeed in continuing so for very long. I think Part I is remarkable for two qualities—its cowardice and complication. It is by Complication out of Cowardice. So far as its cowardice is concerned, it postpones the whole problem. The alleged reason for this postponement is to give the Government time to make further investigations—to enable some Departmental committee to go further into all the problems concerned. Well, I recollect something that was said of William Ewart Gladstone in this House; that he could persuade most people of most things, but that he could persuade himself of absolutely anything. I felt that the Attorney-General was very much like that when I heard his explanation of the need for this postponement.
The truth is that after years of propaganda, denouncing wicked landlords and the wicked Tories in alternate breaths, and after statements such as those in "Labour Believes in Britain" thatLabour will take steps to reform the law so as to do justice to the tenants,after years of condemnation and claptrap, the Government do not know what to do, the Government cannot agree what to do, and the Government have funked the issue, and have further postponed it for two years, because they know perfectly well that, at the end of that time, there will be a Conservative Government firmly in the saddle who will have the responsibility for taking the necessary 403 decisions, and, incidentally, for clearing up the mess caused by this makeshift Bill.
So much for cowardice. My first observation under the head of complications concerns the very different method adopted for people covered by Part I from that adopted for those covered by Part II. The Attorney-General really admitted, inferentially at all events, the manifest injustice of continuing, even for two years, rents fixed 100 years ago without any discretion for the court to vary them. Under Part II the court has complete discretion, but under Part I there is no chance for the court to intervene, and I think that some alternative proposition to that will certainly have to be examined in Committee. A rough and ready test might be the net ratable value, or something of that sort. There are alternative methods which would be much better rough justice than this perpetuation of rents fixed 100 years ago.
The first complication is that anyone who has bought the fag-end of a lease has it extended. For example, in August of this year a man might have bought a fag-end of a lease due to expire in a year's time for £100, with a ground rent of £5. This Bill extends that lease for two years. In other words, it makes that man a present of £190. Conversely, someone who may have spent a substantial sum of money in purchasing a reversion with the intention of living in the house, possibly carrying on a business, letting lodgings, or something of the sort, has his right to possession postponed for two years. It is at his expense that the purchaser of the fag-end is to get the sum of money to which I have referred. So, the first beneficiary under this great piece of Socialist legislation is the speculator in fag-ends. I ask the right hon. and learned Gentleman to contrast with that the method of dealing with the purchaser of fag-ends which the Conservative Government adopted when it introduced the Leasehold Property (Repairs) Act, 1938.
The second complication is that a ground lessee who has bought the fag-end of a lease may be living in one room and letting off all the other 14 rooms of the house at exorbitant rents. He may be frankly profiteering, because I think I am right in saying that the rents of the other rooms would not be controlled. He may be paying a tiny ground rent, but he may 404 have huge rents coming in. The ground landlord seeking to obtain possession may be some perfectly worthy public body, while the ground lessee who is in occupation of only one room is protected under Part I of the Bill. Therefore, the second beneficiary under this great piece of Socialist legislation is the profiteer.
The third complication under Part I is that a ground landlord may be waiting to re-develop and modernise a whole block of property. There may be one lease which they are waiting to fall in to enable them to carry on with this job. A tenant may have gone in well knowing the position, and that single tenant can hold up the whole scheme of improvement. So, the third beneficiary under this great piece of Socialist legislation is the obstructor of progress and development. These are the people who are protected under Part I.
The Attorney-General very nearly anticipated my next point. He did so with regard to the question of no enforcement of covenants, except those with regard to rent and insurance. It seems very curious that it should be impossible to enforce a covenant not to assign the premises in view of the purpose of the Bill. He mentioned a covenant not to use a house for immoral purposes. That cannot be enforced under this Bill, even if an order of the court has actually been obtained but not put into effect, under paragraph 4 of the First Schedule. So, the fourth beneficiary under this great piece of Socialist legislation is the brothel-keeper.
Added to that, for the first time, as is pointed out in the leading article in "The Times" today, there is direct encouragement given not to keep premises in repair. Therefore, the Government really come forward as supporters of rack and ruin—
§ Mr. Turner-Samuels
Is there not merely a suspension for two years? There is a suspension of a right of action for two years, but at the end of that time the right of action revives and action can be brought for breach of the covenant.
§ Mr. Lloyd
It is difficult to forecast the future, not knowing what this great moratorium will produce, but the plain 405 fact of the matter is that if a tenant should permit property which is now in a good state of repair to fall into disrepair in the course of the next two years, there is no means of enforcing any covenant to repair, against him in any way.
§ Mr. Turner-Samuels
No, I said I was sure the hon. and learned Gentleman wanted to be fair, but my hon. Friend doubted it.
§ Mr. Lloyd
I acknowledge my gratitude to the hon. and learned Gentleman. It was with his hon. Friend that I was joining issue. I am glad that the hon. and learned Gentleman agreed with me in my most reasonable and wise proposition, because every one of the cases I have given are cases which fall within the provision of Part I of the Bill as it stands.
Then we come to Clause 5. I do not know whether any hon., right hon. or hon. and learned Member has sought to read Clause 5. The Attorney-General gave a fairly simple explanation of what the Clause was intended to mean, but I defy him to deny that there is considerable obscurity about its terms. I hope that in reply to the debate the Solicitor-General will go in some little detail into Clause 5 and explain just exactly how it carries out the apparently simple purpose of the Attorney-General.
I propose to read to the House a letter which appeared in "The Times" yesterday with regard to this Clause:The tangled mass of rent restriction law is about to be further complicated by yet another prize example of bewildering draftsmanship. I refer to the Leasehold Property (Temporary Provisions) Bill, and give a simple example to show the complexities of Section 5 of this measure:—A freeholder A, in 1929, granted a lease for 22 years to B, which comes to an end in 1951. In 1940 B sublet for the remainder of the term less 10 days to C (i.e. this letting is less than 21 years). C then divided the property into 406 four separate flats which he sublet to D, E, F, and G on yearly contracts. The house as a whole is outside the control of the Rent Acts having a rateable value in excess of £100. Under Section 5, D, E, F, and G would appear each to be persons having a right of occupation derived from a sub-tenancy,' and the section gives them such rights against the 'reversioner' as they would have if the 'tenancy' were hypothetically continued for two years after the commencement of the Act.C would presumably he the reversioner under the 'definition' in subsection (4), but the wording is highly ambiguous. But C's lease [...]s not a superior tenancy ' because the section defines a superior tenancy as one granted for a term of years certain exceeding 21 years. Consequently, the presumed intention of the section, i.e. to protect D. E. F, and G, is not given effect to, because under existing law D, E, F, and G are not protected by the Rent Acts owing to the decision in Cow v. Casey, December, 1948. In this case it was held that a tenant of an uncontrolled house, the rateable value of which took it outside the Rent Acts, could not by sub-letting portions create statutory tenancies of these parts valid against the landlord at the termination of the lease. Lastly, there is subsection (3). As I read this paragraph, the sub-tenancies in the above example of D, E, F, and G are not sub-tenancies at all because they are not created immediately out of a superior tenancy (which must be for more than 21 years).On the other hand, if the meaning of the whole section were to he construed in such a way that C were a sub-tenant and D, E. F, and G 'persons claiming under him' by virtue of the definition in the last paragraph in subsection (5), then C could again not claim protection (and consequently neither could D, E, F, or G as persons claiming under him) because C is not living in the property. Surely it is possible to avoid the trail of needless litigation which such draftsmanship as this is bound to leave in its wake. Why must the unfortunate judges he faced with the task of interpreting such ambiguity? No doubt in the House 90 per cent. of the non-legal Members will lamely permit the section to be passed in a fog of incomprehension, while the legal Members will remain justifiably baffled and probably powerless to effect any improvement.
§ The Attorney-General
I want to relieve the hon. and learned Gentleman of his misery. The letter in "The Times" was written by a gentleman who had obviously given very careful and able study to this matter. I do not want to say anything in derogation of it. He assumed we wanted to catch Cow v. Casey. It was not and never has been the intention of this Bill to deal with the case of Cow v. Casey. The Leasehold Committee made no recommendation that Cow v. Casey should be dealt with. It made recommendations that Knightsbridge Estate v. Daly should be dealt with urgently. We are dealing with that on the advice of the committee. We are 407 going to deal with that one in the case of a long lease. Cow v. Casey, which seems to have given rise to no practical difficulties, we are leaving. I indicated in my speech that we are already considering a number of drafting Amendments which we want to make—and this Clause is obviously the subject of some of them—on Committee points.
§ Mr. Lloyd
The right hon. and learned Gentleman seems to have pleaded guilty by that speech. The purpose of reading that letter was to emphasise the complications and obscurity of this particular Clause. The right hon. and learned Gentleman admitted them, and has indicated that the Government will try to make obscurity less obscure during the Committee stage. The fact is that, considering the purpose of this Bill and the short time it is expected to be going to have effect, it is an extremely complicated and difficult Measure. I am referring to Part I. The fifth beneficiary, I was going to say—and I adhere to that view—of this great piece of Socialist legislation will be the lawyer, or should the lawyer go off his head in trying to interpret the Bill and advise his client upon it, then the keeper of the lunatic asylum. I could give more examples of the complications and anomalies.
This is what the "Daily Herald," in its leading article yesterday, called "Labour applying its mind to a problem." The fact is that there is a much simpler method of dealing with the problem. I admit—and I have never denied—that there is a problem. There are cases of real hardship. There are cases of people—nothing like so many as are made out, as appears in the paragraph, the first sentence of which the right hon. and learned Gentleman read—where people have been in houses for many years. If supply and demand were equated it would be a sentimental wrench for them to leave their houses, but it would be possible for them to find others as convenient or as suitable. I believe that in these matters most landlords are in fact reasonable, but it cannot be disputed that, in law, such a tenant is at the mercy of his landlord at the present time, so far as renewal is concerned.
If the tenant has to go—and as I say it is a very exceptional case—it might literally mean that that tenant is going 408 on to the streets, because in many parts of the country it is impossible to get on to a housing list unless one is actually without a home in which to live. [HON. MEMBERS: "Oh."] For these people I believe that a very much quicker and simpler remedy is to give to them the right to a rent-restricted tenancy. As I say, that right to a rent-restricted tenancy will put them in a position to bargain on much more equal terms with their landlord. If the right is exercised, they will have their occupation of the premises protected at a comparatively modest rental.
If, as I hope, the right does not have to be exercised, it will mean that the landlord and tenant have come together and made a new bargain on reasonable terms for the prolongation of the lease. I admit at once that even this proposition is not a simple one—there are difficulties of covenants to repair and things of that sort—but I submit that it is a much simpler proposition than Part I of this Bill.
This was the unanimous view of the committee. It is the only thing on which the committee were unanimous, and that in itself is sufficiently remarkable for the Government to have taken some action about it. It was urged on the Government at an early stage in the deliberations of the committee. It was in November, 1948, that Lord Uthwatt wrote to the Lord Chancellor to put forward this unanimous view of the committee. It was by 17th November, 1948—I checked these dates—that he received a reply from the Lord Chancellor saying that the view had been put before the Minister of Health. Nothing whatsoever has been done by the Government since then to seek to implement that recommendation. It ended up, so far as we know, at the Minister of Health, and I can only say that on his shoulders apparently must rest responsibility for failure to take any action.
The reason that the committee took the step of unanimously putting forward that recommendation in November, 1948, was because at that time there was about to come before this House a Measure, part of which this proposition could conveniently have been made. I say that the Government have to face a very serious indictment on this question of failure to take action to do something to help these people. There has been a lot of talk 409 about the Hammersmith case recently. I do not know the rights and wrongs of it, but I know that had this proposition, put forward in November, 1948, been carried out by the Government, there would have been no anxiety on the part of anyone in connection with the Hammersmith property. [Interruption.] It was to give the right of a rent-restricted tenancy on the expiry of a lease. I did not dispute that there were certain difficulties, but I said that it was a simpler proposition than the proposition which the Government are putting forward.
I submit that the Government's record in this matter—and certainly so far as the majority interim Report is concerned and so far as the matter with which I have just been dealing is concerned—has been really one of procrastination and delay. They have ended up with this Bill, Part I of which, I submit, is full of anomalies, injustices and obscurity. We believe that some action is necessary. We are ready, as I have indicated, with our proposals. We propose, therefore, to give the Bill a Second Reading, and to seek in Committee to make it match more nearly the needs of the people at the present time.
§ 5.40 p.m.
§ Mr. Ungoed-Thomas (Leicester, North-East)
One thing I have in common with the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) is that we are both guilty of having signed a minority Report, although not the same minority Report. On the other hand, I am pleased to know that the hon. and learned Member for Northants. South (Mr. Manningham-Buller), with whom I have signed the same minority Report, will be winding up this debate for the Opposition.
The difficulty the Government are in is that of deciding precisely what should be done. It is very easy to come to a conclusion, as the Opposition have done, that something must be done. It is a very difficult thing to produce some proposal which, in a matter of this nature, cannot be riddled with criticisms of one kind or another. The hon. and learned Member made a number of criticisms, with several of which I am in complete agreement. They are criticisms of detail—Committee points. I was very glad to hear my right hon. and learned Friend indicate that there are matters in this Bill which the Government will consider 410 sympathetically for amendment when we come to the Committee stage.
Let me say straight away that, on the main principle of this Bill—the question of moratorium or no moratorium—I am in complete agreement with the Government. I should like to turn to one or two matters of comparative detail, and then come to the fundamental difference of principle which separates the Opposition from this side of the House with regard to the reform of the law of landlord and tenant. I will deal with Part II of the Bill first. My first criticism is that the limitation to shops is too restricted. I am very glad that the hon. and learned Member for Wirral signed a Report at one stage which recommended that all business premises should be included in a measure of protection. I understand that he has now withdrawn from that position. I do not know how far he has withdrawn from that position, but it is now a matter of considerable doubt whether he would support such a proposal or not.
§ Mr. Selwyn Lloyd
I thought that I made that clear. I said that two or three years ago I was in agreement with the proposition not to restrict it to shops, but that at the present time I thought that the Government were probably right.
§ Mr. Ungoed-Thomas
That is precisely what I said. No one who has signed any of these Reports has suggested that the restriction should be to shops only. The majority Report states:The protection afforded by the Act should apply to tenants of all types of business premises, including premises used for trading, manufacturing, and professional purposes, whether profit-making or non-profit-making.There were a few who dissented from that recommendation, but even those who dissented considered that it should be extended.to trades, professions and businesses carried on for profit.In other words, the line of demarcation should come, not between shops and other business premises, but between profit-making premises and non-profit-making premises.
The evidence before the Committee established that professional premises, manufacturing concerns and non-profit-making concerns are all in need of protec- 411 tion. The evidence established that all needed security of tenure, and all suffered because they have not got security of tenure.
I will now quote from the interim Report which the hon. and learned Member for Wirral signed. Hon. Members will note the reasoning of that Report, which is as valid now as it was in 1949 when the hon. and learned Member signed it.The evidence submitted to us shows that no class of business activity is immune from the dangers of exploitation by landlords. Trades, lawyers and professional men generally, trade associations and trade unions, professional and voluntary bodies of all kinds need protection equally with industrialists, shopkeepers and other businesses.It is established on the evidence, and it is the unanimous decision of that Committee, including the hon. and learned Member, that this should not be confined only to shops. I hope that when we come to the Committee stage the Government will consider Amendments which will propose the extension to other premises.
The second line of criticism—and here I agree with the criticisms made by the hon. and learned Member—is the question of greater precision in the directive to the court. Clause 10 (1) follows the Scottish Act. I appreciate that it has worked in Scotland, and the reasoning of the hon. and learned Member indicating the reasons why it may not work as satisfactorily here, and there are other reasons which I could produce to support the same conclusion. The Clause leaves it wide open to the courts to decide what is to be done. The words are:The court may, if in all the circumstances of the case it appears reasonable so to do, order that there shall be granted to the tenant a tenancy for such period, at such rent, and on such terms and conditions as the court in all the circumstances thinks reasonable,A purely drafting point arises here. I do not know why the word "may" should be used instead of "shall," when it is followed by the phraseif in all the circumstances of the case it appears reasonable so to do.That serves to emphasise, however, the width of the discretion that is given to the courts. There are no principles established in this Clause for the guidance of the courts. It is an "oak tree" discretion. It is an onerous duty to put on any court. We have experienced this in administering the Inheritance (Family Provision) Act, 412 where a wide discretion was given which is exceedingly onerous and difficult for the judges to administer.
We have here the same kind of uncertainties, with the possibility of decisions which may vary with, to quote a phrase that is familiar to my right hon. and learned Friend, the "length of the judge's foot." We ought to have greater precision in the Clause. Both the majority Report and the interim Report provided greater precision than is provided in the Bill. With my hon. Friend the Member for Oldham, West (Mr. Leslie Hale), I would prefer the decision of the interim Report, which was signed by the hon. and learned Member for Wirral. The provision in that Report with regard to rent is better, unless the hon. and learned Gentleman now also wishes to withdraw from the position which he adopted originally in this Report.
§ Mr. Selwyn Lloyd
When the hon. and learned Gentleman talks about my signature to the interim Report, I would ask him to read the last paragraphs in my minority Report to the final Report, in which I made it clear that there were differences of detail with regard to the interim Report. There were many kinds of differences in detail, which were readily acknowledged, and before I signed the Report I made that perfectly clear. It was generally known at the time that we were not accepting every detail and every formula contained in the Report.
§ Mr. Ungoed-Thomas
I accept at once that that is so in matters of detail, but this is not a matter of detail. The rent to be assessed is a matter of vital importance. Every single Member of the House will appreciate the importance of that. Every single member of the Committee appreciated its importance. An enormous amount of time was spent on it. Meeting after meeting was spent in making the definition, which is included in the interim Report. I cannot accept the statement that what the hon. and learned Gentleman states in his minority Report can in any way be read as excluding his signature from a vital decision on rent, which is included in the interim Report.
Passing from the rents and the terms of leases, may I come to another matter which is of importance in dealing with the precision which is required under 413 Clause 10 of the Bill. I suggest that the right of renewal given to the tenant should be a prima facie right of renewal. This is an emergency scheme. It is the practice of good landlords to continue a tenancy for a sitting tenant. For practical reasons, with which the hon. and learned Member for Wirral is familiar, it is far easier to administer a provision which provides for a prima facie right of renewal.
This is an emergency scheme limited to two years, and it is clear that, administratively, it is far better, in accordance with the practice which has already been followed by good and responsible landlords, to lay it down quite clearly in this Clause that there shall be a prima facie right of renewal, followed, of course, by the exception that renewals should not be granted in particular cases. In the interim Report, which the hon. and learned Member for Wirral approved, the proposal was for a prima facie right of renewal. And when it came to signing the final Report, the hon. and learned Gentleman aligned himself in favour of a prima facie right of renewal. I hope that in the Committee stage we shall have the support not only of the hon. and learned Gentleman but of his party as well.
§ Mr. Leslie Hale
Further, in the final Report the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) protested that the interim Report had not been put on the Statute Book.
§ Mr. Ungoed-Thomas
Yes, he has done that in this House and with that I agree. I too should like to see the interim Report on the Statute Book.
There are two other very small matters with which I wish to deal in regard to shops. There are grounds upon which refusal is made compulsory. These grounds include alternative accommodation and greater hardship. I merely make the comment that both these matters are matters of considerable complexity. The greater hardship provision, in particular, has led to great heartburnings since its inclusion in the Rent Restriction Acts. I hope both those grounds can legitimately be left out of a short emergency Measure of this kind.
I welcome Part I of the Bill, and it should be borne in mind—and I am very glad that my right hon. and learned 414 Friend the Attorney-General emphasised it in opening the debate—that this is not so much a temporary Measure as an interim Measure. It is something to hold the position until further legislation is brought in.
I do not conceal from hon. Members for a moment that I should have much preferred a permanent Measure at this stage. I should have preferred, as the hon. and learned Member for Wirral suggested, and as we all recommended, that the Rent Restriction Acts should be immediately applied to ground leases. I should have preferred, as my hon. Friend the Member for Oldham, West would prefer, the minority Report on leasehold enfranchisement. But I appreciate the difficulty in which the Government are in dealing with this matter, and I am afraid that some hon. Members in the House may not realise it to the full extent that lawyers do.
It is a matter of very considerable difficulty to apply the Rent Restriction Acts to ground leases, because it involves changing the whole nature of the lease from that of a ground lease into that of an ordinary occupational, controlled rent tenancy. That involves changes in the position with regard to covenants; it means recasting the whole lease and fitting it into an entirely new setting. Not only is it difficult to recast and fit it to the Rent Restriction Acts, but perhaps even more important is the difficulty which county court judges or other tribunals will have in administering the provisions and actually working out the conversion of the leasehold from a ground lease into a controlled lease.
§ Mr. Janner
I hope my hon. and learned Friend the Member for Leicester, North-East (Mr. Ungoed-Thomas) will point out that there are many people who are not in agreement with that point of view, and that it will be a simple matter to continue the leasehold of their present holding.
§ Mr. Ungoed-Thomas
My hon. Friend has in mind precisely what I am not talking about. He has in mind continuing the present ground leases. That is what the Bill does in the two-year tenancy. I am dealing with the proposal of the Committee, which is entirely different, that the Rent Restriction Acts should be applied to the ground leases. 415 My hon. Friend is in complete agreement with Part I of this Bill and suggests it should be a permanent provision. That was not, in fact, the recommendation of the Committee. All I am saying now is that I, personally, would welcome the Rent Restriction Acts being applied to ground leases, but that I appreciate the difficulties with which the Government are faced in enacting that at this moment.
I did refer to this as an interim Measure. I hope that the interim Measure will be preliminary to four permanent pieces of legislation: first the extension of the Rent Restriction Acts to occupying leases; secondly, leasehold enfranchisement; thirdly, a permanent scheme of security of tenure of all business premises; and fourthly, a permanent scheme of security of tenure for all residential tenants outside the Rent Restriction Acts.
What are to be the principles of the permanent scheme and the principles we should have in mind in approaching this Bill? The differences that existed in the Committee are of some significance. They were not differences of a technical nature but were fundamental differences of principle based upon differences in social and political outlook. One can claim, as a result of the workings of the Committee that all those four Measures to which I have referred, and which I hope will become permanent, are perfectly feasible.
It is purely a matter of political decision whether or not they will be put on the Statute Book. Our principles on this side of the House are entirely different from those of hon. Members of the Opposition. We consider that a landlord's interest in property is purely financial, whereas the tenant's interest is that of user. The landlord's interest is in what he can get out of the property, while the tenant's interest is in the actual use of the property itself. The tenants, therefore, have a closer and more real interest in their homes or business premises, than have the landlords, who are now considered as predominantly the owners.
We consider that the landlord's absolute ownership should be replaced by dual ownership of landlord and tenant. The Opposition are basing themselves the whole time upon the sanctity of contract and the rights of property. Those matters are fully discussed in both the majority and minority Reports. We do not take 416 the view that there is sanctity in a contract which we consider unjust in its origin and in its incidence. We do not consider that there is a justifiable right of property when that right does not serve the happiness of human beings but cramps their enjoyment in the use of the property.
The Liberal position in relation to this great problem is one of some ambiguity and difficulty. In the past, the Liberals have been very strong in their condemnation of the ground lease system.
§ Mr. Ungoed-Thomas
Unfortunately, that is not true of every one of them. The Select Committee of 1886 which considered this matter produced one of the great Reports on the subject. The minority Report favoured a measure of leasehold enfranchisement and its signatories included all the Liberals on the Committee. They stated that the building lease system was proved—and here I quote—(1) To have been maintained by private Acts of Parliament framed on the lines of ecclesiastical and family settlement avowedly in the interests of the landowners. (2) To have led to bad building. (3) To have imposed vexatious and harassing covenants on lessees. (4) To have kept property in insanitary and dilapidated condition at the 'fag-end' of the lease. (5) To have charged lessees with exorbitant fees and law costs. (6) To have separated ownership and occupancy and to have brought in being a number of intermediate interests of middlemen and ultimately of house jobbers. (7) To have inflated rack rents on both houses and tenements.The late Mr. Lloyd George, when he was Chancellor of the Exchequer, considered this matter to be of such vital interest for the Liberal Party that he set up the Land Inquiry Committee, which reported in 1912, before the First World war. This is what that Report said about the building lease and ground lease system:Speaking generally, the introduction of the system has only proved possible where landowners were few and acted in actual or tacit combination. Its parents are the monopoly of the landlord and the necessity of the tenant, and its creation has aggravated all the evils of land monopoly.It is remarkable, after all that, that we should not have had signing the minority Report in favour of leasehold enfranchisement the solitary Liberal Member who was on that Committee. 417 Not only did that hon. Gentleman not sign the Report in favour of leasehold enfranchisement, but in the majority Report he commended for investigation a proposal that, not the lease owner, but the freeholder, should have a right of compulsory purchase—a complete reversal of the Liberal position.
§ Mr. Emrys Roberts
The hon. and learned Gentleman, in reviewing the Liberal position, should take note of the Liberal election manifesto last February which stated specifically that the Liberal Party were in favour of leasehold enfranchisement and of enabling leaseholders to buy freeholds at a fair price. The hon. Member to whom reference has been made by the hon. and learned Gentleman is unavoidably absent.
§ Mr. Ungoed-Thomas
I am very sorry. I fully expected the hon. Gentleman in question to be here. However, I am dealing with the Liberal Party and fortunately there is a Member of the Liberal Party present who can speak for the Liberal position. The hon. Gentleman to whom I have referred has his own mind and is entitled to his own views, but I am entitled to deal with the position of his party. I am delighted to hear from the hon. Member for Merioneth (Mr. Emrys Roberts) that on this issue the Radical wing of the Liberal Party has prevailed. I hope the Liberal Party will give unanimous support to the Bill.
§ Mr. Ungoed-Thomas
I hope the hon. Gentleman is not backsliding already in his nervousness about his companions.
Taking the Bill as an interim Measure and a stopgap to hold the present position until other arrangements can be introduced, I am wholeheartedly in favour of it. I hope that in the Committee stage it will be improved in some respects, and that all hon. Members will participate in strengthening it and in preventing any steps which might be taken, as already indicated, to weaken it. I strongly support this Measure.
§ 6.9 p.m.
§ Mr. Donald Wade (Huddersfield, West)
May first, congratulate the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) upon his elevation to the Opposition Front Bench, although he says 418 it is temporary? I am sure we all wish that it may be permanent and not limited to only two years.
I find myself very much more in agreement with the hon. Member for Leicester, North-West (Mr. Janner), than with the hon. and learned Member for Wirral on this occasion. Although the Bill could be improved in Committee, the House should support it on Second Reading as an attempt to deal temporarily with grievances which undoubtedly exist under the leasehold system and under our present law of landlord and tenant. This is only a stopgap Measure. The Attorney-General calls it "a temporary standstill." I should be happier if a Measure had been introduced immediately after the interim Report, for in that case, by now we might have been in a position to discuss legislation of a more permanent nature. Had that been done perhaps many of the hardships which have occurred during the last two years would have been avoided.
But however much one might wish that something had been done sooner, that is no reason for not supporting this interim Measure now and the sooner it is put on the Statute Book the better, because leases are still falling in and tenants are still being given notice to quit. If the Bill does not become law until the end of January or February—I am only surmising that—there may be many more cases of hardship with which the Act will not deal.
I have been studying the Bill to try to reach a conclusion about the position of those whose leases have come to an end or have been given notice to quit, but are still in occupation when the Bill comes into effect. A lease may come to an end, but the tenant may still be in occupation and willing to pay the rent and to continue his tenancy. The rent may not, however, have been accepted by the landlord. A retailer may have received notice to quit, but may not actually have left the premises when the Bill comes into force. Clause 2 contains the words:… living in the property … in continuation of the tenancy ..In Clause 8 there is the expression:… occupier of a shop under a tenancy …I am not sure whether the cases I have mentioned would be regarded as "in continuation of the tenancy" or "under a tenancy." Though he might still be in possession, in such circumstances the 419 occupier might find that he has no remedy under the Act. On the other hand, if the test is actual occupation it would seem that there is every reason for the landlord to hurry up and get the man out or get him to agree to a higher rent before the Bill comes into force. I am not suggesting that all landlords would do that, but some might do it. Whichever view one takes, it is clear that the sooner the Bill is passed the better. Also, the sooner permanent legislation is introduced the better, because this is just another case of piecemeal legislation, and we have had far too much of that already.
I agree that as a temporary measure it is necessary to divide the Bill into two parts, one dealing with long leases and the other with retail businesses, although there is a strong case for including other business tenancies. As a Yorkshireman I have not the experience of long leases which some other hon. Members have, for in Yorkshire there is a preference for owning the freehold. I do not know whether that is due to the sturdy independence of Yorkshiremen or to their foresight. I must not pursue that too far because the greater part of my own division is leasehold. The builder in Yorkshire has always preferred to buy the freehold of his land, and if necessary, raise a mortgage. He has always disliked long leases. Some of the evils of the leasehold system have undoubtedly been avoided as a result of that.
In paragraph 64, on page 24, the Report says:One witness with great experience in conveyancing attributes the deterioration often observable in urban leasehold property towards the end of a long term to the multiplicity of interests commonly intervening between the freeholder and the occupying tenant. …To a certain extent we have been able to avoid that evil in Yorkshire through not having the long lease system. To those who uphold the leasehold system, I would say that experience in Yorkshire suggests that that system is not inevitable or necessary and that we can get along without it.
As to Part I of the Bill, I can appreciate the reason for not creating a tribunal to which application should be made but giving a right to continue for a limited period. I am not entirely happy, however, 420 about the covenant to repair. I am thinking not so much of claims for dilapidations as of essential repairs, and I suggest that an Amendment might be introduced to deal with essential repairs within the period of two years.
§ Mr. Janner
Does the hon. Gentleman appreciate that if a repair is really essential the local authority has the power to enforce the carrying out of the repair?
§ Mr. Wade
If I may put my view briefly, our aim should, be first, to remove the injustices which undoubtedly exist and, second, to encourage the ownership of property by occupiers, and, particularly in the case of dwelling houses, I would favour the tenant having the right, with due safeguards, to apply for the transfer of the freehold. I am only speaking in very general terms, but those are my views.
Another point which I wish to raise concerns the word "family," which is used in Clause 2. It is true that it has been defined by a series of cases, but it has led to a good deal of litigation under the Rent Restriction Acts and it would be helpful if the word could be defined.
§ Mr. Turner-Samuels
Is not the reason for that, that it would create inconsistency and complications between the meaning of the word as used in the Rent Restriction Acts and in the Bill, if such a definition as the hon. Member suggests were included in this Measure?
§ Mr. Wade
I support Part II of the Bill, which gives the retailer greater security of tenure. I have already mentioned that I should like to see this extended to other business tenants. I have always been a critic of the Landlord and Tenant Act, 1927. I can recollect 421 the outcry about the leasehold system which led to the introduction of that Act. I can remember being very critical of the Act, I admit that I was only a law student in those days and had not reached the age at which one appreciates how little one knows.
§ Mr. Wade
The Landlord and Tenant Act, 1927, was intended to give greater security of tenure, but so many conditions were inserted for the benefit of the landlord that it has not been of very great value to the business tenant, particularly as regard security of tenure. As hon. Members will appreciate, the tenant has to prove a great deal before he gets a renewal of a lease. He has to prove that he is entitled to a claim for loss of goodwill—which is not easy under the Act—that the granting of compensation would not be adequate, and that he can only be relieved by a renewal of his tenancy. I welcome this part of the Bill, but I should like to see a radical reform of the Landlord and Tenant Act, 1927.
In the meantime, there is a considerable degree of uncertainty, which really is my main criticism of this temporary Measure. It leaves both landlord and tenant in a state of uncertainty. The latter does not know quite what to do about alterations and improvements, because be does not know what is to happen at the end of his 12 months or of his second year.
I refer now to Clause 13, in connection with appeals. I appreciate the wish not to put great legal expense on to tenants, or landlords either, for that matter, but if there is no right of appeal, on matters either of fact or of law, and no guidance is given as to how the Act should be administered as regards fixing rents, imposing conditions, and so forth, then there is bound to be very considerable variation between the decisions in different county courts. That will lead to a sense of grievance where comparisons are made between one decision and another.
Lastly, on the subject of uncertainty. This affects my constituents to a considerable extent—I refer now to both parts of the Bill—because the greater part of Huddersfield is leasehold. I do not think I should be unfair in comparing it with the Bournville Estate, which is referred to 422 on page 138 in the minority Report. In a reference to the Bourneville Village Trust, there is this sentence:There is here no exploitation of a monopoly position or divorce between social function and ownership.It so happened that in September, 1920, the Huddersfield Corporation acquired practically the whole of the centre of Huddersfield and a considerable part of the suburbs from the Ramsden Estate. I think that that was a wise step. The policy which has been pursued has been in keeping with that sound Liberal doctrine that land values created by the community should accrue to the benefit of the community. As leases have fallen in, the practice has been to grant renewals when applied for, the adjustment in the rent being in accordance with the increase in site value. From time to time applications are made for extensions for longer periods, and these are dealt with on a similar footing. For some little time, however, these applications have been held up because of the uncertainty about the legal position.
When permanent legislation is introduced I shall probably contend that cases such as the Bourneville Estate and the Huddersfield Corporation should be dealt with in a special category.
§ Mr. Wade
Yes, but I thought it only right to mention it.
On the general position, taking the leasehold system throughout the country as a whole, I do not find myself able to accept the argument about sanctity of contract in this respect because, while we do not know a great deal about the circumstances when the leases were originally created, it seems probable that there was not equality between the parties at that time; at any rate I do not feel able to put great weight upon that particular argument. Be that as it may, there are undoubtedly many grievances and injustices under our leasehold system and under the present law of landlord and tenant so far as it affects business tenants. Therefore, I believe that reform is urgently needed, and I hope that it will not be long delayed.
§ Mr. Llewellyn (Cardiff, North)
Would the hon. Member say whether it is still the long-term policy of the Liberal Party to enfranchise leaseholds?
§ Mr. Wade
I hesitate to speak for the whole of the Liberal Party. [Laughter.] I made that remark well knowing that it would probably cause laughter at my expense. I believe that a distinction has to be made between dwelling-houses and business premises, but I think I am right in saying that that is still the long-term aim of the Liberal Party.
§ 6.27 p.m.
§ Mr. Donnelly (Pembroke)
I feel very diffident in intervening in the debate, as I am, I believe, the first layman as yet to have had the temerity to open his mouth. I think that probably one of the great difficulties of the whole leasehold problem has been that too many lawyers have been mixed up with it already. As I have been listening to the debate, I could not help thinking that there was a good deal of truth in the lines which G. K. Chesterton wrote about another great Welsh social issue—the question of Welsh disestablishment. He then directed his attention to Mr. F. E. Smith and said:For your legal cause or civilYou fight and get your fee;For your God or dream or devilYou will answer not to me.I should like to parody that and to add:But the homes of Christian peoples—Chuck it, Smith.As far as the social issues are concerned, some of us ordinary mortals who see them from the purely social angle, have a right to say something about the ultimate policy and then to invite the co-operation of our learned friends to help us to achieve the ultimate goal which we have in view.
I am very glad that the hon. Member for Huddersfield, West (Mr. Wade), has come down in favour of leasehold enfranchisement. I hope that tomorrow his colleague the hon. Member for Cardigan (Mr. Bowen) will read his speech and learn a great deal from it, because it is a matter of considerable interest to a great many people in West Wales.
Perhaps I may say a word or two about some of the astonishing remarks with the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) opened the debate from the other side of the House. I was amazed and surprised to hear him say that the whole leasehold problem was a new one, aggravated by two world wars. As the hon. Member for Huddersfield, 424 West, and my hon. and learned Friend the Member for Leicester, North-East (Mr. Ungoed-Thomas) have said, the Liberal Party were fighting for the cause of leasehold enfranchisement long before the First World War; and the Tory Party know that only too well, for their friends lost every seat in Wales in the General Election of 1906, because the Liberal Party then championed leasehold enfranchisement.
§ Mr. Donnelly
I was just coming to that. The fact that they did not then do anything about it when they had power to do so, is the reason why the Liberal Party are in the position they are in today.
§ Mr. Llewellyn
Is the hon. Member aware that on 1st May, 1931, a Socialist Member introduced a Bill for leasehold enfranchisement in this House, and so little interest was taken in it by the Socialists of the day that the Bill was counted out, as there were not 40 Members present?
§ Mr. Donnelly
I am very interested to hear the remarks of the hon. Member for Cardiff, North (Mr. Llewellyn), but, as I think his party had nearly 200 Members in the House at that time, they must share the burden of responsibility.
Everyone will agree that this Bill is only a temporary provision. Everyone is equally in agreement that permanent provision should come as soon as possible so that we can end the whole uncertainty in the quickest way. I agree with the hon. Member for Huddersfield, West, on that point. However, there is a very real need for having this Bill at this time.
I represent a constituency where this leasehold problem is at its most acute. In the town of Pembroke Dock, 96 per cent. of the properties are leasehold and at this moment whole streets are falling in, with the result that ground rents of £2 or £3 a year are going up to £30, £40, or even £50 a year in specific instances. This represents a real hardship and problem for the ordinary people of that area. In addition, there have been some monstrous examples of the operations of landlordism in my constituency in the last few months. It is within the recollection of the House that in July I raised the question of cottages in Marsh Road, Tenby, where the 425 leases fell in last March. The householders were served with notice of trespass and had county court orders brought against them unless each was prepared to pay £1,000 for the freehold. This was despite the fact that some of the tenants had been living in the cottages all their lives.
That, I think, is as good an example of the operation of landlordism in the 20th Century, as one can find today. It is no good trying to say that landlordism in its wickedest form is a thing of the past. It is a very real and wicked problem as far as those people are concerned, when they are faced with the difficulty of having to pay large sums for the freehold of their cottages and when they could not raise the sums without assistance from outside sources.
A similar problem exists in the City of Cardiff, and my hon. Friend the Member for Cardiff, West (Mr. G. Thomas), on many occasions in this House has raised the problems of people faced with eviction in the City of Cardiff. I believe that only the other day a family was evicted in the constituency of my hon. Friend the Parliamentary Secretary to the Admiralty in particularly unfortunate circumstances.
I feel very strongly about this matter and am very glad indeed that the Government have introduced this Bill at this time in order that there shall be no continuance of what I think are monstrous social injustices while we continue to consider a permanent form of legislation so that we shall have an opportunity of dealing with the whole problem without prejudice and shall have the maximum time to look round without at the same time prejudicing people whose leases are falling in at the moment.
I am sorry that all building leases have not been included in the Bill. I cannot see why one type of building lease should be included, but not all. If this Bill were really to be without prejudice to any permanent solution, all building leases should be included, and I hope the Government will consider that point on the Committee stage, which I hope will be in a very short time.
I am also sorry that the term of the standstill is not five years instead of two, because, if the Government are to bring in a permanent Measure in a very short time, it would not matter whether the 426 period were five years or 50 years, as the permanent Measure will repeal this temporary provision. But five years would give people who had this sword of Damocles hanging over their heads a great deal more security and certainty in their lives. The hon. and learned Member for Wirral said that he thought this Bill was a kind of house freeze, but I hope he will realise the great warmth of security which has been brought to people's homes already as a result of this Bill. It means a great deal if they can have that security extended to five years.
My third point of criticism is the one point on which I agree with the hon. and learned Member for Wirral, the rather complicated question of Clause 5. I hope we shall have an opportunity of looking at the Clause again and seeing whether it can be simplified and any anomalies removed.
To my hon. and learned Friend the Member for Leicester, North-East, we on this side of the House owe a great debt, as we do to my hon. Friend the Member for Oldham, West (Mr. Leslie Hale), for their minority Report contained in the Jenkins Report. I wish to reinforce the argument of my hon. and learned Friend for the inclusion of all business premises. I see no reason at all why, if shops are included, we should not include all business premises.
This Bill has been criticised by legal correspondents of "The Times" and by the spokesman of the Tory Party, who has given a clear indication of what the Tory Party think about leasehold reform—something we will remember when the time is opportune. But this Bill is greeted with considerable rejoicing in the valleys of Wales, where the people have thought about leasehold reform for many more years than I have been alive. I think there is no more fitting way of concluding, as a representative of a Welsh constituency, even if I am not a Welshman, than to remind the House of the famous words of David Lloyd-George when speaking in Newcastle-on-Tyne in 1909:Who gave the land of Britain to 10,000 people as a perquisite? And who made the rest of us trespassers in the land of our birth?The answer to David Lloyd-George's question was that the Tory Party have made us trespassers in the land of our birth and ultimately the Liberal Party acquiesced in that system. I am glad 427 to have been in this House when the Labour Party set out to alter that monstrous injustice.
§ 6.39 p.m.
§ Mr. W. T. Aitken (Bury St. Edmunds)
As a director and shareholder in the company which has been so often depicted in the House as the big bad bold wolf of the leasehold system—I refer to Western Ground Rents Limited, of Cardiff—I feel I must disclose that interest. I have also had some practical experience in various matters relevant to the Bill and I propose briefly to discuss some matters in connection with the occupiers of leasehold houses and, perhaps, one or two other matters relating to the Bill.
As a shareholder in a great landlord company I certainly favour proposals for the reform of the law of landlord and tenant as far as household property is concerned and as recommended in the majority Report of the Leasehold Committee. I also favour and realise the necessity for temporary measures to meet the immediate needs and safeguard the interests of leaseholders under present conditions of temporary scarcity. I can assure hon. Members that all responsible investors, who, perhaps, invested quite recently in freehold ground rents, will support any constructive proposals designed to prevent hardship and injustice to leaseholders, whether those hardships or injustices arise out of Socialist mismanagement of our housing programme or the machinations of property speculators.
It is interesting to me to see that the Leasehold Committee, which was set up by the Government, and which started out as a witch hunt, found remarkably few witches. Indeed, the leasehold system and the vast majority of landlords came out remarkably well as a result of that very thorough expert examination which was carried out by the Leasehold Committee. It is also very interesting to see that both the majority and minority Reports of that Committee acknowledge the perfectly legitimate interest of the investor in freehold ground rents not only in the income from his investment but in the reversion as well. Both sides recognised that quite clearly.
I do not agree with the principle of leasehold enfranchisement, not only on 428 grounds of public policy but for other reasons which are highly controversial. It is noteworthy that the Socialists on the Leasehold Committee, while supporting the doctrine of leasehold enfranchisement, which they are quite entitled to do, rejected the view of some of their less informed colleagues that the principle of the compensation which should be paid to the ground rent owner in the event of leasehold enfranchisement should be based on the capitalised value of the ground rent only. They fully recognised that there were certain inherent rights in the reversion. In any of these discussions, it has to be recognised, however strongly one may feel about this matter, that the people who have had an opportunity of looking into this question very carefully, believe that there are certain fundamental rights which must be considered.
The hon. Member for Cardiff, West (Mr. G. Thomas) does not, I assume, believe in the leasehold system, and he is quite right to put forward his views, both here and elsewhere, with all the vigour he can command. I regret, however, that I was not here on many occasions when he did so, because it seems monstrous to me that he should use his privileged position as a Member of Parliament to single out by name, and both directly and by implication attribute to Western Ground Rents, Ltd., all the evils and abuses which he sees in his conception of the leasehold system. By direct misstatement and exaggeration he has placed in the minds of many people the impression that the hardships which we are now discussing, and which the Bill is designed to mitigate, are far more prevalent in Cardiff than is really the case.
I remember reading in HANSARD. and I regret that I was not in this House at the time to hear it myself, that the hon. Member referred to Western Ground Rents as owning 20,000 houses in Cardiff. They actually own 11,000. He said that over the next 10 years half the city would be taken over, presumably by Western Ground Rents. The fact is that only 167 leases owned by Western Ground Rents are due to fall in during the next 16 years. The only other ground rent concern which can in any way compare with Western Ground Rents is the Tredegar Estate, which is in a very similar position. It owns in Cardiff 4,150 properties. In the 429 next five years only 56 of those leases expire, and no others expire for another five years after that.
§ Mr. Janner
Would the hon. Member say what conditions have been imposed by the Tredegar Estate or by his own company when leases have fallen in?
§ Mr. Aitken
I will gladly do so in a moment, but I wish to continue my argument. I will refer to the conditions which I believe we should impose on people when leases fall in.
Another statement made by the hon. Member for Cardiff, West, was that in Grangetown Ward there were 4,000 houses, which would be taken away from their purchasers, unless something was done about the matter in the present Parliament. There are 3,139 houses in the Grangetown Ward. In this housing area 951 ground rents are owned by Western Ground Rents. None of these leases falls in before 1974, and only 62 fall in between 1974 and 1989, an average of two a year after 1974. Again, last month, the hon. Member said that between now and Christmas many homes in Cardiff would be lost if the Government did not protect people. The fact is that there are no leases whatever falling in between now and Christmas on the Western Ground Rents Estate or on the Tredegar Estate.
§ Mr. George Thomas (Cardiff, West)
I have not interrupted the hon. Member earlier because anything that Western Ground Rents say against me, will only do me good in Cardiff. I should like to ask the hon. Member, however, whether he is speaking of the whole of the city in what he is now saying?
§ Mr. Aitken
I am referring to the properties owned by Western Ground Rents in Cardiff. The statements from which I am quoting were all associated either directly or indirectly with Western Ground Rents.
§ Mr. Thomas
Would the hon. Member mind reading any passage where I have connected the statement about Grange-town with Western Ground Rents?
§ Mr. Aitken
I think I can do that. I have HANSARD here. Any reasonable person is entitled to assume, from the hon. Member's speech of 7th March, a link 430 between Cardiff and the enormous number of houses which, he assumes, are owned by Western Ground Rents. I think that further in his speech the hon. Gentleman referred to Grangetown.
§ Mr. Thomas
The hon. Member is surely not making charges against me without having the quotation on which he relies.
§ Mr. Aitken
If I am allowed to look at the quotations—I have them here—I will do my best, but I do not intend to be put off, because the hon. Member knows perfectly well that in every speech he has made, he has associated all these matters with Western Ground Rents. If he cares to tell me that he was not referring to Western Ground Rents when he made that reference to Grangetown that is all right, I will accept that. But it should be borne in mind that they own 951 houses there and it is only natural that the hon. Member should assume that they have a very big interest in Grangetown. I refuse to be put off, or to accept that intervention by the hon. Member as in any way a defeat or a rebuke.
Another point which interests me is that some years ago the hon. Member, in an article in "Tribune" referred to the fact that thousands of leases were falling due each year, and that this was the speculator's opportunity. This again linked up with a previous statement about the activities of Western Ground Rents. The fact is that between 1938 and 1950 two ground leases on houses owned by Western Ground Rents in Cardiff fell in. One of the tenants was given a life tenancy. The other—and here I come to the point made by the hon. Member for Leicester, North-West (Mr. Janner)—was offered a statutory tenancy at £1 a week.
§ Mr. Janner
Would the hon. Gentleman now say how much was the ground rent for which £1 a week was charged as a rack rent?
§ Mr. Aitken
I will put it in another way. I will answer the question hindside foremost, because that is the way in which hon. Members opposite have twisted the whole of the principle of the ground rent system. I could give the exact figure, but if I say that it is a small one will the hon. Member be satisfied?
§ Mr. Aitken
It was a very small ground rent. The house was not offered for sale; it was offered on a statutory tenancy. That is a proper action for a responsible landlord to take. We are doing exactly what is recommended by the various people who have discussed this matter in the Leasehold Committee. When a lease comes to an end, people are given a chance of remaining as statutory tenants. That is what this company have done.
A number of other statements were made on this subject. All were inaccurate. They were certainly designed to convey a misleading impression of a perfectly legitimate business in Cardiff. It is a business which has the same interest in the development, the amenities and welfare of that great city as any of the big banks, insurance companies, chain stores or building societies who do business there and in other great cities throughout the country. However sincere the hon. Member may have been in making these statements, they do him no credit in the eyes of a people who really know the leasehold situation in Cardiff.
§ Mr. W. T. Williams (Hammersmith, South)
The hon. Gentleman has spoken at considerable length about the position in Cardiff. Would he not agree that this is misleading in respect of Western Ground Rents generally? Is it not true that the interests of Western Ground Rents in South Wales cover a very much larger area than Cardiff and that in South Wales generally, especially in the Welsh valleys, it is true that a large number of ground rents will fall due in the next 10 or 20 years?
§ Mr. Aitken
No, that is not true. Western Ground Rents own a great deal of different kinds of property and businesses, but they are not purely and entirely a property company. The vast amount of their assets are in Cardiff, especially their house property. This is an enormous company, holding a lot of different kinds of property, and unless the hon. Member can give specific cases I cannot go into the details. I can assure him, however, that the property owned outside Cardiff is comparatively small in relation to their holdings in Cardiff.
The main object of the Bill is eminently desirable. Western Ground Rents gave evidence to this effect and recommended it on the various occasions when they 432 appeared before the Leasehold Committee. A good example is that the company own 11,000 houses in Cardiff and only 61 are affected by the Bill, and 26 of those are occupied by the leaseholders themselves. The whole of this business can be very much exaggerated, especially by the propaganda carried on by the hon. Member for Cardiff, West, and his friends.
My main criticism of the Bill so far as it concerns house property is that it is a great pity, in view of the present housing situation, to take any action which removes even a skeleton of a policy for maintenance and repairs. Under Clause 4 (1) all the covenants of the leases are suspended, with the exception of the payment of rent and insurance. This is a most undesirable feature. Even if the pledge of the right hon. and learned Gentleman that the Bill will not be extended beyond two years is fulfilled, it seems to be a great mistake to suspend maintenance covenants.
Even in the Leasehold Property (Repairs) Act, 1938, it was found necessary to state specifically that certain actions must be taken. That Act was designed for the same general purpose as this Measure—to help to release the leaseholder of some of the burden of excessive covenants in the way of repairs. In the Act of 1938 exceptions were made in any relief given in respect of any action necessary or proper for putting or keeping a property in a sanitary condition, or for the maintenance or preservation of the structure, and also of any statutory liability to keep the house in all respects reasonably fit for human habitation. These are absolute fundamentals of normal good house maintenance. I hope that in due course an Amendment will be made at least to maintain the bare bones of good maintenance of property.
§ 6.58 p.m.
§ Mr. Hayman (Falmouth and Camborne)
I also speak as a layman on this question, but the Attorney-General said that this was not altogether a legal problem and that it was also a social problem. It is from the latter point of view that I wish to speak. I give a great welcome to this Bill, which will obviate a lot of hardship among thousands of people and give to thousands of others a hope that in time 433 they may be able to own the house which either they or their fathers built.
My constituency is that of Falmouth and Camborne, but I will take those two towns in the reverse order. I should like to quote from evidence given to a mining commission in 1864, where it was said:There are 800 houses in Camborne, the property almost entirely of labouring miners, which they have built themselves and which they have on a lease of three lives.How many of those houses are owned today by the families of those who built them? Almost every house has reverted to the ground landlord who did nothing to provide amenities or other facilities of that kind. When I have heard hon. and right hon. Gentlemen opposite talk about the great town planning benefits conferred on this town, it has made me smile derisively.
§ Mr. Hayman
The hon. Gentleman may have heard another hon. Member, I think the hon. Member for Huddersfield, West (Mr. Wade), speak about Yorkshire, where they built their houses on freeholds. Our people in Cornwall and the people in Wales have always wanted their freeholds, but cannot get them.
My postbag has contained many more letters on this question of leasehold reform than I have received on the Festival of Britain, and my constituency, after all, is in a Nonconformist part of the country. I should like, if I may, to quote the example of my own family. One of the 800 houses already referred to was one built by my grandfather under the Cornish system of three lives. When my grandmother was 75, she was called upon to prove the existence of the third life. Those who know anything about Cornwall are aware that our people emigrated in thousands because they could not get work in Cornwall, and so my grandmother was unable to prove the existence of the third life. She was therefore evicted from her cottage, and there was no widow's pension in those days.
So much for Camborne. I will now refer to Falmouth. A great part of 434 Falmouth is owned by the Earl of Kimberley, who in recent months has seen fit to send to his tenants a letter inviting them to renew their leases at considerably increased ground rents. In the past few days, I have received one or two letters on this particular question. I would point out that the increases in these ground rents will affect the compensation which may be payable if and when the Government bring in a Bill for leasehold enfranchisement, and we hope that time will not be long delayed.
A widow came to me to inquire what she ought to do. She had a property with a fair number of years to run, and she wanted to spend £1,000 on it and turn it into two flats. The Earl says: "Yes, you can do that, provided that your ground rent of £2 15s. is raised to £15 a year, and, in order to have another flat, you must pay an extra £2 10s. a year." So that the compensation which, on the original ground rent of £2 15s., at 25 years' purchase, might have been £68 15s., would, under this new lease, become £437 10s.
The hon. Member for Bury St. Edmunds (Mr. W. T. Aitken) said that the Leasehold Reform Committee had not heard very much evidence from leaseholders themselves. That may be so, but I can assure him that there is—
§ Mr. Aitken
I did not say that. I said that the Leasehold Reform Committee had heard a great deal of evidence, but I did not say that it had not heard evidence from any particular body.
§ Mr. Aitken
I think the hon. Gentleman is confusing what I said with what he read in the Leasehold Report. I did not say it, but I think it appears in the Leasehold Committee's Report.
§ Mr. Hayman
The Leasehold Report, I think, did refer to the fact that there had not been many letters from leaseholders, but I can assure the House that, in my constituency at least, there is a good deal of agitation about this question of leaseholds and ground rents. I hope that this House will not consider legal contracts too much, because these legal contracts were enforced on people who wanted to build their own houses, and, 435 therefore, one has to consider both the moral rights and the social rights.
I hope this Bill will have an easy passage, and that the time will not be too far distant when we shall have a leasehold enfranchisement Bill, so that the whole question of leaseholds may be placed on a proper basis.
§ 7.5 p.m.
§ Mr. Henry Brooke (Hampstead)
This Bill is so exceedingly difficult for almost all of us to understand that I think the hon. Member for Falmouth and Camborne (Mr. Hayman) has taken a wise course in directing most of his remarks to the problem in his own constituency, and I intend in a moment to follow his example by relating my remarks to my constituency.
First, however, I would submit to the House that, while the hon. Gentleman who has just spoken complained in his speech that the leasehold system had created many problems in his constituency, he failed to prove that the Bill is the best or the only way of solving these problems. I think he said that, when he heard from the Tory benches references to the great town planning benefits which the leasehold system brings, he smiled derisively. May I make reference to those benefits by reading this passage:The difficulties of carrying out adequate planning would be much increased if such houses were all separately owned, some probably by occupiers who would be unwilling to part with their freehold until long past the reasonable life of the building had expired.
§ Mr. Brooke
I am not reading from the Leasehold Committee's Report; I am reading from the evidence which was submitted by the Socialist-controlled London County Council to the Leasehold Committee, for I want to prove that this matter of the planning, benefits of the leasehold system should not be seized upon as a Tory argument. It is not a partial view; I would have thought that it was an almost universally accepted view, by all who attempt to approach this subject as the hon. Member for Pembroke (Mr. Donnelly) said we should—without prejudice.
My constituency happens to be one of those which includes several large leasehold estates, and my mind goes back to 436 the remark of the hon. and learned Member for Leicester, North-East (Mr. Ungoed-Thomas), who is not at present in his place, but who expressed the view that the interest of the landlord is a purely financial interest. The hon. and learned Gentleman said that that was Socialist belief on the whole matter. Certainly in Hampstead, we have a contrary experience in dealing with a number of large estates, which have not taken only the narrow, pecuniary view of their responsibilities, but have attempted, at times in mistaken ways, some may perhaps think, to take a long view and ensure the development and the redevelopment of the land and property in a manner that will be of general public benefit.
I find it so much easier to visualise the problems of the Bill in the concrete if I look at a particular case, and not at the obscure wording of the Bill itself. I cannot possibly be a beneficiary under the Bill, because I am not a lawyer, neither am I a lessee. One estate which I have in mind owns about 1,000 houses in the borough of Hampstead. They were built in the last century, and, in the last six years, the leases of about 100 have fallen in. In the next three years, which will, presumably, be the period to which the Bill applies, 183 further leases will fall in.
Of the 100 which I have mentioned, the great majority were found, when the leases fell in, not to be occupied by the lessee himself, and this estate normally pursues the practice of refusing to extend or renew a lease to a lessee if he is, in fact, an absentee. As regards occupying lessees its practice, which, I think, is in accord with the practice of the responsible large ground landlords of London—I stress the word "responsible"—has been to re-let the houses either at normal annual rents related to market value or on quarterly, monthly or weekly tenancies.
§ Mr. Janner
So that we may know exactly what the position is, can the hon. Gentleman give us an illustration by referring to the ground rent paid before the lease fell in and to the amount of rental charged subsequent to the lease falling in? That is the important matter that we want to consider.
§ Mr. Brooke
Yes, this particular estate let these plots of land at very low ground rents 100 years ago and is now, quite 437 rightly, raising those rents to market value, to reasonable rack rents for the property. When the lessees entered into a contract 100 years ago for a limited term they did not bind the ground landlords to require only that limited rent in perpetuity. The hon. Member appears to be wishing that the terms of the contract made 99 years ago had been varied at the time.
To return, an estate like that—and I wish to say that I have no personal connection with any such estate—runs in these days against two or three difficulties. First of all, it is extremely hard to get the necessary licences for reconditioning and modernising. As my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) pointed out, one of the essential purposes of the leasehold system is to ensure that at the end of a period of about 100 years the property is either pulled down or thoroughly modernised.
Secondly, there is the difficulty that a number of lessees, in spite of their covenants, and possibly through not understanding them, and possibly, again, through the great increase in costs in these days, have not got the necessary money for carrying out their responsibilities for repairs. I think we are all agreed that the rise in the cost of repairs is one of the factors which necessitate the whole problem of the leasehold system being very carefully looked at, in relation to the leases that are running out at present.
The third, and, possibly, the greatest, difficulty is the misunderstanding by many lessees of the terms of the contract they have entered into. Frankly, I think that the report of the Leasehold Committee does not give sufficient weight to that factor. My own belief is that there are considerable virtues in the leasehold system, and that it can give public benefit for the long-term development of our towns. Nevertheless, unless we can secure means by which those who are lessees clearly understand when they enter into the contract and throughout the term of it what their obligations are, I entirely agree that the leasehold system has a black mark against it in that respect.
The trouble is that though the leasehold system is not working well at the moment because of those two or three difficulties that I have mentioned, the Bill fails to give any help whatever in any of those respects. Nor does it help to do what is surely the most essential 438 thing of all—to hold the balance fairly between the parties, when that balance is tipped in one direction or the other. At present the balance is tipped in favour of the ground landlord because of the housing shortage, as the lessee whose lease is running out has not—
§ Mr. Brooke
—got a free choice. He cannot risk having nowhere to go. But the Bill, instead of taking the right step, as recommended in the majority Report, to restore the balance, claims to deal with the problem merely by tipping that balance heavily in the other direction.
As I said, in the estate I have mentioned there are some 183 leases soon to run out, of which only 40 or 50 are, in fact, occupied by the lessees, and in most of those cases the lessees are not in what is called single family occupation, but have just a flat or a room on the premises. That means that during the currency of the Bill about 4 per cent. of the total number of houses in such an estate will be affected by its provisions. To protect that 4 per cent. against the possibility of exploitation, the Bill offers those particular lessees exceptionally favourable treatment in relation, not only to the ground landlord, but also to other lessees, for instance, those whose leases ran out a year or two beforehand and who have renewed their tenancies or entered into some other arrangements on less favourable terms than the exceptional treatment which the Bill offers.
The real remedy is to find some means of restoring the balance fairly now that it has been tipped, and I see no better solution for that than the one contained in the majority Report. That would protect the lessee against possible exploitation by the lessor, and it would also, as I see it, protect against exploitation by the lessee because, let the House be under no illusion about this, there are cases in the country where the lessee, the owner of the head lease, is in enjoyment of premises at a very small ground rent, and has let them off into flats or even into single rooms at such rents that he is seeing a very considerable income from them. The Bill's contribution to that particular piece of exploitation is to say that it may go on, uninterrupted, for a further two years.
§ Mr. Brooke
The right course, if we are to have this Bill, is, as my hon. and learned Friend the Member for Wirral said, to adjust the rent during those two years to something comparable to the rack rent of the premises. My hon. and learned Friend threw out one or two suggestions well worth looking into in Committee as to the way we should do that.
I strongly agree with my hon. Friend the hon. Member for Bury St. Edmunds (Mr. Aitken), that there can be no defence for anything in the Bill which will stand in the way of keeping properties in good repair. Any of us who know the great cities must look with dismay at the rapidity with which one street after another is falling into disrepair through the operation of rent restriction or the difficulty of obtaining licences, and now come the temporary provisions of this Bill. It cannot be right in the national interest that the obligation to keep a house in good repair should be set aside and jettisoned as the Bill proposes. The trouble with it in that respect, as with the Rent Restriction Acts, is that it strikes blindly.
My main difference of opinion with hon. Members opposite comes down to this, that they are inclined to talk as if all landlords were bad and all tenants were responsible citizens. The fact is that landlords are good and bad and tenants are good and bad, and we have to frame legislation in this House so that it will deal hardly with the bad landlord or the bad tenant and will deal justly with the good landlord or the good tenant who is trying to fulfil his contract, and do his duty by the nation.
I quite agree that in conditions of housing shortage some statutory protections are needed for the lessee who is liable to eviction. They are equally needed for the sub-lessee against the lessee. But I cannot accept the suggested solution that the lease should be continued at the existing ground rent for a period of two years or, as the hon. Member for Pembroke wanted, for a period of five years.
Let us look at this analogy. Suppose there was a Government 5 per cent. stock due to be repaid in 1951, and suppose somebody said, "That will cause great hardship. We will prolong the term of the stock by two years. The holder may 440 claim repayment at par in 1951 or he may continue to draw 5 per cent. up to 1953." Everybody would say that that was an arrangement unfair to the Government.
§ Mr. Granville West (Pontypool)
Would the hon. Member draw a distinction between the investment of £100 capital stock by the investor and the expropriation of a building which has been erected by another person, as is done under the present leasehold system?
§ Mr. Brooke
The hon. Member is trying to bring the debate back to the whole system of leasehold and leasehold enfranchisement. I am trying to apply myself to the terms of the Bill. What the Bill does, in fact, is as if, in a case like that, the holder of the stock was allowed not only to continue with his enhanced rate of interest for another two years, but also to get, as a stock-holder could, an increased cash value for his holding if he wished to sell. The Attorney-General may point out that I am wrong, but I can find nothing in the Bill to require a lessee who is a beneficiary to remain in occupation for the two years. It strikes me that at any time he can dispose of his asset at an increased value. The Bill seems to ignore entirely these words in paragraph 105 of the Leasehold Committee's Report:We think that any scheme of compulsory renewal would be open to strong and wholly justifiable criticism if it merely had the effect of providing the fortunate tenant with a cheap leasehold interest which he would be free to assign or sublet at a profit.Surely we have to see to the amendment of the Bill in that respect.
I cannot think that the Bill provides the best way to protect the under-dog. I shall not oppose the Second Reading, of course, because there is a problem here and at last we have a Bill to deal with it, a Bill for which some of us, who have watched the proceedings of the Committee and have read their Reports, have been waiting for a long time. I am certainly not one of those, referred to by the Attorney-General, who think that at the present time this is a negligible problem. The Bill is an almost negligible contribution to the solution of the problem. but we must seek to improve it in Committee, and I was happy to hear the Attorney-General say that he hoped we should all join in doing so, irrespective of party.
§ 7.25 p.m.
§ Mr. Gibson (Clapham)
Unlike the hon. Member for Hampstead (Mr. H. Brooke). I do not think one can discuss this matter without realising and emphasising the social implications of this problem. I agree that this Bill does not solve the problem, but at least it gives us a period of two years in which injustice may be lessened a little while really comprehensive legislation is worked out to deal with this question of leasehold, the whole question of landlord and tenant relationship and, as was said earlier from these benches, the Rent Restriction Acts and other Acts which deal with this matter.
In the meantime there is a growing and very serious social and personal problem in this country. I do not think, and I do not believe this House will agree, that the merely legal rights of landowners ought to be allowed to impose tragedy and hardship on many people in this country who have bought a house and thought it was theirs and who now discover, at the end of their lease, that the house is not theirs at all and that the landowner can take it from them or impose onerous conditions upon them.
The fact is that there is a large number of people in the country, and in London, who have bought their houses or at least who thought they had bought them. They are members of what is sometimes called the working class—a phrase I do not like very much—and members of the so-called middle class. They are people who have spent the whole of their life savings in buying a small house in which they thought they could live their lives out and raise their family in security. As the hon. Member for Hampstead said, they are not lawyers. They do not understand, and I doubt whether many other people understand, including lawyers—
§ Mr. Manningham-Buller
Would the hon. Member explain how they reconcile being owners of the houses with paying a ground rent?
§ Mr. Gibson
That is not the point I am making. The point I am making is that they have taken a lease and built or paid for a house which is on the ground and they are paying ground rent to the landowner, but they do not understand—and I doubt whether there are many people in this country who do 442 understand—all the complications of the law relating to landlords and tenants.
§ Mr. Turner-Samuels
This sounds like a reflection on the legal profession. Is the hon. Member saying that people buy houses and then find that they have not bought them at all? If so, what evidence has he for saying that?
§ Mr. Gibson
The fact is that thousands of people—and many in my constituency have written to me in the last few months—are under the impression, rightly or wrongly, that the house they have built out of their own life savings belongs to them and that at the end of the lease, whether it be 20 or 90 years, it is still theirs. What they do not understand is why, at the end of the term of that lease, the landlord can take the house from them and evict them. They are now beginning to realise this, and I suppose we are all receiving letters from our constituents. I have certainly received some. I should like, briefly, to give the House two illustrations of the kind of problem about which I receive queries.
There is in my constituency a family, the father of whom was a railwayman. Somehow from his railway wages—I do not know how he did it; he was a hero—he saved enough money to buy a house. Then, unfortunately, he died just after he took occupation, and his widow has been left with it. She has tried to get the landowner to sell her the freehold because she now realises that in seven years' time, that house will disappear from her ownership. She has been unable to get any agreement from the landowner to sell her the freehold, and the poor woman and her family are worried out of their lives about their position in a few years' time when the lease runs out. My view is—and I am sure it is the view of all decent-minded people—that there ought to be some security for a person like that.
Let me give another example. I should like to quote a letter which was written to me by a constituent. He writes:I am an old trade unionist now past work at the age of 78. My wife is 76, and some time ago so that we should have some comfort in our old age I bought the above small house.443 He gives the address—Owing to the housing shortage I had to pay a good deal more than it was worth. Now, under the present law, the ground landlords who did not put a single brick to the house have the power not only to practically steal the house, but can demand a large sum being spent in repairs.Obviously he did not know he was in for all this when he took the lease. He goes on to say:It will not actually affect me as both my wife and myself will have passed on before the lease expires, but I was hoping to leave it to my only daughter. Surely if I purchased and paid for anything it should he my own property?What we are saying is that the law should be reformed to enable property which people have bought to remain their own.
§ Mr. Gibson
I know it does not, but for two years it protects people from eviction, so that during that period this difficult and complicated subject of landlord and tenant shall be discussed and a Bill prepared which will bring the law up to date and will, I hope, give to tenants the security and justice to which they are entitled.
I make one final point relating to the period of two years. During the last few months I have taken some closer interest in the legal complications of this matter—I am not a lawyer—and I am beginning to doubt very much whether in two years it will be possible to sort out this matter and get a new Measure passed through this House. I therefore ask that if at the end of two years this House has not passed the comprehensive legislation for which we are all hoping, the present Measure will be extended for a further period so that the hopes of these people will not be frustrated.
The root of this problem, as of so many other social problems, lies in our present land ownership system. I know that hon. Members opposite think that the private ownership of land is morally, ethically and legally right. I do not think we shall ever completely solve this problem, or many other social problems, until this House decides to deal with this question of land monopoly. I hope that the hint which the hon. Member for Hampstead gave when he read from the report of the evidence which the London County Coun- 444 cil gave to the Committee will come about, and that land will become publicly owned in this country. If the land is publicly owned, these problems can be dealt with much more easily. They will not be solved until the land in this country does return to the ownership of the common people.
§ Mr. G. Thomas
On a point of order, Mr. Speaker. In view of the speech which the hon. Member for Bury St. Edmunds (Mr. Aitken) made earlier, in which there were constant references to myself, may I ask whether it is not the custom of the House that an opportunity should be given to me to reply?
§ Mr. Speaker
It is not for the hon. Member to challenge the selection by the Speaker of those who are to speak. Sir Austin Hudson.
§ 7.35 p.m.
§ Sir Austin Hudson (Lewisham, North)
I am not a lawyer and I am not a landlord, but I am one of those Members who, like the hon. Member for Clapham (Mr. Gibson) and my hon. Friend the Member for Hampstead (Mr. H. Brooke), sit for constituencies of a dormitory type and to whom these leasehold Bills are of vital importance.
Like the hon. Member who said that he had sat for two years on the Leasehold Committee, I sat for two years on the Ridley Committee which dealt with rent restriction; and many of the problems which we had to solve then, particularly the problem of the eviction of tenants, rather than the amount of rent they paid, were very much the same on both those Committees. I was sorry that the findings of the Ridley Committee could not be implemented during the last Parliament. Still, they are there, and it may be that in this Parliament—I am encouraged by what the Attorney-General said—a comprehensive rent control Measure will be introduced.
I should like to say a few words about the timing of the Bill. We had the interim Report of the Leasehold Committee in March, 1949, and I understand that the reason why that interim Report was put in and the reason for the hurry was that the Government wanted to deal immediately with the pressing problem of shops and business premises. However, until now nothing has been done. I am 445 not a lawyer, and I do not have to deal with these matters from day to day as part of my business, but I am told that a great deal of property is being disposed of, shopkeepers are being evicted, and so forth, even now. I have been told of a case in Halifax concerning a place called the Arcade Royale—why it was spelt in French I do not know—which is a large block of shops. All the leases have fallen in, all the tenants are being evicted, and I believe that the Co-operative Society is to take over the lot. That is hard luck on the people who are being evicted and who would have been protected by this little Bill had it been brought in earlier.
The final Report relating to the housing side of this Bill was introduced in June, 1950; we are now in December, and we have only an interim Bill. The Attorney-General announced that we shall have further legislation within two years. I have been wondering about that period of two years, and I came to the conclusion that that is as long as the Government think they will last. Obviously, if there had been agreement among the whole of the party opposite about the long-term solution, then more permanent legislation would have been introduced. It is clear from the speeches made by hon. Members opposite, as it may be clear from speeches made on this side of the House, that this is not the sort of thing about which everybody in every party is unanimous.
This is a subject upon which the Government must make up their mind and must then introduce their final legislation and try to pass it through the House. I should have thought that a House composed, as this is, of almost an equal number of hon. Members on each side would not have been a bad one in which to bring forward this issue, because there are divisions on both sides of the House and, after discussion, after threshing out the subject between us, we might have produced a Bill which would have lasted for some time.
I want to say a few words on future legislation. I read the Report of the Jenkins Committee with great interest and I thought the reasons advanced by the majority of the Committee against leasehold enfranchisement were pretty formidable. The objection which, it seemed to me, could not easily be overcome was that which pointed out that it 446 is a social advantage if we can provide for a number of leases all to fall in at the same time. That is particularly the case in London. I am thinking, in particular, of part of my own constituency of Lewisham, where it would be an advantage if leases all fell in at the same time. At present the buildings are made into flats in the most inconvenient way, whereas if the leases of blocks of buildings fell in together, the buildings might be modernised and converted into more suitable dwellings. I will not continue on that subject, however, because it is something with which we shall have to deal when we consider the permanent legislation.
There is one point which I want to mention in particular. It has already been mentioned by my hon. Friend the Member for Hampstead. It is the question of disrepair. House after house in Lewisham is falling into disrepair simply because the landlord is unable to effect the repairs. It is not a fact in most cases that he is unwilling to do so; it is that he is unable to do so, either because the rent is fixed too low or because he cannot obtain the licences, and so on. I am frightened about the effects of Clause 4 of the Bill, which protects the tenant for two years with penalties for breach of covenant. We must go into that very carefully on the Committee stage. Two years will make a good deal of difference to some of these houses. Their roofs are sagging already, the walls are crumbling and they need repair at the earliest possible moment. We must be careful about that.
In Lewisham we have a problem which I think is peculiar to only a few parts of London and, in fact, to only a few parts of England. It is the problem of tenants of Crown property. There seems to be quite a lot of Crown property in Lewisham—possibly an overflow from Greenwich. Although these tenants occupy the same kind of house as that which next door is rent restricted, their houses are not subject to rent restriction, and the result is that certain unscrupulous people have in some cases bought up the leases and are putting the screw on the sub-tenants who are in occupation, or have already put the screw on them, either to push up the rents or to evict the tenants—and that is where this Bill might operate. The Government know that this problem exists because I 447 have told the Minister of Health about many cases. He told me that in suitable cases he is giving authority for the local authority to use requisitioning powers. He said that he wants to deal with the problem at the earliest moment, but he thought that it could not be dealt with under this Bill.
I want to ask the Government whether the eviction of these tenants and subtenants comes within the provisions of Clause 14 (1) of the Bill. I am afraid that it does not, because if we look at the last few lines of the first page of the Bill—Clause 1—we see that it says:The tenancy shall continue after the date of expiry as if it had been granted for a term expiring at the end of the said period of two years but otherwise (save as hereinafter provided) on the terms and subject to the conditions of the tenancy.Unfortunately, the terms and conditions of the tenancy of these people are that, first of all, their rents can be increased—although I agree that that cannot be dealt with under the Bill—and secondly, that they can be evicted. If the right hon. and learned Gentleman would look at that point and deal with it, it would be of great advantage to a number of these tenants who live in my constituency and with whose cases I have been trying to deal for some time.
For those hon. Members who may be interested and who think that the Crown tenant is subject entirely to what we might call Buckingham Palace, I would explain that we seem to have come closer and closer between Crown and Government, because when I first took up these cases I wrote to the Commissioners of Crown Lands and, after a suitable delay, I received a reply from the Minister of Agriculture and Fisheries, who said that these Crown lands came under his jurisdiction and who gave me a very polite reply on the exact state of the law. Thus, in pleading for these tenants of Crown land, I am, in fact, pleading with the Government for tenants of their own land.
As my hon. Friends have said, we intend to support the Second Reading of the Bill because we realise that there is a social evil which we have to put right. We do not altogether like the drafting of the Bill, particularly that of Clause 5 and of Part II of the Bill, and we shall feel ourselves at liberty to move and vote for Amendments when the time comes.
§ 7.48 p.m.
§ Mr. Granville West (Pontypool)
There seems to be a fundamental conflict between the two sides of the House about the problem we are discussing today, although there is no conflict so far as the Measure before us is concerned. The conflict would appear to be one between law and equity—the party opposite representing the law and this side of the House, I think, representing the equity. Several hon. Members opposite have dealt with the question of hardship and I have detected that they are rather more concerned about the hardship to the landowner than the hardship to the building lessee.
Some of them, I noticed, have referred to the question of repairs. I do not know whether hon. Members opposite take the view that the exacting of premiums from building lessees and the increasing of their ground rent at the expiration of their term is likely to enable them more effectively to carry out repairs upon their property. In my view, the terms which are imposed upon them make it very difficult for them to put their properties in repair.
The hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who opened the debate on behalf of the Opposition, made some general observations with regard to the theory of building leases, and he endeavoured to put forward the proposition that it had enabled development to take place under proper planning and control and, further, that in deciding the rent to be charged to a building lessee the lessor had taken into consideration the house that was to be built and the repairs which would be carried out during the period of the lease. I would like to ask the hon. and learned Gentleman who is to reply on behalf of the Opposition whether there is any evidence at all which was given to the Leasehold Committee to indicate that there is a single case where the ground landlord ever made a reduction in the ground rent in consideration of the building lessee erecting the house and undertaking to keep it in repair.
§ Mr. Manningham-Buller
I was asked whether there was evidence before the Leasehold Committee. I was not on the Leasehold Committee and I do not know whether any such evidence was given.
§ Mr. West
I think we can assume that no such evidence was before it, if there had been I think we should have found 449 it in the Report, and there is no evidence in the Report to indicate that building lessors at any time had made a concession in the ground rent.
I think it is clear that there is some misconception about how the building lease began to operate. It is suggested that the building lessor determined as a policy the planning and development in the country. In point of fact, the historical truth is entirely to the contrary. In my view, the development of the building lease followed on the decay of villein tenure in this country when the landowner was unable to develop his land, and he had therefore to let it out to other people to farm it for him. That and the law of primogeniture, whereby the land descended to the eldest son tended to promote the accumulation of large estates in the country, which passed as a whole to a single inheritor.
When the Industrial Revolution came about, what happened was that people flocked to the urban areas of the country and wanted plots of land on which to build houses in which to live, and they had to deal with one landowner, a monopolist in that area. They could not get land for sale. They had to take the terms which the landlord insisted upon. He imposed upon them the building lease, for the simple reason that he wanted to preserve his estate in one whole, and not out of any consideration for planning or control. I suggest that when the landowner in those days granted his building lease, he extracted from the building lessee the highest rent he could obtain.
Hon. Gentlemen who are members of the legal profession and who have been in practice as solicitors will know full well—and let us have no humbug about this—that when they have acted for building lessors or building lessees, the building lessor always extracted the best rent he possibly could for the land he leased. [Interruption.] It is not the way in which we advised him, but the way in which he instructs those who act for him.
Some hon. Gentlemen opposite have pooh-poohed the suggestion made by my hon. Friend the Member for Clapham (Mr. Gibson), who spoke about working people buying leasehold property not really understanding what they were doing. I ask hon. Gentlemen who are members of the solicitors' branch of the 450 profession: how many times have working people brought contracts into their office which they had signed after having bought properties at public auctions, the only reference being that the title should commence with a lease of such and such a date? No covenants or conditions in the lease had been explained to them, and when they came into the solicitor's office the solicitor tendered the advice that, having signed the contract, and having bought it at a public auction, they were bound to take the property.
§ Mr. Hay
Since the hon. Gentleman seems to be looking at me, may I say that my own personal experience is that frequently people come into one's office and say, "I have bought this property at an auction." One explains to them what they have done. The hon. Gentleman's point is that at the end of their lease these people believe that they have the freehold.
§ Mr. West
When the hon. Gentleman opposite explains to them what they have done, he also explains to them that it is much too late for them to get out of it. If it is too late to get out of it, and he has found it necessary to advise them on what they have done, then he recognises that they have been misled.
§ Mr. West
If the hon. Gentleman advises them on what they have done and advises them that it is impossible for them to get out of it, he must recognise that those unfortunate people have been led into a situation into which in fairness and in equity they ought not to have been brought. That is the view which I take with regard to this building lease system.
There is no question but that large numbers of people are completely misled with regard to the operation of this system; one has only to go into the mining villages of Monmouthshire and South Wales, to Newport, Mountain Ash, Aberdare and the Rhondda—and the hon. and learned Gentleman talks about planning and control! I would suggest that the hon. and learned Member for Wirral should go into these industrial areas of South Wales and he will appreciate that this problem is very acute. Let him go there and see whether this building lease system has been responsible for orderly 451 development and good planning, and then he would know what are the views of the hundreds of householders in those areas.
There is no doubt that in South Wales, in particular, the conditions are due to the operation of the building lease system, because no one could get a plot of ground on which to build a house except under the building lease system. The landowners were monopolists and could impose what terms and conditions they pleased.
In a speech which I made in the debate on the Address, I stated that I had seen leases in which the building lessor imposed a condition that if the building lessee at any time embraced the Roman Catholic religion, the property was to be forfeited. Can anyone suggest that such a system should be operated in this country. [Interruption.]
I am making use of that example to indicate the power which the landowners had to impose harsh and iniquitous terms on building lessees because they were powerless to enter into negotiations with them. It was the power of the monopolist. Therefore, when the hon. and learned Member for Wirral, who I am glad to see has returned to his place, says that the building lessor, when he granted the lease, made concessions in the ground rent for the obligation which the building lessee undertook to build the house and keep it in repair, I ask him whether there was a single scrap of evidence brought before the Leasehold Committee to show that any building lessor had in fact made any such concession.
§ Mr. Selwyn Lloyd
So far as the evidence was put before that Committee, I think that it was a matter of agreement that we should not state what it was.
§ Mr. West
I gather from the Report that general statements on behalf of the freeholders had been included, and I think that they set out the conventional arguments, but I do not see even in the conventional arguments that they say that the building lessor had granted leases at a rent less than that which he could have extracted at that time. Therefore, I think that I am entitled to take it that no evidence came before the Leasehold Committee that any reduction in rent had 452 been made at all. In fact, I suggest that the lessee had to pay the highest rent which the landlord could possibly extract from him.
The view which I take in regard to this Bill is this: I welcome it, but I do not think that it goes far enough. I know that there are arguments, and perhaps strong arguments, against the inclusion of all building leases in this Bill because there are some who will say that to include all building leases is merely to substitute one landlord for another; that is, if the person who owns the building lease is not in occupation, and this Bill applies to him and his lease is extended for two years, he merely continues on as the owner receiving the rack rent of the property instead of the ground landlord stepping in and taking it. But has the ground landlord a better claim to the rack rent than the person who has built the house and maintained it in repair and paid all the outgoings in respect of it?
I would say that there is a much stronger case for the building lessee, even though not in occupation, to continue being regarded as the owner of the property than that the ground landlord should come in and take it over. I would say further—and I draw the attention of the House to this—that the Leasehold Committee expressed the view that under the Town and Country Planning Act, if leasehold enfranchisement were brought about or options to purchase were incorporated in the lease, it would tend to kill the leasehold system.
As far as I am concerned, I should like to see the building lease system completely killed. I do not think it has any place at all in the law of our land today. Unless the building lease system is killed, the ground landlord has one very good way of circumventing the operations of the Town and Country Planning Act. Under that Act, the development value in land is taken away from him. He gets his compensation out of the £300 million fund. But I have not yet come across a case where the building lessor has been taking any less rent than he was taking before the Town and Country Planning Act was passed, because the development value of that land has been taken away from him.
Anyone who takes the land now should take it only on the basis of its existing use value. But the ground landlord is 453 obtaining the same ground rent for the land that he could have obtained before the passing of the Act. When the building lessee wants to build his house upon it, he has to pay a development charge to the Central Land Board. Let us put it at £500. What happens, if the building lease system is permitted to operate, is that the building lessor, or his descendants, at the expiration of the lease will take the land, the building on it and the value of the development charge. Therefore, the continuation of this building lease system will completely circumvent the desire of the Government expressed in the Town and Country Planning Act. For that reason and for others, there is no longer any purpose in maintaining this building lease system in our country.
There is one other short point I should like to raise with my right hon. and learned Friend, which has been referred to before in connection with the debate, and that is the definition of "family." I know that the right hon. and learned Gentleman said that it has been sufficiently clarified by judicial decisions. As I understand the position, "family" has been taken by judicial decision to include, as well as the wife and children, the tenant's husband. That was decided in the case of Salter and Lask. A case was required to decide that. In another case in 1930, that of Price and Gould, it was decided that brothers and sisters were members of "a family" Further, by Brock and Wollom, it probably means that stepchildren and illegitimate children may be regarded as members of "a family."
The text book I have referred to in regard to this matter says that probably grandchildren, nephews and nieces who live with the tenant are members of "a family." No legal decision has yet decided that they are members of "a family." The point is that unless we get a proper definition, we may have some exacting landlord who will take a tenant to the Court of Appeal to decide whether his nieces or grandchildren are members of "a family." I see no difficulty in introducing some definition in the Bill.
If the right hon. and learned Gentleman says that these people I have referred to constitute "a family," what is the difficulty in putting it in the Bill? If there are others who ought to be included, then why not put them in as 454 well? Why should a tenant have to run the risk of going to the Court of Appeal to decide whether he is a member of "a family" or not? Further consideration should be given to this, to see if some definition cannot be included to make this a more workable Measure.
§ 8.7 p.m.
§ Mr. Molson (The High Peak)
A good deal of the speech of the hon. Member for Pontypool (Mr. Granville West) was devoted to a general discussion on the policy of building leases and directed, no doubt, to the time when permanent legislation will be introduced to deal with that matter in accordance with the promise of the Attorney-General. The latter part of his speech dealt with Committee points, and I trust that he will acquit me of any discourtesy if I do not follow him in any great detail in this respect.
I shall read with special care and attention what he has had to say about circumventing the provisions of the Town and Country Planning Act. In those parts of the country with which I am familiar, the effect of that Act, to which I gave general support, has been almost to bring to an end all development by private speculators. I do not know whether I shall not welcome the discovery that the ingenuity of South Wales men has enabled them to continue to build houses despite the provisions of the Town and Country Planning Act.
I want to say a few general words about the Bill. It is a remarkable thing, when this Government of planners has been in power for more than five years, that we should now be confronted with an interim Measure of this kind. A number of Members opposite have told us how great, how pressing and how long standing is this problem, In those circumstances, we should have expected that as soon as the Government came in, being anxious to liberate tenants from the tyranny of the system which has been described to us, almost the first action they would have taken would have been to set up a committee to investigate the matter.
Since we are told that this is a problem which particularly harasses South Wales, we might have assumed that the Minister of Health, upon his appointment to that office, would have thought what a happy 455 coincidence it was that he should be appointed especially to be responsible for matters of this kind, remembering all the hardships under which he and his fellow Welshmen have suffered since their childhood. Although the right hon. Gentleman went to the Ministry in 1945, it was not until 1948 that he thought of setting up the Committee under Lord Uthwatt. So impressed were the Government with the need to deal with this matter, that they presented an interim Report in March, 1949, but it has taken them from then until now to agree upon an interim Measure. And what a strange interim Measure it is. It has no relationship to the recommendations of the Leasehold Committee which had been set up, and whose Reports they had been considering for so long.
The Bill is divided into two parts. The principles which it applies in one part have no application in the other. Indeed, one might say that in both cases there is no general and permanent principle applied at all. Little expedients have been resorted to to deal with two kinds of leasehold. We have been told—and this, indeed, I welcome—by the Attorney-General that the Minister of Health and his Department are examining the Rent Restriction Acts with a view to codifying and amending them. I trust that the study will be conducted with greater expedition than has been the case with the Bill now before us. I urge that something be done to bring rents generally into line with the prices of building and repairs.
Let me deal, very briefly, with Part II. To that I can give a general welcome. Much as I dislike any interference with the free play of supply and demand I recognise, and the party to which I belong recognise, that to prevent the consumer from being exploited where there is a state of acute shortage, it is necessary for the State to step in and to exercise some control. At present the State is exercising control over all building, and very few shops are now allowed to be built in this country. Therefore, it is only fair, right and reasonable that shop occupiers should enjoy reasonable protection.
I welcome the method which the Government have adopted in dealing with this matter and which bears a certain resemblance to the proposals of the Ridley Committee on Rent Restrictions. I agree 456 with my hon. Friend the Member for Lewisham, North (Sir A. Hudson), and I hope that the Government will give careful attention to the recommendations of that Committee. The county court is probably a good substitute for the rent tribunal, but I hope that the Government will agree that some guidance should be given to the county court. The courts should take into account all relevant considerations and not only what Parliament thinks should influence their discretion, which is unfair to the courts. It would be reasonable to require the courts to take into account the increase in the cost of repairs.
I welcome those provisions. A constituent of mine who has occupied a shop for 10 years has paid a yearly rent of £65. When the rent was due for renewal he obtained the opinion of a valuer, who suggested that at present a fair rent would be £90 a year, an increase of approximately 50 per cent. over the 10-year period. The landlord sought to obtain a rent of £250. We on this side of the House do not wish to enable landlords to take advantage of a temporary condition when there is an acute shortage of accommodation of that kind. I suggest that it is necessary that the county courts should be given guidance as to what would be a reasonable increase in the rent as a result of the change in the purchasing value of money.
§ The Attorney-General
I listened with great interest to what the hon. Gentleman has just said. Does he think that we should have some provision to exclude scarcity value?
§ Mr. Molson
Yes, that is my personal opinion. I entirely agree that scarcity value should be excluded. That is the reason why I am in favour of the local tribunal; but I am asking that the landlord should be entitled now to receive a rent which makes adequate provision for the increased costs which he has to bear as owner of the property.
I now turn for a moment to Part I. I can see no justification whatever for a purely arbitrary extension of all leases as they fall in, for two years. I listened with attention to cases which were mentioned by hon. Gentlemen opposite. I do not exclude at all the desirability of the State intervening to prevent exploitation of a tenant in cases where the owner of 457 land has enjoyed a monopoly. It appears to me that exactly the same line of reasoning that I have applied to shops, where there is shortage of shops, can logically be applied in cases of building leases. I do not suggest that the same has applied in the case of all building leases. Building leases given at different times in different parts of the country, have all been treated in exactly the same way.
The Attorney-General, who said that we cannot legislate to deal with hard cases on the principle that hard cases made bad law, might also bear in mind the opposite and equally true statement that bad law certainly does make hard cases. In any case there should surely be some increase in the grants which are allowed in these cases. The fact that the Government are providing for this in Part II shows, according to their own line of reasoning, that there can be no justification for refusing it in Part I. As these leases dealt with in Part I are of very long standing, the fall in the value of money in 99 years is very much greater than the fall in the value of money in the last 10 years.
I hope the Attorney-General will keep an open mind about Clause 4. I was interested in the argument which he advanced at one point in his speech. He was showing why the Government had not been willing to introduce a statutory rent restrictive tenancy in place of the building lease. On a question of altering the rent, he said that if that were done it would be necessary in each case to take into account the provision of the lease requiring repairs, and so forth and so on. I think that was an impressive argument, but surely he must realise that it is unreasonable to continue the duration of these building leases for a further period of two years, and suspend the operation of all conditions that apply. That is inequitable.
Here, I must refer to the speech of the hon. Gentleman the Member for Clapham (Mr. Gibson). He said that he would deal with the matter from the social and not from the housing point of view, as was done by my hon. Friend the Member for Hampstead (Mr. H. Brooke). What greater social interest is there than the preservation of houses in a good state of repair? I am not sure that if somebody, 100 years hence, writes a really impartial book upon the housing records of this 458 Government, the greatest criticism will not be that they did so little to prevent the existing housing stock of the country from falling into a state of disrepair during the time they were in office. Surely to give tenants a continuation of their leases and make no provision for their houses to be kept in a reasonable state of repair is the most anti-social action that could be taken.
I hope, also, that the various conditions which are at present requiring to be kept by tenants will be noted by the Government during the Committee stage, and that all the provisions of that kind that are fair and reasonable will be preserved in operation during these additional two years. I hope, further, that the Attorney-General will not overlook the unfairness of giving a fortuitous advantage to those tenants who happen to be in possession at the present time. It may be that if someone who has suffered hardship in the way hon. Gentlemen opposite have mentioned has sold the remainder of his lease to another person to avoid the liability for repairs, and so on, the purchaser will enjoy a benefit to which he has no entitlement either in law or in equity.
I regard this as a typical piece of legislation by the present Government. It is hand-to-mouth legislation. They have postponed for another two years the time when a decision will have to be taken upon these difficult subjects. For five years this Government of planners have been unable to decide upon their plan, and they have to take two more years at least to consider further this very important question.
§ 8.25 p.m.
§ Mr. Weitzman (Stoke Newington and Hackney, North)
I hope it will be appreciated that this problem is not confined to South Wales. I have the honour to represent what is the largest London constituency, and there are many difficulties arising from occupation of leasehold property in that constituency, with which my constituents are concerned. The hon. Member for The High Peak (Mr. Molson) taunted the Government with having brought in what I imagine he would call a stop-gap Measure. The evil which the Bill seeks to remedy has existed for many years. The difficulties of the Rent Restriction Acts, the Landlord and Tenant Act. Leasehold 459 enfranchisement and such other subjects have been continuously before the public.
There were many years before the war when there was plenty of time for the Conservative Government in power to tackle this matter. Therefore, it hardly lies in the mouths of hon. Gentlemen opposite to taunt the Government for not having done anything, particularly when we are faced with a majority Report, and a number of minority Reports on this intricate question. How anyone could expect legislation dealing with matters such as are set out in the majority Report to be brought before the House in the conditions under which we are working today I do not know.
I very much welcome this Measure, but I, too, would like to criticise it in some respects, because I feel that it does not go nearly far enough. My main criticism is this. Although it is true that on the final Report of June, 1949, it would have been impossible to bring in an agreed Measure on leasehold enfranchisement, there was a great deal of agreement in that Report, and a Measure could have been brought in containing a great deal more than is contained in the present Bill.
Reference has already been made to paragraph 68 of the interim Report. That paragraph had the support of very many members of the Committee. Paragraph 68 explicitly recommended an extension of the provisions of the Landlord and Tenant Act, 1927. Considerably beyond what is set out in this Bill. The paragraph says:The evidence submitted to us shows that no class of business activity is immune from the dancers of exploitation by landlords. Doctors, lawyers and professional men generally; trade associations and trade unions; professional, learned and voluntary bodies of all kinds need protection equally with industrialists, shopkeepers and other businesses.Having got agreement on that point, was there any reason why Part II of the Bill should not have been drawn up so as to include all these people? I can understand the argument of the Attorney-General that the law of landlord and tenant contains many thorny problems and that one could not get agreement on all of them, but when in the Report of a Committee there is agreement about a Measure of that kind, and when it is patent to all that here is an evil which ought to be dealt with as quickly as pos- 460 sible, why was it not possible to draft a Clause specifically extending the right to continue occupation not only to shopkeepers but also to professional people and all the others mentioned in paragraph 68?
I turn now to a number of matters arising out of the Clauses in the Bill. I strongly agree with the criticism which has been uttered of Clause 10 and the use of the words:… the court may, if in all the circumstances of the case it appears reasonable so to do …The result of a Clause of that kind is to leave a person at the mercy of the tribunal. We know that county court judges are very fine people, taken as a class—and I should not venture, especially in this House, to offer a word of criticism against them—but they are only human beings and they differ from one another in what they think is reasonable. In cases under the Rent Restriction Acts, in which the word "reasonable" is used, there is very often a great deal of feeling over the way in which this term is interpreted. Surely we should make clear in the Bill how the court should act in this matter. Some guidance ought to be given to the tribunal It is true that Clause 10 (3) lays down conditions in which a court shall not order the grant of a new tenancy. That may help in some degree, but it does not deal with the point. Something ought to be done to prevent any difficulty arising from the use of these words.
A curious provision is contained in Clause 12 (4). Under the Landlord and Tenant Act, 1927, in regard to a right of compensation one had to show occupation for a minimum period of five years. Why it should be said in Clause 12 (4) that in considering the period of occupation one has not to take into account the period of extension given to the tenant I do not know. The tenant is still there, carrying on the business, and I can see no reason for the inclusion of the subsection.
I deprecate excluding the right of appeal as provided for in Clause 13. I know that it was thought proper to shut out the right of appeal in the rent tribunal legislation, and I know that it was said that it ought to be cut down in those cases because they were simple cases, but when we get complexities in a Bill of this nature, such as the use of the 461 word "reasonable." what harm is there in preserving the ordinary rule in regard to actions in the county court, that if there is any appeal on a question of law the litigant has a right to pursue it? I hope that we shall not in any way limit the very important right to go to the court of appeal.
§ Mr. Weitzman
My right hon. and learned Friend knows perfectly well that when one goes to the Court of Appeal one must get leave to appeal to the House of Lords. Unless there is a very important question at stake, or unless the House of Lords gives leave to appeal, there is no question of going to the House of Lords. The problem, therefore, is a simple one.
§ The Attorney-General
I do not want my hon. Friend to think that I am not impressed by his argument or am not interested in this question, but it would help me very much if someone would suggest the kind of point of law which might be taken to the Court of Appeal. The question of reasonableness would, normally, be one of fact, turning on the circumstances of each case. I do not see how there can be a question of appeal on what is "reasonable." That is essentially a question of fact.
§ Mr. Turner-Samuels
The whole Bill is to last only two years. Going to the House of Lords would certainly take longer than that.
§ Mr. Weitzman
There is nothing in the argument of my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels), because one can do a great deal even within two years. To my right hon. and learned Friend the Attorney-General, I say that if one could not conceive of any point of law in regard to the meaning of the word "reasonable," the difficulty does not arise; there would then be no right of appeal.
It is difficult when a Bill is before the House to anticipate what complexities will arise in its operation. My right hon. and learned Friend will know that when the Workmen's Compensation Act was passed it was not thought that there would be any question of taking any matter to the Court of Appeal, but one has only to look 462 at the decisions which have been made to realise the wealth of learning which followed in many decided cases. If it would do no harm, and if there is a possibility that a case might arise in which a point of law can be taken surely the right to go to the Court of Appeal should be preserved.
I turn now from Part 11 to Part I of the Bill. I certainly welcome, as far as it goes, the right of continuing a tenancy for two years, but there are one or two points about which I want to inquire on this part of the Bill. I should like my right hon. and learned Friend to give some meaning to the expression "member of a family." A great deal of legal definition is contained, I know, in cases. The words of the Rent Restriction Acts show that a member of a family was a person who had been living with the tenant for a period of six months. In the Bill, Clause 2 contains the words:either the person who was the tenant immediately before the date of continuation or a member of that person's family.What does that mean? Does it mean, for example, that a person who was in occupation for one day only has a right to continue there? This illustrates the sort of case which requires that a proper definition should be given. I should like to know, also, what is the meaning of Clause 2 (4). If it means what I think it means, it is very badly expressed. I should not like to put my suggestion forward, but I should like the wording to be looked at to see whether it can be clarified in some way.
I agree with some of the criticisms that have been made that forfeiture of a lease should not be restricted only to the questions of non-payment of rent or a breach of the insurance clause. I was not present when this aspect may have been referred to by other Members, but it is clear that if a person misuses premises—for example, if he uses a house as a brothel, or there is a wrong user of the premises in some other way—the right to forfeiture ought to remain. These points can doubtless be dealt with in Committee, but my main criticism of this part of the Bill is that it does not go nearly far enough: it merely nibbles at the problem.
The final Report contains many clauses which received the support of most of the 463 members of the Leasehold Committee. I am looking now, for example, at page 99 of the final Report. I look at recommendation 2, which recommends:That the provisions of the Leasehold Property (Repairs) Act, 1938, should be extended to all types of premises, irrespective of their rateable value. …That is a very important recommendation. I also read other provisions, for example, recommendation 6, which suggests that "rent" should be defined because of an obvious difficulty which arises under the Housing Act, 1930. Then, if we look at recommendation 9 we find thata standard form of weekly tenancy agreement for incorporation in the rent books required by the Rent Acts for weekly lettings of controlled housesis recommended.
If we look at the recommendations, on page 118, we findthat absolute covenants against assignment or sub-letting should be construed as if they were covenants against assignment or sub-letting without licence or consent, and should thus be subject to the proviso that consent is not to be unreasonably withheld.Surely we have there a great many recommendations which are not of a controversial kind in regard to which everyone is agreed on matters by which vital changes of the law could be made.
One hon. Member opposite said, and I very strongly agree, that in a Parliament of this kind, where, very often, we have a lot of time to do certain things, those are the sort of things we should deal with in the Measures brought forward. We must recognise that however thorny the field of the law of landlord and tenant may be, and however impossible it is to get rid at the moment of the complexities and difficulties of the Rent Restriction Acts, there are a very large number of recommendations of a vital kind, agreed by everyone, and I should have thought that this Bill could have introduced these measures of reform and remedied a great many evils which exist. I regret exceedingly that that has not been done.
I support the Bill as far as it goes; I think it is very important for the short benefit it confers, but I hope that at an early date something will be done to remedy the many present evils in the field of law of landlord and tenant.
§ 8.42 p.m.
§ Mr. Black (Wimbledon)
Possibly I may have an interest in this matter which it would be proper for me to disclose. I am interested in various companies which own land and property. I cannot recollect any cases of ground leases expiring within the next two years, so it may be that I have no personal interest, but, if I have an interest then I declare it now.
In the very short time for which I can speak, I do not want to go in great detail into the case for or against leasehold enfranchisement, but I feel that there are two classes of people in regard to leasehold enfranchisement to whom reference has not been made in the very moving and appealing speeches on the subject to which we have listened from the benches opposite. In my constituency there are a good many houses belonging to the local borough council which are let to tenants. In some cases the tenants are anxious to buy their houses and the borough council is willing to sell the properties to them but, owing to the intervention of the Minister of Health—without whose consent council houses cannot be sold—those occupiers are deprived of the opportunity of buying the homes in which in many cases they have lived for many years, although the owners of the property, the local authority, are willing and anxious to sell them.
There is also the case of those people who own the freeholds of their own homes in the new town areas and have enjoyed the ownership of those freeholds for many years past, and who are now to be dispossessed of their freeholds and will only have the opportunity of acquiring leasehold interests in place of the freeholds. I am sorry that more regret has not been expressed from the benches opposite in connection with this subject of leasehold enfranchisement for those two sections of the community whom it is within the power of the Government quite easily to assist, but who are deprived of the opportunity of acquiring or retaining their freeholds by the action in the one case of the Minister of Health and in the other of the Minister of Town and Country Planning.
The differences of opinion in regard to this Bill and in regard to the leasehold system generally which have emerged from our debate today seem to me to arise very largely because of a difference of view 465 as to the merits of the leasehold system itself. There are, quite clearly, Members on the benches opposite who hold the view that the leasehold system is a bad one, and that the sooner it can be brought to an end the better it will be for leaseholders and for the community at large. That view is not, I think, held by Members on the benches on this side of the House. We would subscribe to the view expressed by the Leasehold Committee when they say:We ourselves take the view that the leasehold system is a convenient and even an essential feature of our real property law.
§ Mr. Ungoed-Thomas
Of course, the hon. Member must draw a distinction, as a distinction is drawn in these Reports, between the building lease system and the general application of rack rent leases?
§ Mr. Black
I am obliged to the hon. and learned Gentleman. I fully appreciate that that distinction exists, but I still say that the leasehold system has by and large conferred great benefits down the years, and that the advantages of the system far outweigh the disadvantages to which reference has been made in today's debate.
§ Mr. H. Hynd (Accrington)
When the hon. Member says that it has conferred great advantages, on whom does he mean it has conferred those advantages?
§ Mr. Black
It has conferred great advantages on sections of the community who could not otherwise have secured a long-term interest in the ownership of property because they had not sufficient money both to pay the purchase price of the land and put up a house, and whose finances, but for the fact of their being able to acquire a site on a long lease, would not have enabled them to acquire a house at all. That is a section of the community on whom the ground lease system has conferred great advantages.
But it is agreed on both sides of the House that there is a case for a Bill to deal with this matter. That fundamental point is not really at issue at all, but I wish to occupy the few minutes that remain to me in pointing out the difficulties and disadvantages of legislation of this kind. Such legislation is often open to the danger, in the process of seeking to cure a certain class of grievance, of creating more grievances and more difficulties than the grievances and difficulties that 466 are cured by means of the legislation. I am not at all sure, that this consequence may not follow from the type of legislation which we are now discussing.
Interference with the right of contract between landlord and tenant, and particularly with the landlord's right to recover possession of his property at the end of the contract, inevitably leads to less and less property being available for letting, and to landlords taking up the position that they will sell their properties only when those properties come into their possession. The Rent Restriction Acts are a good example of that. No house is re-let today when it falls vacant. It is sold, and thereby the renting public are deprived of the opportunity of a tenancy. The same is true of farm properties. Farms are invariably sold today when they come into possession, because the landlord cannot be sure of getting back possession of the property if he lets it when the contract expires. Therefore, he prefers to sell on a favourable market rather than to let with all the uncertainties that will follow.
I give one example to illustrate the point I am seeking to make. It follows from the operations of the Landlord and Tenant (Rent Control) Act, 1949, which introduced an element of uncertainty as to the rents which will be obtained by builders of new property or by persons converting existing properties into flats. In my constituency there are many big houses which were in process of conversion into flats when this Act came into force. We can agree that it is advantageous from the point of view of the community at large that houses which are too big for single occupation should be converted into several flats, thus making a contribution to the solution of the housing problem.
In the five years before the passing of this Act—the years 1945 to 1949 inclusive—the rate of conversion per year of houses into flats in the borough of Wimbledon was an annual average of 76 houses converted into 314 flats. For five years we had on an average over 300 new flats a year put on the market as a result of the conversion of big houses for multiple occupation. But in the year that has followed the putting on to the Statute Book of this Act the number of houses converted into flats has been 12 and the number of flats provided has been 37. Therefore, we reach the position that when we control, unreasonably as the 467 landlords may feel, the right to fix a rent by negotiation with the tenant, at the same time we dry up the source from which new housing units are made available to the public.
The fact that in the year following the passage of that Act the number of flats provided by conversion of large houses has fallen to little more than 10 per cent. of the average number provided in each of the previous five years, is a good example of the argument that interference with the ordinary operation of contract between landlord and tenant dries up the supply from which new houses and flats come.
§ Mr. Mitchison (Kettering)
Do I gather that the hon. Gentleman and his right hon. Friends are in favour of repealing the Rent Restriction Acts?
§ Mr. Turner-Samuels
Is the hon. Gentleman in favour of including in the Rent Restriction Acts the selling of the very same houses in connection with which the leases are restricted?
§ Mr. Black
On this matter I agree with the view which has been expressed on a number of occasions by the Minister of Health that it is impracticable to do so, and that any attempt to control the selling prices of individual houses would be bound to break down because of the administrative and legal difficulties.
I want to conclude on the point I was making that, while under present abnormal conditions there is a case for a Bill, the detailed provisions of this Bill will have to be looked at most carefully in Committee, as there is a very real fear that, if the Bill is not carefully and wisely framed, more harm than good will result.
§ 8.55 p.m.
§ Mr. Manningham-Buller (Northants, South)
Having listened to most of the debate, I must say that the Bill has not been received with any remarkable degree of enthusiasm. Indeed, ever since it first saw the light of day it has been subjected to severe criticism, and not least by "The 468 Times," which published an excellent leading article only equalled in its severity by the articles it published about the proposals of the party opposite for the nationalisation of iron and steel.
Some of those who are prepared to accept this Bill have made it quite clear that they are willing to give more time to the Government to think about what should be done, while regretting that the Bill contains no proposals of a permanent nature. The hon. Member for Pembroke (Mr. Donnelly), who made an eloquent speech, and the hon. Member for Clapham (Mr. Gibson), who made a somewhat confusing speech, did not think that two years was long enough. They may be right. It may take five years for the Government to make up its mind what should be done, they may be right in their view of the Government, but, if the Bill is extended beyond two years, its extension will, in my opinion, have deplorable consequences.
I hope that the right hon. and learned Gentleman, in view of what has been said from his own side of the House in the debate, will make it clear beyond doubt, when he comes to reply, that it is the intention of the Government that the Bill should only be temporary, and that it will not be extended by the Government for more than the two years which is provided in the Bill.
Before saying any more on this matter, I think I must comply with the usual custom of the House and declare that I have an interest indeed, two interests. I have no interest in Western Ground Rents, but I am a trustee and also a beneficiary of an estate. I have made inquiries, and I think it is just possible that there may be four cases which come within Part II of the Bill and possibly one which comes within Part I. But I have, of course, another interest. I once wrote a book on this very technical subject of landlord and tenant, and, if the Government had introduced a permanent Measure of the magnitude contemplated by the Report of the Committee, I feel quite certain that an invitation would have been extended to someone, and perhaps to me, to prepare a new edition.
I hope that, having declared these interests, I shall not be thought to be prejudiced against this Measure, but perhaps to be more qualified to express a view about it. Before making any com- 469 ments on the Bill itself. I should like to draw attention to what is a rather curious coincidence in our political life, in that the opening speeches from the Front Benches on either side of the House were, on this occasion, made by members of the Northern Circuit, and the winding-up speeches from either side will be made by members of the Midland Circuit.
I am sure that the right hon. and learned Gentleman will agree with me when I say that we of the Midland Circuit always enjoy watching how those of the Northern Circuit do their work, and, in this connection, I should like, if I may, to pay a tribute to the delightful, and at the same time devastating, speech made by my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd). He triumphantly surmounted the ordeal, and it is an ordeal, of speaking for the first time from this Box. I hope the House will not take it amiss if I offer him my congratulations, and congratulations not only upon his speech today.
The right hon. and learned Gentleman, in moving the Second Reading, gave us a detailed explanation of the Bill. Indeed, he established today, contrary to what has been happening elsewhere, that the stickier the wicket the longer he bats—but without making many runs. But it is indeed a disappointing Bill—disappointing to some because it does not go further. At the same time, there is the possibility that we can make it, if not a good Bill, at least a fairer and better Bill in the course of the Committee stage, if only the Government are prepared to listen to the suggestions put forward from this side of the House. It is in the hope that the Government will pay attention to the views that we put forward that we are prepared to give the Bill a Second Reading without a Division tonight. In the light of what happens during the Committee stage we shall, of course, consider what our action shall be on the Third Reading.
As I have said, it is a disappointing Bill. After all the trumpeting at the General Election, after the Lord President's broadcast, in which he said:One important reform we shall introduce will he the law of leaseholds which, at present, does injustice to many tenants, including thousands of small shopkeepers and businessmen.470 —after all that, we have this Bill. This is the important reform—
§ Mr. Manningham-Buller
—which is instituting a "house freeze," as my hon. and learned Friend said. I think that the first question that really requires to be answered and which has not been answered as yet is: Why was this Bill, or a Bill of this nature, imposing a freeze, not introduced before?
§ Mr. Manningham-Buller
The hon. and learned Gentleman can modify my words in that connection if he wishes whenever the party opposite gets into difficulties it causes a freeze of one kind or another. First, the "wage freeze," then a "house freeze," and one can guess what the next freeze will be when the supply of coal runs out.
Why was a Bill of this character not introduced before? There was the interim Report, which was presented to the Government in March, 1949. But nothing was done in spite of the pressure by the hon. Member for Pembroke and others at Question time. Nothing was done, and now we have this standstill Measure, which does not fulfil the Government's election pledges. I should be interested to know the reasons for the delay. Is it because the right hon. and learned Gentleman and the Government want time to think, or is not the true reason that the Government want time to make up their minds? I am all in favour of their being given time.
It is always easy to make a cheap gibe at landlords, and we have had examples of that today. But hon. Members opposite must decide whether they are in favour or opposed to the leasehold system, and, if they are opposed to it, to what lengths their opposition goes. They must decide whether, as a general principle, they are in favour of people keeping their word when they have given it or breaking it—and when one talks, using the familiar phrase, of the sanctity of contract, to put it in ordinary language it really means that one is in favour of people keeping the word they have given.
I quite agree that where people are tricked into contracts by fraud they should be relieved of the obligation to 471 keep their word. The same applies where an improper advantage is taken, but we in this House ought to be extremely careful when we interfere with bargains which have been made and when we relieve people of the obligation to fulfil their promises.
§ Mr. Turner-Samuels rose—
§ Mr. Turner-Samuels
I agree with the sanctity of contracts, and every decent person will. Suppose one gets a case of economic pressure where people are forced to enter into a contract which is morally unfair. I still say that there ought to be enforcement, but ought not the Government to intervene to protect the public against the abuse of that economic pressure?
§ Mr. Manningham-Buller
Owing to economic pressure largely arising in so many spheres, from the policy of His Majesty's Government, many people, no doubt, will have to go to their banks to try to secure overdrafts. They will make a contract to repay the overdraft. Does the hon. and learned Gentleman really think that an obligation to repay a loan—a loan obtained on account of economic pressure—should be freed because of what the Government have done?
§ Mr. Turner-Samuels rose—
§ Mr. Turner-Samuels
I quite agree that once a contract is entered into it ought to be carried out. I am talking about the future and not about the past.
§ Mr. Manningham-Buller
I have not had the advantage of hearing the hon. and learned Member's views about the future. I am talking about contracts entered into a considerable time ago and I was referring to ground leases.
I come back to my theme. The party opposite must make up their minds where they stand on this matter. The majority Report of the Leasehold Committee, on page 30, made quite clear the views they hold about these leasehold tenures. They said: 472We ourselves take the view that the leasehold system is a convenient—and even an essential—feature of our real property law. It enables the residential tenant to avoid the initial outlay, risk of capital loss, and permanent choice of a particular place of residence involved in buying the house he lives in. It is an invaluable aid to the financing of many schemes of development or accommodation for businesses to be obtained without locking up in the purchase of the freehold capital required for other purposes. Financial considerations apart, it provides means, hardly to be replaced, by which the development and use of given areas can be carried out and controlled in accordance with a uniform policy in the best interests of the neighbourhood and of the community generally, whether by private owners of large estates or by Local and other Public Authorities.
§ Mr. David Grenfell (Gower) rose—
§ Mr. Manningham-Buller
I am limited for time. I am asking the right hon. and learned Gentleman the Solicitor-General to deal with these matters, because we really must know where the party opposite stands. That view was expressed by the majority in that Report. The hon. and learned Member for Leicester North-East (Mr. Ungoed-Thomas) will correct me if I am wrong, but I do not think I have read anything in the minority Report, signed by him, dissenting from that proposition.
§ Mr. Ungoed-Thomas
The minority Report is confined, of course, to the occupying ground lessee and the hon. and learned Member will appreciate that much of the statement in the majority Report dealing with the leasehold system deals with the rack rent system.
§ Mr. Grenfell
Does the hon. and learned Member appreciate that all these building leases or agricultural leases were at a value more than 20 times the value of the original purchase?
§ Mr. Manningham-Buller
I am sure that that is not the case generally. It may be so in some places, but I will come back to that in a moment.
I think it is clear from what the hon. and learned Gentleman said, and indeed from the other speeches, that the real objection of hon. Members opposite is to any form of ground lease. I will ask them to consider this: when we had the 1947 Town and Country Planning Act under consideration there were proposals for dealing with blitzed and blighted 473 areas. It was provided that no one within those areas should be able to acquire the freehold. There had to be long leases limited, I think, to 99 years.
When we had the New Towns Bill before us it was laid down that there should be long leases but no freeholds. According to my recollection, we on this side of the House during the passage of both those Bills, pressed for people within the areas affected to be allowed to acquire the freeholds. That was opposed, and it is really very inconsistent for the party which opposed that, to come forward today and tell us that they are the champions of leasehold enfranchisement. If, indeed, they believe in people having the freeholds, I am surprised that they did not help us to secure that during the discussions on the New Towns Act.
§ Mrs. Middleton (Plymouth, Sutton)
Surely the hon. and learned Gentleman draws a distinction between the ownership of land by a local authority in the public interest, and the ownership of land by people purely for private interest.
§ Mr. Manningham-Buller
I draw no distinction at all. The Government have not done so in the Bill. I do not accept the proposition that the State or a local authority always prove the better landlords. If I may take the hon. Lady's memory back to the 1927 Landlord and Tenant Act, what led to the passage of that Measure was not the conduct of the private landlord. It was the State, and the huge rents demanded for fresh leases of Regent Street properties.
§ Mr. Manningham-Buller
That argument will not hold.
As I was saying, it is by no means right to assume that the State is the better landlord. I am sure the hon. Lady will admit that private landlords, in this matter, have played a very useful part. But for the private landlords, the West End of London would not be like it is today.
§ Mr. Manningham-Buller
The good lay-out of the West End has been due to the owners of large estates, and I am sure that has been to the advantage of the community.
474 In the debate today we have not heard very much about leasehold enfranchisement. It has been made clear to us that on this issue the Liberal Party are once again, unfortunately, divided. I must say that I am very surprised at the violence of the attack which has been made concerning ground leases. I think perhaps the most savage attack came from the hon. Member for Pontypool (Mr. Granville West). He asserted that in fixing the ground rent, the value of the building to be erected was not considered. I am sure that that is not right. Does anyone believe that if a landlord is trying to let a building he will not get a higher rent than if he tries to let the land free of buildings? The bargain which is made in relation to a ground lease is this: in return for the erection of a building which will ultimately become the property of the landlord—that is, the original bargain made—there will be a very much lower rent.
§ Mr. Manningham-Buller
But hon. Members opposite do not suggest that if the landlord builds the building himself and lets it at a rack rent then, at the end of the lease, it should become the property of the tenant. They have not suggested that at all in the debate, and yet we can find ground lessees occupying premises at present at a much lower rent than the rack would be, and less than the rack rent of equivalent premises.
§ Mr. Manningham-Buller
Because the building of the house has been taken into account in the original assessment of the rent.
§ Mr. Gibson indicated dissent.
§ Mr. Manningham-Buller
It is no good the hon. Member for Clapham indicating "No"; earlier today he tried to assert that people who bought ground leases thought they were buying the freehold, and I must say that I found that an argument which was very difficult to follow.
§ Mr. Grenfell
I do not know of a single case of a landlord becoming a building speculator. He does not do it in that way. He puts up a sign "Land to let for building," and people who must have land go 475 to ask his price. He generally asks as much for the building plot of one-eighth of an acre as he would ask for the whole acre before building began.
§ Mr. Manningham-Buller
That is not the point. I am sorry if I have not made it clear to the hon. Gentleman, but that is not the point I was trying to make. Obviously, in a free society the owner of a plot of land will try to get what rent he can, but obviously he will get a higher rent if he has incurred the cost of putting up a building. In the case of the ground rent, instead of putting up the building he receives a lower rent, and the cost of putting up the building represents the difference in the rent. I hope I have made that clear. It seems to me astonishing that, whereas, in the case of rack rent, no one opposite has suggested that the tenant should be relieved, as a general principle, of the obligation to keep his word, yet, when the contract is a little different, that is strenuously pressed.
Hon. Members on all sides of the House sympathise on this question, with tenants who have lived in the same house all their days, as have, perhaps, their families before them, but I cannot help thinking that the number of ground lessees who are doing that is very limited indeed. The hon. Member for Bury St. Edmunds (Mr. Aitken) clarified the position in relation to Cardiff. about which some confusion has been caused by the hon. Member for Cardiff, West (Mr. G. Thomas). Indeed, the Report of the majority of this Committee, as shown in paragraph 61, is to the same effect. It says:Such factual information as we have been able to obtain from South Wales and other localities where the leasehold system is predominant, suggests that relatively few ground leases of working class dwellings are now held by the actual occupants, who in the majority of cases held weekly tenancies from intermediate landlords. We have, moreover, heard of practically no cases in which occupying ground lessees have in fact been compelled to quit their holdings on the expiration of their leases.That is a very astonishing statement. One would have thought that if cases of that kind had occurred, they would have been brought to the notice of the Committee. At the same time, I must say that no one in the House wants to see that class of tenant moved out of the premises which he has occupied for so long. We are all in agreement about that and I am 476 sure that no good landlord wants to see it, either, whether we pass this Bill or not.
We can give protection to that category of tenant by the extension of the operation of the Rents Restriction Acts, as suggested in the majority Report of the Leasehold Committee. That would be much easier to introduce than the procedure foreshadowed in the Bill. I know there is a difficulty about covenants, but I think that could be overcome. We could secure that they had security of tenure, we could secure that their rents were controlled, but even though one may wish to do that it is not always desirable or possible—and I think this must be recognised—to secure that people who have lived in a house or shop for a long time shall continue to do so. It may be that planning considerations have to be taken into account—the widening of a road or something of that sort—or, indeed, it may be that a new purchaser, because the weight of taxation has forced the old ground landlord to sell out, has come along who adopts a different attitude to the tenants than the former landlord would have done had he remained in occupation.
My hon. Friend the Member for Lewisham, North (Sir A. Hudson) referred to the case of the Arcade Royale at Halifax. There, there is a row of shops, all bought by the Co-operative Society, and the tenants of these shops are all given notice to quit. Well, I suppose something of that sort may from time to time have to happen in the cause of planning and co-operative progress, but I feel sure that there again we should like to see—and we are united in wanting to see—some protection in these days of scarcity against the shopkeeper, the small man, being abused by a bad landlord. But I am sure that these cases are few in number.
It really is an anomaly, and has been an anomaly, that the tenant under a ground lease of a house that would otherwise be within the Rent Restriction Acts is not protected by these Acts. I believe that would be a much easier change. It it really curious to reflect that until the Knightsbridge case, quite recently, the sub-tenants of a house held on a ground lease were always thought to be within the Rent Restriction Acts. I should not have thought that it would be so very difficult to put them back again.
477 But the main criticisms of the Bill remain. The right hon. and learned Gentleman, in moving the Second Reading, said that it would be fortuitous who is protected by the Bill. It is one thing to protect the kind of tenant to whom I have been referring—the man who has occupied a house or a shop for a long time; it is another thing to extend the provisions of this Measure to all and sundry—to the five categories specified by my hon. and learned Friend the Member for Wirral. I think that he has summed it up very well, except that he put the lawyers in the wrong place. [An HON. MEMBER: "Where did he put them?"] Last. I think that ultimately he moved them into the asylum.
Why have the Government departed from the recommendations of the majority about this? It was suggested that the protection should be given to those who had been in occupation for three years. That is an arbitrary line, it is true, but we often have arbitary lines. The inclusion of some provision of that kind would eliminate the speculator in fag-ends, the profiteer and the obstructor to progress. For that reason, I should have thought it desirable. Even in the hon. and learned Member's minority Report, we find it suggested that it would not be unreasonable, although he ultimately decided against it, to include a provision limiting the protection to those who had been in occupation for at least three years.
Then there is the question of rent. This question has been touched on a good deal. I must say, listening to the right hon. and learned Gentleman, that I could see no valid reasons whatsoever for continuing the existing ground leases for a further two years at the rents fixed 80 or 90 years ago, particularly when we bear in mind that the rent under Part II in relation to shops is to be adjusted, and when we bear in mind that the right hon. and learned Gentleman made it clear that where there is a ground lessor, tenant, and sub-tenant, the tenant will be eliminated and the sub-tenant will go on paying the rent he paid to the tenant, so that the ground lessor in that case will be getting a rack rent. In that case, the ground lessor will be getting an increase in rent. If that be so, what is the justice in differentiating in that way between that 478 ground lessor and the ground lessor, where there is a direct lease and the ground lessee is in occupation?
§ Mr. Manningham-Buller
He may be paying the same in each case; but that is not correct, as there will be no increase in what the occupying ground lessee is paying. It may mean having tenants in adjoining houses paying entirely different rents, with one paying the rent to the tenant and the other paying rent direct to the ground lessor. It seems to me to be a matter of fairness and justice that, when we are interfering with a contract which has been voluntarily entered into, we should at least in equity provide for the payment of a fair rent to the ground lessor.
Something has been said about covenants. Clause 4 (1) will obviously have to be much altered. It is quite wrong to think of covenants being merely for the protection of the landlord. I have taken the trouble to get a copy of a draft lease for London, and I should like to read part of it to the House. This is the covenant entered into by a tenant for a long lease of more than 21 years. It states:That the tenant will not do or suffer to be done in or upon the demised premises or any part thereof any act or things which shall or may be or become a nuisance damage or annoyance to the landlords or their tenants or the occupiers on any adjoining or neighbouring property.If the Bill is passed in its present form, the landlord will not be able to take any action to protect the neighbours from nuisance. I do not suppose that he will often do so, but because there is the power to do so it often prevents a nuisance from arising. It goes on:Or permit in or upon the demised premises or any part thereof any open shop or offensive noisy or dangerous trade business manufacture or occupation nor use the same nor allow the same to be used for any immoral or illegal purpose.
§ Mr. Manningham-Buller
I am glad that the hon. Member is at least with me in that. These are typical covenants, and steps must be taken to assure that they can be observed. We shall have to go into Clause 4 (1) in great detail.
479 I only want to say this one word about the shop provisions. It is true that they are temporary. I do not know that there is so much demand now for them, but I would say this as a general observation; that I am sure it is true that it is to the landlord's interest to retain a good tenant. It is worth keeping a good tenant, because if you lose him he may be replaced by a bad one.
We regard the Bill as a most disappointing Measure. It is a bad and unsatisfactory Bill. It freezes the situation, and it fails to tackle the injustices. It will create a multiplicity of anomalies of all kinds. The only justification for it is that it is a temporary Measure, due to the appalling failure of the Government's housing programme and rebuilding. There is a need for reform of the law about landlord and tenant, particularly with regard to repairs and dilapidations, but that is not tackled here. In the hope that we can do good work on this Bill in Committee, we shall not oppose the Second Reading.
§ 9.30 p.m.
§ The Solicitor-General (Sir Frank Soskice)
I should like at the outset of my observations to join in the congratulations on the appearance of the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) on the front bench opposite. He acquitted himself extremely ably in the speech that he made. I wish I were able to congratulate the hon. and learned Gentleman the Member for Northants, South (Mr. Manningham-Buller), but the only thing upon which I can congratulate him is that he did not say he was going to be entirely non-controversial. He made use of a good deal of the time allotted to him in making what seemed to be rather extravagant and ill-thought-out statements. Having made them and spent a lot of time in doing so, he crushed into a few minutes at the end of his speech those criticisms which I think he intended to voice about the Bill when he began to speak.
Some of the things he said seemed a little bit hard to take seriously. He said we had to make up our minds whether we believed in the sanctity of contracts or not. [HON. MEMBERS: "Hear, hear."] Hon. Members say "Hear, hear," but just conceive the case of a lease granted in 480 1851 at a few pounds a year, which had devolved down from generation to generation until now, in 1950, the assignee, a descendant of the family to which the lease was first granted, is in occupation. The lease comes to an end, and he, having thought—as do many people in this country—that the premises were to all intents and purposes his own, finds himself faced with the prospect of eviction unless this interim Bill is passed. To give him two years' extra protection is said to indicate an attitude of contempt by the Government for the sanctity of contracts. It is a little extravagant to talk in these terms unless the hon. and learned Gentleman does not want to assist the House in considering this Measure, but wants to make a little rather cheap propaganda for his own party.
He said that we had to make up our minds whether we approve or disapprove of leasehold interests. That remark seemed to be on a par with his previous ones. It was a Conservative Government, unless my memory serves me wrongly, which sponsored the Moneylenders' Act in 1927, It was also a Conservative Government which brought in the Landlord and Tenant Act which was passed in 1927. Both those Acts interferred most drastically, very effectively and greatly to the public benefit in contracts entered into freely between borrower and lender in the one case and tenant and landlord in the other. They were attempts to afford some modicum of protection to the public, and were Measures passed by the Conservative Government to which I have already referred.
§ Mr. Manningham-Buller
Could the right hon. and learned Gentleman give us the evidence which shows the numbers of people who honestly think that their houses are their own, when for years they have been paying rent on them?
§ The Solicitor-General
I can very easily do so. If the hon. and learned Gentleman has not received heaps of letters from people who honestly think that these houses are their own, I can only suggest that he should consult with large numbers of his colleagues in this House who certainly, over and over again, have received such letters. I should have thought that that was almost a matter of commonplace, especially where a family have been leaseholders under a 99 481 years' lease for a period which extends many generations back.
§ Mr. Drayson (Skipton)
Would the Solicitor-General say whether the real point is not that these people think that these houses are their own, but that at the end of the term they should have the opportunity of buying them?
§ The Solicitor-General
That just is not the case. People who occupy houses which have come down to them through the various generations of their families for practically 100 years find it difficult to conceive that these houses do not to all intents and purposes belong to them. It is a great shock to them to find that they run the risk of being turned out at the instance of a landlord who happens to be the reversioner at the expiration of the 99 years' lease. It is just that sort of situation which the Government had in mind in framing this Measure.
I agree that there are cases in which that provision causes hardship to landlords, but one has to consider the generality of cases and to see where the balance of hardship lies. Certainly it lies, in the view of the Government, with the very large number of persons who find themselves confronted with the danger of being turned out from what they regard as their own homes after the lapse of so many years. It is for those reasons that we considered alternative ways of going about this protection, and we thought that it was preferable that tenants should pay what they had heretofore paid and should continue to do so during the two years when the protection is afforded.
It is very difficult to see on what alternative basis we could have proceeded. It has been suggested that the right way was to bring the leases within the protection of the Rent Acts. The hon. and learned Member for Wirral suggested that, and it has been suggested in other quarters as well. If one did that in this interim Measure, it would necessitate very nearly rewriting the contracts, if we wished to convert these long-term building leases into ordinary occupational rent-controlled leases. One could not do it realistically unless one reconsidered and readjusted the burdens contained in the covenants of the leases so as to make them conform to what would be modern occupational rent-controlled leases.
482 It has been said over and over again that one has to remember that this is purely an interim Measure to preserve the status quo until permanent legislation can be put upon the Statute Book. In this interim Measure it would be inappropriate, the Government feel, to try to reconstruct, in the very elaborate form that would be necessary, the provisions of these ground leases so as to convert them into rent-controlled occupational leases. Even the hon. and learned Member for Wirral accepted that it would be a matter of considerable difficulty. I think he used the expression that the rent payable should be reasonable in the circumstances.
If we converted these leases as I have said, and converted the ground rent into a reasonable rent, we could do so only by approaching the matter realistically and rewriting the covenants to adjust the burdens evenly between landlords and tenants and in the form in which they would be drawn in rent-controlled occupational leases, at a reasonable, controlled rent. Therefore. after having listened to all the arguments, we feel that that part of the Bill, at any rate, is perfectly right and that the only proper approach to this is to fix upon the existing rent as the rent which should continue to be paid.
In the concluding moments of his speech, the hon. and learned Gentleman called attention to what he thought was an illogical contrast between Clauses 1 and 5. He said that in the case of Clause 5 one might have a sub-tenant who, as the result of that clause, had to pay a rack rent to the freeholder of the house in which he lived. He said that it was unreasonable that the sub-tenant should have to pay the same rent as he had previously been paying, which amounted to a rack rent, and that the tenant under a building lease should continue to pay the small ground rent for which the lease provided.
There is nothing illogical or inconsistent at all. In each case the, tenant continues to pay the rent he was heretofore paying. Under Clause 5, the tenant continues to pay the identical rent to the freeholder. Under Clause 1 the tenant continues to pay the rent he has been paying under the terms of the ground lease. There is nothing inconsistent about this, and it certainly does not point to any 483 desire on the part of the Government unnecessarily to interfere with the operation of contracts freely entered into.
The hon. and learned Gentleman and other hon. Members referred to the provision with regard to the non-enforcement of covenants. The hon. and learned Member for Wirral paraded before us the various people whom he thought would be beneficiaries as the result of the clause. May I say at once that in the Committee stage—I say this entirely without giving any form of undertaking—we would desire to reconsider the arguments with regard to some forms of covenant—for example, a covenant against use for immoral purposes, or something of that sort. That is perhaps the sort of covenant which should be excluded from the operation of Clause 4; but we certainly do not think that a covenant to keep the premises in proper repair should be taken out of the scope of the clause.
If we did that we should really be giving the tenant what would amount to a purely illusory protection. We give him two years, and if we then enable the landlord to re-enter if the tenant does not comply with the covenant to keep the premises in repair, we are taking away with one hand what we are giving with the other, because in nine cases out of 10 the landlord can re-enter because of breach of the covenant to keep the premises in repair. That covenant is certainly one which should remain within the scope of Clause 4, but the kind of covenant relating to use for immoral purposes should not.
§ Mr. Molson
I hope that the Solicitor-General will not exclude the possibility of requiring reasonable repairs to be undertaken by the tenant in order to keep the house in a decent condition. The provisions should not be so onerous as completely to destroy the protection, but I hope he is not ruling out the possibility of requiring a place to be kept in a reasonable state of repair.
§ The Solicitor-General
I am giving no kind of undertaking whatever in regard to any covenant. I said that we might be prepared to consider excluding the sort of covenant which requires that premises must not be used for some illegal or immoral purpose. I would point out that the operation of Clause 4 is far less onerous on the landlord than has been 484 suggested in the debate. After all, although the landlord cannot re-enter for breach of covenant, he can, when the two years have expired sue for damages for breach of covenant. Not only that, but while the two years are still in course of elapsing he can go to the court, if he wants to do so, and ask for an injunction against use for some purpose contrary to the provisions of the lease. It is not. therefore, as if the landlord is left in any sense unprotected. He can ask for an injunction, and in many cases the remedy by way of injunction is, in fact, the most effective way of preventing any continued breach of the covenant. It may well be, in the particular circumstances, of more use to the landlord than the right of the landlord to re-enter within the last two years of a long lease of 99 years.
I should like to deal with a point that was made in an article in "The Times to which reference has been made. Clause 2, as the House knows, provides that the tenant, in order to enjoy the benefit of that clause, must be occupying the premises at the same rent. It was suggested that possibly the effect of the First Schedule to the Bill, particularly paragraphs 3 and 4, would be that the tenant, if he paid a premium, could set off that premium against the rent and stay on although he paid the premium. That is a misreading of the Schedule, paragraph 3 of which would not apply to premiums.
We propose, however, during the Committee stage to make it perfectly clear by way of an Amendment that if a premium has been paid Clause 2 will not be applicable, because, as my right hon. and learned Friend the Attorney-General pointed out, under the terms of the Clause, when a different rent is payable, or when the circumstances are such as to indicate that the parties have accepted that the lease has come to an end, the tenant will not be entitled to the benefit of Clause 2 We therefore propose to make that clear by an Amendment which we will introduce in the Committee for that purpose.
The hon. and learned Member said that really the Bill would have the most unfortunate effects in that, after all, a tenant who was allowed to remain on for the two years could assign or could occupy only a portion of the premises and sub-let the rest at a substantial profit. That is only partly true. No doubt he can assign the tail end of the lease—the two years 485 which he is given—but it is an asset of very doubtful financial value having regard to the fact that the right to claim damages for breach of covenant still exists and could be enforceable against the assignee, as that is a right which runs with the land.
Therefore, if the tenant, being given the extra two years, sought to try to capitalise that situation by assigning for value the residue of the lease, he would get only very little, if anything, for it if in fact there were a liability to damages for breach of covenant, because the assignee would have to pay those damages. This also is a matter which no doubt can be very profitably discussed during the Committee stage.
I would, however, issue this warning. If it is suggested that we should in any way change the Bill so as to provide that a tenant, by living in a part of the premises and sub-letting the rest, deprives himself of the protection of Clauses 1 and 2, we would be running into very serious difficulties of definition. Therefore, although without commitment I say that we will think about the question of assignment to see whether any change ought to be made in the Bill to prevent an assignment, we would think it extremely difficult to contemplate a change which would prevent a tenant from living in part of the premises and sub-letting the rest at a profit during the remainder of the two years.
Clause 5, it has been said, is at first sight of some complication. It really is a good deal simpler than it seems, and deals with the comparatively simple case of a freeholder who has granted a lease for over 21 years at a rent which is less than two-thirds of the rateable value and that lease comes to an end. What the Clause does is to provide that a sub-tenant who is in occupation, either by himself or his family, shall be in those circumstances entitled as against the freeholder to the same rights to which he would have been entitled against the lessee had the lease continued. That is really all that it does. I think that some hon. Members have possibly made rather heavy weather of the Clause which, when looked at more closely, works perfectly satisfactorily.
Here, again, there is a slight change which I think we might desire to make in order to effect an improvement, as a 486 result of the letter which appeared in "The Times under the signature of Mr. Fischl, and which the hon. and learned Member read out. This letter pointed out a slight defect in the Clause, that is, in the case of the sub-tenant who is not in occupation himself but lets the premises to sub-tenants. We would desire to amend the Clause so as to give those subtenants equal protection, but that could be done by a quite simple Amendment on the Committee stage, and that is an Amendment we would be disposed to make.
The other matters of principle which have been discussed can be said to be those which centre upon Clause 8, which deals with shops. Several hon. Members thought Clause 8 too restrictive, and felt that it should go further and deal with all sorts of business premises, or at least with professional premises. There are serious difficulties in the way of doing that. As my right hon. and learned Friend explained, we limited the operation of Clause 8 and succeeding Clauses to shops because in the case of shops there is a plain and obvious need. As my right hon. and learned Friend pointed out, goodwill attaches to shops, and therefore it is urgently necessary, whatever other protection is afforded by the Bill, that shops should receive the protection which Clauses 8 to 10 give them.
The difficulty about adopting too wide a definition is that if one adopts a definition which includes factories and workshops and things of that kind, the repercussions throughout the industrial world may be considerable, and it would be rather difficult to see precisely what the results of a very drastic Clause of that kind might be. It would be extremely difficult as a matter of definition to go half way and try to bring in professional premises whilst excluding business premises in the larger sense. But there again, if any hon. Members are able on the Committee stage to suggest some form of wording which might get over the difficulty of definition, certainly the Government—and again I can give no kind of commitment about this—would be interested to see the proposed form of words and give them consideration. But that again, although it is a matter of principle, is a matter which could with great advantage be gone into further on the Committee stage of the Bill.
487 There were criticisms of Clause 10, and it was suggested that the Clause would not really operate satisfactorily because it would allow too great a lack of uniformity in decisions throughout the country. It was suggested that there should be some test or guide of a more reliable character provided in the terms of the Clause for the learned county court judges who would have to administer it and that in its present form it imposes a heavy burden on them. I would say in regard to that matter that the Scottish Act, which as the House knows is very much in the same form as the Measure the House is considering, does not contain any very precise guiding criteria in its relevant sections, but no difficulty has been experienced in the administration of that Act.
That Act is very similar in form to this Measure and, inasmuch as there has been no particular difficulty in the administration of that Act, it is felt that probably in this interim Measure it would be better to leave to the judge the duty to decide in the language which at present is in the Clause, rather than to attempt to introduce precise criteria which, I suppose, would mean calling a great deal of expert evidence to try to determine on which side of a test a particular case came, and which would in consequence almost certainly introduce a great deal of complication which in the circumstances might appear to be quite unnecessary. After all, the learned judge in each case would be dealing only with a lease of one year's length and it would be a great pity, particularly as the Scottish Act has worked perfectly easily, to overload this new Measure, which is an interim Measure, with a great deal of burdensome elaboration which is unnecessary. Our present view is that we should leave the Clause in its present form.
There is one other matter with which I should like to deal, namely, the question of appeals. That arises under Clause 13. Some Members felt that an appeal should be possible from the decision of the county court judge in a case that comes before him. There are a number of objections to that suggestion, one being that in these cases, if an appeal were desirable at all, it would nearly always be an appeal on a question of fact. Not many questions of law would be likely to arise when there was a dispute or when the parties felt 488 dissatisfied with the finding of the county court judge; it would generally be that they disagreed with a view of fact which he had taken.
§ Mr. Manningham-Buller
Would it not often be a disagreement with an order made by the judge in fixing the covenant or in saying that a particular covenant was unnecessary?
§ The Solicitor-General
That would be an appeal against the order, and there would no doubt be cases of that sort. But, in endeavouring to look forward, and conjecturing the kind of case that would arise, we think, having considered the matter, the probability is that in most cases the appeal would be because the parties disagreed with the view of fact which the county court judge took. The hon. and learned Gentleman knows very well that an appeal to the Court of Appeal would be on law only; therefore, it would, generally speaking, be ineffective for the purpose for which an appeal was desired.
It seems to us that the more basic objection is that one is, as I have said, considering only a yearly lease. Supposing the tenant were refused a lease, it would be impracticable to expect him to vacate the shop premises while the appeal was pending inasmuch as the appeal quite naturally takes a little time to hear, particularly if there is to be an appeal to the House of Lords. I do not know whether that is desired or not. In such a case the period of the lease in question would to a certain extent, and possibly to a large extent, have elapsed before the appeal had been disposed of.
Under the provisions of Section 111 of the County Courts Act, 1934, there is already machinery available for removing the case from the county court to the High Court if matters of importance are involved, so that if the parties so desire it would be perfectly possible ordinarily to secure that the case was heard in the High Court instead of in the county court. What is really desirable is that there should not be two hearings in a matter of this sort. As the law now stands, there can be either a hearing in the county court or, if important issues are involved, in the High Court.
Those appear to me to be the points of principle that have been canvassed in the debate. As my right hon. and 489 learned Friend said, it cannot be too much emphasised that this is a purely interim Measure. It would be wrong to consider this as a permanent Measure, and to consider its contents with that degree of examination. In those circumstances, I commend the Measure to the House.
§ Question put, and agreed to.
§ Bill read a Second time.
§ Committed to a Committee of the whole House.—[Mr. Sparks.]
§ Committee upon Monday next.