§ 3.33 p.m.
§ The Secretary of State for the Home Department (Sir David Maxwell Fyfe)
I beg to move,That this House takes note of the proposals relating to Leasehold Property in England and Wales (Cmd. 8713) and Leases in Scotland (Cmd. 8714).This Motion calls attention to the proposals set out in two White Papers, Command Papers Nos. 8713 and 8714. I intend to deal with the proposals relating to leasehold property in England and Wales, and I must leave it to my right hon. and learned Friend the Lord Advocate to speak about leases in Scotland.
Any general debate on the subject of leasehold property in England and Wales must take as its starting point the work of the Leasehold Committee, whose final Report was published in June, 1950. We are fortunate in that no fewer than four Members of the present House of Commons served on that Committee: the hon. and learned Members for Cardigan (Mr. Bowen) and Leicester, North-East (Sir L. Ungoed-Thomas), my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) and the hon. Member for Oldham, West (Mr. Hale) whom, in this context, only the custom of the House prevents me from calling "learned," and indeed only a stern sense of duty allows me, a comparative beginner, to speak before so many old hands.
My right hon. and learned Friend the Minister of State will, unfortunately, be prevented by his Foreign Office preoccupations from giving us his assistance this afternoon, but I hope that we may have the pleasure of hearing the other three; and, for reasons I shall mention in a moment, I look forward with particular interest to hearing the views of 2351 the right hon. and learned Member for Leicester, North-East and the hon. Member for Oldham, West.
The Committee's Report was no doubt considered by our predecessors. I have no means of knowing what conclusions they reached, but perhaps we shall be told this evening. We, for our part, have also considered the subject carefully and our conclusions are set out in the White Paper. I do not suppose that everyone will agree with them. That would be unreasonably optimistic when one considers the disagreements on the Committee itself, but I am glad to have this opportunity of putting them before the House, and I am sure we shall have an interesting discussion upon them.
Let me begin with the question of leasehold enfranchisement, a subject which has attracted a good deal of attention. Everyone will agree, whether they agree with its contents or not, that the White Paper deals with the subject fully. We are not in favour of enfranchisement, but we are very anxious that the subject should not be discussed on abstract grounds of a political character. I desire to make that point clear from the start. That is why we have sought, in the White Paper, to direct the attention of the House and of the country rather to the practical problems than to the philosophy of the matter. We have tried to do this reasonably and dispassionately, and our conclusion is that even a moderate scheme of leasehold enfranchisement runs into such difficulties that it is simply not worth while.
Paragraph 7 of the White Paper poses the two fundamental questions on which the advocate of any scheme of leasehold enfranchisement must first make up his mind. Is the compensation payable by the tenant to be related to the market worth of what the tenant is acquiring or is it to be something else? Is the right of enfranchisement to be limited to the leasehold occupier or to extend to the leasehold investor who sublets at a rack rent?
The minority of the Leasehold Committee, that is the right hon. and learned Member for Leicester, North-East and the hon. Member for Oldham, West, gave clear answers to those questions. They said that the compensation should be 2352 equal to the market value and that the right should be limited to existing leaseholders. As a result, they erected a scheme of leasehold enfranchisement which, I say with complete sincerity, is undoubtedly one of the most moderate and sensible that has yet been produced. It was limited to occupying ground leaseholders of residential property; and it would provide that the price to be paid by a leaseholder on enfranchisement would be the market value of the landlord's interest.
Again, I am speaking sincerely when I say that we were grateful to find such a scheme before us to help us in our study; but when we subjected it to critical examination we concluded that even this scheme would not do. The results of our examination are set out in detail in the White Paper, but perhaps I may summarise the serious objections that we see to the scheme.
The first is that the cost to the tenant will often be so high that poorer tenants will be unable to take advantage of the scheme: that objection is developed in paragraphs 17 and 18 of the White Paper. The second is that there will be great complications about apportionment when more than one house is comprised in the ground lease: we deal with that point in paragraphs 19 and 20.
The third objection is that it would be fair to exclude from the scheme cases where either the tenant or the landlord had bought his interest during the last few years of the term. I remind the House that the minority scheme of our two colleagues recognises the former of these exclusions but not the latter, which would be only a transitional provision. These exclusions would whittle away the scheme a good deal and would lead to some complaints from those excluded. That matter is dealt with in paragraphs 21 to 23 of the White Paper.
The fourth objection is that there would be three major difficulties—set out in paragraph 24—which would arise in cases where the house in question was part of a sizeable estate. The first is that amenity covenants are normally features of such estates, and it would be necessary, though difficult, to provide that the tenant who became a freeholder should be under an obligation to play for the benefit of the whole estate, the 2353 same part that his landlord and himself had to play in regard to amenity covenants before he was enfranchised.
The second difficulty is that the first tenant of a large estate to enfranchise would have to pay a great deal to the landlord because of severance, that is damage done to the estate as a whole by the withdrawal of his property from it. Later enfranchisers would do so more cheaply because the integrity of the estate had been already broken by the first piece of severance. This would have the inevitable result of causing great inequity between different enfranchisers on the same estate, or, indeed, on other estates.
The third difficulty is that enfranchisement would remove from the landlord the possibility of re-developing the estate as a whole on the expiry of the leases unless, of course, he bought out the enfranchised freeholders, probably for a fancy sum, and that would be contrary to the public interest. Some machinery would have to be sought for barring the enfranchisement in cases where the public interest and good planning would be imperilled.
The next objection is that it would be necessary to exclude from enfranchisement leases granted by public authorities, such as local authorities, new town development corporations, the Duchies of Cornwall and Lancaster and the Commissioners of Crown Lands; and this would exclude another category of beneficial enfranchisers. When one makes these exclusions the scheme begins to look very far from worth while.
These are practical difficulties which must face everyone when considering this matter. They are not preconceptions or old-fashioned ideas. They are difficulties which exist today. Therefore, having considered these matters, I think that it is fair to conclude that the scheme which is propounded by the hon. and learned Member for Leicester, North-East and his colleague would be complex and controversial and, in the end, would achieve very little which could not be achieved by agreement under existing conditions, except in so far as it achieved things which are contrary to public policy.
Now I come to the views of the party opposite. Since the White Paper was published a number of comments have 2354 been made in the Press and elsewhere, but nowhere does there seem to have been any attempt to answer the criticism in the White Paper of the minority scheme. It may be that an answer will be given to us in the present debate. I hope so, because although it appears that the Labour Party are disposed to favour leasehold enfranchisement, which found a place in their Election programme, it is far from clear how the party, as a party, answer the following four fundamental questions.
First, are the views of the Labour Party the same as those given in their private capacity by the hon. and learned Member for Leicester, North-East and the hon. Member for Oldham, West? If that is so, if these are the views of the Labour Party, then how do the party regard the difficulties which are explained in the White Paper? The third question is: do the Labour Party throw over the hon. Members and propose leasehold enfranchisement in a less moderate form, for instance, by making the compensation less than the market value or by extending the right to leasehold investors? The fourth question, which follows, is that if that is not the party position what exactly are their proposals and how do they justify them? That is what we want to know. I am glad that we have an extra hour for this debate in which to slake our thirst for knowledge.
It has been suggested that the Government do less than justice to the very strong feeling among leaseholders in certain parts of the country for some form of enfranchisement which would benefit them. Naturally, I have in mind South Wales in particular. The Government, and certainly the Minister for Welsh Affairs, are indeed well aware that such a feeling exists. No one could hold the office of Minister for Welsh Affairs for 18 months without knowing that there is a special problem in South Wales.
§ Mr. David Grenfell (Gower)
If the right hon. and learned Gentleman will allow me to say so, I went to much trouble to give evidence before the Committee. The evidence did not appear in the White Paper, nor does any reference to it. How can this House do justice even to the findings of the Committee if a substantial proportion of the whole of the case in favour of leasehold enfranchisement is excluded from the White Paper?
§ Sir D. Maxwell Fyfe
I think that the right hon. Gentleman, the Father of the House, really does not make the necessary distinction. There is, first of all, the evidence given before the Committee. Secondly, there is the Report of the Committee, and, thirdly, the views of the Government on the various suggestions in that Report. The White Paper gives the views and the proposals of the Government. The right hon. Gentleman will find the matter discussed in the Report in much greater detail. If he would like the evidence to be published also I should be very pleased to consider it. But there are reasons the other way which the right hon. Gentlemen who were in the previous Government will at once appreciate. However, if it is the general feeling of the House, and I am asked from the benches opposite to publish the evidence, I will consider it.
§ Mr. Grenfell
I wished to ask a favour of the House, and I thought that with the help of Mr. Speaker some of the evidence could be published today.
§ Sir D. Maxwell Fyfe
I will consider that point. I should not like to answer it right away because there are other aspects that have to be considered, but I will glady consider the point.
§ Mr. Patrick Maitland (Lanark) rose—
§ Sir D. Maxwell Fyfe
I should like to deploy my argument on this point before I am interrupted further.
I was saying that we recognise the feeling in Wales, and we had, first of all, to face this position, that the difficulties which I have endeavoured to put forward and which lie in the way of any scheme of enfranchisement still exist after one has considered the opinion in favour of it. It would have been very wrong for the Government, in deference to representations in South Wales, to hold out hopes that a sensible and workable scheme could be devised when, in fact, their dispassionate review of the problem had led them to the conclusion that it was impossible.
Fortunately, one must not stop at negation. There is a positive and hopeful aspect, and I should remind the right hon. Gentleman the Father of the House, for whose views and background in this matter I have every sympathy, that the campaign for leasehold enfranchisement 2356 has a long history and that it started long before there were any provisions for protecting the right of occupation. I would ask everyone to approach this matter as frankly as old ideas and preconceptions allow. I feel that today the main need is for the right of occupation to be protected rather than for a new right of ownership to be conceded.
It may well be that the many advocates of leasehold enfranchisement have never seriously considered whether they would continue to feel so strongly if there were a guarantee that every occupying long leaseholder should continue in protected occupation of the house after the expiry of the lease. That is what we now propose, and we think it probable that once that is realised among the general body of long leaseholders, their general desire for leasehold enfranchisement may be diminished by that great change in the circumstances.
§ Sir D. Maxwell Fyfe
I have not yet had a chance of hearing from anyone the answers to these difficulties that I have found. I have spent 15 months in considering this matter with the greatest care and in great detail, and I say with complete sincerity that I want to hear today the answers to these points. These points are independent of party differences. They stand out for us all to consider. They are practical points, and that is why I said that I was very glad and anxious that this debate should take place because I want to hear the answers. When I hear them I will be prepared to consider them.
It would be wrong and disrespectful to the House if I were merely to put in other words what is before the House in the White Paper, and I want to keep my speech more or less to ideas on what is there rather than to a mere statement of the facts. I should like to say a few words on the part dealing with security of tenure for residential tenants. I think everyone who has considered this matter will agree that a scheme for giving security of tenure on the expiry of a long lease necessarily involves a good deal of complication. We made considerable progress in our consideration of the difficulties involved, and the White Paper 2357 gives a very brief general outline of our proposals.
The first point that I want the House to note is that the scheme involves a deliberate forgiveness to the tenant of part of his repairing obligations under the long lease. Repairing covenants, I think everyone will agree, generally provide that the tenant must repair the house, or pay a lump sum in place of repairing it, up to a very high standard, sometimes virtually to a "good-as-new" standard. These obligations are subject to certain modifications under the present law. For example, they cannot be enforced if the house is to be pulled down or substantially modified.
The question what to do about repairing covenants when granting the tenant a statutory tenancy on the expiry of his ground lease, is certainly the most difficult part of the problem. Hon. Members will appreciate that under the ordinary statutory tenancy—when I say "statutory tenancy" I mean a Rent Act tenancy—the repairing covenants rest on the landlord rather than the tenant. That is why it is right for the tenant to pay a rent substantially higher than the ground rent which took account of the fact that the tenant was responsible for repairs.
There has to be a fresh starting-off point. If the tenant were in substantial breach of his repairing covenants it would be wrong to let him off them altogether, and still more wrong if the rent that he was required to pay under the statutory tenancy took account only of the low standard of repair to which the tenant by his default had allowed the house to fall. Therefore, the Government's plan is that the house should be brought up to a reasonable state of repair, the cost of the necessary repairs being borne by the tenant either by a lump sum or by instalments—after all, the repairs are the tenant's contractual obligation.
But—and this is an important point for the House to note—this reasonable state of repair is not the same as the standard which could be enforced under the letter of the repairing covenants. It must clearly take account of the character of the neighbourhood, the standard of life of the tenant and matters of that kind. It is left, in the case of disagreement, to the judgment of the county court judge assisted by assessors. The rent also is to 2358 be a reasonable rent as agreed between the parties or as fixed by the court, and we do not propose any rigid statutory formula for this.
§ Mr. Arthur Pearson (Pontypridd)
Rent for what—for something on which the landlord did not spend a halfpenny to build?
§ Sir D. Maxwell Fyfe
I do not think the hon. Gentleman has followed me. What I am saying is that under the original lease the tenant has had an obligation to keep the property in certain repair, and he has failed to do so. We are not saying that he has to keep it up to that high standard of repair which may be as good as new, but to a reasonable standard haying regard to the locality and the position of the tenant, and matters of that kind.
The next point is that he has contracted to pay a small rent—the ground rent is a very small one—on the basis of this repairing covenant. He is to be set free from the repairing covenant and, being then in a better position, he has to pay a higher rent, and he pays the rent for the house. What the hon. Gentleman wants to go back and discuss—and what I believe bedevils this matter—is the morality of the original transactions in the middle of the 19th century.
I would ask hon. Members to remember that in many cases the tenant got the right to build the house he wanted, on the terms he wanted. [An HON. MEMBER: "No."] Hon. Gentlemen opposite have-asked me to develop this point and I hope that they will contain themselves until I have done so. We are trying to discuss this matter dispassionately. The answer I was giving was that that was the position in those days. In addition, the tenant got what I have already referred to, the development rights in that land, which we have discussed so often in another context.
I am trying to face the position as it is now, and to suggest how we should deal with it. I say that we should do so by giving a protected right of occupation which, first, means that the tenant is relieved of his responsibility for excess repairs and has to pay only for reasonable repairs. That rent, after allowing for the reasonable repairs, will be a rent which is related to the property he gets 2359 and which may be settled by the county court.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
Would the right hon. and learned Gentleman say whether the tenant or the landlord is afterwards responsible for repairs?
§ Sir D. Maxwell Fyfe
I am grateful to the hon. and learned Member for his intervention. I hoped I had made it clear that I was proceeding on the basis that the incidence of repairs is the same as in the ordinary protected tenancy, where the cost falls on the landlord.
§ Several Hon. Members rose—
§ Sir D. Maxwell Fyfe
I think the House will agree that I am always most reasonable in giving way, but I ask hon. Members to allow me to deploy my argument. When I come to the end of a stage in the argument I shall be very pleased to answer questions.
I do not think that anyone would say today that there ought not to be this protection in a large number of cases. The argument is whether in a small number of cases—and the essence of my argument is that there can be only a small number of cases—there is also room for leasehold enfranchisement. I have considered this matter over and over again and I have tried hard to see if I could find a way out of the difficulty. Whatever the hon. Member for Pontypool (Mr. West) thinks of the results I should like him to believe me, because I respect his opinion.
I have come to the conclusion that we can protect the right of occupation. What we cannot do, if we are to have due regard to the practical problems of planning, severance, estate management and all the things which are accepted parts of our modern life, is to find a remaining category in which leasehold enfranchisement will really help. That is the argument and that is why I am so anxious to get as sound a protection as possible for the leaseholder. Whatever conclusion hon. Members have come to I am sure they will be glad to help in this problem.
§ Mr. Scholefield Allen (Crewe)
The right hon. and learned Gentleman used the words "reasonable state of repair" and suggested that it should be left to the county court judge and assessors to 2360 decide. Is it proposed to leave those words as they are, or do the Government propose to interpret them in some way? The right hon. and learned Gentleman has interpreted them today. He has mentioned the state of the neighbourhood and the standard of the tenancy. It is no use quoting those matters to the court. As the right hon. and learned Gentleman knows, these things must be defined in the Act; otherwise, they are left to be decided by the yardstick of a particular county court judge.
§ Sir D. Maxwell Fyfe
I gave my interpretation today. We are not discussing a Bill; we are discussing a White Paper, and it will be for the House to decide two things. First, it must be decided whether they approve my criterion and, secondly, whether the Bill carries out my criterion. I was pressing the point that it was a standard of repair which took these matters into account.
When the hon. and learned Gentleman interrupted me I was saying that in fixing the rent the court will also take into account the state of repair of the house, the rents charged for similar houses in the locality and the nature of the covenants which, as I said, in the ordinary way will follow those usually obtaining in Rent Act houses. We think that that should work out all right. I know there is the attraction of a simple arbitrary formula for the rent—taking a proportion of the rateable value, or something of that kind—but I do not think that that would work because it would not take into account the background of the covenants, the new position which is obtaining and the change that is created in that way. That is why I did not think we could arrive at a simple formula.
I have given a criterion. I think it is right and I think its working out should be left to the county court. I thought it better to leave it to the court—with the sort of guidance I have indicated— to make a comprehensive judgment of all the points in dispute and assess a rent which, in their view, is reasonable having regard to the decision they have reached on other points.
§ Mr. Granville West (Pontypool)
Would that rent then fall within the protection of the Rent Restriction Acts and become the standard rent of the property 2361 in future? Is it intended that a building lease should become subject to the Rent Acts? Is that the principle underlying the Government's proposal?
§ Sir D. Maxwell Fyfe
On the first point, yes. On the second point, I do not think it becomes so much subject to the Rent Acts as that it is succeeded by a Rent Act tenancy. The lease will, ex hypothesi, come to an end and there will then exist a protected tenancy. The hon. Member is correct on that point.
I now pass to Part IV of the White Paper, dealing with business premises, and I should like to make a few general remarks about it. I think everyone would agree that the relations between business tenants and their landlords are those of mutual convenience and mutual service; and I should like the House to ignore for the moment the cases where the relation is purely and genuinely temporary—where the landlord means to get possession on the expiry of the lease for his own occupation or development. These cases represent a very small proportion of the leases of business premises at any time.
I should like hon. Members to ask themselves this question: in the normal run of cases what does each party expect from the other? The landlord expects to conserve his capital and to earn a reasonable return on it. He wants a fair rent and a secure rent. So he wants a good tenant who will preserve the value of the property by looking after it well, by complying with his covenants and by conducting a sound business which will be good for the rent.
Then we turn to the tenant. We have to ask ourselves why he is a tenant at all. The answer is that he does not want to incur the capital cost in providing his own premises. There are some sorts of businesses where—because of their size, or the expense of heavy machinery and equipment that is required, or for some other reason—the occupant must have a freehold or a very long lease; but, generally speaking, the business man wants to put such capital as he has available into his business rather than into his premises. He, therefore, finds a landlord who can provide the premises for hire and he pays the rent out of his business profits. That is a great service to him. In return, the tenant should 2362 comply with the reasonable requirements of the landlord.
What can the tenant, on his side., reasonably expect? He can expect that the landlord will treat him with reasonable consideration when the tenancy comes up for renewal; that he will not use the tenant's desire to stay on as an occasion for extorting an unreasonably high rent or other onerous conditions. The tenant will not expect his landlord to say, "I have had a fancy offer of rent from a big firm, "or" I could sell these premises with vacant possession for an enormous sum: if you do not give me something comparable you are out." That, is a state of affairs which I do not think any of us can face with equanimity. After all, that is a state of affairs which has been envisaged as requiring statutory attention for 26 years since the Landlord and Tenant Act, 1927.
I want to make it quite clear that I believe that the landlord is entitled, on renewal of the tenancy, to a reasonable increase of rent if that reflects an improved condition in the community or improved conditions in a locality inside a town. In other words, as is set out in paragraph 43, he is entitled to the contemporary market value, and that is what our proposals suggest he should have.
There is no doubt that as between a reasonable landlord and a reasonable tenant reasonable terms normally prevail, and what our plan does is to ensure that they shall prevail even if one party or the other is being unreasonable. It is as simple as that. No doubt, in some cases there will be room for discussion and differences of opinion when we come to the details of the plan, but with the general principle which lies behind our proposals—I have been dealing with cases of investment in business premises—I do not think there can be any real controversy, political or otherwise.
I do not want to go into what is a point of detail, but I should like hon. Gentlemen to be good enough to let me call their attention to paragraphs 49 and 50 where we deal with the question of compensation. We have tried to set out in those paragraphs the argument for, in this case, choosing an arbitrary figure of compensation and in that way preventing a good deal of disagreement and 2363 litigation. I do not think I can help hon. Members further by putting this argument in different words.
I did not intend to delay the House by dealing with the miscellaneous matters which are in Part V, and I will leave it this way. If any hon. Gentleman, wherever he may sit in the House, has any difficulty about Part V and will raise the point, my hon. and learned Friend the Solicitor-General will be glad to deal with it.
In concluding my account of our proposals, I apologise if I have detained the House too long, but the subject is a wide one and I felt it called for a fairly full exposition both because of its intrinsic importance and its interest. As I said when I began, we do not expect everyone to agree with the conclusions we have reached and the proposals we have set out in the White Paper. The subject is controversial and technically difficult. In this subject there is room for very different views to be sincerely held, but I say again that it is also a field in which abstract theory and obstinately preconceived notions are very liable to obscure essential issues and shut out the clear light of common sense and reason.
I know that ever since Hazlitt's time there has been a prejudice against lawyers in the House. No doubt lawyers have many qualities which deserve that disapprobation, but I put this point in favour of the profession, that as far as they translate into our legislative work the concept of reasonableness—which is the thing that lies at the root of the English common law—even hon. Members will, in the end, believe that they have made some contribution to the work of this House.
I put this White Paper before the House today as one which endeavours to deal with these difficult problems on the basis fo reasonableness and of trying to find a practical solution. That is why we welcome the opportunity of submitting our proposals to the judgment of the House before we put them into legislative form. We hope we may have the advantage of a debate inspired by that practical wisdom, which, if I may be allowed to say so, the House so often displays on subjects which are both difficult and controversial.
§ 4.19 p.m.
§ Mr. David Grenfell (Gower)
I think it is fortunate that it was the Home Secretary who was entrusted with the task of explaining this White Paper. He has done his usual best, which is usually good, but I must confess I do not think the White Paper comes close to the heart of the problem we should be discussing. There will be a Bill some other time, I hope, because then we shall be able to examine even more closely the validity of some of the representations made by the Home Secretary. I am very glad that in his new capacity—I was going to say of Prime Minister of Wales—of Minister for Welsh Affairs he referred to the setting, the location, of this problem in its most grievous form. He referred to the South Wales coalfield. He is, I am sure, by now well informed of the conditions, the geography and the industrial history of that coalfield.
It will benefit all of us if we stay a little while with that coalfield, because it does exemplify this problem as nowhere else does in Britain or the world. This coalfield is an area encroaching upon three of the Welsh counties. The bulk of it lies in Glamorganshire. I have the privilege of having been born there. I have spent the best years of my life in that county. I have given the best part of my energy and what little talent I was endowed with to the service of the coal industry, and I know that it is quite impossible to discuss a problem like this in relation to the past, the present or the future, unless one has a very clear and full picture of the industrial fabric upon which the life of that region lies.
This 1,000 miles of coalfield, which is divided into hills and valleys, is a very uneven setting for the problem, but those mountains cover a tremendous volume of this nation's principal material asset. It is a district where very considerable wealth has been produced, a district that has made a larger contribution to Britain's prosperity and influence than any other similar district anywhere in the Kingdom. The story of the problem we are discussing today can best be told in South Wales.
This problem arose from the fact that land was available for mining purposes but not suitable for agricultural and residential purposes. Those narrow valleys which run almost due north and south, that undulating country, has always 2365 depended upon outside sources for the nourishment of its population and material wealth. The population 150 years ago was a very sparse population indeed, a tenth of the population at the present time. Today we have more than a million people who dwell on the coalfield. There were no houses there for the people who worked in the coalfield. A very large proportion of those people who came into the coalfield did not even belong to Wales.
My grandfather came from Cornwall to work in Wales and he helped in the gigantic task of development which has gone on unceasingly for 150 years. He came with the best body of outside sinkers to sink the shafts into the deep measures of that coalfield. We found out by degrees that that land of ours was more and more valuable, more and more important, the deeper we dug into the soil searching for minerals. We have the richest coalfield in the world.
They had to build everything. Society, the new and increasing society there, had to build its own foundations in those valleys, and national elements were mingled as the process went along. More important than anything else, those people who, with no roots in that part of the country, came into it had to build homes. The No. 1 want, the No. 1 necessity, in Wales was for homes for the people who came in increasing numbers year after year. It is true that this area derived its population largely from the agricultural areas of Wales itself.
However, there were no homes for a tenth of the present population even as late as 100 years ago. I well remember the building of the new houses. I well remember the kind of houses in which the people previously lived. I well remember the kind of house I lived in when I was a child, a thatched cottage, that went to oblivion years ago. That kind of thatched cottage multiplied by thousands. Those thatched cottages were the homes of the people of my generation. When they fell down there were no more houses. I said when they "fell down," but some almost ran down after standing 200 or 300 or more years. I saw the beginning of building boom after building boom. Those building booms were not accidents. They followed from the discovery of a rich seam of coal there or an extension of a rich seam somewhere else 2366 along those valleys amid those mountains upwards from the seaboard to the Black Mountains.
Those houses for the accommodation of the industrial population of Wales were not provided by the landlords. They did nothing to help found that wonderful community that is there today. I never saw a capitalist lend money to a collier by any chance. Perhaps it was as well, because those working people had scarcely enough money in my time to feed themselves and their families week by week let alone pay debts.
There are some very nice people in this House today, but they are not a bit better than the fellows I met in the villages of South Wales, the thousands of very nice people like my father and grandfather who met in the villages talking over business affairs 50 and 60 years ago, and discussing and planning the development of towns and villages and water supplies and, later on, of electricity. My father was one of the shareholders in the first electricity works in urban Wales. There were no companies to come to help us with money, with resources. We collected for and we provided an electricity station and water mains for the population.
All this owed nothing to the landlords. They obstructed as far as they could, and the system of which we complain today is the system which enabled the landlords to derive very large annual contributions in rents from people who worked themselves almost to the bone. I know something about hard work myself. I did 30 years of it in the pit, and all the best people that I know worked in the pits, although I am not saying that they are better than anybody else.
Let us dismiss the landlord from consideration. This is not a landlords salvation Bill. This is the emancipation of tenants of houses which they themselves built. We are asking the House to consider giving those people the largest measure of security possible in the houses which they built entirely at their own expense. I do not bother about my lease. I have a lease of 999 years, and I am quite sure now that I shall not live as long as that, and I do not think I should want to. However, what the ordinary decent fellow wants is some kind of guarantee of protection for his wife and children for whom he is responsible, and 2367 certainty of what we regard as ordinary decent justice and reward, to be meted out according to his deserts in the society we ourselves have built.
There are now well over a million people on the coalfield, and one and three-quarter million people connected with coal, steel, tin-plate and other industries in South Wales. More than half of them own their own houses. There is a tremendous exhibition of confidence, patriotism, good house-keeping and national service. They have built the houses in which they find accommodation while engaged day by day throughout their lives in building up national wealth and security.
Surely, when the lease comes to an end, the person who has built the house and who has provided all the expense should have the right to negotiate as an equal with the person who has done nothing but receive from the very beginning to the end. We do not dispute the claim of the landowner to rent for his land. I have ceased to get angry when I hear about the coal owner receiving royalties on the coal which other people produce. I do not think it is worth getting fashed over those things in this House, but when, with the lapse of time, the person who has dug the coal, who has made the roads, built the houses and the community is uncertain about his lease, we must see that the law does not permit him to be sacrificed in the interest of the person who at one time had a doubtful ownership to the land.
I cannot get serious at all about land ownership in South Wales. The mountains belong to the sheep. Nobody else lived there until the colliers, the steel workers and the tinplate workers came along. I confess I do not know what the landlords have done. As I have said, I live in a house that has a 999 years lease. I am all right. I do not think I have ever seen the ground landlord. He is just a fiction which I acknowledge for the sake of logicality. In the same way, I acknowledge his claim to £3 10s. a year for the land. I know full well that it is no use quarrelling with him, because neither he nor I will be here when the lease comes to an end.
But I want to make certain that this House does its level best in this matter. I have been here for some time and have 2368 tried never to do a shabby trick. I have tried to play straight throughout my life, and I claim to be almost No. 1 as an industrial worker. I do not want to spoil the right hon. Gentleman opposite by praising him too much, but I think he is a decent fellow like myself. I want him to look at this problem, remembering all the time that he is trying to do justice where justice is due, and not to give concessions where the reward has been out of all proportion to the value given.
The landlords have done very well. I shall weep no tears for them, but I shall fight all the time for justice for the tenant whether he be a small hill farmer, a large farmer or the fellow who runs a business in the town or city and who gives indispensable service to the community. I hope that the House and the Ministers, for whom I have individually and collectively the highest respect, will remember that the land which these people now regard as valuable and for the tenure of which they are year after year pushing up their charges, should not be helped to the disadvantage of the community.
I had to borrow the money with which to buy my house, and I had to pay interest on that money. Thank goodness, I am now almost a free man owing nobody anything. I went to the Uthwatt Committee and I am not ashamed of the story I told there. There is nobody sufficiently interested to tell the world what I said, but I think it was very important. Do not let us bury the testimony of honest men in this House. Let the honest men speak for themselves. If we have to speak for them, let us speak openly, honestly and firmly so that justice can be done in this and other matters.
§ 4.36 p.m.
§ Mr. Charles Doughty (Surrey, East)
As a comparatively new Member of this House I feel honoured to be called upon to speak after one of far greater experience than myself. I am afraid that I cannot accept the invitation of the right hon. Member for Gower (Mr. Grenfell) to follow him down to South Wales, though when I have more time I can perhaps meet the charming people there to whom he referred.
I do not propose to speak in defence of any one particular category of persons, whether they be landlords or tenants. I prefer to speak impartially of both, 2369 remembering that in every case there are bad landlords and bad tenants, and that by picking out particular cases on either side one does not prove a general principle. I want to say, however, following upon what the Father of the House has just said, that landlords who let land upon building leases, and so forth, very frequently do not let the matter rest there. They often have to provide the capital, whether it be on mortgage or otherwise, for the persons who build the houses for them. They often have the duty of seeing that the houses are kept in repair, and in many cases—I am not saying in all cases—they perform useful functions in the work they do.
In any case, as the Father of the House has pointed out, we are considering leases of less than 99 years, at the end of which time neither of the parties will have any practical interest in the matter. Still less will they have any interest after the 999 years to which the right hon. Gentleman referred. By that time fresh people on both sides will have arisen, many of whom will have bought their leases according to what they think them to be worth in the ordinary commercial morality of this country, believing that if they enter into an agreement to pay so much rent or to cease to occupy the house at a particular time, there is a reasonable prospect that the bargain will be kept.
For those reasons, among others, I consider that leasehold enfranchisement, as it is called, is bad in principle. Do not let us forget that if such a scheme were in force the number of houses available for letting, certainly on a fairly long lease, would diminish; and it is the object of everyone in this country to maintain a fair proportion between houses to let and houses for sale. If we have almost entirely houses for sale, because landlords are frightened to put them into the long lease market, there will be a disproportion which we shall very much regret. From reports of cases we see only too well how many disputes there are at present between landlord and tenant, although that is an infinitely small fraction of the leases which exist today.
Leasehold enfranchisement must lead to an interminable number of disputes and arguments and to a good deal of bad feeling when the leases come to an end. It would leave districts of this country in- 2370 capable of being developed because when estates fell in, instead of the old and, perhaps by that time decrepit, houses or flats, or tenements, being pulled down and new, up-to-date, modernised and sufficiently improved buildings provided in their place, there would be no development. We have heard today about repairs, but we have heard nothing about improvement.
§ Mr. Doughty
By the landlords or the person to whom they have let the land, the landlords probably providing the money themselves.
§ Mr. Doughty
That is very likely the case. The local authority might purchase the property compulsorily. In some cases they do so. May it happen in other cases. We will no doubt discuss that matter at the appropriate time when we consider other Measures. But there are many properties which do not fall within the category of slum clearance and yet need improvement. Those were the properties I had in mind.
Those are some of the reasons why I support the White Paper, rejecting, as it does, the suggestion of leasehold enfranchisement, which, I submit, is completely impracticable and not to the interests of the tenants, who would have to find such large sums of money, in many cases, to have this enfranchisement registered.
I said earlier that the great objective is to provide a sufficient number of houses for those who desire to take them on lease. The more of these restrictions we have, the more we have the transferring of leases to the occupying tenant, the more we are reducing the mobility of the population and the more we are preventing repairs from being carried out. How often have we heard of a man being offered a better job in another town, with more responsible work and better pay, and yet refusing it because he dare not leave the house which he occupies?
Although it is not mentioned in the White Paper, I do not think I shall be 2371 out of order—because it is part of the leasehold system of this country—if I mention in passing the question of furnished tenancies, which are difficult to obtain nowadays because of the furnished rent tribunals. In my maiden speech I referred to the harm which these tribunals were doing. I hope that a term will be placed upon their activities. There is no necessity for those who occupy furnished tenancies, which are essentially short-term affairs, to have their agreements, voluntarily entered into, set aside in this way.
One of the principal parts of the leasehold system of the country are those houses which are controlled by the Rent Acts. The White Paper tells us that some 90 per cent. of the houses of this country are subject to the Rent Restriction Acts, and it is that type of house to which we have mostly to confine ourselves.
§ Mr. Janner
Surely the hon. Gentleman is entirely off the subject. Those houses do not come within the sphere of enfranchisement or leasehold reform in any sense, because the rates are below two-thirds of the rateable value. He is speaking about an entirely different subject.
§ Mr. Doughty
I was not speaking about a different subject. The subject before the House, dealt with in the White Paper, is the suggestion that those houses which are let on long ground rents should be brought under the Rent Restriction Acts. They therefore come in the 90 per cent. of the houses which, because of their rateable value, are subject to the Rent Restriction Acts. They will have to be considered under those Acts when these proposals are passed. Speaking broadly, as their rateable is £100 or less they are, in a loose sense of the term, rent restricted houses.
We must not look upon the Rent Restriction Acts, in their present form, as a permanent part of our national institutions. Income Tax was first introduced as a temporary measure and now is all too permanent. It was not until 1915, as a temporary war measure, that a limited amount of restriction was introduced until the end of the war. Between the wars a measure of de-restriction was passed—that is to say, houses down to £45 a year rateable value were de-restricted. No hardship was felt by anybody.
2372 I hope that nothing I say will suggest that I propose that rent restriction should today be abolished either in whole or in part. The time has not yet come for reducing the level of the rateable value of the rent restricted houses, but do not let us look upon these Acts with too much favour. They are extremely harmful to the repairs condition of houses. They do not encourage tenants to repair and they do not encourage landlords to repair; and they certainly do not encourage anybody to carry out any improvement, distinct from repairs, to any houses which fall within their control. I hope it will be borne in mind that as houses become more plentiful the level of the rateable value of protection will be reduced.
Turning to the proposals in the White Paper, I want to make a few comments about the transfer of this type of house from the long lease—from the ground rent—to the fair economic rent basis, together with a provision for repairs. The Home Secretary referred to this. When the long lease comes to an end and the house is in bad repair—if it is—there is provision that it shall be repaired according to the condition of the house and of the neighbourhood and of other matters to which my right hon. and learned Friend referred. According to the White Paper, that is to be carried out by the landlord no matter upon whom the liability fell in accordance with the lease.
It may well be, and, unfortunately, nowadays it frequently is, that the tenant is a far richer man than the landlord. It is placing a liability on the landlord which in many cases it was never intended he should carry. Very likely if he had a number of houses falling in at the same time he would have to find a very large sum of money, and all that he can do is to recover that apparently in instalments from the tenant who may not even continue to reside in the house for a very long time. It is much better to leave this burden and duty where it lies, subject always, of course, to the proper arrangements being arrived at between the long leaseholder whose lease falls in and his landlord.
There is so much in this White Paper that if one were to refer to it paragraph by paragraph one would monopolise the time of the House for the next two hours. I want only to deal with a few points, as 2373 I know that other hon. Members wish to speak.
About Part IV of the White Paper, which deals with shops, business premises and the protection of tenants in those particular premises, I have little to say except that perhaps I should refer to the proposal to improve professional tenancies. I do not know whether I have an interest to declare in this matter. All I can say is that if I have, I am against such protection being given to professional tenants. I know a good many of those in various professions, and I have never heard the least demand that they should have a kind of vested interest in a particular room for examining people, if they are doctors, and advising them, if they are lawyers. They have always up to now managed to arrive at a proper arrangement with their landlord, or, if not, have found somewhere else. Apparently the hon. Member opposite seems more unfortunate than most people.
§ Mr. Janner
Has not the hon. Gentleman read or heard of the complaints of professional people, doctors and others, being turned out of their surgeries or professional offices by landlords who take no note of their long standing and goodwill in the places they have got?
§ Mr. Doughty
Of course, there will be the odd case occasionally. I have read long reports of such cases, but, personally, I have heard of no such things at all, and I am sure that if the hon. Gentleman were to change his profession and look for rooms in Harley Street he would probably have no difficulty in finding them, and, if turned out of those, of finding others. I think that to make any change by way of extension or restriction upon the law is unnecessary and uncalled for.
I want to ask one or two questions about the procedure for assisting these rents. That the court should have to sit with assessors is a matter which, I think, requires a little further elucidation. Who are these assessors to be? Are they to be local house agents or surveyors or a permanent panel to set as assessors in the court and do nothing else? I think that when this matter is looked into more closely, it may be found that a judge without the aid of assessors is still capable of deciding these questions, and, if I may use the 2374 word unoffensively, without the handicap of having such assessors sitting beside him and not assisting very often in the proceedings being carried on.
I only touch on some aspects of this matter. I approve of the Government's proposals because leasehold enfranchisement, however attractive it may sound to those who do not go into it very fully, is impracticable, impossible and a hardship on those who have bought property, and a fruitful source of quarrel between people who otherwise would not quarrel, and the proposals do give what people really want, which is some form of protection in the house in which they live.
Do not let us blame this on a large proportion of people in this country who are rooted in one house because they cannot leave it, because if they do they cannot find another. Let us keep a large amount of freedom of contract of people who when they make bargains and sign their names to them stick to their word and do not try to get out of it upon any excuse they may be able to find. I therefore support the proposals in the White Paper, and I ask other hon. Members of the House to do the same.
§ Mr. Doughty
No. Freehold ownership does nothing of the sort. It is the statutory tenancy of the house which is a personal matter belonging to the tenant and induces mobility, but if the person who leaves that house leases the occupation of it and has difficulty in finding anyone, he says, "I will stay where I am."
§ 4.56 p.m.
§ Sir Lynn Ungoed-Thomas (Leicester, North-East)
I always find it difficult to try to reply to the observations of the Home Secretary because he is disarming and courteous, if I may say so. The right hon. and learned Gentleman referred to those of us who were on the Committee. I should like for my part, 2375 as a Member of the Committee who signed the Minority Report with my hon. Friend the Member for Oldham, West (Mr. Hale), to acknowledge the debt we owe to other hon. Members of the House, including my right hon. Friend the Member for Gower (Mr. Grenfell), who is the Father of the House, the Member for Pontypool (Mr. West) and the hon. Member for Hayes and Harlington (Mr. Skeffington) who, by their evidence, contributed so substantially to the conclusions which my hon. Friend the Member for Oldham, West and I formulated in the Minority Report.
I should very much like to deal in detail, paragraph by paragraph, with the White Paper, but of course that is unfortunately quite impossible in the time available. It was alluded to by the right hon. and learned Gentleman who suggested that I should bring forward some positive Labour Party policy in detail as though this were a Bill before the House for consideration. Of course I shall do nothing of the kind. The Labour Party adopted the principle of enfranchisement, and what we are concerned with here is the discussion of the Government's intention as laid down in the White Paper; it is the Government White Paper that has to be discussed in this debate.
There are three substantial matters in issue. There are the business premises, security of tenure for residential tenancies and leasehold enfranchisement. I may say at once, like the hon. Member for Surrey, East (Mr. Doughty) and my right hon. Friend the Father of the House, that I too have an interest in business premises and an interest in leasehold property which will live long after my time, but not to 999 years which the Father of the House so happily contemplated as being a possible human span. I shall deal with them in this order— business premises, then residential tenancies and then the leasehold enfranchisement.
With regard to business premises, I welcome the acceptance in the White Paper of, if I dare say so, the minority report proposal that the tenants of business premises should have the prima facie right of renewal. That, I understand, is the conclusion to which the Government have come. They have not 2376 stated it in terms in the White Paper; it is not actually headlined in the White Paper, but on an analysis of the paragraphs in the White Paper I understand they have rejected the Majority Report proposal and have adopted the Minority Report proposal in favour of a prima facie right of renewal. My hon. Friend the Member for Oldham, West and I certainly welcome that action.
I now come to the criticisms of the proposals of the Government. Unfortunately, what they have given us unobtrusively, as it were, with one hand, they take away clandestinely with the other. What they provide on business premises is a provision for contracting out where the business tenant has been in occupation for less than five years. Every person who has considered this subject—the Interim Report, the Minority Report, the Majority Report and every person—has come to the conclusion that it is fatal to a scheme of this kind to have a contracting out provision.
They limit the contracting out to an occupation limited to five years, but that is the very point considered in the Interim Report, and the difficulty is that if we put in a limit of that kind the whole scheme can easily be avoided by simply providing for tenancies with a less period than the limit for contracting out. What was recommended in the Reports was a special provision in special circumstances. It was a special provision where the landlord had possession of the premises, and he was going to use those premises for some purpose of his own, but there was a period before he wanted to use them for that purpose.
Therefore, quite obviously, it would mean that to meet his requirement and at the same time to enable a tenant who wanted that property for the interim period some special arrangement would have to be made in those circumstances so that the landlord could let, the tenant could take, and the landlord could have the premises at the time when he required them. There was a unanimous recommendation that in that case it should be provided that the tenant should not have the advantage of this scheme, but with the vital stipulation that there would have to be an application to the tribunal showing precisely what the circumstances were. Everyone was agreed that without that safeguard of the tribunal it would 2377 be possible to drive a coach and horses through the scheme.
What it does, therefore, is to give the prima facie right of renewal, introduce a five year period in which contracting out is possible and, by that method, make the scheme subject to defeat. I have other substantial criticisms, but I want to pass on to other matters; I will deal with the criticisms very briefly. There are criticisms, of course, on the provisions for compensation and provisions about the landlord getting the advantage of the tenancies—
§ The Solicitor-General (Sir Reginald Manningham-Buller)
The hon. and learned Member made some strong observations on the contracting out provisions in relation to business premises. I would draw his attention to paragraph 51, where I think he will see that the only power of contracting out is in relation to the right to receive compensation. There is no power of contracting out from the provisions which would give the advantage to a tenant of security of tenure. Therefore, I think that on reflection the hon. and learned Member will see that some of his observations are ill-founded.
§ Sir L. Ungoed-Thomas
But what is the point of a five-year period? The whole conception as I read it is of a right to contract out within a five-year period if the occupation were less than five years. That is the whole provision as I understand it. If there is any correction of that and, in fact, the five-year period is not to apply except for compensation, I am sure the hon. and learned Gentleman will deal with that in detail when he replies, so that I shall be able to follow precisely what it is. Is the provision that for a five-year period it would be possible to contract out of compensation and after that period, up to 14 years, there would be the equivalent of one year's rateable value by way of compensation and, after 14 years, twice the rateable value? I hope that the Solicitor-General will deal with this as it is very difficult to deal with it by way of Committee points across the Floor of the House.
§ The Solicitor-General
I am willing to answer, but I think it will be more convenient to do so when I wind up the 2378 debate. I think the hon. and learned Member is under a misconception.
§ Sir L. Ungoed-Thomas
If I am under a misapprehension I shall be glad to hear the explanation of the right hon. and learned Gentleman. I come to another criticism. The White Paper, in paragraph 49—again if there is any misapprehension about this I should like to know it—sets out the grounds disentitling the tenant to compensation. As I read it, those grounds include cases where the tenant has not sought renewal; in other words, before any compensation can be given there must be an application for renewal. This ground as a ground for disallowing compensation was unanimously rejected by the Leasehold Committee. I do not want to take up much time over this. I will give the reference to the hon. and learned Gentleman so that perhaps he may deal with it in his reply. The reference is in the Majority Report, page 78, paragraph 19, where this was specifically rejected by every member of the Leasehold Committee. Obviously it is a provision which would work most harmfully.
Take the case of a tenant of a small shop who is an old man, who retires and does not want to continue on the premises. Why on earth should he be refused compensation in that case when the landlord would get the advantage of the goodwill which results from the tenant's work? There seems no justification at all for that course. It is an unjust provision quite contrary to the unanimous recommendation of the Leasehold Committee.
I come to the method of assessing compensation. This really is a most astonishing method. The whole reason for compensation, surely, is that it should be related to the loss to the tenant or the gain to the landlord. In all common sense, the right test should be the gain to the landlord if the tenant ends the tenancy so that the landlord gets the property pushed back to him, not at his will; it should be based on the loss to the tenant if the landlord ends the tenancy. That should be the basis of compensation, but the White Paper proposes that compensation should have no relation to gain or to loss but should be the equivalent of the rateable value if there has been occupation up to 14 years and twice the rateable value if longer. If it 2379 is once or twice as much, why should it not be six times?
A provision of this kind favours the bad tenant in comparison with the good tenant, because the good tenant is precisely the person who will increase the goodwill of the property and will therefore suffer the more loss on leaving the property. In the circumstances, it has an entirely wrong and unjust effect. It seems to me that the Government by their provisions on contracting out—subject to the observations to which I shall look forward from the Solicitor-General—are driving a hole through the scheme and then providing this lucky dip in place of compensation.
I turn from that to the security of tenure for residential premises. We are glad that the Government have accepted the unanimous recommendation of the Leasehold Committee that the Knights-bridge Estates case should be reversed. The effect of reversing it will be to ensure that the occupying lessee of a ground lease should have the advantage of the Rent Restrictions Acts. The last two sentences of paragraph 37 of the White Paper say:The proposal is that the occupying subtenant in such a case should, on the expiry of the mesne tenancy, become a direct statutory tenant of the head landlord. The Government accept this recommendation.May I consider the effect of that? Clearly the occupying sub-tenant becomes at the end of the ground lease the statutory tenant of the head landlord at the same protected rent as applied before the end of the ground lease. That protected rent is based on the standard rent which is fixed in accordance with the Rent Acts. In the case of a ground lease made in 1900 and sublet to a rack rent tenant in 1914, that rack rent will be the standard rent of the rent restricted property, and it is on the basis of that standard rent that he will be paying the ground rent when the lease comes to an end.
What the Government propose in the case of a ground lease, if the ground lessee is in occupation and not the subtenant, is that there should be a new fixing of rent for the ground lessee. Again take the case where a ground lease property is let to a sub-tenant at a rack tent in August 1914. That is the standard rent of the property. If the ground 2380 lessee has let the property to a subtenant who is in occupation, that continues to be the standard ground rent. If, however, the lessee is in occupation of the property himself, there is a new rent which is fixed more or less on market value lines, and is at any rate a rent which would be appreciably higher.
In other words, the ground lessee in occupation, whose moral claim is the higher—which is acknowledged by the Government in the White Paper—will have to pay more than the rack rent tenant. This appears to us to be unjust. Why should the ground lessee at the end of his occupation pay more in rent than the rack rent sub-tenant?
The Minority Report agrees that the standard rent must be fixed by reference to a rack rent tenancy and not to a ground rent tenancy. It should be determined, if need be, by a tribunal in the way we know, by reference to comparable premises and with reference to the 1914 standard rent. Apparently there has been some confusion about this, because the Government criticism in the White Paper of the basis of compensation in our leasehold enfranchisement proposal, seems to assume that it is the same as that of the Government. There is a substantial difference, and therefore a good deal of that criticism made in the White Paper on the basis of the cost of leasehold enfranchisement is quite unjustified. There is a substantial difference between us on that issue. It will arise on the Government proposals for applying the Rent Acts at the end of the ground leases, and it arises between us on the application of leasehold enfranchisement.
The Government claim that this protection, which they propose by applying the Rent Acts, is an alternative to leasehold enfranchisement. It is nothing of the kind. Security of tenure alone completely fails to meet the essential core of the ground lease problem which, as emphasised by my hon. Friend and myself in the minority report and recognised fully in the majority report, is the moral claim of the occupying ground lessee to his house subject to the ground landlord being compensated. That essential core of the problem is not met at all by any provision as to security of tenure.
2381 Now I come to leasehold enfranchisement, which raises questions of fundamental principle and of technical practical application. The Majority Report, as the Government recognise in their own White Paper at paragraph 12, base their opposition mainly on grounds of principle. The Government in their political wisdom, if I may say so with great respect both to the Government and to the Majority Report, do not wish to face the kind of moral attack which was made so strongly by my right hon. Friend the Father of the House. Therefore they take the second line of objection which a Conservative Government always takes to this kind of proposal, namely, one of practical difficulty. It is a course of Conservative retreat with which Liberals and ourselves are familiar.
The first line of defence is the question of principle, of sanctity of contract, of the landlord's right of property—I am quoting the ones actually discussed in the Majority Report—the impropriety of compulsory purchase for private purposes, retrospective legislation. None of those grounds, as the right hon. and learned Gentleman in his political wisdom knows perfectly well, can stand up in the country against the kind of moral fervour that lies behind the demand for leasehold enfranchisement. That is why, as anybody who has been familiar with this problem for some time knows perfectly well, the Government have withdrawn to their second line of defence, that of practical difficulty.
The White Paper on page 6, paragraph 16, makes this valuable concession from our point of view in the third sentence:It may be conceded, that an occupying ground lessee has a greater interest in his home than has an ordinary rack-rent tenant, since it is he and his predecessors in title, not the ground landlord, who have had to build and maintain the house.That goes to the foundation of our case for leasehold enfranchisement. The White Paper continues:Whether, and (if so) at what point and in what circumstances, this special interest may be held to give to the occupying ground lessee a right (denied to the occupying rack-rent tenant) to enlarge his proprietorial interest by compulsorily acquiring the freehold against his landlord's wishes are no doubt more controversial questions, and the Government are very far from conceding that occupying ground lessees possess such a right as a matter of principle.So the Government admit to the "special 2382 interest" of the ground lessee, but they do not wish to defend themselves on differences in principle and they withdraw to what they call in the next sentence "the practical difficulties of application" to which I shall now come. First; those practical difficulties are not treated as of primary importance in the majority report.
My second observation is the interesting decision of the Government in their White Paper on Leases in Scotland. The Government have adopted what is the equivalent of leasehold enfranchisement for Scotland on the recommendation of the Report of the Scottish Leases Committee. The Scottish Committee distinguished the leasehold position in Scotland from the position in England and Wales, it is true; but they distinguished them on historical grounds affecting principle. That is the important point. They did not distinguish them on grounds of practical difficulty, yet it is on grounds of practical difficulty, not on grounds of principle, that the Government objection to leasehold enfranchisement is based.
So far as practical difficulty goes—and I confine myself to that at the moment— the Government's adoption of leasehold enfranchisement in Scotland is in flat contradiction to their objection to leasehold enfranchisement in England and Wales. If Scotland can have it, England and Wales can have it as far as practical difficulty goes. The interesting thing is that the Scottish Report is made by a Committee composed exclusively of Scotsmen, and I guarantee the Secretary of State for Welsh Affairs that if he appoints for Wales a committee of Welshmen of all parties he will get a unanimous report in favour of leasehold enfranchisement for Wales.
§ Sir L. Ungoed-Thomas
Yes. But many Englishmen are proud to call themselves Scotsmen; and now, of course, we have an Englishman in the Home Secretary, who I am delighted to see is happy to call himself a Welshman.
§ Sir L. Ungoed-Thomas
I beg the right hon. and learned Gentleman's pardon. We have in him a genuine Scotsman.
The substance of what I am saying, which I am sure the Home Secretary appreciates, is that in Scotland we have had this unanimous recommendation. There is in Wales, dealing with Wales as a unit for leasehold enfranchisement, amongst all parties, including the right hon. and learned Gentleman's own party, very strong feeling in favour of leasehold enfranchisement for Wales.
Now for my third observation on practical difficulties. The practical difficulties conjured up against the Minority Report recommendation are appreciably less than the difficulties the Government themselves face and propose to overcome in converting a ground lease into a rack rent tenancy. There will be fewer cases of leasehold enfranchisement, and the whole difficulty of enlarging the tenancy into freehold would be less than the difficulty of converting the ground lease into a rack rent tenancy—a substantial difficulty which I recognise and have never burked.
My fourth observation is that there is no major objection made by the Government on grounds of practical difficulty. What they have done is to accumulate a collection of minor criticisms. I think I can say that every one of these minor criticisms—and I say this with great respect to the right hon. and learned Gentleman—have already been considered and dealt with in the Minority Report. They have not been overlooked. What the Government have done is to cull these criticisms, put them in the White Paper, and accumulate them into an objection to leasehold enfranchisement.
§ Sir L. Ungoed-Thomas
Because the Conservative Party do not want leasehold enfranchisement.
My final general observation is that the practical difficulties of application are not what one would expect from those words. Reading the words "practical difficulties of application" one would expect a practical difficulty in operating it, in putting leasehold enfranchisement into operation 2384 They are not that, except for one instance only. They make six what I would call minor criticisms. One criticism is a genuine practical difficulty of application, and only one. That is the difficulty of dealing with apportionment. The difficulty of dealing with apportionment is a practical difficulty of application which arises in converting a ground lease into a rack rent tenancy or a tenancy into a freehold estate. But none of the others are that. All the others are minor criticisms of leasehold enfranchisement as a political proposal.
I deal first with apportionment. I shall deal very briefly with these matters, but I must try to cover as much as I can. The difficulty of apportionment arises over apportioning the price of leasehold enfranchisement, if I may put it so, where several houses are subject to one inclusive rent and the ground lessee lives in one of them—which, of course, is the only one he is entitled to enfranchise. I take that as the typical and most prevalent case. That is not a novel difficulty, as the Home Secretary and the Solicitor-General know extremely well from their own experience. It has been solved already, as is pointed out in the Minority Report, in a number of other cases where the difficulty of apportionment arises. The Scottish Report recommendation raises precisely the same difficulty; it expressly refers to precisely this difficulty of apportionment. Yet it is overcome. If it can be overcome in the case of Scotland, it can be overcome in the case of England and Wales.
Further, on the Government's own proposal to apply the Rent Restriction Acts, this problem of apportionment will likewise have to be faced, and in that case it will have to be faced in the case of every single tenancy. So, if I may just put it a little closely in this way: The Government contemplate applying the Rent Restriction Acts in the case of every ground lease when the ground lease comes to an end. When the ground lease comes to an end, if one of several houses, as I have mentioned, is in the occupation of the ground lessee the problem of apportionment will arise and the Government will then solve that problem of apportionment.
The leasehold enfranchisement which we propose in the Minority Report only comes into operation after the 2385 Rent Restriction Acts have been applied to that property, so that the apportionment problem will have been solved before the problem of leasehold enfrancisement arises. Therefore, in point of fact, this is a complete mare's nest, and in accordance with the Government's own proposals this difficulty of apportionment will arise on applying the Rent Acts and it would not then arise again in applying leasehold enfranchisement.
Now I come to no more genuine practical difficulties but to what I call the minor criticisms. The first is amenity covenants. What we proposed in the Minority Report was that the covenants should operate in precisely the same way as on the sale by the landlord. Here, of course, we come back to the principle upon which the Government do not agree with us, but there is no difficulty about it.
This, though a minor criticism, raises the fundamental issue between the Conservative side and the Labour side on leasehold enfranchisement and, indeed, between the Conservative side and the Liberal side, although the hon. and learned Member for Cardigan (Mr. Bowen) failed to sign the Minority Report. We say that the moral claim of the tenant to the property is greater than that of the landlord, and if the moral claim of the tenant to the property is greater than that of the landlord he is the person who should decide whether he buys the property; it is not for the landlord to decide whether he sells the property.
In that case, if on that ground of fundamental principle the tenant is given the right to decide whether he buys the property, the sale takes place and the amenity covenants operate in precisely the same way as amenity covenants would operate in the case of a sale by the landlord. That is a problem that goes to the very root of the issue of principle between us on the right of the tenant or the right of the landlord, as the case may be. We come down on the side of the tenant. The Conservative Party come down on the side of the landlord. There are a number of other answers to this question of amenity covenants, but I shall not go into them at this stage, although I should very 2386 much like to write replies in detail to the White Paper.
The publicly-owned estates was another criticism. This, again, is not a practical difference of application, but a minor criticism. The Government propose that the publicly-owned estates ought to be omitted from any scheme of leasehold enfranchisement. They are proposing to do that in the case of Scotland. The obvious retort arises that if they propose to do it in Scotland, what greater substance is there in the criticism for excluding them in the case of England than in the case of Scotland?
What we proposed in the Minority Report was not that at all. We proposed that these public authorities should have their property excluded only when the property was required to be used for the public purpose for which the local authorities themselves existed. Even if the Government excluded publicly-owned property, there would, of course, be large areas of the country—South Wales in particular—which would not be affeced at all by that exclusion.
Finally, we come to the cost to the tenant. I suggest that the tenant should be allowed to judge for himself. We say, set the people free; let the tenant have an opportunity of deciding whether or not it is worth the cost to him to get leasehold enfranchisement. If the Government consider that the Minority Report scheme is too costly—and they have misconceived the position of that, as I indicated earlier in my speech—and if they are really concerned for the welfare of the tenant and to see that he has a good bargain, what would be wrong in adopting precisely the proposals-which the Government themselves are adopting in the case of the Scottish Committee? Paragraph 8 of the White Paper dealing with leases in Scotland says:Broadly this means "—that is, their scheme for assessing compensation—that no lessee would have to pay more than about one-quarter of the value of the property held under the lease.If that is so, I am quite sure that no tenant would call it a particularly bad bargain, and I ask that the tenants in England and Wales should be given the opportunity of deciding for themselves whether or not leasehold enfranchisement is worth while. The Minority Report 2387 proposals would work out very substantially to the benefit of the tenant. I should have thought that tenants would have welcomed with open arms the opportunity to obtain the houses for themselves on the terms suggested in the Minority Report. All we ask is that instead of the Government deciding for the tenants that they cannot afford enfranchisement, the tenants should be given the opportunity of deciding for themselves.
Therefore, in principle, we welcome the White Paper on business premises; we welcome the White Paper proposals on the Knightsbridge Estate Case, and we welcome security of tenure being given to occupying ground leases at the end of their lease. We do not like the terms upon which any of these proposals are put forward. We have objections to all of them, and we shall have to consider in detail the objections, which I have indicated very roughly this afternoon, when Bills are brought before the House.
But when it comes to leasehold enfranchisement, we consider that the Government's criticisms are criticisms of detail only, that there is no criticism of practical application, except the one on apportionment, that that difficulty is solved by the Government in applying the Rent Acts to the property, that the real difference between the Conservatives and ourselves is the one which is brought out so clearly in the various reports on the subject, and that it is one of fundamental principle.
Do we or do we not consider that the occupying ground lessees right is greater than the financial interest of the landlord? We unfailingly come down in favour of the tenant, just as the Tory Party inevitably comes down in favour of the landlord.
§ 5.36 p.m.
§ Mr. Roderic Bowen (Cardigan)
I am grateful, as one of the signatories of the Majority Report of the Leasehold Committee, to have this opportunity of intervening in this debate. It is not often that I find myself in the position of being associated with the majority.
Before I attempt to make some detailed observations on the White Paper, I wish to say that we are dealing here with proposed reforms of the law in relation to landlord and tenant. For many years there has been a tendency, when any changes have been made in that law, to 2388 strengthen the position of the sitting tenant. I certainly do not dissociate myself from that tendency.
We have heard a fair amount today about the injustice sometimes done to tenants, and we have heard criticisms about landlords. I think that most of these problems arise because of the existence of a situation of scarcity, either in residential property or business premises. They arise also because in many instances in the past the tenant has been in a very unfair position from the point of view of bargaining power as compared with the landlord. The ultimate remedy for most of these difficulties is the creation of a situation in which there is no scarcity, either of residential property or business premises. Nearly all the problems with which we are faced today would cease to have any practical application if that state of affairs could be brought about.
Reference has very properly been made to tenants' rights and to the rights of landlords. I believe that we are in grave danger of overlooking the rights of another section of the community—the prospective tenant. If we create a situation whereby we discourage building development and thus make it extremely difficult for a young and enterprising person to establish a business or industry, we shall be doing something which will certainly be detrimental to the interests of the community as a whole.
While we must be acutely conscious of the rights of tenants, and particularly the rights of sitting tenants, we must beware of creating a situation which will discourage the only final solution of this problem, that is, the doing away with scarcity which creates a situation in which consistent tenants, particularly business tenants, are placed in a position of exceptional difficulty.
Having said that, may I return to the White Paper and to some of the criticisms made by the hon. and learned Member for Leicester. North-East (Sir L. Ungoed-Thomas). In the main, the White Paper has accepted the recommendations of the Majority Report, which I signed. So far as the Government have done that it is not for me to complain. But in one or two important instances they have departed materially from the recommendations of the Majority Report, and I wish to refer to those instances because I think there are matters of real substance involved.
2389 Before doing so may I return for a moment to the question of leasehold enfranchisement. The hon. and learned Member for Leicester, North-East taunted me with the fact that I had not signed the Minority Report recommending leasehold enfranchisement. As I am a Member of the party which has advocated leasehold enfranchisement for many years, I can make no complaint about that. This question of enfranchisement was gone into very carefully indeed by 10 persons, all of them I believe approaching the matter in a spirit that was commended by the Home Secretary. I certainly do not believe we approached it from any party angle. Eight came to the conclusion that it was right to reject the application of compulsory enfranchisement.
§ Sir L. Ungoed-Thomas
The hon. and learned Member recognises, of course, that it was rejected, as is pointed out in the White Paper, mainly on the grounds of principle.
§ Mr. Bowen
Yes. I do not want to go through the whole of the grounds. They are set out fully in the Report. I make no complaint about the taunt, but it hardly behoves the Socialist Party to express criticism in this respect, because they are certainly very recent converts to the conception of leasehold enfranchisement. To the best of my knowledge, the first time the Socialist Party ever indicated their belief in leasehold enfranchisement was in their General Election manifesto of 1951. The speeches of the Government spokesman on the temporary legislation as late as 1950 indicated they were quite undecided on the matter.
I have searched in vain for any indication that the persons who were advising the Socialist Government on this matter committed themselves to leasehold enfranchisement.
§ Mr. Bowen
He has certainly used that phrase, but he did not go on to say that the cure for the disease was enfranchisement. Were that his view I would have expected it to be expressed in no uncertain terms. The same applies to the right hon. and learned Gentleman who was the Attorney-General in the Socialist Government. So far as I know, the right hon. and learned Gentleman the Member for St. Helens (Sir H. Shawcross) has never indicated that he is in favour of leasehold enfranchisement.
Further than that, the Socialist Party, in its legislative programme during the years 1945 to 1950—I am making no complaint about it, I am merely indicating the inconsistency—acted in many instances in a way which is in conflict with the conception of leasehold enfranchisement, such as in the provisions in the Town and Country Planning Act, and the New Towns Act and their attitude towards the selling of council houses. In their evidence to us the Committee of the Haldane Society never put forward leasehold enfranchisement as a cure for the ills of the present leasehold system.
§ Mr. Bowen
If the hon. Member for Pontypool (Mr. West) will look at the back of the Report he will see the volume of evidence which we heard over two-and-a-half years. It is not a matter for me, but I suggest the most appropriate course would be for the evidence to be made available in the Library. There is a specific reference in the body of the Report to the recommendations of the Haldane Society, and it is clear that they certainly did not recommend the principle of leasehold enfranchisement.
§ Mr. Janner
Would the hon. and learned Gentleman say whether he is against leasehold enfranchisement or not, since he has departed from the policy of Lloyd George as declared in the book which is the background to the Liberal policy?
§ Mr. Bowen
If he has read the Report he will know on which side I eventually came down, and on which side the Committee came down.
I listened with interest to the speech of the right hon. Member for Gower (Mr. Grenfell). He expressed sentiments which have existed in South Wales for many years. I will concede that at once. But it would be quite wrong to suggest that the recommendations of the two members who signed the Minority Report in any way meet the claims of the right hon. Gentleman or those who agitated—I do not use the word in any critical sense— against the building lease system. The whole basis of the case put forward, in particular in South Wales and by those who gave evidence from South Wales and who spoke for leasehold enfranchisement, was totally different from that put forward by the hon. and learned Member for Leicester, North-East and in the Minority Report.
The White Paper puts the matter quite clearly when it poses what it chooses to call two fundamental questions. The advocates of leasehold enfranchisement, and in particular the Welsh advocates, answered both those questions in the opposite way to the way in which they were answered in the Minority Report. The whole basis of the case for leasehold enfranchisement as put forward by the Welsh advocates was that the only claim the landlord had was the capital value of the ground rent. If we are considering whether we are meeting the sense of grievance of those ground lessees in South Wales, I believe that the scheme put forward by the signatories to the Minority Report does no more than the scheme put forward in the White Paper to meet it.
The sense of grievance arose in two ways. It arose, first of all, from what is basically—it is not wrong for that reason —an economic cause. It was the sense of grievance of a person whose grandfather had taken a lease for 99 years and built a house on it, and the house had passed from his grandson to the landlord, who had paid nothing towards the cost of the bricks and mortar and the maintennance of the house. The claim made by that ground lessee was not a claim that he should be allowed to buy at the market value but a claim that he was entitled to the house as of right 2392 The advocates of leasehold enfranchisement have never put forward as far as I know—certainly not the Welsh advocates—that what he was entitled to was to buy it from the landlord.
Therefore, if one is not prepared to meet that claim—a claim which in law would amount to confiscation—one must consider in what other ways one can assist the ground lessee.
§ Mr. Bowen
I am not arguing for the moment about the moral aspect, but. legally, it would be confiscation.
Let us remember also that it would be conferring rights upon a large number of people who have no particular merits whatsoever. It would be conferring an equity upon some people who could make quite a strong moral claim—I am not disputing it; they are the persons the right hon. Gentleman the Father of the House has in mind—but it would be conferring advantages on at least an equal number of persons, and probably far more who had no more claim and, in fact, far less claim than even the landlord. [HON. MEMBERS: "No."]
Hon. Members should look at the evidence relating to Cardiff. One of the matters to which we had to apply our mind was: how many of the ground lessees in Cardiff were in occupation? I am sorry if I am taking up the time of the court by going into this case. [Interruption.] I beg your pardon, Mr. Deputy-Speaker, although I am not sure that I was altogether incorrect in using the word "court." It would not be right for me to give the figures relating to these cases for hon. Members can see them in the evidence, but this case was more the rule than the exception. It was that of a lessee who was not in occupation but had sublet the premises, usually to a number of persons, at substantial rents. What would happen to him on enfranchisement, assuming that he was enfranchised under the terms put forward by the advocates of leasehold enfranchisement? All the advantages would pass to the lessee, who would have no more claim to them than had the landlord.
§ Sir L. Ungoed-Thomas
I am sure that the hon. and learned Gentleman does not wish to mislead the House. I am sure 2393 he recognises that that is not the proposal for leasehold enfranchisement which is made in the Minority Report, nor the one which is before the House in the White Paper.
§ Mr. Bowen
I am sorry if I have not made myself perfectly clear. That was the case which was argued before us by the advocates of general enfranchisement. Let us remember that there may well be instances where the lessee who is not in occupation has a sense of grievance. It may be that the lessee, perhaps for domestic reasons, has had to depart from his house: he may be getting on in years and may have had to go to live with a sister or some other member of his family. The South Wales advocates of enfranchisement did not differentiate between the lessee in occupation and the lessee out of occupation.
§ Mr. West rose—
§ Mr. Bowen
I am afraid I cannot give way. I have already given way a number of times. I do not believe that the alternative—the Minority Report proposals—would do any more than the proposals in the White Paper to remove that sense of grievance.
If it does not do that, we must look to the second grievance which has been ventilated, the sense of insecurity of a person who is living in property subject to a ground lease when that lease is drawing to a close. Apart from the argument based on purely economic grounds, I believe that the other sense of grievance which these persons very properly have is the danger that they will be thrown out at the end of their tenancy. That is, they want security of tenure.
My reaction to the evidence that we had about leasehold enfranchisement was this. Once we were not prepared to concede the title of the lessee to the property as of right, or, at least, to a conversion of his term from 99 to 999 years, the interest of the ground lessee was then concentrated upon security of tenure, and security of tenure on proper terms. In that respect I wholeheartedly agree with the general principle which has been laid down in the Government White Paper.
There is one point of criticism that I wish to make about that. I refer to the vagueness—I say it with respect—both in the White Paper and in the Home Secretary's observations relating to the rent to 2394 be paid by persons who will become statutory tenants if these provisions become law. I believe that the tribunal —the county court judge and the assessor —should have much more specific guidance in this respect, and the tenant— the ground lessee—should be given a far clearer idea of what call is to be made upon him in the form of rent than we have been given either in the White Paper or in the right hon. and learned Gentleman's observation.
The Home Secretary talked about what was a reasonable rent. If many of the rents which are now being paid under the Rent Restriction Acts came under review by a county court judge and an assessor, they would be deemed to be unreasonably low for the premises. Some might be reasonable and some might not; but it would lead in a substantial number of cases—I put it no higher than that— to a change in the rent payable. Therefore, we have the danger that if the matter is left in this way we may find the ground lessee whom we have converted into a statutory tenant being called upon to pay a higher rent than his neighbour who happens to be a rent-protected tenant in the ordinary way, whereas the statutory tenant has, as the hon. and learned Member for Leicester, North-East has said—I concede it straight away—at least as high a claim—if not, indeed, a higher claim— for consideration in this respect than his neighbour who happens already to be protected under the Rent Restriction Acts.
If we are not to create not only a sense of injustice and a sense of uncertainty but also an unsatisfactory variation in the application of the law from one court to another, we shall have to be much more explicit in our directions to the tribunal as to what rents should be paid. We should at least take steps to ensure that the ground lessee who becomes a statutory tenant is not in an unfavourable position compared with the ordinary lessee under the Rent Restriction Acts occupying comparable property in the same area.
I agree with what the hon. and gallant Gentleman the Member for Leicester, North-East had to say about the remedying of the difficulties which have arisen by reason of the decision in the Knights-bridge Estates case. I am disappointed that the Government do not propose in 2395 their White Paper to implement the recommendations set out in the Supplementary Report, as distinct from the Majority and Minority Reports of the Committee, in relation to residential properties which fall outside the Rent Restriction Acts. I do not put this forward as a matter of very great importance, but it would have been tidier to have done it. It would have protected people who, despite the claims of many, certainly need as much protection as many business people who will be protected under the business premises provisions.
There is one other matter on which the White Paper is silent, and I regard this as unfortunate. I refer to the recommendations of the Leasehold Committee about the possibility of providing tax relief in respect of premiums payable on policies entered into with a view to lessees meeting their obligations at the end of the lease. One of the real grievances of the ground lessee is that he is called upon to meet very heavy demands at the tail end of the lease when it is difficult for him to do so. If some encouragement could be given to him to meet these difficulties by taking out an appropriate insurance policy, it would certainly help. I hope that the Government will consider that matter further.
On the question of business premises, it was unfortunate that the Interim Report of 1949 was not put into operation by the Socialist Government. If it had been it would have provided the present Government with useful material on which to assess the needs for permanent legislation. I do not quarrel with the business premises recommendations, although they depart in some respects, but not materially, from the recommendations of the Majority Report. I agree with the criticisms of the hon. and learned Member for Leicester, North-East about compensation for loss of goodwill. I do not think that his fears about the five-year period are well founded, but I share his criticism of the basis of assessment of compensation for goodwill. With all the difficulties of ascertaining what is adherent goodwill, I think the proposals of the Majority Report have more to commend them than those put forward in the White Paper.
Another matter which I regard as being of some importance is the rejection by 2396 the Government in the White Paper of the proposals of the Majority Report that compensation for improvement should be granted to the tenants of residential property in common with those of business premises. That is a problem which we attempted to go into with some thoroughness. The evidence which we had from professional bodies and persons in the habit of dealing with property of this kind was that there was no ground of principle for distinguishing between business premises and residential premises.
I do not want to go into full details, because that would be improper, but reference to that part of the Majority Report which deals with this aspect of the question makes it clear that the criticisms in the White Paper about compensation for improvements on residential property could all be met by the tribunal which would have to decide the matter. If the improvements did not add to the letting value of the premises to the landlord, then there would be no claim for compensation. If they did, and did so substantially, I see no earthly reason why the lessee in those circumstances should not be compensated in the same way as he would be if the premises were business premises.
I am disappointed about the attitude to the improvement of residential premises, but I welcome what the White Paper says about repairs and restrictive covenants. I believe that for repairs the settling of a code of standard conditions would be a great help. I apologise for detaining the House for so long but, while I believe that on the general points this White Paper is travelling in the right direction, there are a number of matters of detail on which greater information is highly desirable, and there are some points of detail on which I think the Government would be well advised to reconsider their attitude.
§ 6.8 p.m.
§ Mr. Patrick Maitland (Lanark)
In having the good fortune to follow the hon. and learned Member for Cardigan (Mr. Bowen) and having enjoyed the generous objectivity with which he dealt with the subject, I cannot also fail to bask in the sunshine of the Celtic tribute to the perspicacity of Scotsmen which was paid by the hon. and learned Member for Leicester, North-East (Sir L. Ungoed Thomas). If I do not follow him in his adventures 2397 into the sphere of moral philosophy, it is because I wish to direct my attention to certain arguments arising out of the White Paper on Leases in Scotland and its endorsement of the Guthrie Report.
It is my hope to condense these arguments as much as possible, although I am afraid that they are at points somewhat complex. The Scottish White Paper points out that the Guthrie Committee recommended action in connection with the leaseholder's right to convert to feu but only—and this is the important point to which I wish to draw attention—in the case of occupying tenants. In other words, by the proposals of the Guthrie Report, the leaseholder's right to security is to be limited to that part of the lease which is in his own personal occupation.
As Member for Lanark I am bound to note, and to reinforce before this House, the viewpoint set out by the Leaseholders' Association of Stonehouse in my constituency. In passing, I would add that if my right hon. and learned Friend considers it desirable to make public the evidence brought before the other Leases Committee I am sure that there would be some among us who would welcome a like procedure for Scotland.
At all events, the Stonehouse leaseholders maintain—and having thought about it I must say I incline to agree with them—that the right of conversion should apply not only to occupying leaseholders but also to the whole of the lease. I wish, therefore, to submit certain points designed to suggest that the course of argument in the Guthrie Report is not wholly consistent and, indeed, that the premises from which conclusions are drawn are in certain respects contradictory.
The Guthrie Report says that the housing shortage is the crux of the whole problem; that is in paragraph 67 (4). If that were indeed so—that that was the crux of the problem—then the Committee's limited recommendations might conceivably be justified. I am not going to challenge that premise. But, that premise having been laid down, I must remind the House that the Committee then laid down other premises later which, in my view, qualify the first. Yet, having done so, the Committee has not qualified the conclusions which it has drawn from its original premise—namely, that the 2398 housing shortage is itself the crux of the problem.
In paragraph 67 (4) of the Report, the Committee develops its study of the housing shortage. It says, and I quote:… all tenants of other than large dwelling houses under occupation leaseshave security of tenure. That is, thanks, of course, to the Rent Restriction Acts. This, the Commitee argues, reduces the availability of houses to let, and so aggravates the shortage. Then the Committee goes on to point out that, on the other hand, ground lessees have no comparable protection.
Now, by drawing this contrast between unprotected ground lessees and protected rack rent tenants, the Committee seems to imply that ground lessees should be given some protection. Indeed, the Guthrie Report even appeals to the Jenkins Report for confirmation of this idea. In the Guthrie Report, it is "noted with interest"—and that can only mean with approval—that the Jenkins Report, states that theground lessees are victims of an anomaly in the sense that they find themselves without protection, whereas their neighbours enjoy it—thanks again to the Rent Restriction Acts.
In other words, the Guthrie Report suggests that there is an injustice. If there is an injustice, the implication is that that injustice should be corrected, and if the implication is that the injustice should be corrected, this must mean that the whole lease should be converted to feu and not only that part that is occupied by the leaseholder.
There is a further argument in the Guthrie Report. Paragraph 68 (2) (i), still further qualifies the original premise about the housing shortage, because it goes on to say:We consider that, as the landowner would almost certainly have granted a permanent right of feu had he had the power to do so, the lesssee should be entitled to have his temporary right converted into a feu. …In other words, the argument here is not the housing shortage at all. It is the presumed original intention of the landlord, and, on those grounds, a right on the part of the leaseholder is admitted and even asserted by the Guthrie Report. If that is so, I submit that it can only logically mean that the whole lease, and not 2399 merely that part occupied by the leaseholder, should be converted to feu.
The Report finally proceeds from a third premise. In at least three passages —in paragraph 67 (4), in paragraph 68 (1) and in paragraph 68 (2) (i)—the leaseholder is described as having a right to feu. The main shortcoming of this right, according to the Report, is its temporary character. There is nothing in regard to that right to suggest that that right itself is too extensive—merely that it is temporary. This right is not, in fact, defined. But if it covers anything at all, it must certainly cover the right of a leaseholder to sublet—and I think that is the proper legal term in regard to rack rent tenants.
If the right is to be converted to feu, and if the only shortcoming in that right is in its temporary character, then also the right to continue to sublet to rack rent tenants should be continued as well. Therefore, I submit that there is a case for arguing, on the basis of the premises advanced or implied in the Guthrie Report, that the right to convert to feu should extend to the whole lease. Having stated these arguments, I am hoping that the Lord Advocate may be able to deal with them, and that he and my right hon. Friend the Secretary of State for Scotland will keep these points in mind when the legislation is being prepared.
I have one final point to raise. In paragraph 8, the White Paper endorses the suggestion of the Report that, in calculating the grassum payment which the leaseholder must make to the landowner in converting to feu, the value of the landowner's reversionary right should be calculated on the basis of vacant possession. I submit that that is a fiction, in any case. Certainly, if we are to proceed from the calculation of the shortage of housing as the crux of the problem, then it is a fiction indeed.
But, more than that, we find the Guthrie Report itself having recourse to an argument as to what the landowner originally intended and would have done, had he been free to do so for the Guthrie Committee have asserted that, if he had been free, the landowner would have granted a feu. In that case, he would have been confronted today by an irre- 2400 movable tenant—I hope tenant is the correct term, but I hope also that those in the House with legal minds will be able to comprehend what I suggest. If that is the case, it seems perfectly clear that the only calculation that needs to be made in this connection is the difference in value to the landowner between an intended and an actually irremovable tenant or occupier.
In other words, whether on the ground of considering the landowner's original intention, or the premise that the housing shortage is the crux of the matter, I submit with very great respect, that it is fictional and misleading to introduce a suggestion, which the Report does, that in calculating the grassum payment we should assume vacant possession. There is a sitting tenant in fact. Indeed, in the circumstances foreshadowed in the Report, he will come before the sheriff's court if there is disagreement about the conversion terms, and the landlord will face the disagreeable process of having to remove him if he will not go and will not come to terms. In such a case, at any rate, if the leaseholder is not a sitting tenant, he is something very near to it.
The suggestion of having vacant possession in name only is unreal and belongs in no way to the premise about the landowner's presumed intention set out in the Report. I would submit that we should not endorse this fictional view argued in the Report—that the conversion right should be treated as for a sitting tenancy, and that the payments for the conversion right should be treated and calculated on the basis of a sitting tenancy and not of vacant possession. Further, this should apply to the whole of the lease.
I submit that these are the logical conclusions to be drawn from the several premises stated in the paragraphs of the Report to which I have referred, and I must earnestly ask the Lord Advocate and the Secretary of State for Scotland, when this legislation is being prepared, to consider these points.
In general, the outline of the Guthrie Report is one that commends itself to the leaseholders in my constituency. But it would be a pity if their approbation were to be qualified by doubts about the logic, let alone the justice, of the proposals.
§ 6.20 p.m.
§ Mr. William Ross (Kilmarnock)
I was glad to hear from the hon. Member for Lanark (Mr. Patrick Maitland) that the general outline of the Guthrie Report had commended itself to his constituents. Without his constituents there would have been no Guthrie Report. I am certain that it was because of the agitation against this set-up carried on throughout the years by those who were considerably affected by this problem that the Labour Government decided eventually to set up the Guthrie Committee to go into the question thoroughly.
I was interested in the remarks of the Liberal hon. Gentleman, the hon. and learned Member for Cardigan (Mr. Bowen), who spoke about leasehold enfranchisement in Wales. The Scottish problem is not so complicated as the English one and not nearly so complex or so widespread, but fundamentally it comes down to the same problem; when the lease falls in, the same legal right is available to the landowner in Scotland as in England and the same danger faces the leaseholder in Scotland as in England and Wales. It was in 1893 that a Select Committee of this House was set up to go into the question of leases and feus in Scotland, and it decided that there should be leasehold enfranchisement. What were the Liberal Party doing thereafter?
§ Mr. Bowen rose—
§ Mr. Ross
I have not finished yet. When Mr. Lloyd George was Chancellor of the Exchequer, he established in Scotland the Scottish Liberal Land Committee, which went into the same question and came to the same conclusion; but nothing was done. In 1917, a Royal Commission went into the question in Scotland and once again came across this problem. They also agreed that the right of conversion from leases to feus in Scotland should be granted. It is far too late to turn to what happened between 1945 and 1950, so far as Scotland is concerned.
§ Mr. Ross
For a long time we in Scotland did not think there was a leasehold problem, and until the Guthrie Committee was set up we felt that it was an isolated problem limited to Lanarkshire. Then we discovered that in places quite unheard of the system of leasehold had crept in through the centuries. Anyone who is interested in the by-ways and tangled threads of land tenure in Scotland will find it a very interesting study.
There is the question of kindly tenants in Aberdeenshire, in the fishing towns on the north-east coast, or the strange happenings in the Saltcoats area of Ayrshire. It was discovered that leases had been granted there for hundreds of years. No formalities were entered into. The contract was written out often by the local schoolmaster and the parties just carried on. Taking only the recorded leases there are records of between 13,000 and 14,000 leases; about 9,000 of them are for over 100 years and are more or less outside our consideration. Hon. Members will be very interested to know that in West Kilbride in 1814, one lease was agreed on with what I would call a slight suggestion of perpetuity—it was for 9,999 years.
§ Mr. Ross
I will come to the question of breaks, duplicands, and all the rest of it. Nothing I say on this problem will be nearly as scathing as what Mr. Tom Johnston said in 1920, when he referred tocasualties of superiority, duplicands of feu duty every 19 yearsand awhole mesh and network of feudal exaction still surround us, an ever-present reminder that the baronial Old Man of the Sea is yet astraddle our backs.I am going to talk in a different note tonight. In Scotland, there was a departure from the ordinary feudal tenancy. We must come to the conclusion which was stated by the hon. Member for Lanark, that, for the greater part, feus would have been granted if the legal right to grant them had been there to heirs of estates. About 100 years ago in Scotland, nearly half the land was under entail, and it was purely and simply to get round a strict deed of entail that 2403 leases were granted at all. It was not until 1914—and I am sure the Lord Advocate will tell us that was why we select 1914 as our date on the question of which leases should be permitted enfranchisement—that there was freedom for all landowners to adopt the feuing system complete. Since 1914 there have been practically no leases. All the leases since then have been selected by choice and not from force of legal or other circumstances.
The actual fact is that in Scotland there has been very little difficulty about this matter. I do not agree with the hon. Member for Lanark about the evidence we have. I say with the Guthrie Committee, with the Lord Advocate and with the hon. and gallant Member for Edinburgh, West (Lieut.-Commander Hutchison) that we cannot dismiss the recent hunger for houses. There was no great difficulty of this kind in Stonehouse before 1935–36. It was the inflation of property values after 1935, plus the great scarcity of housing in the post-war years, that brought this matter in Scotland to become a social problem.
§ Mr. Patrick Maitland
The point I wanted to make was not that that premise was itself unsound but that from other premises different arguments arose which seemed to me to conflict with it.
§ Mr. Ross
It is not only a reasonable but a very logical premise. It is this which has created a really pressing problem for the hon. Gentleman's constituents. If he accepts the facts, and goes through the records of the agents who have been granting conversions from leases to feus over the past 20 years, he will probably find that there has been considerable exaggeration by his constituents of the difficulties with which they are faced. I will admit right away that in the past there has been a considerable amount of pure extortion. There was a case of the Hamilton Memorial Manse.
Fears have been aroused. Quite a number of leases are to fall in within the next 10 years. I believe that there are 287 of them, and about half of those are occupied by people whose grandfathers or great-grandfathers actually built the houses. Succeeding generations have brought them up to date. It is the fact that the day of reckoning is within sight. 2404 It is always the bad case one hears about. Today the people's fears are considerably greater than they were about 20 years ago.
One can quote a case such as that of a young man who took over a house with the agreement of the rest of the family. The rateable value of the house was £10 a year. He wanted to convert it into a feu to get rid of the insecurity of the lease, which I believe has about six years to run now. He offered the ground landlord £350 as a capital sum or grassum and a feu duty of £6 in place of the tack duty of 13s. 1d. then being paid. The ground landlord said, "No, we must have £1,100."
I think that the hon. Member for Lanark (Mr. Maitland) would be the first to admit the formula suggested by the Guthrie Committee and accepted by the Government would have been welcome in a case like that. No doubt he is prepared to argue about the formula and to say that it could be even better from the point of view of his constituents— and he would receive considerable help from this side of the House on that point. The case which I have quoted is an instance of extortion. It is that kind of case that has created the fear to which I referred.
There have been isolated cases in other parts of Scotland. There have been practically none in Ayrshire. Conversion has been going on regularly there and no one has been troubled. The words used by Mr. Campbell from Saltcoats, who gave very valuable and interesting information on the subject, more or less expressed the feeling about this development. He said:The suggestion that buildings erected or purchased by the owner might actually revert to the landowner is so repugnant to the Scottish ideas of land tenure as to give rise to the self-assuring assumption that such an eventuality would never happen and that something would necessarily turn up to prevent it.The White Paper is the prelude to that something.
But I think that we have to be fair and say that the Guthrie Committee did not come to their conclusion on the basis of the actual practice of the generality of Scottish landowners. I do not know whether Tom Johnson will ever forgive me for what I am going to say, but in the conversion of leases into feus in Scotland Scottish landowners have been 2405 very generous indeed. Generally speaking their practice has been to convert the existing tack duty into a feu duty with only slight increases and without any grassum at all. That has been going on in Aberdeen and Ayrshire and all over the place, even in Lanarkshire. Only on two estates in Lanarkshire has there been any real difficulty. But the danger is in the fact that there is no guarantee that that generosity will continue. Things have happened which take people a long time to forget.
When that Select Committee of 1893 went into the question they had a case of something which happened in my constituency in the year 1705 when kindly tenants in Kilmarnock were suddenly forced to buy back their own buildings and pay a feu duty in place of the former tack duty. So we must look into this question of whether or not we should be inclined to leave matters there. Bad habits spread much more quickly than do good ones. We can well remember how, after the war, the "buy or quit" racket started in Glasgow. It applied especially to shops and people were told, "Buy your shop for £2,000 or get out." The racket started there, but it spread right through the whole of Scotland and the Labour Government were forced to take action to stop it.
There is no saying but that what has been happening in Stonehouse in exceptional cases may become a normal happening in Scotland in the future. I hope that it does not, but there is no guarantee that it will not. There was one case which is mentioned in the Report of the Guthrie Committee, and it is only right to refer the House to it. It was the case of an agent who appeared before us and quite openly confessed that in the past he had been too generous and that in future he would exact what he thought was a better bargain for his employer.
So there is no doubt about the fear which I have mentioned. This legal right is repugnant to the Scots idea of land tenure. It remains, and while it remains the danger that it will be exercised just as it has been exercised in the past will remain. That local incident in Kilmarnock was echoed 190 years later when the Select Committee urged that a statutory right of conversion be granted to Scottish leasehold holders. Nothing was done then. I feel that we must do something now.
2406 There is also the question of the housing situation, because it has been proved in the past that if one does not assure people that there will be a renewal of the lease, or that they will be granted reasonable conversion terms, they let the property wither away. It happened in Ayrshire, in Ballantrae and in Wick. One can go round Scotland and I dare say round Wales and see how, rather than improve and hand over the improvements to the landowner who did nothing for them, people just let the property deteriorate. That is what we have seen in Lanarkshire. Houses were built by miners and weavers, lighting was supplied by the county council and roads and a water supply were provided by the community. The landlords did nothing. It is too dangerous to leave this right of conversion in the hands of the landowners, despite the fact that they have exercised it so carefully in the past.
The danger of leaving it is that in legislating for the minority, and making things easier for the minority of these unfortunate people in Lanarkshire, one might be making the terms so reasonable, and advantageous to people who have been treated exceptionally badly that the majority will pay more than under the present practice for the granting of their feu charter. That is the difficulty which I found when I was a member of the Guthrie Committee. If I were assured that there would be continuity of the generosity and the paternal feudalism of the Scottish landlords I would be satisfied. But land and estates have the habit of changing fast. We have seen it happen in some parts of Scotland, and the same kind of family and paternal interest does not always go with the transfer. It must be admitted that we are living in rather a materialistic age, and the desire to "cash in" grips even the most reasonable of men sometimes: and if we do nothing in this matter we shall leave the leaseholders of Scotland pretty well at the mercy of such people.
The hon. Member for Lanark said how strange it was to have this notional idea of vacant possession when it was not vacant at all. He should have referred to the first proposal of the Guthrie Committee. Whereas at present leaseholders have only got the cover of the legislation that we passed earlier, the Guthrie Committee say that where a lease has actually expired or is going to expire, say, in two 2407 years, in calculating the landlord's reversionary right there is to be a notional lease with 30 years still to run. What we tried to do was to get a proper balance in the interests of equity.
§ Mr. Maitland
I am obliged to the hon. Gentleman for giving way again. I do not deny that the 30 years' lease is notional; that is as notional as vacant possession. But the Committee have also considered the landowner's presumed original intention. It has been presumed that the original intention of the landlord would have been to grant a feu. In that case, the occupant would today have been irremovable. What we had to distinguish between was the actually irremovable tenant and one who was intended to be irremovable.
§ Mr. Ross
There was some confusion because we could only presume in many cases what was the original intention. Referring once again to Ayrshire, I gather that when the Earl of Eglinton was developing the town of Ardrossan, he deliberately let out the property on leases to safeguard development. However, I do not think that matter should be pursued at the present time. When the enabling Bill is passed, resort to the formula that will eventually be in the Bill should be made only in exceptional cases, and I hope that the existing generous conditions of conversion by agreement between leaseholder and landlord will continue, and that only those who will be less generously treated will resort to that formula. Otherwise there will be the danger of the majority being injured while the minority benefit.
I want to ask the Lord Advocate if, in accepting the recommendations that we have made, he accepts also the recommendation that those leases which have expired but which are continued under tacit relocation and are at present covered by the Extension Bill will be given the benefit of any future legislation. I hope that they will be. I think that the advantage of the formula that we made is that it is capable of adjustment. The notional period can be extended from 30 years to 40 years if it is desired. That would considerably benefit leaseholders: or. as the hon. Gentleman suggested, the calculation could be on the basis of property without vacant posses- 2408 sion, with a sitting tenant. However, the Guthrie Committee does not claim full knowledge of all the factors, and if Parliament produces fresh matters for consideration I am certain that they will be accepted by the House and the balance can be adjusted properly.
One thing that worries me is that the value of the property is to be judged as at the date of the enabling Bill. That means that in all these properties no one will make any improvement between now and that date. It means that properties will be allowed to decay. After all, if the property is improved the greater will be the grassum or feu duty. I think that is bad, and I would commend to the Lord Advocate the practice that prevails on the Kirkton Estate in Carluke, where in considering the reversionary right recent improvements over a few years are discounted altogether. Such a procedure, if adopted, would certainly lead to the carrying out of very necessary work on these houses.
I welcome the White Paper. We talk a lot about civil servants and laugh scornfully at their work, but without the two joint-secretaries, Mr. Moran and Miss Connor of the Scottish Office, we would have had no Guthrie Report and, therefore, no remedial legislation. I would be failing in my duty as a member of that Committee if I did not give a full meed of praise to Miss Connor and through her to the Keeper of the Registers of Scotland, whose staff must have worked overtime night after night in order to dig up information which hitherto has not been available and which enabled us properly to consider the problem of leases in Scotland.
When I made a speech in Committee the reports in the Scottish Press were, to say the least, misleading. They seemed to give the impression that there was a difference of opinion between my right hon. and learned Friend the Member for Edinburgh, East (Mr. Wheatley), the former Lord Advocate, and myself. The impression was created that I did not want legislation. The only difference between us was that he wanted legislation as soon as possible and I am not so anxious to get it as soon as possible. The housing situation will ease, and if the Bill is a year later than some people might wish, obviously the leaseholders will get the benefit of the fall in property 2409 values. That is an important point. But I sincerely hope that the White Paper will eventually pass into law; we shall then have dealt satisfactorily with one trouble spot in the tangled threads of Scottish land tenure.
§ 6.49 p.m.
§ The Lord Advocate (Mr. J. L. Clyde)
Two Members for Scottish constituencies have addressed the House on the Scottish White Paper in particular, and as the problem regarding long leases in Scotland is, as I see it, fundamentally different from the problem in England, it is perhaps not inappropriate if I intervene at this stage to deal with the Scottish matter.
Some reference was made in the speech of the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) to comparisons between the solutions suggested in the English White Paper and the solutions suggested in the Scottish White Paper. It seems to me very misleading to try to apply in the one country solutions which have been suggested for totally different conditions in the other. I am reinforced very much in that regard by a passage in the report of the Scottish Leases Committee.
In paragraph 67 (1) the Committee say:On careful consideration of all the evidence furnished to us"—and there was a very substantial body of evidence furnished to them—one point that stood out clearly was that the position in Scotland in the matter of ground leases is so completely different from that obtaining in England that no comparison of possible solutions to the problem of leases north and south of the border would be useful.Accordingly, I do not propose to say anything about the situation in England. I shall confine myself to the quite different and separate problem in Scotland—the solution for which I agree with the Committee in thinking cannot be assisted by considering possible solutions for the different English problem.
As regards Scotland, I want to make two preliminary observations. The first —and here I am referring to something which was mentioned by the hon. Member for Kilmarnock (Mr. Ross)—is that the problem in regard to these leases in Scotland is nothing like so complicated or widespread as it is in England. These leases and, indeed, leases generally, are 2410 not nearly so common a feature of our form of land tenure as they are in England. It therefore follows that the recommendations of the Guthrie Committee for Scotland do not cover nearly so wide a field, and are much less controversial than those to be found embodied in the English Report.
My other preliminary observation is that the conclusion of the Guthrie Committee was a unanimous one. They went to very considerable trouble to examine all the various facets of the problem before them. They made a meticulous examination over a very wide field, and I think I am fairly summarising the result of their investigations when I say that they found little to criticise in the existing conditions. Therefore the positive alterations of the law which they recommend naturally cover a relatively small field.
Let me now come to the points that have been raised by my hon. Friend the Member for Lanark (Mr. Patrick Maitland) and the hon. Member for Kilmarnock. The first point raised by the hon. Member for Lanark was in regard to the failure of the Committee to recommend that the right to convert into a feu should apply to other than occupying tenants. This very matter was considered in great detail by the Guthrie Committee. It is quite true that in their Report one finds references to difficulties and disabilities encountered by non-occupying tenants, but the conclusion they arrive at is that no case has been made out, on the evidence before them, for lessees who give occupation leases to other parties being treated in the same way as occupation lessees.
The reason why they confined this benefit to occupying tenants was that the hardship which they were seeking to remedy was the loss of a home, particularly when houses were in short supply. Because it was the loss of a home which they were seeking to put right they confined the remedy they provided to those who lost their homes, namely, occupying tenants whose leases came to an end.
I have listened with great interest to the three points put forward so clearly by the hon. Member for Lanark, and I shall certainly take them into account when we consider the terms of the Clauses of the proposed Bill. At the moment, however, I am impressed very much by the careful consideration which has been 2411 given to this matter by the Guthrie Committee and the conclusion they have arrived at to limit the right they are proposing to occupying tenants.
The second point raised by the hon. Member for Lanark was in regard to the terms upon which the conversion from a lease into a feu should be provided for in the proposed legislation. As I followed his argument, what he desires is that the terms of conversion shall be on the basis of a controlled rent. That matter was also considered by the Guthrie Committee and they rejected that view. What they were doing—and what the House will ultimately have to do when it deals with the Bill—was to seek a basis of conversion from leasehold to feu right which would be equitable to both parties.
They thought it fair that when a tenant was being given something which he has not got at the moment, namely, a right to convert his interest in the land into a feu right, he should not be given so large a benefit as to prejudice the other party to the bargain. The conclusion they arrived at, therefore, was that the basis of conversion should not be a controlled rent but vacant possession. It is suggested that in some way that is an artificial value, but it would be quite artificial to treat the existing tenants who are getting this right to convert as if they were sitting tenants under controlled rents. They are not, and conversion from a lease into a feu, as recommended by that Committee and proposed in the White Paper, is therefore a more real basis of conversion than the method advocated by the hon. Member for Lanark.
The hon. Member for Kilmarnock wanted to know whether the leases that were at present being extended by the legislation passed in 1951—and also those that would be covered by the Bill at present passing through Parliament— would be covered by the legislation which is in contemplation. I can be quite clear about that. It is the intention that it should apply to leases covered by both those statutes.
The other matter raised by the hon. Member for Kilmarnock was whether improvements made between now and the time when the conversion occurred would be taken into account in calculating the terms of conversion. That was a new 2412 idea to me. I shall certainly consider it, but I am not prepared at the moment to give the hon. Member an undertaking one way or the other.
I think I have covered all the points that have so far been raised in regard to the Scottish problem. I am glad to be able to agree with the hon. Member for Kilmarnock that hitherto, with one or two possible exceptions—as we must inevitably find in a human world—the vast bulk of these conversions have been carried through perfectly fairly by landlords who are becoming superiors and tenants who are becoming vassals. We hope that that situation will go on in the future as it has operated very largely in the past.
The legislation that will follow on this White Paper will merely protect people against the possibiity that justice will not always be done. For that reason the legislation will obviously be very narrow in its scope.
§ 7.0 p.m.
§ Mr. Granville West (Pontypool)
We are in great danger in this debate of forgetting the fundamental principle which exists in the building lease system, and I should like to support my right hon. Friend the Member for Gower (Mr. Grenfell), the Father of the House, in what he said in the speech which he made on the consequences of this system. I have always taken the view which I still hold, that enfranchisement of leaseholds is the only solution, and I do not think it is right that this House of Commons should continue to temporise with this situation.
Leaseholders have looked to Conservative Governments in vain. They have looked to Liberal Governments in vain, and they looked to the Labour Government as their only hope that action would be taken. The last Labour Government did bring in a standstill Act which gave them protection on the expiration of their leases. It is true to say that it was disastrous for the country that a Labour Government was not returned to power at the last Election, and it was particularly disastrous for the building lessees, because had a Labour Government won the last Election today we should have been discussing leasehold enfranchisement and not the White Paper which this Government have produced.
2413 I should like to bring the House back to the issue that clearly is involved in this question. Is the house which the lessee has built his house or is it the ground landlord's house? That is the fundamental question. Is the house which a man has bought, and everything in respect of which he has paid for, to remain his property, or is it to become the property of the landowner who let the land for him to build on? I have in this House on previous occasions, as I did before the Leasehold Committee when I gave evidence, tried to demonstrate that in those areas where the building lease system operates it operates largely where there is a monopoly or near-monopoly in land. The person who wanted to build a house was not able to get any land upon which to build except under the building lease system. If he had had the opportunity of buying the land outright he would most readily have done so, and he would have built his house upon it, but it was a case of a monopoly existing in those areas, and the unfortunate house builder had to accept a building lease.
There have been some suggestions about the sanctity of contract. In an earlier debate I drew the attention of the House to a particular clause, and I will do the same tonight for the purpose of proving to hon. Members that this sanctity of contracts, or freely negotiated contracts, in fact, never existed. I reminded the House earlier of an occasion when a landlord, having the power of a monopolist, not only insisted upon the best rent he could obtain for the land which was being leased, and not only insisted upon onerous covenants being inserted in the lease which the lessee had to accept, but he also inserted a clause that if the building lessee were at any time to embrace a particular religion, the house was to be forfeit to the ground landlord. Will hon. Members in this House really suggest that there has been freedom of negotiation and freedom of contract there?
There is no doubt that there has been very bitter feeling in the minds and hearts of building lessees against this system, which they regard as wicked and unjust. The Government's White Paper recognises that the building lease system has harsh and inequitable features. In bringing forward the proposals they do which interfere with the rights of contract, which they have been so anxious to support, 2414 they recognise that harsh and inequitable features exist in this system. Therefore, something has to be done to try to prevent the worst features of it being brought into operation.
I know there is sometimes a danger of hon. Members and others who are advocating leasehold enfranchisement taking advantage of the worst possible cases which come to their notice in showing how wicked and inequitable the system is. I want, if I may, to deal with some cases which are, not of the worst landlords or the bad landlords, but of the best landlords. I have had information given to me which has been thoroughly investigated and vouched for. The first case I want to put to the House is that of a landlord having under a monopolist power the whole of the land in a particular area. People going into the coalmining industry in that area had to get plots of land on which to build their houses.
In 1850, there was a plot of land in this particular area which was on the mountainside. It was scrub land and useless. It was bringing in no rent, it was not being cultivated or even looked after. In fact, this land required no service on the part of the landowner. There were a number of colliers working in a neighbouring colliery who wished to build houses upon that land. Eight of them joined together and made representations to the estate, but they were not able to get the land freehold because the landowner was not prepared to sell the freehold. What he did was to grant them 99 years' lease at a ground rent of £1 per house a year.
In the course of the years the descendants of the people who had built the houses were faced with the situation that their houses were on leasehold land. In 1944, when the leases were beginning to expire they wanted to have security of tenure, and they made approaches to the same estate for terms upon which they could buy the freehold so that they might have security in their homes. They were told that they could not have the freehold, but that the estate were prepared to grant them a renewal of the lease for 99 years on an increased ground rent of £5 per annum per house, which was extremely reasonable, and, of course, subject to the tenants paying a premium of £200 per house. It was done.
2415 Those were very reasonable terms imposed by the best of landlords under the building lease system. The lessees paid their £200 per house and they took their new leases. In a short time they were told that they could buy the freehold at 33⅓ years' purchase, and having had experience some little time before they decided to buy the freehold. So out of this worthless bit of scrub land on the mountainside that estate received for 94 years £8 per annum, which brought in an income of £752.
The landowner received a premium of £200 a house on each of the eight houses, and he received on that score £1,600. He then had the purchase price of the freehold, and on that he received £1,320. Altogether out of this worthless bit of scrub land the landowner received £3,672, of which £2,920 was tax free. Today we talk about spivs. All I can say is, that if we want to find the original spiv, he is the building lessor who has been able throughout the years to obtain such extraordinary capital accretion free of tax.
I could detail many cases which are worse than that. I can give a few examples of the kind of methods that have been adopted. Here is a case of a 99-year lease, again under a good landlord, where the lessee had built the house, had paid all the expenses of sewering, of lighting, and had paid all the rates and outgoings in respect of the property; the landowner had reserved a ground rent of 19s. per annum. With eight years to run he demanded from the lessee, as a consideration for a conversion of that lease into a 999 years' lease, a ground rent of £12 per annum and a fine of £1,114. In another case where there were 15 years to run and the ground rent reserved was £1 10s. per annum the ground landlord insisted upon an increased ground rent of £17 and a fine of £1,170.
Some hon. Gentlemen have been arguing today that building leases have been of some advantage because they have enabled the landowner to insist upon the proper maintenance of repair and condition of the property. Let me quote another example. A working men's club had purchased a leasehold property and had been in occupation for many years. They desired to modernise and improve the premises. They were pre- 2416 pared to spend £2,500 on the improvement and modernisation of the building, but before they were prepared to embark upon that expenditure they wished to have security of tenure, so they approached the ground landlord to see if he was prepared to give them an extension of their lease or was prepared to sell them the freehold.
The ground landlord refused to grant an extension unless they were prepared to pay an increase of their rent from £2 10s. a year to £80 a year, and so in those circumstances the improvements were not carried out. In due course they were faced with the situation, when the lease was about to expire, that they had to do something, and so they accepted the landlord's terms and paid £80 a year rent, with a fine and with an obligation of spending at least £3,000 to modernise and improve the property.
Then it has been suggested that ground landlords have done much and have contributed much towards the layout and sewering of property. I have received a letter from an urban district council in these terms:My Council are in the process of sewering the urban district, and, as you will be aware, property owners will be required to contribute 50 per cent. of the expenditure incurred in carrying out connection and privy conversions necessary. My Council considered that it was unfair to expect the owners of houses the leases of which are due to expire within a few years to meet all this expenditure, and consequently the ground landlords were approached with the suggestion that they might contribute towards the expenditure incurred in converting the houses the leases of which are due to expire within 10 years. The ground landlords refused to entertain the idea.After a fairly extensive experience of the leasehold system I have definitely come to the conclusion that the building lease system has no place whatever in the conditions of our modern society. Whatever advantages may have been claimed for it in the past with regard to planning and layout and so on, those conditions do not apply today.
No one can set out and develop an estate without the plans of the house being approved by the local authority and the layout being sanctioned and controlled by the local planning authority. Therefore, these functions of planning and laying out can no longer rest with the owner of the land. I submit that if 2417 this Government intend to deal with this problem in a radical way the first thing that they should do is to see that no building lease should be granted in future, for there is no place for it in the conditions of our modern society.
What arguments can be put against the other areas in the country where the building lease system does not apply at all? It is only in the areas where there has been this monopoly in land that we have the building lease system operated. In vast parts of the country people can buy their land and build their houses upon it. Is there anyone who suggests that those other areas in the country, where freehold tenure exists, are less well planned and the houses in them are worse looked after than under the building lease system? I suggest to hon. Members that they should consider some of the areas where the lease system has been in operation and judge for themselves what advantages can be claimed for it.
I want to deal with the question which was posed by my hon. and learned Friend in dealing with the Government's attitude towards this problem of leasehold enfranchisement. They have brought forward a White Paper, and the Home Secretary stated in most definite terms that the Government are opposed to leasehold enfranchisement. That is not the policy that they went to the people of Wales upon. That is not the policy that the Conservative candidates were putting in the Election in Wales.
§ Mr. West
I am sorry, I have not. All I can tell the hon. and learned Gentleman is this. Not only did the hon. Gentleman in his speeches, and other candidates in Wales, advocate leasehold enfranchisement, but the Conservative policy for 2418 Wales and Monmouthshire said to the electorate just before the election:We favour the encouragement and diffusion of freehold.
§ Mr. West
If that is what hon. Members opposite advocate, why not apply it in the building lease system? That is what we are asking for. Let us have the freehold if that is the policy that the party opposite are advocating.
What the statement goes on to say— and this supports my submission that the building lease system ought to be abolished—is that:Leasehold development, in the past especially, has met needs which could not otherwise have been satisfied; but"—say the Conservative Party—we consider that, in view of the increase in real wages during the last 20 or 30 years and the extended facilities for home-ownership, a large proportion of new development ought either to be freehold from the start or able readily to be converted into freehold.What are the Government doing about that? What arrangements are they making that people in the areas where the monopoly landlord exists shall have the opportunity of having their houses built under the freehold system from the start or, if they cannot have it freehold from the start, that the leasehold can be readily converted into freehold? What are the Government's proposals for the conversion into freehold? In the White Paper there is not a word about the conversion of leasehold into freehold. If the Solicitor-General wants further information, he should call together the Conservative candidates who fought the Election in Wales upon this question.
§ The Solicitor-General
If the hon. Member is making that statement again, would he be good enough to seek to justify it?
§ The Solicitor-General
The hon. Member has said that several times. I only interrupt him to say that very careful search has been made into the reports and records of Election addresses and in the newspaper reports of candidates' 2419 speeches in Wales in 1951. One reference was made to it by my hon. Friend the Member for Cardiff, North (Mr. Llewellyn) in his Election address. He said—I have the passage here:The Conservative Party will extend to leaseholders the protection of the Rent Restrictions Acts when their leases end. The then Solicitor-General rejected this policy as being 'too radical.' In my opinion it was not radical enough, but it would, at least, have removed the nightmare of eviction from most leaseholders under 99-year ground leases.My hon. Friend made it clear that he was expressing his personal views on the subject. Would the hon. Member be good enough to mention any other candidate?
§ Mr. West
The Solicitor-General has to answer the policy statement which was spoken to by the candidates throughout Wales. That policy statement which I have read out says clearly that so far as new buildings are concerned, they should be freehold or ought readily to be converted into freehold. It was upon that statement that the Tory candidates advocated leasehold enfranchisement through the Principality. There is no doubt that this statement was put out in that way to induce the people of Wales to believe that the Conservative Party were in favour of leasehold enfranchisement.
§ Mr. West
To get the Liberal vote. And, of course, the Liberal Party now has been repudiated by the hon. and learned Member for Cardigan (Mr. Bowen), who for the first time in the history of the Liberal Party, so far as I have been able to ascertain, is no longer in favour of leasehold enfranchisement.
With regard to the Government's proposals, it is quite clear that when the Bill comes before the House it will have to be most carefully considered. If the general proposition is that building lessees are to have the protection of the Rent Restriction Acts—of course, we cannot discuss this in great detail until we have the Bill—we have to consider whether building lessees may not be in greater danger under that proposal than they are even at present.
2420 As the Solicitor-General is aware, under the Landlord and Tenant (Rent Control) Act, 1949, any property which becomes subject to the Rent Restriction Acts cannot be sold at a premium. Until we have the Bill, which the Government propose to bring forward following the White Paper, we cannot say whether this proposal may not have the effect of preventing leaseholders whose leases have some years to run, even from selling their houses. That is an important matter which will have to be considered.
With regard to the rights of the landlord, we shall have to consider whether under the present proposals they are to be in line with the Rent Restriction Acts; that is to say, if the landlord desires the property for his own purposes, whether he is to be regarded as a landlord under the old control, who became landlord before 1937, or under the new control, since 1939. These are matters which we shall have to consider when the Bill comes forward.
On the general issue of leasehold enfranchisement, I urge the House to give careful consideration to the abolition in future of the building lease system. As the White Paper concedes, so far as the value of the ground rent is concerned… value varies according to the length of time the lease has still to run. In the early years of a long ground lease it approximates to the capital value of the ground rent.If that is a statement of fact—as, indeed, it is—that the value of the land in the early years of the lease approximates to the capital value of the ground rent, there can be no argument for saying that at the end of the lease the property which has been built upon it should belong to the landowner.
Therefore, I submit that there should be abolition of the leasehold system for the future and that in those cases where the reversion has not begun to increase in value, which according to the White Paper means that a period exceeding 30 years is left to run, it could readily be converted into freehold on the capital value of the ground rent which this the White Paper recognises is the value of the land. In the remainder of the cases to which my hon. and learned Friend referred in his excellent speech, when the leases are about to expire and where the conversion has been bought and sold when the value has increased, I concede at once that 2421 difficult questions arise, but they are not problems which are insurmountable. I made a suggestion to the Leasehold Committee, which, unfortunately, did not find favour with them, as to how that problem should be dealt with, but I have not the time to expand upon those proposals at this stage.
There is no doubt whatever that when land is let by a lessor for building purposes, he obtains the best possible rent at the time. That can be tested by the assessment for Death Duty. If a lease is granted and the lessor dies, the value of his land for Death Duty purposes is not the value of the land plus the building that is upon it; it is merely the capital value of the ground rent. If, however, the building lessee should die, the liability of his representatives for Estate Duty purposes is the value of the house which he has built. Therefore, we find that throughout the years the person who has built the house is regarded as the true owner until towards the expiration of the lease, when the lessor steps in and confiscates it. I regard this as a wicked system, and I hope that the House will express its disapproval of the Government's proposals to deal with it.
§ 7.31 p.m.
§ Sir Patrick Spens (Kensington, South)
I could not disagree more fundamentally than I do with what has just fallen from the lips of the hon. Member for Pontypool (Mr. West). Let me take his very last remark, that for Death Duty purposes at the beginning of a building lease the value of the property to the landlord is the capital value of the ground rent. Of course it is, because the value of the reversion is 100 years away and has no value. The value to the tenant is the value of the house, and so long as the tenant has a 98 years' enjoyment of that house ahead of him the value of the house is substantial. As time passes the value to the landlord of the reversion becomes nearer and the value to the tenant goes down because the lease is coming to an end. That is the simple system.
I also disagree with the hon. Gentleman because I believe that the building lease system, which must be judged by the condition of affairs of approximately 100 years ago, has done an immense amount of good to this country. In my 2422 view, it is not true, except in a very few cases, to say that it exists only in pockets and always was a landlord's monopoly.
We started the debate in Wales; we have been to Scotland, and I should like to come back to London. There are many, many ground leases in London. There are also hundreds of thousands of properties which have been freehold, and nothing but freehold, competing with properties subject to ground leases, competing with ordinary rack rent tenancies. The advantages of ground leases in the London area when London began to expand in the middle of the last century was that one could get a house built on an estate in agreement with the landlord, and there be protected by the fact of being on an estate the amenities of which the landlord was there to protect on one's behalf.
I do not want to talk about the past. We all realise perfectly well that the real trouble at the present time is that the great bulk of ground leases in this country started to run out a few years ago, and are all running out during the next 20 years. They are running out at a time when in most areas the housing shortage is extreme. They are also running out at a time when maintenance and repairs has been extremely difficult owing to two wars, and in very many cases the condition of the houses is nowhere near in compliance with the terms upon which they are held by the tenants. There are obviously, therefore, very serious practical questions which the country has got to face with the system as it is at present.
The Committee—which was, if I may respectfully say so, a very good one, presided over originally by Lord Uthwatt and ultimately by Lord Justice Jenkins, a Welshman and, I say with pride, once a pupil of my own; a Welshman born and bred; and no one could have had more sympathy with the country of his origin than Lord Justice Jenkins—that Committee considered the question of leasehold enfranchisement, and they came down against it. I have studied and enjoyed the Minority Report, which I think makes the best case for any sort of leasehold enfranchisement that has yet been published, but it goes a terribly short way compared with leasehold enfranchisement such as the hon. Member for Pontypool and the right hon. Gentle- 2423 man the Father of the House claims. Neither of them would be in the least agreeable to accepting the proposals of the Minority Report.
Let me read what the White Paper says about it:The Minority scheme would give a right of compulsory enfranchisement only to occupying ground lessees of residential property, the purpose being to enable a long leaseholder, and only a long leaseholder, to enfranchise in respect of his own home, and only of his own home. Thus, the right would not extend to any occupier on a short lease, to any leaseholder who does not occupy the property but sublets it, or to any leaseholder of business premises not occupied by him as his home. Furthermore, the right would not be extended even to an occupying residential ground lessee if he bought the lease during the last 10 years of its term. It was proposed that the price to be paid to the landlord by the leaseholder on enfranchisement should be the market value of the landlord's interest in the property, including of course the value currently attributable to his right of reversion.
§ Sir L. Ungoed-Thomas
I did point out earlier the vital difference between the Minority Report proposal and what apparently is the White Paper understanding of it on this question of compensation. The passage the hon. and learned Gentleman has just read out perpetuates that error. There is, of course, a vital difference there.
§ Sir P. Spens
I had not appreciated the difference, I am afraid. If it was something more, well and good. The point is that, compared with what has been the cry for leasehold enfranchisement ever since the Liberals started it 60 years ago, it is really only offering a pebble to people who were demanding a mountain. It would not deal with the troubles in the areas in Wales to which particular reference was made.
I have not the time to develop the arguments put forward by the majority. As far as I am concerned, it is enough to say that they seem to me convinced against any general proposal of leasehold enfranchisement at this time. On the other hand, I do think that the proposal to bring these occupying lessees of long leases under rent control means that they will get their security of tenure. Those who regard houses as their own—I will go on to deal with what has to be done in a moment—will get their security of tenure, and in all the areas, except a very few, where there are pockets, such as in 2424 Wales, as the housing shortage passes so their real difficulties will pass at the same time.
§ Mr. Grenfell
We have long and short leases running side by side. I have the right to live in the house I occupy for 999 years, if I can manage it. That does not worry us. We are concerned about the man who is in danger of losing a house for himself and his family.
§ Sir P. Spens
But it is that danger which the proposals in the White Paper will entirely remove by bringing the houses under rent control. It will give as much protection as all the other tenants are getting at the present time under the Rent Restriction Acts. We cannot give a tenant more under present conditions in this country. As the conditions change, I hope—I shall not be here, and I do not think that the right hon. and learned Gentleman will be here—the time will come when once again the Rent Restriction Acts will be a thing of the past. For the time being, I suggest that this is the best solution. There are certain other things which I wish to say about the Rent Restriction Acts.
There is nothing in the White Paper nor in anything I have heard this afternoon which stresses the fact that owing to war conditions a great number of the tenants if they had wanted to maintain their houses would not have been able to do so. Therefore, although no doubt it is quite right that houses should be put back, as the leases fall in and as the rent control system takes its place, into a proper state of repair, I think that under any Bill that is brought in it must be remembered that many of them are not cases of tenants allowing the premises to go out of repair if they could have repaired them. That is one of the great troubles certainly in the London area.
I apologise to the House for not having done so before, but I ought to have declared an interest in this matter in that I am a director of an insurance company which is a landlord and has a certain number of ground leases.
The other thing I want to say is this. On the rent point, I agree with the criticism which has been made that there will have to be in the Bill being brought in some proper formula on which the rents are to be fixed by the tribunal. I do not 2425 see how we can possibly give carte blanche to the county court judges to fix reasonable rents.
I think the point has been made that if houses are to be brought forward under rent control it is most important that the rent paid should not be high as compared with that paid by people who have been next door under the rent control conditions all the time. In other words, the right to control rents in the area will have to be one of the governing factors in fixing rents.
I do not want to sit down without making reference to the speech of the hon. Member for Kilmarnock (Mr. Ross). I am, after all, a Scotsman, and he brought out, what is perfectly true, that in Scotland this is nothing like such a big problem but by common sense they have been doing what also has been done in England, namely that numbers of tenants have been making arrangements with their landlords for surrendering existing leases of 10, 15 or 20 years before they are up and taking on longer terms at slightly increased or substantially increased rents as the case may be. That has been going on all over this country at the present time. There are hundreds and hundreds of tenants who instead of allowing their leases to run out are in fact making voluntary agreements with landlords and taking longer terms thereby getting for themselves security of tenure.
I myself always feel that the danger of matters of this description getting into the hands of Parliament is that people are far too much inclined to look to Parliament and not attend to their own affairs and make their own bargains. I think that it is very important even during this period while this Bill is maturing and passing through that during the next two or three years it can be said, just as truly of England as it was said earlier this afternoon of Scotland, that there are good landlords who are perfectly ready to meet their tenants and come to a proper arrangement with them to give them the security of tenure for their homes which they want.
§ 7.45 p.m.
§ Mr. Arthur Skeffington (Hayes and Harlington)
I am not really entitled to ask the indulgence of the House because, strictly speaking, this is not a maiden speech, but it is three years since I last had the privilege of addressing the House, 2426 through, may I add, no fault of my own. Therefore, I hope that I shall have the sympathy of the House with me personally if not with my arguments.
I am happy to have been able to intervene in this debate because I had a little to do in pressing for the Leasehold Departmental Committee to be set up, and, indeed, like the Father of the House, I had the rather horrifying experience of giving evidence before such a formidable body—and it was a rather terrifying ordeal.
I was devoting most of my activity at that time to the very genuine hardships which existed in relation to business premises and premises occupied by professional people. A number of cases came to me and I raised this matter in the House. At that time, the position was possibly even more acute than it is now. Many people had built up socially useful businesses, for example, as agents for export firms and London offices of engineering establishments and their leases were falling in. They were often given no option of renewal, or if they were given an option of renewal it was at an excessive rent, sometimes 10 times the original rent was asked, and in many cases a premium was demanded as well.
By a curious anomaly of our tax law the premium was not an item on which they could claim any Income Tax relief, but the fortunate landlord who received it paid no tax as it was treated as a capital gain. I was then fortunate in raising the matter on the Adjournment. I received letters and examples about the hardships affecting the business community from all over the country which indicated how widespread was the problem. I got to know at first hand the difficulties which were arising.
I am very glad that some of the worst of the hardships which were confronting small businesses in particular and those who occupied professional premises are now to be remedied, and I think we are all very grateful that some advance is being made. I am certainly delighted that the 1927 Act is to be substantially amended, particularly in relation to the difficulties of trying to define adherent goodwill, which has always been a most complex matter, and the whole structure built upon it has largely failed because 2427 of the legal difficulty of establishing exactly what that meant.
I am also glad that some degree of permanency of tenure will be now available for business premises, small and large, and I am especially pleased that it is, for the first time in our history, to be extended to those occupying professional premises. I was astonished when an hon. Member opposite said that he thought this was unnecessary. At the time when we raised this matter, we received illustrations and examples from all over the country of accountants, solicitors, doctors and many others who were, by the very nature of their activity, tied down to a particular district, and who, if their premises were taken away were denied a very substantial part of their livelihood or driven to start up all over again in another district, if they were lucky enough to find accommodation, elsewhere. At the end of the war, with the destruction of property and the fact that building licences were, quite rightly, only sparingly given for office accommodation, the plight of the professional person was a very difficult one indeed.
I hope that the reference to some of the conditions for the granting of tenure will be explained more precisely. For example, it is suggested that if suitable alternative accommodation is provided this may be one ground for refusing to extend the tenancy. I hope, and I imagine that definition will be tested as it has been tested with regard to domestic property in the county court. We must know what is suitable alternative accommodation. The other condition that the tenancy may be extended at the end of the lease of business premises provided that the landlord does not require it for his own business is a provision which must also be carefully studied.
We all know that it is common practice for the owner of a number of shops or businesses to let out on short lease a business which may be going badly to see if someone else can work it up. If the lease ends, say, in seven years it may well be that there will be a considerable injustice to the person who took over the lease and worked up the business if the original landlord now says he wants to resume his business. I appreciate that this may be a Committee point, but if we are 2428 not able carefully to define these conditions they may give rise to unfortunate misconceptions.
I am bound to say that the compensation provisions for business premises astonish me. They are extraordinarily trifling. I cannot think that the basis proposed is at all adequate. It would seem to reveal a very different attitude of mind of the Government to paying compensation for business premises and, for example, in the way in which the tenants of domestic premises would have to pay for dilapidation for the benefit of the landlord. I hope we shall get some justification for the formula which has been adopted. I am all for having a simple formula in these matters, but this one seems to involve a payment which is contemptuous.
When we come to the treatment of domestic property the position is not nearly so satisfactory as that which I have been discussing. It is, I suppose, a case of a fundamental difference of principle between the sides of the House. The Government view is expressed in paragraph 8 of the White Paper, where they say as regards the question of what shall be the market value of the landlord's interest:As regards the first question, it would be harsh indeed on the landlord to require him not only to submit to the compulsory acquisition of his property by his lessee, but also to accept a price much less than his interest is worth.If that were the principle on which this House acted when endeavouring to bring in reforms we should have made no progress at all.
To take an extreme case, and I admit it is extreme, supposing this argument had been applied—as indeed it was in another place—when the House was trying to reform the electoral system by removing the rotten boroughs. Take the case of the Duke of Newcastle who owned, I think, six rotten boroughs worth half a million pounds. It was said, "We cannot do anything about this because we shall be harming his financial interests." That is an extreme example, but the clash of principle is indicated by this very sentence which gives a clue to the mind of the Government on the matter and their primary occupation with the interests of the landlord to see that he suffers not at all or very little. Compare this with 2429 the philosophy expressed by the two hon. Gentlemen on this side of the House who signed the Minority Report.
§ Sir D. Maxwell Fyfe
The two hon. Members agree that the landlord should receive the market value of his interest.
§ Sir L. Ungoed-Thomas
I do not wish to continue a Committee argument across the Floor of the House, but it is most important from our point of view that the distinction in compensation provisions outlined in the White Paper and the compensation provisions in the Minority Report should be thoroughly understood. As I emphasised in my speech, there are big and substantial differences between us on that issue.
§ Mr. Skeffington
As I was saying I think it is a matter of emphasis. But the fundamental principle on which the Minority Report is based was contained in a statement on page 126, where the signatories say:But the conclusions of the Majority Report are based on fundamental tenets of the rights of landlords which we do not share. On the contrary, we consider that nowadays, in general, the landlord's interest is an investment or financial interest whereas the tenant's interest is for use and occupation ….They go on to say:In our view, the time has come to recognise that, in general, tenants have a more special and specific interest in their homes and business premises than their landlords and to express this interest in terms of legal rights.That is what those of us on this side of the House would like to have seen instead of the proposal to turn, at the end of a term of years, the occupying lessee into a statutory tenant.
I think this has some advantages. It would certainly be churlish to deny that this is not some improvement. But I do not think the proposal is worthy of the praise with which it has been received in some parts of the House. Taken over the whole period of the lease, the new statutory tenant is in one case very much worse off than he was before. If he is subject, as I imagine he will be, to the ordinary conditions of the Landlord and Tenant Acts, he will be allowed only one change of tenancy. In the old days, if the leaseholder died, the wife would have the property; then it went on to the children, and there was a home which was at least fairly permanent. If we were going to make what is after all a 2430 very big change in the whole system of leasehold law, I think it a great pity that the Government did not have the courage to go a little further than they have done.
Regarding dilapidations, it seems to me that the proposed onus upon the tenant is still very heavy and unfair. We were told by the Home Secretary that the degree of repairs would not be that required to put a house into perfect condition, but I hope we shall get more indication about what degree of repairs will be required. Certainly the schedules now being served are excessively severe on the tenant. It so happens that I have an example of a case that came in today from Cogan in Penarth. It relates to a covenant made in January, 1864, between the right hon. Baroness Windsor on the first part and Charles Pearson on the second part. The schedule as now served runs into 33 paragraphs. It includes gas fittings.Thoroughly overhauled system of gas lighting and leave the same together with all fittings in sound and working order.When the premises were erected there was no gas in the place at all. It is the same with regard to the drains. The house had no drain originally, but the repair schedule states:Test, flush and cleanse all drains, gullies and inspection chambers, making good all defects found thereby.The final paragraph states:Well and substantially repair the premises with all erections and improvements thereto since its erection and note that the completion of the schedule does not excuse the execution of other work if found necessary.This kind of schedule is much too harsh. The poorer occupying lessee will be financially unable to carry out even what is requested. The hon. and learned Member for Kensington, South (Sir P. Spens) made the point that many of these repairs have accumulated because the work was not done during the war and the dilapidations are often not the fault of the tenant. If he is forced to repair to a very high standard, the financial burden is so great that this new scheme may become unworkable.
One other thing about restrictive covenants. If one examines the matter dispassionately I am sure it will be agreed that in considering the erection and use of residential property, it is not unnatural that there should be some conditions laid down as to what ought to transpire to safeguard other occupiers or 2431 the neighbourhood. Surely, however, in the 20th century, if it is necessary for certain sanctions to be maintained in order that the common good of the district may be considered, this ought to be done by the local authority or Parliament and not as a result of a bargain between private individuals?
We have had some examples today of how covenants can be unfair and may go almost to the root of freedom. I want to give an example of a case which came before the Paddington Rent Tribunal about two years ago. I shall not give the names of the individuals, but they can be seen in the records of that Rent Tribunal. The cutting I have in my hand states that it is the case ofa young waitress—described as a perfectly respectable girl, a good woman, an ideal tenant … Miss N. E., aged 29, has lived for over 10 years in a basement room in Lanark Road, Paddington. She has always paid her 14s. a week rent regularly, lived quietly, was on the best of terms with her landlady.The landlady had given her notice to quit but not because she wanted to, so she told the Paddington Rent Tribunal, but because she had in fact been instructed to do so.The landlady, Mrs. E. D., of Clarendon Gardens, Paddington, told the tribunal that she and Miss E. had always been good friends. She had nothing whatever against her. Mrs. D. held the house on an old building lease—granted in 1854—which had fallen in. Paddington Trustees Estate made it a condition of renewal that Miss E. must go.The chairman said:'So, to please them, a perfectly good woman is to be considered undesirable, and we are faced with the fact that if we give her the protection of the Rents Act we deprive the landlady of her lease.'The representative of the estate company said:'I don't want to put a pistol to the head of this tribunal. But if you give security to this tenant, we can evict our lessee. …'So two serious things happened. First, an individual woman, who had nothing whatever to do with the parties to the contract could be turned out and, on going to the tribunal for protection, if protection were given to her, her landlady would be breaking one of the new conditions which the estate company wished to impose. As I have said, I should have thought that today such matters ought not to be the subject of 2432 bargains between individuals but ought to be left to public authority.
However, we must be grateful for what advances have been made. With regard to business premises, they are considerable and I, personally, am very grateful. With regard to domestic property I think the advances are timid and weighted in favour of the landlord. I had hoped that the Government would take the opportunity of sweeping away this remnant of feudal law and would act up to a slogan about which we heard a good deal a few years ago, of making a property-owning democracy.
§ 8.5 p.m.
§ Sir Austin Hudson (Lewisham, North)
This debate has shown that on all sides of the House we are in favour of a reform of the leasehold system. I shall speak about residential tenants and not business tenants, because in that part of London which I represent I have not had a single complaint from a business tenant but I have had a number from residential tenants. That part of South London is well known to the hon. Member for Hayes and Harlington (Mr. Skeffington), who represented a neighbouring constituency for some time.
Why we have there these long leases I do not know. It is certainly not due to a monopoly. It is certainly not because 100 years ago land was so scarce there that it was bought up and the people had to take these long-term leases, because at that time it must have been almost country. There were no big businesses there, so I can only assume that these long building leases were concluded because they represented a bargain convenient to both sides.
In a place like Lewisham, with 11,000 people on the waiting list, it is a major disaster to lose one's home. It sometimes happens that as a result of county court cases the person is evicted and one hears of very sad cases indeed. Because of that, I was anxious that we should do something to give security of tenure. That is the tenants' first grievance. Their second is that in many cases they cannot afford dilapidations. All this property of which I am speaking is small. Some of the tenants are the direct descendants of the original leaseholders, but many are not. The lease has been bought within the last 100 years. From what I 2433 can see, many of them have come down in the world, and I would say the same thing about the property. It is certainly not the same type of property as when it was originally constructed 100 years ago.
The person who took the original building lease of one of these small houses no doubt thought that, with a ground rent of £5, sufficient could be saved up to pay for the dilapidations. Indeed, that would have been so with prices ruling at that time but, as so many speakers today have shown, the position is now very different. There is an accumulation of repairs waiting to be done and the price of building work is three, four or even more times what it was 100 years ago. So we have the problem of a poor class of tenant, the problem of how to prevent eviction and the problem of how to prevent the payment of excessive dilapidations. An example of that has been given by the previous speaker of gas having been put in afterwards and then having had to be brought up to date. I have had similar cases brought to me.
As regards dilapidations, as I see it the tenant has the protection of the Leasehold Property Repairs Act, 1938. He can go to the county court if necessary, and the county court can decide what repairs are necessary and what are excessive. Yet I have found that very few people in my constituency seem to know of that Act, and few seem to work under it. Under the White Paper this provision will remain, and the suggestion is made that the tenant can spread over the payments for his reasonable dilapidations, the original payment being made by the landlord.
As regards the fear of eviction, he now has the right to stay on as the statutory tenant paying, as I see it from the White Paper, an ordinary rent-controlled rack rent. We have now had some discussion about it, and perhaps it will be difficult to phrase it when the Bill comes before the House, but I presume that the rent which the tenant will pay will be the same as that paid for equivalent property by a rent controlled tenant. That has been done before when certain leases have been brought under rent control. If it cannot be agreed between the tenant and the landlord, the county court judge will fix a rent equivalent to the controlled rent for an equivalent property in the 2434 street. I assume from the White Paper that that is what is in the mind of the Government.
Leasehold enfranchisement is not a subject on which I have any preconceived views, but I find that my local leaseholders' association appear to want something quite different from that which is envisaged in the Minority Report. They appear to want 25 years' purchase which, with a £5 ground rent, would represent £125 — I heard the other day of a £1 ground rent, which would represent £25, but I do not think we have anything like that in London—or 999 years' lease at the existing ground rent and no dilapidations.
I always tell the leaseholders that I do not believe that there is anybody in the House of Commons who would be prepared to stand for that. The Minority Report—I do not want to be unfair; I believe this to be correct—suggested the fair market value of the reversion, with the sitting tenant protected by the Rent Restriction Acts, which seems to be fair. There are various arguments in the minority Report leading up to that.
I had hoped that we might hear today from the party opposite their ideas about fair leasehold enfranchisement. The phrase is used frequently but when we come down to detail we find that everybody has a different idea about it. I find that the people in my constituency want security of tenure, but the majority of them are so needy that they cannot pay the dilapidations and, therefore, they cannot pay a fair market value for the property. I feel that their desire for security is fulfilled in the White Paper proposal. They are to be made into rack rent tenants.
I have no objection on principle to leasehold enfranchisement—I want as many people as possible to live in their own houses—but, having read the Leasehold Report and White Paper, I have come to the conclusion that the system is almost unworkable. What is more, Parliament seems to have given up the idea too, because I see in the Leasehold Committee's Report that there have been no fewer than 18 Bills on the subject in the House since 1884 and not one has ever got through.
§ Sir A. Hudson
A number of people. After all, as many hon. Members have said, the Labour Party have not been enthusiastic about this until recently. The first we saw of their scheme was their General Election manifesto, and even now we do not know what the detailed scheme is. In the old days there were Liberal Parliaments with very big majorities who confessed themselves in favour of leasehold enfranchisement but whenever they came to work out the details the Bills were dropped because they were found to be unworkable. We shall no doubt discuss this matter much further when the Bill comes before the House. In the meantime, it is interesting that over a very long time Parliament has had this matter before it but has never succeeded in passing a Bill to bring in leasehold enfranchisement.
I am not entirely happy about the position now. The schedules of dilapidations referred to by the hon. Member for Hayes and Harlington seemed to be sent in two or three years or even more before the end of the lease, there being the possibility of eviction if the dilapidations were not carried out three or four years before the lease came to an end. Whether that sort of thing is covered by the two standstill Bills I am not sure— I do not think it is—and I hope that my right hon. and learned Friend will look into the matter.
I thank my right hon. and learned Friend for the trouble that he has taken in this matter. Comparatively few constituencies are vitally affected by long leases falling in. Those of us on both sides of the House—certainly on this side —who have been worried have written to him while he has been framing these ideas and cited cases in our constituencies. I have had nothing but courtesy from him, and long letters explaining the position and telling me how I could help my constituents. I am sure that that has been the experience on both sides of the House, and I pay my tribute to my right hon. and learned Friend for the way in which he has dealt with the matter.
§ 8.17 p.m.
§ Mr. Barnett Janner (Leicester, North-West)
The tribute paid by the hon. Member for Lewisham, North (Sir A. Hudson) to his right hon. and learned Friend is one which many of us would 2436 heartily support, but the right hon. and learned Gentleman is very experienced at giving the pill a good coating of sugar and our regard for him must not be taken as an admission by anyone, least of all by me, that we are prepared to swallow all that he provides for us.
I do not think that the right hon. and learned Gentleman has yet seen that there is involved here a fundamental principle which can be dealt with in a practical way. The suggestion is made that the morals attached to the problem and the practical side of it conflict with each other. I am sorry that the hon. and learned Member for Carmarthen—
§ Mr. Janner
I am sorry; I meant the hon. and learned Member for Cardigan (Mr. Bowen). Both those constituencies know, as the hon. and learned Gentleman should know, that the former great leader of his party issued a book which dealt with this very problem. The hon. and learned Member will be interested to hear what he ought to be preaching tonight. The book says:Leasehold enfranchisements for dwelling houses. Subject to certain restrictions in the public interest"—which, I believe, means the proviso we have been trying to introduce. Someone has complained about local authorities' houses being exempted. I continue to quote—the leaseholders of dwelling houses shall have a right of compulsory enfranchisement on application to the Leaseholds Tribunal. It will be the duty of the Tribunal to make an Order for the sale by the landlord to the tenant of his interest in the property if the conditions were satisfied.What are the conditions? They are:(a) That enfranchisement of the property would not conflict with public interest or with the intentions of public authorities regarding the use of the land affected, (b) That the tenant owns the building lease of the premises, or alternatively a lease for a total term of not less than twenty-one years, (c) That the property in question is wholly or primarily residential, and is occupied by the lessee who seeks to enfranchise it, or has formerly been occupied by him and is at present tenanted by some member of his family or by a subtenant on a short-term agreement.Those words were used many years ago by the party of which the hon. and learned Member is a member and apparently to whose objects and objectives he still subscribes.
2437 Leasehold enfranchisement is, in the view of many people on both sides of the House, highly desirable. I do not want to repeat what has already been said except perhaps for the purpose of emphasising one or two points. We have heard of the origin of the practice of granting building leases. In London, we were told a few minutes ago, there was an area which was not worth very much. People took building leases and put up their houses in those fields; and that was that. The fact of the matter was that the actual ground rent charged in London, as elsewhere, was, if anything, more than the annual value of the land at that time. There is no question about that.
My hon. Friends from Wales have talked about this matter. I know the situation there very well indeed because I have practised in Cardiff, I know Cardiff and the district surrounding Cardiff very well. When my hon. Friends talk about these matters they refer to the real moral fundamental basis of the whole position quite clearly. What happened then? People occupied a certain area on the coast to which coal had to be brought. This was a distance away from the coalfields. An area was chosen to build a dock, for example. Somebody decided to build the dock there because it was convenient to transport coal there so that it could be shipped elsewhere. Before that the site was just a beach, a piece of coastal land which had no value except for some agricultural purpose, and sometimes it was not even useful for that.
Suddenly this and the adjoining land became very valuable. The docks were built. The workers who built the docks had to have somewhere to live nearby, and those who had to work in the dock later had to have an area of land on which to build their houses. Obviously the landlord had a monopoly of the land because the people could not build houses on land 20 or 30 miles away. Even today, with modern transport, it is extremely difficult for people to get to and from work unless they live fairly near to their place of employment; but in those days if they lived at a distance from their work it might even have involved a day's journey to get there and another to get back, with no work done in between.
The result was that lessees were granted building leases with onerous covenants. People were compelled to take these leases, which required them to build, not 2438 according to the design they wanted, because the landlord said that they had to build according to a plan prepared by the landowner himself. The people had to keep the land in order; in most cases for 99 years. They had to keep the houses in full repair and to contribute towards building all the roads, bridges and all the rest of the amenities. They had to build their communal institutions in the district. The land went up in value and the houses went up in value. The ultimate result is that in districts similar to that which the hon. Member for Pembroke (Mr. Donnelly) represents today, most of the leases are falling in almost at the same time. This is not a case of one house or a dozen but of streets, districts and whole areas. I know that very well myself. I have seen these things happen. I have seen the results, which are very serious for the lessees concerned.
Those who give excuses for such conditions say, "Yes, but the person who entered into the lease is dead." That may well be. The original leaseholder certainly should be dead after 99 years. [Laughter.] I do not know. I would not go as far as to say that some may still be alive, but I say that in hundreds and possibly thousands of homes in Wales and other parts of the country direct descendants of these people are still living in the houses which their predecessors built. The hon. and learned Member for Cardigan said that perhaps half the houses are occupied by descendants of those who originally took the leases, and the other half are occupied by people who bought the leases. The trouble is that instead of suggesting legislation making the rule an enfranchisement rule and the exception to provide for those cases where persons bought, the Government are using the exception as the rule and the principle as the exception.
We must consider the matter as a fundamental one from the point of view of the individual who built, and of his descendants, and then, if hon. Members want any exceptions, we must deal with those cases in which the property has changed hands at what may ultimately be a loss to the buyer. There are many of us who certainly would not be prepared to regard leasehold enfranchisement as being a system which imposed upon the lessee a duty or a compulsion 2439 to pay the equivalent of the present market price for the property which was built by those who preceded that lessee and towards which the landlord has not contributed a penny piece.
I am prepared to concede a point. I am prepared to say that perhaps the amount paid for the ground rent originally may not represent the value of that money today. It may well be that one ought to make a certain allowance for that purpose. For example, if a £1 ground rent was bought by the lessee then the equivalent of that today may be £2 or £3. I am prepared to say that if the tenant wishes to purchase the leasehold he should be given an opportunity on, say, a 25-year basis, or something of that sort. I might go just a step further, but we have to be very careful in dealing with this matter as to what amount we propose to allow to the landlord by way of compensation when he has not created the wealth of the place at all.
There may be exceptional cases where people have purchased for investment purposes. It may be that they will have to be dealt with by some exceptions in any Act which is brought into force. But I repeat that this must not be taken as the rule. It would not be a fair or proper thing to do. I could give many examples. It is not only a question of individual houses. In some areas of which I have spoken not thousands or tens of thousands of pounds are involved in the increases in value which would have to be paid to landlords, but literally hundreds of thousands of pounds, even in a small district.
The value of the property built up by the lessees themselves was of such a nature that they have already brought a terrific amount of money into the pockets of landlords, who had done absolutely nothing in that direction.
§ Mr. Janner
That is why I referred to the actual terms of the proposal in the book of the hon. and learned Member's party. Let the hon. and learned Gentleman remember what that book said, because it is his bible. It was mine many years ago, but I do not accept it now, although I have a lot of respect 2440 for some of the suggestions in regard to enfranchisement. The hon. and learned Gentleman should know what is said there, I quoted it word for word. It said:that enfranchisement of the property would not conflict with public interest or with the intentions of public authorities regarding the use of the land affected.That answers the point which the hon and learned Gentleman has made.
I now turn to the question of protection. My hon. Friend the Member for Hayes and Harlington (Mr. Skeffington) made a very important point, when he said that, if we are to give protection to the lessee at the end of his lease by making him a statutory tenant under similar conditions as those which prevail under the Rent Acts, first, we shall be providing that he can be turned out under certain conditions. If we look at the Rent Mortgage Interest Restrictions (Amendment) Act, 1933, which the right hon. and learned Gentleman knows very well, we find that there are certain conditions in which a person can be turned out of his house.
It may be that the landlord wants the property for his own use, or that he may have a servant whom he wants to put in the premises. There are a dozen and one provisions in the Rent Acts and in the appendices to those Acts which would make the tenancy much less secure than it was prior to the termination of the lease. Even worse than that is the position of the lessee's survivors. Supposing on old man has a leasehold house. When the lease expires, he will according to the White Paper become a tenant under the Rent Acts. He may have a wife who is of a similar age to himself; and, after a few years, he may die. His widow's tenancy is protected, but, after a year or two, if she dies, the whole protection goes. These events happen today, and we cannot rely on tenancies under the Rent Acts in the same way as we can rely on tenancies which are protected by means of a lease.
It is a pity that I cannot mention many of the cases which have been brought to my notice. I can say this about one thing upon which the right hon. and learned Gentleman relies, and upon which he intends to rely in this matter, namely the moral aspect that once a person has entered into a contract for a tenancy it is unbreakable—and that is that. I see 2441 the hon. Member for Wimbledon (Mr. Black), who is a great protagonist of this kind of idea, agrees with that, but if so what does he mean by also agreeing with this White Paper? Does he not see that the White Paper will only create new tenancies under the Rent Acts, and that the whole of the Rent Acts are based upon a few sentences in the 1915 Act and the 1920 Act, which latter is now the principal Act, and that the relevant words of those Acts areany agreement to the contrary notwithstanding.The whole of our present system of protection for tenants is based upon the fact that we cannot allow contracts between landlord and tenant to prevail if they are not ethical, and, what is more, the purpose of this White Paper is to bring all these leases within the provisions of those Acts, which have that particular phrase as their fundamental basis. We cannot in those circumstances speak about the inviolability or sanctity of contractual obligations. Nobody can base an argument on tenancy questions upon that kind of formula, because it no longer prevails.
The truth of the matter today is that we are faced with a position even more difficult than that of the short tenancies which were protected under the Rent Acts. Large numbers of people are affected throughout the country. My attention has been drawn to cases in Southport, Deptford, where I was at a meeting last week at which very strong resolutions were passed about this matter, Wales and the Midlands. If we do not give the lessee the right to purchase the land as well as the buildings for a reasonable sum, based upon the ground rent or a little more than that, we shall be doing a wrong to the people who have to purchase the land and pay enormous amounts as a kind of gift to others who have done nothing to build or improve the properties.
I am sorry if I have occupied more time with my speech than I should have, but I should like to spend a long time upon this matter. There are many cases which can be referred to. There are, for example, many things to be said about the other provisions of the White Paper. It is proposed that business and professional premises should have some kind of protection. A professional man's office is as important to him as the shop is to 2442 a business man, and he has to maintain his practice in the area in which the office exists. Very large rents are demanded of professional men for renewal of leases, and in many cases professional people are being turned out.
I hope that the Home Secretary will introduce some kind of provision whereby these cases can be considered otherwise than in open court. It is bad enough for people to have to go to court in domestic cases and open up all their family secrets to the public, but for professional people to have to ask a judge to decide the balance of hardship may mean that professional secrets have to be divulged. I hope that the Home Secretary will give consideration to that point.
I also hope he will reconsider the question of enfranchisement, which is an extremely important and fundamental issue for which people have fought year in and year out. Some of the greatest political leaders in this country have in this region used the slogan "God gave the land to the people." Let the right hon. and learned Gentleman think about that and understand that very many lessees do not realise that the covenants under which they have been labouring for many years really are as onerous as they would be held to be in a court of law.
§ 8.40 p.m.
§ Mr. Cyril W. Black (Wimbledon)
I think that it is within the knowledge of the House that I am by profession a chartered surveyor and that I am interested in the ownership of land, both freehold and leasehold. That is obviously a fact that I ought to disclose before addressing the House on this subject. I hope that the hon. Member for Leicester, North-West (Mr. Janner) will not mind if I do not follow him on the subject of leasehold enfranchisement, because I find myself in very general agreement with the White Paper on that subject. The White Paper states the difficulties in the way of enfranchisement and the objections to the proposals which have been made in a way very much better than I could hope to do, certainly in the course of my short speech this evening.
I want to confine myself to one very limited aspect of the White Paper of which, quite frankly, I am critical; and I want to bring some considerations to 2443 the notice of my right hon. and learned Friend, the Home Secretary, in the hope that on this aspect of the matter his mind is not entirely closed. I refer to the proposal to extend protection in the case of business premises other than shops. I have in mind particularly office premises.
Notwithstanding what has been said by various speakers on this subject, I am very far from convinced that the balance of advantage lies on the side of affording protection in the case of tenancies of professional and office premises. It is not without significance that protection of one kind or another has been extended now for about 35 years to residential premises within the rent or rateable value limits covered by the Rent and Mortgage Interest Restrictions Acts, and there has been a modified system of protection for shops for a period of about 25 years, that protection being embodied in the 1927 Act. But so far as I am aware, with some knowledge of this problem, there has been no general agitation or demand during that period for the extension of protection to tenancies, or for control of rent, in the case of professional and office premises.
§ Mr. Janner
Perhaps the hon. Member will help the House by giving an idea of the difference between rentals for offices 14 years ago and the rentals today. Will the rental today be three or four times as much? It would be interesting to know the hon. Member's views.
§ Mr. Black
It is exceedingly difficult to generalise on a matter of that kind. I am sure that the hon. Member wants to be fair on this subject. Any generalisation could not possibly apply, for instance, in the same degree to old-fashioned office premises as to modern office buildings. In my judgment the present level of rents for office and professional premises has not risen compared with pre-war to a degree more than is sufficient to give effect to the difference between the value of money now and the value of money before the war. If that be the case, as I believe it is, then it seems to me that no real complaint can be made about the generality of rents which are now being charged.
In my judgment, there are very real reasons for differentiating in this matter 2444 between houses and shops, and offices and professional premises. I want to indicate briefly to the House why I think that different considerations apply. In the case of houses the necessity for some kind of protection, both as to rent and security of tenancy, is quite overwhelming because of the scarcity of that type of property that has existed for so many years. It is quite unthinkable that in the conditions which have existed in recent years tenants of houses should be left without protection and at the mercy of landlords. I am quite sure that on that point I am on common ground with hon. Members on both sides of the House.
Shop premises are in a position quite different from that of offices and professional premises, in that the question of goodwill arises to so much greater an extent. With a shop, a man's whole livelihood may be destroyed if he loses the tenancy of the premises. It is not sufficient to say that there may be shops in other nearby streets or in other districts of which he could secure a tenancy, because most retail businesses are dependent for their continuance upon the owner being able to continue the tenancy of the premises from which they are carried on. It was for that reason that this House as long ago as 1927 decided that some measure of protection was required in the case of shops, the argument being briefly that the goodwill of the tenant ought to be safeguarded.
In the case of offices and professional premises, however, that argument does not apply to anything like the same extent. A man who has an office can nearly always carry on his business from some office within a reasonable distance of the office from which he has to remove. His goodwill is not destroyed, because his business is personal to himself rather than being adherent to the premises from which it is carried on. I submit, therefore, that the mere fact that protection is necessary in the case of houses and shops does not of itself constitute a reason for saying that protection is necessary in the case of offices and professional premises.
I want to make four brief submissions on this point in the hope that my right hon. and learned Friend the Secretary of State for the Home Department will have another look at this aspect of the matter to make quite sure that the course 2445 which is recommended in the White Paper is the right one. I have very grave doubts whether it is. My first submission is that the need for this particular control has passed, if it ever existed. I think I would be prepared to concede that five years ago there was a strong case for some temporary security for tenants of offices and professional premises, because five years ago the demand very greatly exceeded the supply, and it was possible then for the landlord to demand an altogether extortionate rent from the tenant under threat that the tenant would lose his tenancy if he did not yield to the extortionate demand.
I feel that a case could then have been made out for some temporary measure of protection being given. But I submit that the disequilibrium between supply and demand has very largely, if not completely, passed. There is no great scarcity of office and professional premises today. The level of rents has already fallen appreciably compared with five years ago. I can assure hon. Members that any members of the public who wish to acquire office or professional premises today, in London or in most other parts of the country, are not in any great difficulty in securing suitable premises at reasonable rents. My first submission, therefore, is that if a case ever existed for this particular control that case has now passed, with the passing of the worst of the scarcity.
My second submission is that the proposal to extend control to something that has never been controlled before in the history of this country is contrary to the whole trend of the legislation which the present Government are undertaking. At the present time we are witnessing progressive measures of de-control—the taking off, one by one, of controls which were considered necessary during the war period and in the abnormal conditions which existed for a few years after the war but which we now realise are no longer required in the public interest. A very strong case must be made out if justification is to be found for this proposal.
The third point I would make—and I make it in no party sense—is that Members of the party opposite, according to their philosophy, are much greater believers in control than are Members who sit on this side of the House. It is significant that in a period when the scarcity of office and professional premises was 2446 greater than it is today the party opposite did not consider it a matter of importance to impose controls. Surely it would be an extraordinary thing, now that the scarcity has largely passed and any case that ever existed for control has passed with it, that this particular type of property should for the first time be brought under control by a Conservative Government.
My fourth point is that I do not feel that it is conclusive to pray in aid in support of this proposal the fact that the Leasehold Committee came to the conclusion that the control of offices and professional premises was justified. The Leasehold Committee sat several years ago; the evidence they took and on which they reached their conclusions was taken during a period of shortage, and it is by no means certain that if evidence were taken again, in the different conditions which prevail today, a body such as the Leasehold Committee would come to a similar conclusion.
There are very strong reasons against bringing this particular type of premises within the ambit of control. The balance of advantage seems to be the other way.
§ Sir L. Ungoed-Thomas
In their recommendation in relation to business premises the Leasehold Committee recommended permanent legislation, and they had perfectly well in mind what the future development was likely to be. The suggestion that they might now make a different proposal therefore has no foundation.
§ Sir L. Ungoed-Thomas indicated dissent.
§ Mr. Bowen
I think in fairness to the hon. and learned Gentleman, the Interim Report relating to business premises was based on complete agreement about the scarcity of premises. The recommendations in the final Report were not based on any such idea of scarcity but on the situation which was envisaged would operate in the future.
§ Mr. Black
If the view of the Leasehold Committee was that there should be control where no scarcity existed, because that is the case that is now being put forward, all I can say is that it seems to me to be very difficult to justify a permanent state of control even when the situation is such that no scarcity exists. Surely the whole basis of the need for control is scarcity, which confers an unfair bargaining power upon the landlord as against the tenant. When that scarcity has passed surely one can leave the ordinary power of bargaining between the parties and where there is equilibrium between supply and demand it operates fairly and well.
§ Mr. John Hay (Henley)
My hon. Friend will probably remember that the Interim Report of the Leasehold Committee contained two Minority Reports by two very distinguished professional men, both of whom strongly supported not only the case being put forward by my hon. Friend for office premises but for business premises, because they envisaged that the scarcity situation would very soon come to an end.
§ Mr. Black
Yes, but I do not go as far as that, because in my view there is a strong case for protection for shops even when there is no scarcity because of the factor of goodwill, to which I have referred, and which may be destroyed even if the tenant of the shop can secure another shop not very far away. But that seems to me to be a special case and the circumstances do not apply with any strength in the case of offices and professional premises.
2448 The last submission I wish to make is this—that at a time when we are seeking to get rid of old controls rather than to impose new ones, surely the onus or proof must be on those who wish to establish new controls, and that onus cannot rest primarily upon those who resist the controls. I would have thought that in present circumstances the onus of proof that there is any necessity for control in present conditions for office and professional buildings was one that it would be very difficult indeed to support. I hope this particular matter can be looked at again in view of the circumstances of today which are very different from the circumstances of a few years ago.
§ 8.59 p.m.
§ Mr. James MacColl (Widnes)
I am sure the Home Secretary enjoyed listening to his master's voice, and we shall all wait with very great interest for the Bill to come out to find out what influence the hon. Member for Wimbledon (Mr. Black) has had on the policy of the right hon. and learned Gentleman in that direction. I ought to begin by declaring an interest in that I occupy a house under a lease, and I live in a borough which has already been quoted this evening, and which I suppose has suffered more from bad estate management than I think any part of the country. I say that by way of defence, because what I want to say is not going to be very popular among my hon. Friends. It is never nice to be in a minority even if one is being orthodox.
The hon. and learned Gentleman the Member for Cardigan (Mr. Bowen) was perfectly right, of course, in saying that the enthusiasm of the Labour Party for leasehold enfranchisement was a new thing. It is not in any sense an orthodox Socialist doctrine, and I am inclined myself to think that the 19th Century comment quoted in the Majority Report is much nearer to the point when the advocates say:Enfranchisement would give small proprietors an interest in maintaining and improving their holdings, would encourage in them a sense of domestic and civic responsibility, and would remove a powerful stimulus to Socialism and conditions likely to bring about revolutions.I do not want to get involved in an argument about the pros and cons of leasehold enfranchisement and the advantage of leasehold as a method of estate 2449 management. I am all in favour of expropriating extortionate landlords, and I quite appreciate that in certain parts of the country there is a need to do something, and to do something pretty drastically, in the situation mentioned by the Father of the House my right hon. Friend the Member for Gower (Mr. Grenfell).
I do not want to go on from that, however, to condemn the whole idea of leasehold as a form of estate management. I think it has got a part, and a very important part, to play, and I am fortified in that view by the comments of the Minority Report itself, because referring in paragraph 56 to the Bournville Village Trust, it says:There is here no exploitation of a monopoly position or divorce between social function and ownership. If this practice were general there would be very little Leasehold Enfranchisement problem.The weakness of leasehold enfranchisement as a universal panacea for this problem—and I am not denying that it may have a part to play—is that it would break up estates which in many cases are well managed. There are many cases, as many of us know to our cost, where they are not well managed, but, nevertheless, they are units which, when they are not being worked properly, can be much better taken over into public ownership than if they were split up into many more smaller units which might present very considerable difficulties of redevelopment, and in many cases might be in the hands of owners without the capital or other resources to keep them under adequate supervision.
The whole trouble in this debate so far on both sides of the House, has been that people have looked at this problem as primarily a contractual problem, a problem of holding the balance evenly between two contracting parties, the landlord and the tenant. I think that that is the wrong point of view from which to look at it. The point of view that I take, I think, is the fundamental Socialist point of view. The important thing is that property, whoever happens to own it, whoever happens to occupy it, is a national asset, a community asset. The important question is to find out what is the best way of managing the property to make sure that the national asset is managed and improved adequately.
I think it was that background of thought that made the Webbs in "Socialism True and False" say: 2450Fabianism has no desire to see the Duke of Bedford replaced by 500 little dukes of Bedford under the guise of enfranchised leaseholders, but prefers to assert the claim of the whole community to the land.That is, I think, the good, sound approach to this problem, and it is along that approach that I turn to examine the proposals in the Report and the proposals in the White Paper.
Seldom, it seems to me, can a body of people have laboured so prodigiously and produced so little as the signatories of the Majority Report. They faced up with amazing courage to a number of difficult problems, and in every case they walked round them. They have produced a nerveless and timid document, and what little virility there was in it has been emasculated by the White Paper. The seriousness of that situation is that those who do think there is a case for leasehold are finding the case taken away altogether because no attempt is to be made to meet the evils, the abuses of leasehold, and to make it into a socially responsible system of estate management. The real people who will destroy leasehold control are not my hon. Friends who signed the Minority Report but the Home Secretary and his right hon. Friends who have produced the White Paper.
I want to make three points where, I think, there are obvious evils that have got to be tackled, which we know the White Paper makes no attempt to tackle. The first is the question of repairs. I should have thought it was obvious that the most important thing is to see that a house is kept in good repair. To allow it to get out of repair has a cumulatively bad effect. I have always felt that although from, as it were, a sentimental point of view we very often feel that we want to stop the enforcing of repairing covenants, from the point of view of keeping the asset in a good condition we want to enforce repairs, and enforce them quickly. That, of course, is what does not happen under the leasehold system.
What happens under the leasehold system is that the leaseholder, the owner, or the freeholder, does not make any attempt to enforce the covenants. He allows the place to get more and more out of repair, so that at the end of the term he can present one of those gigantic schedules of dilapidations, which have already been alluded to by my hon. Friend the Member for Hayes and Harlington (Mr. 2451 Skeffington), and he uses that as a document with which to terrorise the tenant and get a cash settlement out of him, which very often never gets put into the house at all. It is really a form of blackmail which does the house no good and merely fills the pockets of the freeholder.
Anybody who takes over leasehold property is in the position of never knowing what his responsibilities are, of never knowing what he will be expected to do, and particularly whether what he wants to do will eventually satisfy the lease. Therefore the suggestion has been made —and it was put to the Jenkins Committee—that the incoming assignee of a lease ought to have the right to have as it were an account stated, that at that particular moment so much work ought to have been done by the outgoing tenants or the outgoing lessees, and from that time onwards the incoming person is only responsible for disrepairs which happen after his occupation of the house. In other words, covenants to repair ought either to be enforced or to be abandoned. They ought not to be kept as a weapon of blackmail. That seems to me eminently reasonable.
This was considered by the Majority Report in Paragraph 250. Of course, they ran away from it, as one would have expected; and they ran away from it for the most remarkable reason, because they said:The practical result would be that the landlord would have to ensure, by action against each successive owner of the term, the performance of the repairing covenants down to the date of each assignment,which, of course, is precisely the value of what we want to do—to insist upon the landlord seeing that the property is kept in repair. That is the only justification for having a landlord at all. I suggest there is one point to which the White Paper ought to look.
Another point that ought to be tackled is the proposal—which I think it a very good one, and which could be extended far beyond this field—of having attached to every house a compulsory repair fund. We make local authorities pay money into a repair fund for their houses, recognising that a house is a wasting asset. Precisely the same thing ought to apply to houses in private ownership; and particularly should it apply to leasehold 2452 houses, which it is important to have maintained. On the question of improvements—and here the hon. and learned Member for Cardigan (Mr. Bowen) did cross swords with the Government—the Majority Report did timidly make a recommendation. That was one of the few recommendations in this field which they did make. They suggested applying the provisions of the 1927 Landlord and Tenant Act to residential property.
That would mean that where improvements had been done with the landlord's permission, the compensation would be given to the lessee if they added to the letting value, if they were suitable to the character of the house and if they did not diminish the value of the property. I should have thought that these qualifications were restrictive enough in all conscience. Personally, I think they ought to be extended. I think that it is important that the consent of the landlord should not be withheld unreasonably —but this particular suggestion was too much for the Government.
At that particular point the Committee seemed to have got out of hand, and they actually made a recommendation which embarrassed the Government into thinking that they ought to do something about this problem, but on page 15 of the White Paper they disposed of it by saying that there was no point in compensating the tenant because he made the improvements for his own artistic delight and not with a view to getting monetary compensation.
The fallaciousness of that argument is that the improvements are not done. There is no incentive to the lessee to make any improvements in the house during the last 10 or 20 years of tenure because there is no guarantee that he is going to get any compensation for them at all and he is increasing the value of something which he has to surrender.
That is a point upon which it is possible for the Government in their legislation to do something to give an increased incentive for improving property. One would have thought that if the Government were serious in trying to preserve these homes that would be something they would try to do. It is better from the point of view of the community that the tenant should do too much to his property than too little. 2453 The whole effect of the present situation is that he does too little.
My final point is concerned with the problem of the multiplicity of interests in leasehold. Where there is a personal relationship between a lessee and a landlord two people have some interest in what is happening to the property. I think that in many cases, although not in all, as I readily concede, we get in that way a very workable system which does keep the property in repair. But what in fact we get in so many instances is a whole pyramid of interests in between. We get the freeholder, then in some cases a person with a 2,000 year lease; then a 99 years' lease on that and a few mortgagees thrown in, just to help matters. Thus there are a number of people acting as a sort of cushion, utterly irresponsible, with no real interest in the property at all and with merely a reversion perhaps of three days left.
Under the Housing Act it is possible for the freeholder to secure an intervening interest in certain cases, but only in narrow cases dealing with danger to health and similar situations. The proposal put up to the Committee was that these powers under the Housing Act should be extended in order to increase the power of the freeholder to buy up the intervening interest so that responsibility could be put on him.
I should have thought that was a reasonable and practicable suggestion. But it was too much for the signatories of the Majority Report. Unable to make up their minds about it, they left it in the air. That is another matter which we ask the Government to consider between now and their legislation on which they can make a very practicable contribution. My hon. Friends who signed the Minority Report, for reasons which I do not altogether share, but I think the idea an extremely good one, suggested that the lessee should also have similar powers of buying intervening interests up the pyramid in order that if the landlord would not take over these various dummies in between, at any rate, the lessee could do it. There is something else which I think eminently practical and should be done.
The issue is very simple. There are enormous disadvantages and an enormous number of abuses in the leasehold system. Some of my hon. Friends appear 2454 to have an emotional fixation about the discarded Liberal Party policy of enfranchisement. I am not saying they are entirely wrong to consider it, but they are exaggerating its importance and forgetting their fundamental Socialist approach to this problem. I wish they would devote more time and more thought to the problem of how to get rid of abuses in leasehold in order to make it a more effective, a more socially responsible and more flexible instrument of estate management. That is the function of hon. Members on this side of the House.
I say to hon. Gentlemen opposite that if they really believe in private ownership of property and the social function of the landlord; if they really believe in the historic function of leasehold, for goodness sake let them have the courage to face up to these evils and difficulties and do something a little less emasculated than is contained in this White Paper. Let them produce something to satisfy public opinion that leasehold is not unjust and unfair, and so take the wind out of the sails of some of us on this side of the House. If they do that they may save leasehold. But if they carry out the ineffective provisions of the White Paper, I am quite sure that we shall see universal leasehold enfranchisement; and I shall support it because I shall feel that leasehold has lost its value.
§ 9.16 p.m.
§ Mr. Robert Jenkins (Dulwich)
There were two phrases in the speech of the hon. Member for Widnes (Mr. MacColl) which no doubt commended themselves to the House. He said that no improvement was made to property by the leaseholder at the fag-end of a lease because he had no security of tenure, and therefore the property was allowed to deteriorate. Good housing was not maintained as it would have been if there had been a longer lease. The hon. Member also said that it is better for a tenant to do too much in repairs than too little.
The leaseholders of this country will welcome the Bill and the White Paper. I represent a London division, and among my constituents are a large number of leaseholders. Most of them are under the control of the Dulwich College Estates, who, I believe, obtained a good reputation as ground landlords when they gave evidence before the Leasehold Com- 2455 mittee. The leases of these people in my constituency are gradually coming to an end, and there are people in other parts of the country who are in a similar position. The White Paper states there will be security of tenure for residential tenants. I suggest that the Government should consider inserting a Clause which will insist upon freeholders extending a tenancy on proper terms.
I can give an instance of a man who has had a property under the Estates Governors of Dulwich for the last 50 years, and there are four or five years of his lease to go. It is a good property, well maintained. If he could get an extension of another 40 years on suitable terms, either by way of premium or increased rent or by some other formula, it would give this man, as well as thousands of other people throughout the country, a definite incentive to maintain the property during the last few years of, say, a 99 years' lease.
At the same time it would maintain the leasehold system and would certainly improve it. In the White Paper the Government have only intimated that they will give security of tenure, and those whose leases fall in will be given the privilege of still living in the premises but they will have to pay a rack rent without having any further financial interest. Before the Bill is produced I ask the Minister to give consideration to those who have bought leases, either a short period before the termination or a long time ago, in order to see what can be done.
I am aware of the administrative difficulties of inserting such a Clause to ensure what I have attempted to put before the House as being just and equitable. Nevertheless, I suggest that for a large number of people owning leaseholds for which they have paid substantial sums in the past, it would be generous on the part of the Government if they can find a way of enforcing on the freeholder an obligation to extend, where appropriate, a lease which is reaching its termination.
§ Mr. Jenkins
The hon. Member for Oldham, West (Mr. Hale) asks whether it should be a rack rent or a ground rent. I did not propose to go into details, but 2456 I would like to do so now in order to inform the House what is in my mind and in the minds of a large number of my constituents. It would be perfectly proper and simple to have, perhaps, ground rent increasing from £5-£10, with a sum by way of premium which would go back to the Dulwich College Estates for their investments for charitable purposes, and the Government would, at the same time, extend the lease for 40, 50 or perhaps 60 years.
That was what was in my mind; the details can be worked out. If tonight the Minister could say that this point would be taken into consideration, I am certain that it would help hundreds of people to maintain the property in a state of good repair during the fag-end of the lease because of the certain knowledge that they would get an extension. In congratulating and thanking the Government for this Bill and the White Paper, I suggest that consideration of the point I have raised would be of great assistance and comfort to large numbers of leaseholders at the present moment.
§ 9.24 p.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
I agree with many of the points made in an excellent speech by the hon. Member for Widnes (Mr. MacColl). One of the dreadful things is that in the Majority Report, even in the Minority Report, and certainly in this White Paper, we have run away from dealing with one of the most important questions, namely, repairs. Apart from any question of leasehold enfranchisement, or anything akin to that, there are many cases where there are dreadful results from the schedules of dilapidations served upon tenants. One of the first tasks ought to have been to find a remedy to this problem of dilapidations. I hope that in connection with any Bill put forward the most earnest consideration will be given to that matter.
With regard to leasehold enfranchisement, the difficulty is that the Government have run away from the recognition of the importance of the moral claim. It is all very well putting forward a great many difficulties and saying, "It is true that there is a moral claim. We believe you are in the right about many of the things that you have said. We know that many people who 2457 have built their houses and have been in them for many years have been unjustly treated and will suffer ruin by being turned out of their houses. We know you have a good moral claim, but the difficulties are so great that we cannot do anything about it." That is not the way to tackle the problem. If there is a moral claim and if justice to the tenant can be achieved only by some form of leasehold enfranchisement secured on certain terms, the difficulties ought to have been faced and some scheme ought to have been evolved to secure such measure of leasehold enfranchisement.
I turn for a moment to the suggestions made in the White Paper in substitution for any form of leasehold enfranchisement. The suggestion is made that security of tenure shall be given by affording protection similar to that given under the Rent Restriction Acts. The Home Secretary said that the amount that a tenant might spend in repairs would be assessed in a lump sum; the landlord would carry out the repairs and then the tenant would be faced with payment of the lump sum. It was not clear whether the tenant would pay the amount as a lump sum or by instalments over a period.
§ The Solicitor-General
The hon. and learned Gentleman will find in the White Paper provision for payments by instalments.
§ Mr. Weitzman
I am much obliged. Whether it be by lump sum or by instalments, a considerable hardship is immediately placed upon the tenant. We have heard that many of the people who are faced with the loss of their property on the termination of their lease are very poor. What will they do when they are faced with the payment by instalments, even over a period, of large sums of money in respect of repairs?
I intervened to ask the Home Secretary what would happen about repairs in the future, and the right hon. and learned Gentleman replied that the burden would be shifted and that the landlord would have the obligation to repair. If the premises come within the Rent Restriction Acts, in spite of the fact that there is a 40 per cent. charge in respect of a so-called obligation to repair, we all know that there is no duty upon the landlord to repair unless expressly 2458 agreed. If there is to be an obligation on the landlord to repair here, it must not be merely said that the tenant is a statutory tenant but a Clause must be inserted to place the obligation to repair clearly on the landlord.
I want to reinforce a criticism already made which is vital in this matter. It is said that the premises will be under the Rent Restriction Acts and that the tenant will have the protection of those statutes. If they are, cases may well arise where the tenants are elderly and may not live for any length of time. Under the provisions of the Rent Restriction Acts, we know that the tenant's wife, who may be of the same age, or another member of his family, may obtain protection. But once that protection has gone, what is the position of the tenant's family? When a person speaks of having a house the ground rent of which has been paid for many years, it is a family home, a home where a family has grown up through many years; and the protection which it is proposed to give the family ceases under the provisions of the Rent Restriction Acts on the death of the tenant or his wife or a member of the family. That would be a very poor protection.
There is another objection which can be made. It is one put forward by an hon. Member opposite. These provisions in the Rent Restriction Acts were brought in as provisions of a temporary nature. One Act has been built upon another Act, every Government putting the hour off and saying that some time or other the day will come when the law will be codified. It is no good hon. Members opposite saying, "Why did not your Government do it?" or, for that matter, this party saying, "Why doesn't the present Government do it?" The fact remains that the provisions in the various Acts are of a temporary nature in the way they have been enacted. Some day they must be codified. Some day something must be done in the field of the law of landlord and tenant to put these provisions on a permanent basis
What are the Government doing? Again, to adopt the words used by my hon. Friend the Member for Widnes, they are running away from the problem by not enacting permanent legislation but by selecting provisions in the Rent Restriction Acts and saying, "We will deal 2459 with this problem not by leasehold enfranchisement but by adopting the temporary provisions of the Rent Restriction Acts and putting this case under the protection of the statute." That is a wrong way of dealing with the matter. It ought to be dealt upon the basis of permanent legislation. Indeed, the whole question of the Rent Restriction Acts ought to be dealth with. This branch of the law ought to be re-examined and put upon a sound and permanent basis.
I wish to say a few words about business premises. This is one of the most important subjects dealt with in the White Paper. Many people have suffered in connection with business premises. Many people have built up businesses and, after a number of years, have been turned out of their premises and entirely lost the goodwill they have built up. It is true that we have the Acts of 1927 and 1951. We know that the 1927 Act, in the way it dealt with the matter, was inadequate. I am glad to see that the suggestion is made that provision ought to be made to give relief to cases where premises are occupied by professional persons. I strongly disagree with the view put from the other side of the House against that view.
A considerable case can be made showing that solicitors, auctioneers, estate agents, dentists, surveyors and indeed many professional people, who are in premises in which they have built up their practices, ought to have security of their tenure. I am glad to see that the Government have seen the light in regard to that provision.
We know the difficulties which have arisen under the 1927 Act about the definition of the word "goodwill." I am also pleased to see reference made to the qualifying period of five years. It is right that where we have a tenant of business premises who has built up a business there, he ought to have the right at the end of his lease to acquire the premises in preference to anyone else. But it is said in the White Paper that that ought to be subject to the right of the landlord, so that when the landlord requires the premises for his own purposes or for a scheme of redevelopment the tenant does not have that right but merely a right to compensation.
2460 I would agree that there are many cases where the landlord ought to have the right to obtain possesion of the premises for his own business, but I am sure that many hon. Members have come across a difficulty which arises where, as the 1927 and 1951 Acts stand today, rights are given to the landlord on this point. The danger as far as the tenant is concerned is that, very often, a landlord has only to go to the court and say, "I want these premises for my own use." and the tenant loses his rights. It may well be that there are cases where a landlord does not need the premises at all, but is merely putting forward a claim in order to obtain possession.
I think there ought to be some provision in the Bill to protect a tenant against that contingency, possibly saying that it should be left to the county court judge to decide whether the landlord has made out a case that he reasonably requires the premises for himself. Alternatively, when we get the case in which a landlord has succeeded in convincing a court that he wants the premises for himself, but where, after a short period, he has let those premises to someone else at an advantageous rent, there should be a right given to the tenant to obtain damages against the landlord.
The final point I desire to make is this. In the instance which I have given, where a landlord desires to obtain the premises for himself, the tenant then has a right to compensation, and the suggestion put forward is that there ought to be a yardstick measuring that compensation. It is that if the tenant has been in occupation for 14 years the amount of the rateable value should be paid and, if more than 14 years, a sum twice the rateable value should be awarded as compensation. I cannot understand how these figures are arrived at. They seem to me to be completely absurd, not only from the point of view of the tenant but also from the point of view of the landlord. Let us suppose that there is no goodwill and that it is not a short tenancy. Is the tenant still to get a sum equal to the rateable value?
§ Mr. Doughty
If the hon. and learned Gentleman will look at the White Paper he will find the words "if any." If there is no loss of goodwill, there is no assessment.
§ Mr. Weitzman
The hon. Gentleman says "Look at the White Paper." It is perfectly true that it deals with contracting out, but I have read it carefully, and I do not think it is quite clear on the point. But whether I am right or wrong, let me take the case where there is some goodwill, but a very small amount of goodwill. In one case, there may be a small amount, in another case there may be a very large amount payable as compensation, but it is still proposed to give one sum, and that an absurd sum, because, if the tenant has lost his goodwill, what is the good of talking about a sum amounting to the rateable value?
I have put forward a number of points to the right hon. and learned Gentleman, who, I know, has said that his mind is not closed and that he is ready to receive suggestions. I hope the matter will be looked at in the light of the criticisms I have made. I think that many of the points in the White Paper are good, while others are not very convincing, but, studied carefully, a great deal more can be done in order to make the Bill when it is produced one of read value.
§ 9.39 p.m.
§ Mr. Desmond Donnelly (Pembroke)
I listened with great interest to the hon. Member for Dulwich (Mr. Robert Jenkins) and the proposals which he put forward a few minutes ago. As I understood it, the question was that, as soon as the leases were ended, the only trouble would be that the rents would have to go up, and that if only something could be done to see that landlords might be compensated for the change in the value of money which might have taken place since the original lease was negotiated, and perhaps some lump sum paid for an extension of the lease, a new kind of incentive to keep property in good order would be effected and a much better system brought into being. I think the hon. Gentleman's proposals will find a measure of support among many of my hon. Friends up to a point.
What the hon. Gentleman was really saying was that the leaseholders were being exploited by the landowners, and he was proposing some kind of reasonable restriction on the rise that takes place in rent. The hon. Gentleman was doing us a great service. I wondered whether he realised the full implication of his remarks. He was seeing 2462 through a glass darkly, but when he comes to read the White Paper he may realise the magnitude of the revolutionary proposals that he was putting forward. Shocking!
I wish to make one small point before coming to the general principle, and I hope that the Home Secretary will take cognisance of it again. That is the question of resale of leasehold houses, where rents have gone up to over two-thirds of the rateable value and the property comes under the protection of the Rent Restriction Acts. Although there may be a long period of the lease still to run, the tenant is precluded from selling the remainder of his lease under a Clause which is in the Landlord and Tenant Act, 1940. I hope that the Home Secretary in drafting the permanent legislation will bear that point in mind because it affects a great many people.
I come to the general problem and the wider issues. In a very disarming speech the Home Secretary said that we ought to consider the situation as it exists today because it was not a moral but a practical issue, to which we had to give a great deal of attention. "Never mind about the past; look at the reality of the present," I think is a fair interpretation of the right hon. and learned Gentleman's case. I am glad that he acquiesces. It is a strange philosophy to put forward, coming from a distinguished lawyer. Many criminals in the dock might say, "Never mind about the past; let us consider only the reality of the present." It is a doubly interesting argument coming from a distinguished Bencher of Gray's Inn, which is taking action against the past activities of one of their members. It is a trebly interesting argument from the Minister for Welsh Affairs.
Knowing the background and the economic history of the Welsh people, many people in Wales say, "Never mind about the past." Hon. Members opposite are confronted with the past only when they come to the realities of the present when they face the electors of their constituencies from time to time There are many landlords who would like to say, "Forget all about the past." I am glad that the Home Secretary has facilitated our argument by acquiescing in the interpretation of his remarks.
2463 My hon. and learned Friend the Member for Leicester, North-East (Sir Ungoed-Thomas) said the Government took refuge in two propositions in dealing with this problem, and the first was the sanctity of contract. My hon. Friend the Member for Pontypool (Mr. West) dealt very well with that point in a very brilliant speech indeed. A far better description of it would not be "sanctity of contract" but "perpetuation of humbug." That is what it boils down to in this respect. My hon. and learned Friend said they then went on to talk about the practical issue. There are difficulties involved, said the Home Secretary. Really he was caught in the bog of legal bureaucracy. If he will only look at the Minority Report he will see the references that were made to the Places of Worship (Enfranchisement) Act, 1920, which sets out in clear terms how this object could be effected without any great difficulty. I bring that point to the notice of those who are interested in the problem. The Minority Report has served a very useful purpose indeed.
My personal friend and neighbour the hon. and learned Member for Cardigan (Mr. Bowen) and the hon. and learned Member for Kensington, South (Sir P. Spens) said that a great deal of this controversy arose out of the scarcity of houses. I do not think that this is so much a case of scarcity of houses; it is scarcity of land. Land which is a diminishing limited monopoly will always give rise to this problem. I represent the town of Pembroke Dock and, as the hon. and learned Member for Cardigan knows only too well, that town is one of the classic examples of the leasehold problem. The whole town was leased by Brigadier-General Sir Frederick Charlton Meyrick to the people, and today his successor, Sir Thomas Meyrick, still owns the estate and still leases the houses to many of the descendants of those who originally built them.
A good many of the leases are falling in today and many serious problems are being created. The other day a man stopped me in the street and said that his lease at 2 a year for 60 years had fallen in and he was being asked to pay in future 45 a year for the same house. That is the kind of problem which is being created in that area. This is a town 2464 which was built where land is limited and where people have to live near their work. Therefore, the real problem involved is the scarcity of land for building near the places of employment.
Two main issues are involved in the case of dwelling houses. One is security of tenure and the other the question of leasehold enfranchisement. I entirely agree with those of my hon. Friends who say that the terms of the White Paper for dealing with new rents for houses protected by the Rent Restriction Acts leave the matter far too wide open and the whole question too vague. We must recognise that the important thing is the period during which the Rent Restriction Acts are to be deemed to have been applied in respect of these properties. When new rents are fixed it is important that they should be fixed at a level which assumes that the Rent Restriction Acts have always been applied to these premises. In other words, it must be on the basis of the pre-1914 level.
The Government are doing something quite different, and in my view they are giving the landlords a far bigger present than would be the case if these properties had been protected by the Rent Restriction Acts before the 1914 war. We are dealing almost exclusively in these cases with property built before the 1914 war, so we should assume that the Rent Restriction Acts were applied then; otherwise very severe hardship will be entailed, and there will be a good deal of public agitation against the Home Secretary, certainly in Wales, if it is discovered that what he has done is to provide at the end of 1954 a new kind of Christmas box for landlords in Wales.
The next point is leasehold enfranchisement. The hon. and learned Member for Cardigan spent a great deal of his speech in trying to explain how he came to sign the Majority Report. I felt that he was to some extent inhibited by his action in signing that Report. But we have a great deal of sympathy with the hon. and learned Member. He should not have been speaking in this debate. He should have been exhibiting himself at the Tate Gallery in the exhibition devoted to "The Unknown Political Prisoner." The hon. and learned Member ought either to be at the Tate or ought to be singing on the road "Half a Lib., Half a Lib. onward."
2465 The hon. and learned Member also made a great deal of play with the fact that leasehold enfranchisement emerged for the first time in the Labour Party manifesto of 1951. No greater tribute could be paid to my hon. and learned Friend the Member for Leicester, North-East than to say that it appeared in our party manifesto at that time. The two signatories to the Minority Report, I think, deserve great credit for getting that into the manifesto even at this stage of development of the Labour Party. I think that some of us who are Welsh Labour Members also can claim some measure of credit for getting leasehold enfranchisement adopted as the Labour Party policy.
My hon. Friend the Member for Widnes (Mr. MacColl), who took a more doctrinaire view, must not allow himself to be misled into seeing this matter purely as a technical, theoretical, doctrinaire problem. It is a real human problem. If my hon. Friend the Member for Widnes represented a South Wales constituency he would realise the deep emotional desire of the people of Wales to be rid of this great social fear which hangs over their lives; and the way in which they wish to be rid of it is in the manner which has been put forward in the Minority Report by my two hon. Friends. In that respect my hon. Friend the Member for Widnes would do well to forget the Webbs—or the cobwebs, as my right hon. and learned Friend the Member for Edinburgh, East (Mr. Wheatley) says—and the inevitability of gradualness, and remember the ordinary people.
Now I come to another point which my hon. and learned Friend the Member for Cardigan mentioned. He said that leasehold enfranchisement involved legal confiscation. I cannot see that it is legal confiscation at all. If we are to use these terms of different kinds, we might as well say, as my hon. Friend the Member for Pontypool said, that the perpetuation of the system is moral spivery. The whole issue that is involved is on which side one happens to be—whether one is on the side of the tenants and the leaseholders or on the side of the landowners and the freeholders. That is the clear issue involved.
Whatever happens, some measure of injustice must be done to some section of the community. It depends on whether 2466 the party opposite propose to stay on the side of the landowners, or whether they propose to join us in helping the tenants and the leaseholders. We on this side of the House speak for the ordinary people who are the victims of landowners.
§ Brigadier F. Medlicott (Norfolk, Central)
Does not the hon. Gentleman agree that in very many cases the owners of these properties are people of very small means indeed?
§ Mr. Donnelly
We have heard this story before, and I suggest that the hon. and gallant Gentleman tells it to the Marines. He can try to tell it to the people in Pembroke, but I can assure him that the landowner who owns the property around Pembroke Dock is worth another 10 men in securing my return to this House.
The real problem is created by the fact that large estates have grown up through land monopolies, and that hardship is created because efficient, successful and sometimes well-run estates are able to use this land monopoly to raise rents and compel people to pay higher prices for their houses. The hon. and gallant Gentleman is only trying to dodge the issue when he brings in the old-age argument of the widow's mite and all the other sob-stuff that we used to hear so often when we were dealing with compensation on the various nationalisation Bills. If the hon. and gallant Gentleman is so interested in the small man, he should think of the larger number of small people involved, who are the tenants, and support us in this discussion tonight.
There are only two things which are really politically possible in this respect if we are not to continue indulging in debates ad nauseum on leasehold reform. One is to get some measure of freezing of the rents at a fairly low level. In that respect I support my hon. and learned Friend the Member for Leicester, North-East in saying that it must be the pre-1914 level. Secondly, we must get some kind of legal set-up which will abolish the leasehold system in perpetuity. The most effective way to do that is by introducing leasehold enfranchisement. No landowner will find it worth while to indulge in the large-scale building of leasehold property if leasehold enfranchisement is introduced.
2467 The reason why it has not been done before is that the position of vested landowners has been too strong. Had the Labour Government been in power now it may be that we should at last have broken that vested interest, but from 1945 to 1950 we were dealing with even more urgent problems than that. During part of that time, however, we set up the Committee of which the hon. and learned Member for Cardigan was a member. If that Committee had not taken so long to report we might have got the matter settled during the 1945 Parliament. As it was, we were still waiting for their Report, and some of my hon. Friends and I proposed that we should have a temporary freeze while we were waiting for it.
§ Mr. Donnelly
The report was so undesirable—that was the truth of the matter—and so confused and unrelated to the issues before the House at the time.
§ Sir Edward Boyle (Birmingham, Handsworth)
The right hon. and learned Member for St. Helens (Sir H. Shawcross), who was Attorney-General for almost the whole of the time the Labour Party were in office, in his speech in this House on the Labour Party's temporary standstill Measure, emphasised the point that there was a great deal to be said against leasehold enfranchisement as well as for it.
§ Mr. Donnelly
That is perfectly reasonable. I hold a different view from my right hon. and learned Friend the Member for St. Helens on this matter—and a different view from that of the former Lord Chancellor. That only shows that we are not stereotyped, rubber-stamped individuals and are fully entitled to say what we think. I also know who speaks for the Labour Movement. It is only on the other side of the House that one sees the cracking of the whip and the threat of retribution from the Home Secretary and his 2468 supporters further down the Front Bench.
Had we a Labour Government in power at the moment I am quite sure that we should have had the issue of leasehold enfranchisement coming before the House. As it is, we have to wait a little longer. Hon. Members opposite who have been arguing against leasehold enfranchisement have only been facilitating the changes in the electoral system which will bring a Labour Government nearer. Tonight the Conservative Party have been solidifying the resistance—certainly of people in South Wales—to a policy which led to the fact that in 1906 when the Liberal Party fought on the question of leasehold enfranchisement, not a single Tory was returned for a Welsh constituency. Today there are only six Conservative Members out of 36 Members for Wales.
Tonight we have gone a step nearer abolishing even those six, so every cloud has a silver lining, and while we may be making haste slowly there will be a move towards leasehold enfranchisement and settling this problem more permanently because of the response which the right hon. and learned Gentleman's proposals will arouse after the discussion which has taken place here today.
§ Mr. Geoffrey Wilson (Truro)
For the purpose of comparison with the figure of 45, which I understand is asked from the hon. Member's constituent, would he say what is the council rent for council houses in Pembrokeshire?
§ Mr. Donnelly
The hon. Gentleman fails to understand the matter. The house to which I was referring was built by somebody else, and the tenant has been living there for years. It has nothing to do with the council. It is not a new house. It is nothing to do with the increase in the public work loans rate which was brought into being by the Government which the hon. Member supports. This is a house which was built nearly 100 years ago, and which the person living in it now considers to be his house. I should like to ask the hon. Gentleman in return how he would like it if, after he had lived for 20 or 30 years in a house, some fellow came along and said, "Up goes your rent by several thousand per cent."
§ 10.0 p.m.
§ Mr. John Wheatley (Edinburgh, East)
We have had a very wide and interesting debate, and many facets of the problem have been canvassed and different approaches discussed. The arguments on this side of the House have ranged from the social and moral justification for leasehold enfranchisement to the more detailed criticism of the Government's proposals; while, on the other side, the arguments have ranged from, in my opinion, unsuccessful attempts by the Front Bench to marry their present proposals with their traditional principles to the rather extreme Conservatism of the hon. Member for Wimbledon (Mr. Black).
In concluding this debate, we want to get its subject matter into its proper perspective, because what we are discussing are the Government White Papers for the two countries and the proposals contained therein. I thought the right hon. and learned Gentleman the Home Secretary, with a disingenuity which was rather in strange comparison with his usual forthrightness, tried to get the debate shifted into a different arena when he issued a challenge by asking us to explain what the Labour Party proposals are. The Labour Party proposals are only relevant to this debate in that they are put forward by way of criticism or alternative to the Government's proposals in the White Paper; the main emphasis of the debate must rest on the Government's proposals themselves.
The origin of this debate is the Government's inability to bring in permanent legislation on this subject during the present Session. They were constrained to introduce the temporary legislation to extend existing temporary legislation despite the criticisms of their own Ministers when they were in opposition. Amongst others, the present Solicitor-General made a very strong speech deprecating the use of temporary legislation on this subject altogether. Nevertheless, they were constrained to continue that temporary legislation because they could not make up their minds what they wanted to do on this subject.
Having listened to the debate and read the White Papers, I am not surprised to find that they could not make up their mind and could not introduce permanent legislation during the current Session. I should like to tender this advice to the 2470 Government. I suggest, having listened to this debate, that they might go away and have some more thoughts on the subject. After all, they did that with the Transport White Paper. They had five different editions of it, and I trust that the ultimate result in this case will be different from that of the Transport White Papers, because, even after five attempts the effort which they ultimately produced was one which did not commend itself to anyone who knew anything about transport in this country.
I trust that when the Government come to reconsider this matter they will consider another White Paper in the light of the very constructive criticism that has been advanced from both sides of the House, and that they will produce something more consistent and more in relation to the realities of the problem. If one examines the White Papers even superficially one finds various inconsistencies of principle. It may be that the problems are rather different in England and Wales and in Scotland, and that the legal structure is different in both countries. But the principle of the problem is exactly the same, and it is passing strange to find a direct contradiction in both White Papers on important matters in them. I suggest in that respect that in this Government of Ministers characterised at least by the numerical strength they might at least have found room for a liaison officer to point out that the Government have suggested principles and policies in one White Paper that they reject in the other. It really would have been better if the Government had reconciled these things before they committed themselves to print.
The Government have to face up to one very important problem in the matter of leasehold enfranchisement. They must stand here and declare tonight whether they are in favour or are not in favour of the principle of leasehold enfranchisement. I rather gathered from the intervention of the Solicitor-General when my hon. Friend the Member for Pontypool (Mr. West) was addressing the House that he was at pains to prove that the party opposite had never been committed and were not now committed to the principle of leasehold enfranchisement. I should like to get his observations on that here and now. I ask the Solicitor-General, Is that the policy of the Government or 2471 are they in favour of leasehold enfranchisement? May I have an answer?
The hon. and learned Gentleman is unwilling to reply. Then why was he at pains to persuade my hon. Friend that no Member of his party in Wales had ever committed himself to this policy? There was no doubt whatsoever that that was what he was doing. Surely we are entitled to know and must know where the Government stand on this matter, because in the White Paper the Government do not follow the line of the Majority Report in saying, "Having regard to the considerations, we come down against leasehold enfranchisement." The Government, without committing themselves, seem to me tacitly to have accepted the principle of the matter and then tried to ride out of it by building a series of difficulties which do not really exist. We are entitled to know, and the country is entitled to know, where the Government stand in this matter.
If the answer is that they are against leasehold enfranchisement in principle, let me invite the Solicitor-General and the Home Secretary to look at the Scottish White Paper. In the Scottish White Paper they accept the principle and they find a formula. The problem being the same, although the working out of the problem and the formula may have to differ because of the different structures in the two countries, why should it be that the Government accept the principle of leasehold enfranchisement for Scotland and work out a formula for it and yet reject it in England? We are entitled to an answer, and I trust the House will get an answer.
In the English White Paper the Government have sought refuge in practical difficulties. The Lord Advocate in his intervention quoted the Scottish Committee as saying that there was a different problem in Scotland, and accordingly there was no useful purpose to be served by comparing a possible solution in one country with a possible solution in the other. I accept that the different structures may result in a slight variation in the formula, but it cannot result in any variation in the principle.
So let us look at the difficulties advanced in the White Paper and by the Home Secretary, as to why they cannot do it in regard to England and Wales. 2472 First of all they say the cost may be too great for the people who may be most in need of the enfranchisement. I think that was one of the strongest arguments. So they propose something else. They propose an extension of the Rent Restriction Acts to cover the new tenancies which will be created. They pose that as if the two were mutually exclusive and only alternatives, that either we have got to give them the protection of the Rent Restriction Acts or we have got to give them leasehold enfranchisement. But, says the Home Secretary, leasehold enfranchisement would not be possible for financial reasons for some of these people, so let us give them all the protection of the Rent Restriction Acts. I think that was his argument.
But they are not mutually exclusive. They are complementary. Why should we not give those people the right to elect, and if it should be that a person cannot meet the financial requirements of any formula that may be devised, such as has been devised in the case of Scotland, why not give him the option? If the tenant under the lease cannot find the money he can get the protection of the Rent Restriction Acts' formula. If, on the other hand, he wishes to have the property as his own and can find the money for it, if a reasonable formula is found—as the Government claim a reasonable formula has been found in Scotland—why should he not do it?
I was particularly struck by the language of the right hon. and learned Gentleman, because what he said was: "We have found the solution, and a much better solution than leasehold enfranchisement, in extending the protection of the Rent Restriction Acts to these people under the new tenancies. It is better to give them that than to give them the right under a reasonable formula to acquire their own homes." I think he had better have a word with his right hon. Friend the Prime Minister. Where has the Conservative Party policy of a "property-owning democracy" got to? This seems a heresy, if I may say so. I hope it is not the beginning of a schism in the Conservative Party, getting away from the concept of a property-owning democracy in favour of a perpetuation of the Rent Restriction Acts—which, incidentally, they are pledged to amend.
2473 What we are doing has, therefore, a two-fold purpose, as my hon. Friends have pointed out. First, we are merely giving to these people a very limited measure of protection. My hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) brought that point out very forcibly. If the lease is translated into a tenancy under the Rent Restriction Acts, then under the Acts as they presently exist—and goodness only knows how they might be altered if the Government bring in fresh legislation—there is only the right of protection to the existing statutory tenant and the next immediate statutory tenant if there be one living in family with the existing tenant during the six months prior to that tenant's death. Then the protection of the Acts flies off.
Is that a real, equitable solution for people, many of whom, through their forbears, have erected, paid for and maintained the houses in dispute? In my submission, the shallowness of this proposal is exemplified the more it is looked at. I ask the Solicitor-General to indicate quite clearly whether it is the proposal of the Government to go ahead with this, having regard to the very effective criticisms which have been levelled against it.
There is one other inconsistency in the proposal of the Government. In the Scottish White Paper they say: "We accept the recommendations of the Guthrie Committee." Let me take this opportunity of paying my tribute to the work of the Guthrie Committee. It was we who set up that Committee, and I should like to pay my personal respects to Lord Guthrie and the members of the Committee, and to the two secretaries who did a great deal of work. But that does not mean one is precluded from criticising the contents of their Report, and they would be the last people to assert that we were not entitled so to do. In the Scottish White Paper the Government say: "We will not give the protection of the Rent Restriction Acts to these people. We will find a formula to give them leasehold enfranchisement, so we will not give them the protection of the Rent Restriction Acts."
Look at the position at which we have arrived. On a question of policy and of principle Her Majesty's Government say: 2474 "In England we cannot give you enfranchisement and we will give you the protection of the Rent Restriction Acts. In Scotland we have found a formula; we give you enfranchisement and we will not give you the protection of the Rent Restriction Acts." It is time we got some reconciliation machinery introduced into the Government.
There are other difficulties which have been advanced. There is the difficulty of apportionment, which is a practical one, dealt with by my hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas). But, after all, though it may be a practical difficulty, it is not insuperable. Is it not a difficulty that has to be overcome where there is a voluntary translation into a freehold between the parties? So too with regard to the amenity covenants. What is to preclude a provision in the Bill when there is a translation from the existing leasehold into freehold—because that is in fact what would happen—injecting into the conveyance the necessary amenity covenants, with the right to the court to determine any dispute that may arise between the parties? What the Government have been trying to do is raise difficulties rather than face up to the moral consequences of their action in refusing to do what justice requires.
Then they say that we have to exclude from the general formula those cases where the landlord or tenant bought their interest in the last few years of the lease. Why should they do so? Why should there be any exclusion in the case of the landlords, because under the Government's own proposals they do not intend to exclude the landlords who have acquired their interest within the last five years. Why should they propose to do that under the alternative proposals? I think that we are entitled to an answer.
There are other arguments, such as that the first tenant on severance would be required to pay more by way of compensation than the succeeding tenant. Why should that be? Perhaps the hon. and learned Gentleman will tell us. Is there any reason why provision should not be made to prevent that? It is said that we remove from the landlord the right to redevelop an estate. That was another difficulty advanced. Are not the Government doing that when giving the tenant the right of the protection of the Rent Restriction Acts?
2475 Exactly the same difficulty arises under the system, much lauded by hon. and right hon. Gentlemen on the other side of the House, when such transference takes place as a result of a voluntary agreement. All these difficulties are there where we have transference by voluntary agreement, yet hon. and right hon. Gentlemen approve of the settling of these disputes by voluntary agreement. How much greater are the difficulties if there is transference as a result of statutory right?
They say that we have also to exclude from the provisions of these proposals ground held by local authorities, by new towns, by Duchies or by public bodies. There may be an argument as to whether or not it is necessary to exclude all these bodies, or all leases belonging to these bodies, but even assuming that the argument is well-founded, is there any reason for not accepting the principle of leasehold enfranchisement in areas not within the ambit of these bodies? What about South Wales? Why should South Wales be deprived of this principle merely because there may be difficulty in extending it to the Duchies. Surely we are entitled to an answer in that respect?
It seems to me that when we come to consider the actual proposals of the Government once again the weakness and shallowness of the proposals are revealed. They first propose a new system of computing the rent for new tenancies that are to be created. We heard the Home Secretary lay down what he conceived to be his idea of considerations that would be taken into account in determining what that rent should be. One thing should be clear. How is that going to work out in principle?
In another of their proposals the sublessees who were excluded from the protection of the Rent Restriction Acts as a result of the Knightsbridge case decision are now to be given the protection of the Rent Restriction Acts, and they will be deemed always to have been within the protection of the Acts, which means in turn that these sub-lessees will get the protection of the standard rent under the Rent Restriction Acts.
On the other hand the lessee himself, who has the greater moral claim, is not 2476 to get equal protection, and the rents which will be determined for him will, by virtue of the considerations advanced by the right hon. and learned Gentleman, be much higher. Is that fair? Is it just and equitable, and will the Solicitor-General explain to us the justification for giving greater preferential treatment to the sub-lessee in these cases than to the lessee, who has the greater moral claim? It seems to me that the Government have refused to face up to the moral and social implications of this problem. They have sought refuge in an expedient which extends the operation of a protective Act which they themselves are threatening to amend in other respects.
Turning to the Scottish White Paper, I would say, while reserving the right to make criticisms of the formula at a later date when the Bill comes forward, that we at least have a formula advanced, and a practical solution which is accepted by the Government. May I ask the Solicitor-General, who may consult the Lord Advocate on the point, why the Government propose to accept the recommendation of the Committee that the right to translate existing leases into a feu should be limited to five years from the passing of the enabling Act? And why should it be confined to pre-1914 leases?
I know the answer the Committee gave. They said that up to that time, as a result of legislation, it was not possible in some cases to grant feus and, therefore, resort had to be made to leases. By the Entail (Scotland) Act, 1914, that disability was removed, and if people entered into long leases they did so freely and voluntarily. Let us get back to that principle. If any long leases have been entered into post-1914 in Scotland voluntarily why, on principle, should not those lessees have an equal right to translate their lease into a feu? May we have an answer to that?
Another important aspect is the question of business premises. The White Paper for England and Wales accepts, and I think the Home Secretary accepted, that prima facie the tenant is entitled to the renewal of a tenancy under certain conditions. Whether or not one agrees with those conditions, at least the principle has been accepted and in accepting it the Government have rejected the Majority Report in England and Wales and accepted the Minority Report. They 2477 also accept the proposal to provide in more detailed form compensation for improvements and goodwill. That is a question of Government policy.
The Landlord and Tenant Act, 1927, did not apply to Scotland and in Scotland we have never had any compensation for the loss of goodwill or for improvement. Nor, apart from the Tenancy of Shops (Scotland) Act, 1949, have we had any form of protection of tenure for business premises. If the principle is accepted by Her Majesty's Government that it is just and equitable that the tenants of business premises should have some degree of security of tenure and the right to compensation for improvements and goodwill, why should not the principle apply in Scotland?
It is all very well to say that the Guthrie Committee recommended that no action be taken, but the Government should have no difficulty in disregarding that recommendation because, in producing the White Paper for England and Wales, they have disregarded almost every recommendation of the Majority and Minority Reports for England and Wales.
§ Mr. Doughty rose—
§ Mr. Wheatley
They have rejected a great number of them. I have not time to argue that, but hon. Members know how many they have accepted and how many they have rejected. In any case, they have ridden rough-shod over many of them.
Why then should they say that they must be thirled to the recommendation of the Committee in regard to Scotland? The Committee said they had no evidence in regard to hardship in this matter and that, therefore, they made no recommendation. Is that to be the criterion? We had the same difficulty in regard to shops. When we set up the original Committee to inquire into the position of shops, they said there was no real evidence of hardship. We knew, however, that a lot of people were not coming forward to give evidence for one reason or another and we introduced temporary legislation. The effect of that was great, and we found it a boon and blessing. If we had followed the recommendation of the Committee, that legislation would not be on the Statute Book today.
It is a question of principle. If it is right that security of tenure should be 2478 given to the lessee of business premises in England and Wales, why should it not be right in Scotland? The hon. Member for Surrey, East (Mr. Doughty) said it was not required, but he can work that out with his own Front Bench. If the principle of giving compensation for goodwill and improvements is right for England and Wales, why should it not be right for Scotland? We are entitled to an answer from Her Majesty's Government on that point.
There are many points with which I could deal but I must leave ample time for the hon. and learned Gentleman to reply. He will require all the time he can get, if he is to do justice to the criticisms advanced. There is, however, one point on which I want an answer in respect of Scotland. The Committee said that the legislation dealing with shops should be extended until 1955. Can we find out from Her Majesty's Government whether it is their intention to carry on this temporary legislation beyond 1955 or to end it in that year?
In conclusion, I advise Her Majesty's Government to do what they did in relation to transport—to take back this White Paper and—whether it is five or six or seven editions I do not care—let them come back, after due care and mature consideration, with proposals that face up to the realities of the situation. Let them consider this problem in the light of the criticisms and face up to the moral and social implications. When they come back, let them bring proposals that will commend themselves to people who have criticised constructively the present ones in order to reach a solution which will end the anachronisms which have been a blot on our social and economic life for generations.
§ 10.29 p.m.
§ The Solicitor-General (Sir Reginald Manningham-Buller)
I am glad to be able to say that I find myself in agreement with one point made by the right hon. and learned Gentleman the Member for Edinburgh, East (Mr. Wheatley) at the beginning of his speech, namely, that we have had a wide and interesting debate. Indeed, it has been a far wider and, to me, more interesting debate than the one which took place on the Second Reading of the temporary Bill brought in by the late Government.
2479 I can well understand why it should be a better debate today, because we now have the advantage of considering the White Paper containing the proposals of the Government for future legislation. We did not have that advantage in 1951. It is all very well for the right hon. and learned Gentleman now to chide us with introducing temporary legislation, and to suggest that we are introducing it because we could not make up our mind. We have produced a White Paper, which we have been discussing all day, showing what our mind is. That sort of gibe does not come well from a member of a Government which introduced temporary legislation on this matter without disclosing their future intentions at all. I was very surprised to hear the right hon. and learned Gentleman make that point.
I want once again to comply with the custom of this House, as so many hon. Members have done in the course of this debate, and declare such interest as I have in the matters under consideration. I have declared it before, and I must do it again. I am a trustee of an estate which comprises some leasehold property, and I am the beneficiary of a trust which also has such property. I have made inquiries, and, so far as I can ascertain, in that property there is not a single residential property subject to a ground lease. On the other hand—I shall make some reference to it later, if I have time—that property would be affected by the proposals in this White Paper in relation to business premises. Having made that disclosure, may I now come back again to the right hon. and learned Gentleman's speech?
I have said all that I have got to say about what I think was not a very fair criticism of what we did with our temporary Bill. I now come to the next point that the right hon. and learned Gentleman made. He drew attention—and for debating purposes he is entitled to do so —to the inconsistencies between the solution proposed for the problem in England and Wales and the solution proposed for the problem in Scotland. He made great play with that, but really when we consider that the two systems of law are different, and when the different problems are fully recognised by the Report of the Scottish Committee, it does not surprise me in the very least to find that 2480 the solutions put forward should also differ, and perhaps in some respects at first sight appear contradictory.
Then the right hon. and learned Gentleman went on to ask where the Government stand on leasehold enfranchisement. I think, when he asked that question, he could not have been here to hear my right hon. and learned Friend's speech in moving the Motion, because in the course of that speech my right hon. and learned Friend said emphatically and quite clearly that we are not in favour of enfranchisement. Nothing could have been more specific than that. It must have escaped the right hon. and learned Gentleman's attention.
§ Mr. Wheatley
If that is the policy of Her Majesty's Government, will the Solicitor-General explain why they have accepted it in Scotland?
§ The Solicitor-General
If the right hon. and learned Gentleman had paid attention to what I had been saying a few minutes ago he would have understood that I said solutions for different problems were likely to differ. I am talking about solutions for different problems which arise at the present time.
The right hon. and learned Gentleman went on to make that familiar remark about a property-owning democracy. I know he is far too good a lawyer not to realise that possession of a ground lease for 99 years is a very well recognised form of property. I will deal with the other points that he raised, and which were also raised by the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) with regard to the practical objections to leasehold enfranchisement which are set out in the White Paper.
The debate today has fallen into four parts. It has chiefly been confined to the pros and cons of leasehold enfranchisement, and the chief criticism of this White Paper has been directed to that issue and to Her Majesty's Government on the ground that the White Paper does not contain proposals for leasehold enfranchisement. The proposals for security of tenure for residential tenants have met with very little criticism indeed. I am not in the least surprised about that because that was the unanimous recommendation of all the members of the Leasehold Committee, although I 2481 agree that it was a recommendation based by some on different reasons from those given by the majority of the Committee.
We have felt for a considerable time that the exclusion of ground lessees from the protection of the Rent Restriction Acts, when occupying houses to which those Acts would normally apply but for their being ground lessees, is something which should go, and indeed should have gone some time ago. We put that forward in the debates on the 1951 Act. Members of the party opposite strenuously sought to resist our efforts to move Amendments to that Bill to carry that into effect. Now today our proposals about that have met with general acceptance. That shows in my belief how right we were to put forward those proposals when we were in Opposition and how wrong the party opposite were then not to listen to us.
§ Sir L. Ungoed-Thomas
The implication might be gathered from what the Solicitor-General said that we were opposed to giving protection to the ground lessee. He knows that if that implication were drawn it would be unjustified, because at the same time we prolonged the advantage they had of the ground lease, which is more substantial than the protection given under the Rent Restriction Acts.
§ The Solicitor-General
The hon. and learned Gentleman knows that from the time that Bill was introduced until it reached the Statute Book we were pressing proposals on the then Government and moving Amendments to seek to extend the protection of the Rent Restriction Acts to ground lessees. We voted upon it on many occasions, and our efforts were defeated by the votes of the party opposite. We have only to look at HANSARD to find out that that is the case.
The proposals in the White Paper about security of tenure have been criticised on two minor points. I will try to deal with them at once and then go on to other subjects. The first point of criticism was with regard to the decision in the Knightsbridge v. Deeley case. The view was put forward that the position of a sub-tenant there will be very much better than the position of a ground lessee who will now get protection under the 2482 measures which we propose. I am not sure that the right hon. and learned Gentleman the Member for Edinburgh, East has really considered that as carefully as I should have expected him to do.
The sub-tenant in the Knightsbridge v. Deeley case would normally be holding on a tenancy agreement without liability falling upon him for repairs. His standard rent would be fixed with that in mind. The position of the lessee under the ground lease will be this: that if he is at the time the ground lease comes to an end under a liability to repair which he has not discharged, then, on our proposals, that liability under his covenant will be diminished to a liability to do reasonable repairs having regard to the character of the neighbourhood, etc. It will not be the full extent of the liability under the covenant, and, as he was bound to keep the premises in repair, it is obviously right that he should, by a lump sum or by instalments, discharge that obligation which falls upon him, but only to the extent of doing reasonable repairs.
In that connection I want to make this point, because I do not think that it has been sufficiently observed. Under our proposals, the tenant will go on holding on the terms of the ground lease, although that has expired, until the landlord puts forward proposals both in relation to the repairs that have to be done and in relation to the rent which he suggests should be payable. In the absence of agreement, there will be opportunity for getting the matter before the county court for the county court to adjudicate upon it.
I hope I have made myself clear about the first point of criticism. I do not believe that by any manner of means it follows that the rent for the ground lessee will necessarily be higher than the standard rent of the sub-lessee in the Knightsbridge Estates v. Deeley case. I do not think, bearing in mind that the ground-lessee starts on this hypothesis, if he has to pay at all for repairs, that he is in breach of a covenant he entered into, that one can compare the two.
What we want to arrive at, having regard to all these facts, is the rent that he will be required to pay on this new statutory tenancy. It is all very well for the hon. Member for Pembroke (Mr. Donnelly) to talk about the pre-1914 rent. This will be a new statutory tenancy. It will not have been subject to the Rent 2483 Restriction Acts before, and the rent which will be fixed must not only take into account the rents of council houses and other restricted houses, but must also take into account all relevant factors in the neighbourhood.
§ Mr. Donnelly rose—
§ The Solicitor-General
Might I finish this first? I will give way in a second. After all, the hon. Gentleman spoke for some time, and I want to finish this part of my speech.
Some hon. Members have suggested that there is too much vagueness about this. The hon. and learned Member for Cardigan (Mr. Bowen), who made a most excellent speech both as to expressing his point of view and as to its clarity of expression, and my hon. and learned Friend the Member for Kensington, South (Sir P. Spens), both thought that to leave it with just the expression "reasonable rent" was too vague. I can assure them that we will carefully consider their views and whether it is possible to give in this connection a guide which will be more helpful to those who have to adjudicate. At the same time, there is the danger when one once starts definition that one may define it too narrowly and so exclude from the county court judge's consideration some factor or feature which all hon. Members in the House would like him to be required to have regard to in determining what would be a reasonable rent; but we shall try to balance those arguments and attempt in further consideration of this to see if anything can de done to meet the points.
§ Mr. Donnelly
Is not the operative point that the houses were themselves built before 1914, and, therefore, one is dealing not with a new article but an old article coming under a new kind of tenancy?
§ The Solicitor-General
The liability to the Rent Restriction Acts, as the hon. Gentleman knows, depends not upon the date the building was erected but upon the type of tenancy or occupation on which the building is held.
§ Sir L. Ungoed-Thomas
This is a very important point. The hon. and learned Gentleman will appreciate that in the Knightsbridge Estates case there is in the rent a repair element and a standard 2484 rent element. Leaving out the repair element, is it the intention of the Government that the standard rent element in the case of a ground lease, taking for instance a ground lease which dates from before 1914, should be comparable to that of the Knightsbridge Estate case, where the property has been let to a sub-tenant in 1914?
§ The Solicitor-General
I really do not think that one can give a firm answer to a point of that sort when one may not be comparing like with like. The sub-tenancy in the Knightsbridge v. Deeley case may be a sub-tenancy of two rooms; the ground lease may be of a whole house. With the best intention in the world, I really do not think that I can give the hon. and learned Gentleman an answer to that question.
My hon. Friend the Member for Dulwich (Mr. Robert Jenkins) expressed concern about the position of some of his constituents. If he looks at the White Paper with regard to ground leases he will realise that our proposals cover the point and give some security of tenure for Dulwich tenants under ground leases that may shortly expire.
The right hon. Member for Gower (Mr. Grenfell) made a speech which the whole House was delighted and interested to listen to. No one who has listened to the debate and has read the Report of the Committee could fail to realise that in certain areas, and in South Wales in particular, very strong feeling exists in relation to ground leases of residential property. Exponents of leasehold enfranchisement say that it is unjust that on the expiry of a ground lease a family who may have lived in a house for years and whose ancestors may have built the house, may have to surrender the property to the landlord unless the tenant can come to terms with him. Our scheme deals with one part of that. We make provision for avoiding the necessity for such a tenant leaving the house by giving him the protection of the Rent Acts, and to that extent our proposals are satisfactory because we have not had very much criticism of them.
The hon. Member for Pontypool (Mr. West) said that although we did not put forward any proposals for leasehold enfranchisement, Conservative candidates were making leasehold enfranchisement 2485 a plank in their campaigns. I challenged him to quote any statement by any Conservative candidate supporting leasehold enfranchisement at the last election, and he failed to quote any. We have made the most careful inquiry. I have made inquiries of my hon. Friend the Member for Cardiff, North (Mr. Llewellyn). He did not fight on leasehold enfranchisement. There is no record of any election address saying that.
It is really rather wrong of the hon. Gentleman to seek to misrepresent what takes place if, at the same time, he and his hon. Friends are indicating to the electors that they stand for leasehold enfranchisement without indicating what form of it they support. One of my difficulties in winding up the debate is to know what scheme hon. Gentlemen opposite are really putting forward. The right hon. and learned Gentleman, speaking from the Front Bench, acknowledged paternity of the Minority Report that he signed, and defended it from attack from whatever quarter.
§ The Solicitor-General
If the hon. Gentleman will read that statement to himself slowly he will see that it says nothing about leasehold enfranchisement. If I may adopt the language of a noble Earl who is a member of the party opposite, merely repeating the phrase "leasehold enfranchisement" as if it were a kind of incantation is not to the point. We have had a good deal of that today. If the party opposite are seeking to get support in the country—as the hon. Member for Pontypool said they are; because he indicated that they were the only party that now stood for leasehold enfranchisement—they should at least indicate for what scheme they stand.
The hon. and learned Member for Leicester, North-East and the hon. Member for Oldham, West (Mr. Hale) put forward a scheme which, as my right hon. and learned Friend said, was carefully thought out and carefully considered, but—as was said by my hon. and learned Friend the Member for Kensington, South and the hon. and learned 2486 Member for Cardigan—it is not a scheme which would meet the clamant demands of those in South Wales, whose views were so well expressed by the right hon. Gentleman the Member for Gower. It would not meet their wishes at all, because the scheme put forward by the hon. and learned Gentleman involves giving consideration in some degree to the value of the reversionary interest of the landlord.
§ Sir L. Ungoed-Thomas
The hon. and learned Gentleman cannot say it does not meet their wishes at all.
§ The Solicitor-General
I do say that it does not meet their wishes at all, because their case is that they should be entitled to an enfranchisement tenancy merely by paying a sum which has some relation to the ground rent and not to the reversionary interest of the landlord.
§ Mr. Grenfell
I still persist in my conviction that it is wrong to permit a person to build a house at his own expense and bear all the charges of building and maintenance and then ask him to pay interest for ever on the money he himself has spent.
§ The Solicitor-General
It is becoming perfectly clear to hon. Members on this side of the House that there is yet another split in the party opposite. I thought the hardest thing of all was said by the hon. Member for Widnes (Mr. MacColl), who expressed the opinion that enthusiasts for leasehold enfranchisement were speaking with an emotional fixation about a discarded policy of the Liberal Party. He saw the enthusiasts only from behind; we had the advantage of being able to judge whether that view was correct by watching their expressions as they delivered their speeches.
In all seriousness, if the party opposite are going to criticise this White Paper on the ground that it contains no proposals for leasehold enfranchisement and are going to represent that they are in favour of leasehold enfranchisement, they should make it clear whether their proposals are of the character which would meet the wishes of the right hon. Member for Gower and the hon. Member for Leicester, North-West (Mr. Janner). They should make it clear whether their policy is that or the policy contained in the Minority Report.
2487 If the party opposite are not supporting the Minority Report it is true to say that not a single member of that Leasehold Committee is in favour of the arguments which they seek to advance.
§ Mr. Wheatley
I did ask the hon. and learned Gentleman to address his mind to the consideration of the Government's proposals. We have put forward a number of constructive criticisms of alleged difficulties which prevent them carrying out leasehold enfranchisement. Would he kindly deal with those criticisms in the five minutes remaining?
§ The Solicitor-General
Certainly, but the right hon. and learned Gentleman, having made his speech, should surely allow me to make mine.
§ The Solicitor-General
With great respect, I have been doing nothing more than answer criticisms the whole way along. I am entitled to point out how wrong it is for hon. Members opposite to put themselves forward as advocates of leasehold enfranchisement without indicating what is their real policy upon that point. The proposals in the Minority Report would not satisfy those who think that the payment on enfranchisement should be calculated on the capital value of the ground rent.
The next question I was asked was with regard to apportionment. The hon. and learned Gentleman the Member for Leicester, North-East suggested there was no difficulty about that because there would have to be apportionment under our security of tenure provisions. I do not agree about that because in that case there is a new statutory tenancy arising in relation to the premises the tenant is occupying after the expiry of the ground lease. Therefore, there would be no need to apportion the ground rent.
The right hon. and learned Gentleman put to me some questions on severance. I think the White Paper makes it perfectly clear what the difficulty is with regard to compensation on severance. I do not want to take up time amplifying those objections, which are clearly stated, but I would say they are real objections to the scheme proposed in the Minority Report, objections which cannot be just passed on one side by saying they do not 2488 matter. They cannot be treated as trivial. They are really practical difficulties to which we have had no answer from hon. Gentlemen opposite as to how they would be overcome: they are real, practical difficulties which would result, if the scheme were adopted, in anomalies and inequities.
Now I should like to say a few words about our proposals in relation to business premises. I think myself that people who are acquainted with the Landlord and Tenant Act, 1927, would agree that the time has come when that Act should be revised. I would say myself, speaking for myself, and having declared my interest in a trust in some business leases, that I welcome, personally, its main provisions. I think it is right, and I am sure the whole House really agrees with this, that the sitting tenant should have the first right to continue as tenant if the tenancy is to go on. If we accept that principle it does not seem to me that it would be right to except from the operation of that principle any particular class or classes of business tenants, and that is why, while I listened with the greatest interest to the speech of my hon. Friend the Member for Wimbledon (Mr. Black) I found myself on this occasion disagreeing with the views he expressed.
The hon. and learned Gentleman the Member for Leicester, North-East asked me about compensation and security of tenure. I interrupted him on the point at the beginning of his speech. I think that he will see, if he considers the White Paper again, that a business tenant will have his security of tenure no matter for what period his lease may be. If he is there only on a yearly tenancy he will be entitled to first right—if I may use the expression—to continue as tenant. But suppose he has to go because the landlord has a prior right either for himself or for business or redevelopment, then we say, with regard to compensation, if he has been occupying for less than five years he gets no compensation.
I hope I have dealt with the points that were raised, and I commend the White Papers to the House.
§ Question put, and agreed to.
That this House takes note of the proposals relating to Leasehold Property in England and Wales (Cmd. 8713) and Leases in Scotland (Cmd. 8714).