HC Deb 18 June 1954 vol 528 cc2463-74

Order read for resuming Adjourned Debate on Amendment proposed [17th June] on consideration of Bill, as amended (in the Standing Committee and on recommittal)—

Which Amendment was, in page 26, line 7, to leave out "there being disregarded," and insert: Provided that the county court judge in fixing the rent make take into consideration whether or not, and to what extent, the sitting tenant is reasonably entitled in all the circumstances to the benefit of,

instead thereof.

Question again proposed, "That the words proposed to be left out stand part of the Bill."

11.5 a.m.

Sir Frank Soskice (Sheffield, Neepsend)

This is the Amendment which we began to discuss in the early hours of this morning, when my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels) clearly put the point about which we are anxious. It is one which is analogous to points previously raised on the earlier part of the Bill.

The object of the Amendment is to seek to urge the Government to introduce into this Clause a provision to exclude the scarcity element from the rent which is to be paid by the tenant of the business premises. I do not suppose that my hon. Friends would wish us to have a long debate on this particular point for the reason that the Government have already clearly explained their view about rent under Part I of the Bill, and it is to be apprehended from that and also from the answer on this point that we had during our Committee deliberations that they are not likely to accede to the point of view which I am now urging.

On the other hand, we on this side of the House regard it as of great importance. I suppose most hon. Members, on whichever side of the House they sit, have had the experience of being told by the tenants of business premises when their tenancy comes to an end that they may have a renewal of the tenancy but only upon the terms that they pay a rent—I will not say many times the amount which they have hitherto paid—greatly in excess of the old amount. That is a circumstance which comes about because there is a scarcity of business premises, and, therefore, landlords are in a position to insist upon a scarcity element being included in the computation of the rent for which they ask.

This is a point which does not improve by repetition, and I do not desire to do so. I would expound it at greater length if we were approaching the matter from the beginning, but I have already reminded the House that we have fully gone into the doctrine which we feel ought to prevail on the computation of rent under Part II of the Bill in circumstances analogous to those circumstances to which we pointed when we were discussing rent under Part I, and which we were urging the Government to adopt.

We desire to go on record as emphasising the view that the tenant of business premises is not getting the security we had hoped he would get, although we recognise that the Government have done quite a little for the tenant of such premises. Nevertheless, he is still left in the situation that he can only exercise his rights under the Bill and extend his tenancy on the terms that he pays a rent which is inflated by reference to scarcity value. We do not think that that is a position in which he ought to be, and we are disappointed that the Government have not been able to go further in meeting us in that particular respect.

The Amendment is designed, in effect, to require that the county court judge dealing with this matter will look at it from the point of view of the sitting tenant. In other words, the matter is not to be left at large in regard to the fixing of the rent when it is a sitting tenant, although my hon. and learned Friend has deliberately left the matter to a very considerable extent in the discretion of the learned county court judge who may have to deal with this particular application.

Therefore, this Amendment raises the general question of scarcity rents. We urge the Government to accept the Amendment or something like it because, with the expert advice in drafting which they have at their disposal, it may be that better wording could be found to achieve our purpose. We are not so hopeful as to think that the Home Secretary may suddenly say that he has been converted after adopting a contrary attitude for a considerable period, but we hope that he will further consider this question of the principles on which the rent of business premises should be assessed.

Notice taken that 40 Members were not present;

House counted, and 40 Members being present—

The Secretary of State for the Home Department (Sir David Maxwell Fyfe)

This Amendment raises a most interesting point and one on which there is, again, a genuine difference of opinion irrespective of party line or of whether the general approach is pro-landlord or pro-tenant. I am sorry that after mature and earnest consideration I still take a different view from the hon. and learned Member for Gloucester (Mr. Turner-Samuels). This is not a policy view, but one that I have formed from considerable experience in valuation in the course of my legal practice. Our basis for the rent is that there should be disregarded the effect on the rent of the fact that the tenant has been in occupation of the holding, and the Amendment asks that the county court judge should be able, in his discretion, to take that into account.

I want to put the argument, as it appears to me, entirely on the basis of the benefit to the tenant, which is how I am approaching this matter. It can be argued, as was argued in Committee, that in a number of cases the good landlord will allow the tenant who has been his tenant for a number of years to continue at a lower rate. That was the way the argument was put against me and it was argued that that point ought to be taken into account.

The way it strikes me is that what we have to guard against is the tenant, who is desperately anxious to continue in the premises where he has built up his business, being asked for a larger rent than the market value by the landlord who knows how desperately anxious he is to continue there. These are the two points which one has to balance, looking at it from the point of view of the tenant. I think it is better to protect the tenant against the second possibility of being driven into the position of paying for his own urgent desire to occupy the premises.

11.15 a.m.

Mr. M. Turner-Samuels (Gloucester)

That, in my submission, cannot possibly happen here. The procedure is that a new rent is to be fixed by the judge. The judge, by the terms of the Clause, has to disregard those things which the right hon. and learned Gentleman has mention, and the court is left with only one consideration, and that is the open market rent. My point was that in this respect the tenant is not only being deprived of any benefits as regards goodwill or improvements that he may have carried out, but he is put on exactly the same footing as a stranger who has not even been in the premises or done anything with regard to improvements or goodwill. That is the issue.

Sir D. Maxwell Fyfe

The points in the Clause are in paragraphs (a), (b), (c) and (d) and I was dealing with (a). I have come to the decision that this is a matter which should be disregarded because in my view, on balance, it will help the tenant if that is done. Whether I am right or wrong must be a matter of argument, but that is my view.

I would remind the right hon. and learned Member for Neepsend (Sir F. Soskice) that in the compulsory purchase procedure, with which he is so familiar, it has been a point since 1919, and I think since 1845, that we exclude the fact that the local authority desires compul- sorily to purchase for schools or other purposes, because, otherwise, it might be put in the position of paying a higher price. So I think it is a good thing to exclude (a).

Now I come to the question of goodwill, of which the hon. and learned Gentleman has reminded me. Paragraph (b) deals with goodwill and as it stands—the same relates to improvements in paragraph (c) either as it stands or as it is proposed to be amended—the benefit from that can never reasonably belong to anyone but the tenant. If it belongs to the tenant, again it is right that in fixing the rent we should exclude consideration of it. It is something for which he should not be charged additional rent. Again, I take the view that the provisions as they stand are for the benefit of the tenant.

The alternative would mean that the court would sometimes award a higher rent where it thought that the tenant was not entitled to the benefit of (a), and sometimes a lower rent where it thought he was. I am clear, however, that, on balance, it would be better that the court should not consider this point. I do not think I need trouble the House at this stage with paragraph (d), which is on rather a special point.

The Amendment would have no effect at all on paragraphs (b) and (c), and since the Clause wholly excludes these elements from the consideration of the court, thus keeping rents down, any effect that the Amendment would have would be to raise the rent, which is a result that none of us wants. That is how I see the position. It is a matter of legal construction and of experience and in matters like that I am more than prepared to reconsider the point, in the sense of looking at it again. I think that all my confreres would agree that the longer one is in the law the more satisfied one is that on the effect of any legal point one may well be wrong. I can give no guarantee, but I will reconsider the point in that sense.

As to the general position, I have noticed what has been said about scarcity value. Speaking quite objectively, my experience, certainly with regard to shop premises, is that the scarcity value situation is improving. There is some improvement, also, with regard to other premises. I do not want to put too much emphasis on that, because the problem does exist and that is the reason why this part of the Bill has been introduced. While I am always prepared to look at the point, I think that our proposal is the best that we can do. If any hon. Member has any suggestion to make before consideration of the Bill is concluded in another place and cares to send it to me, I shall be glad to look at it.

Mr. David Weitzman (Stoke Newington and Hackney, North)

I hope that the right hon. and learned Gentleman will look at the Amendment again and that even if he is not satisfied with the form of words he will see that the effect of the Amendment is secured in some way. I understand that the only real objection to it is that if these words are inserted in the Bill it is conceivable that the county court judge might fix a higher rental. I apprehend that that is a possibility and that no one in the House intends that that should happen. The effect might be avoided by an alteration in the words of the Amendment.

There is a grievance here that should be remedied. If one looks at it from a practical point of view and takes the case of a man who has built up a business and has established a goodwill, is it right that when the rent is fixed in respect of its further tenancy the fact that he has built up a goodwill and that the business is on a sound basis should not be taken into account by the landlord? The tenant may have started from scratch with the business and have had the premises empty at the beginning. He may have built up by his own efforts a really valuable holding there. The county court judge fixes a rental which is the ordinary rental in the open market. I suggest that that is unfair, because even if one says that the county court judge has not to take goodwill into account that goodwill, nevertheless, cannot be shut off if one is trying to assess market value.

It is only right that some benefits should accrue to the tenant when the landlord fixes the rent. I should have thought that the last thing we wanted was to go further back than the benefits conferred by the Landlord and Tenant Act, 1927. It will be remembered that under that Act there were certainly cases of adherent goodwill which involved con- siderable sums by way of compensation. It seems wrong that one should go back and deny to the tenant the advantages given by that Act.

The proper way would be to say to the county court, "Take into account the fact that the tenant has built up a business here and has established a sound holding in the area. In fixing the rent you should have regard to that, for the tenant's benefit, and you should reduce the rental accordingly." If, as the Home Secretary

says, there is a danger on the part of the court that the rental might be increased, let us have words to prevent that possibility arising. I hope that the right hon. and learned Gentleman will look at the matter again and consider whether something cannot be done.

Question put, "That the words proposed to be left out stand part of the Bill."

The House divided: Ayes, 136: Noes, 99.

Division No. 157.] AYES [11.28 a.m.
Aitken, W. T. Hay, John Oakshott, H. D.
Allan, R. A. (Paddington, S.) Heald, Rt. Hon. Sir Lionel O'Neill, Hon. Phelim (Co. Antrim, N.)
Alport, C. J. M. Heath, Edward Ormsby-Gore, Hon. W. D.
Amery, Julian (Preston, N.) Higgs, J. M. C. Page, R. G.
Barlow, Sir John Hirst, Geoffrey Peto, Brig. C. H. M.
Bell, Philip (Bolton, E.) Horobin, I. M. Pitt, Miss E. M.
Bennett, Dr. Reginald (Gosport) Howard, Hon. Greville (St. Ives) Powell, J. Enoch
Bishop, F. P. Hudson, Sir Austin (Lewisham, N.) Profumo, J. D.
Black, C. W. Hulbert, Wing Cdr. N. J. Rayner, Brig. R.
Bossom, Sir A. C. Hylton-Foster, H. B. H. Redmayne, M.
Boyd-Carpenter, Rt. Hon. J. A. Johnson, Eric (Blackley) Renton, D. L. M.
Boyle, Sir Edward Johnson, Howard (Kemptown) Ridsdale, J. E.
Braine, B. R. Jones, A. (Hall Green) Roberts, Peter (Heeley)
Braithwaite, Sir Gurney Joynson-Hicks, Hon. L. W. Robertson, Sir David
Brooke, Henry (Hampstead) Kerby, Capt. H. B. Russell, R. S.
Buchan-Hepburn, Rt. Hon. p. G. T. Kerr, H. W. Ryder, Capt. R. E. D.
Butler, Rt. Hon. R. A. (Saffron Walden) Langford-Holt, J. A. Savory, Prof. Sir Douglas
Campbell, Sir David Legh, Hon. Peter (Petersfield) Scott-Miller, Cmdr. R.
Channon, H. Linstead, Sir H. N. Smithers, Sir Waldron (Orpington)
Churchill, Rt. Hon. Sir Winston Lloyd, Rt. Hon. G. (King's Norton) Spearman, A. C. M.
Colegate, W. A. Lloyd, Rt. Hon. Selwyn (Wirral) Spens, Rt. Hon. Sir P. (Kensington, S.)
Conant, Maj. Sir Roger Lockwood, Lt.-Col. J. C. Stevens, Geoffrey
Cooper-Key, E. M. Lucas, Sir Jocelyn (Portsmouth, S.) Stewart, Henderson (Fife, E.)
Craddock, Beresford (Spelthorne) Lucas-Tooth, Sir Hugh Strauss, Henry (Norwich, S.)
Crookshank, Capt. Rt. Hon. H. F. C. Lyttelton, Rt. Hon. O. Summers, G. S.
Crouch, R. F. McAdden, S. J. Taylor, Sir Charles (Eastbourne)
Dodds-Parker, A. D. Macdonald, Sir Peter Teeling, W.
Drewe, Sir C. McKibbin, A. J. Thomas, Leslie (Canterbury)
Dugdale, Rt. Hon. Sir T. (Richmond) Maclay, Rt. Hon. John Thomas, P. J. M. (Conway)
Eden, J. B. (Bournemouth, West) Macleod, Rt. Hon. lain (Enfield, W.) Thompson, Lt.-Cdr. R. (Croydon, W.)
Finlay, Graeme MacLeod, John (Ross and Cromarty) Touche, Sir Gordon
Fisher, Nigel Macmillan, Rt. Hon. Harold (Bromley) Vaughan-Morgan, J. K.
Fleetwood-Hesketh, R. F. Maitland, Comdr. J. F. W. (Horncastle) Wakefield, Edward (Derbyshire, W.)
Fletcher-Cooke, C. Maitland, Patrick (Lanark) Wakefield, Sir Wavell (St. Marylebone)
Ford, Mrs. Patricia Manningham-Buller, Rt. Hn. Sir Reginald Walker-Smith, D. C.
Fort, R. Markham, Major Sir Frank Wall, Major Patrick
Fraser, Hon. Hugh (Stone) Marples, A. E. Wellwood, W.
Fraser, Sir Ian (Morecambe & Lonsdale) Medlicott, Brig. F. Williams, Rt. Hon. Charles (Torquay)
Fyfe, Rt. Hon. Sir David Maxwell Mellor, Sir John Williams, Gerald (Tonbridge)
Garner-Evans, E. H. Moore, Sir Thomas Williams, Sir Herbert (Croydon, E.)
Glover, D. Nabarro, G. D. N. Williams, R. Dudley (Exeter)
Gough, C. F. H. Neave, Airey Wills, G.
Grimond, J. Nicholson, Godfrey (Farnham)
Grimston, Hon. John (St. Albans) Nield, Basil (Chester) TELLERS FOR THE AYES:
Harvey, Air Cdre. A. V. (Macclesfield) Nugent, G. R. H. Mr. Studholme and Mr. Vosper
Harvey, Ian (Harrow, E.) Nutting, Anthony
Bacon, Miss Alice Collick, P. H. Harrison, J. (Nottingham, E.)
Bartley, P. Craddock, George (Bradford, S.) Healy, Cahir (Fermanagh)
Beswick, F. Darling, George (Hillsborough) Henderson, Rt. Hon. A. (Rowley Regis)
Blackburn, F. Deer, G. Hudson, James (Ealing, N.)
Blenkinsop, A. Dugdale, Rt. Hon. John (W. Bromwich) Hughes, Cledwyn (Anglesey)
Blyton, W. R. Edwards, Rt. Hon. John (Brighouse) Hughes, Emrys (S. Ayrshire)
Bottomley, Rt. Hon. A. G. Edwards, W. J. (Stepney) Johnson, James (Rugby)
Bowden, H. W. Evans, Stanley (Wednesbury) Jones, David (Hartlepool)
Bowles, F. G. Flenburgh, W. Jones, T. W. (Merioneth)
Brook, Dryden (Halifax) Grey, C. F. Kenyon, C.
Brown, Rt. Hon. George (Belper) Griffiths, Rt. Hon. James (Lianelly) Key, Rt. Hon. C. W.
Burton, Miss F. E. Hale, Leslie King, Dr. H. M.
Butler, Herbert (Hackney, S.) Hall, Rt. Hon. Glenvil (Colne Valley) Lawson, G. M.
Callaghan, L. J. Hamilton, W. W. Lewis, Arthur
Lipton, Lt.-Col. M Rhodes, H. Ungoed-Thomas, Sir Lynn
MacColl, J. E. Roberts, Rt. Hon. A. Weitzman, D.
McKay, John (Wallsend) Robinson, Kenneth (St. Pancras, N.) Wells, Percy (Faversham)
Mellish, R. J. Rogers, George (Kensington, N.) Wells, William (Walsall)
Messer, Sir F. Shinwell, Rt. Hon. E. West, D. G.
Moody, A. S. Short, E. W. Wheeldon, W. E.
Morley, R. Simmons, C. J. (Brierley Hill) White, Mrs. Eirene (E. Flint)
Moyle, A. Slater, Mrs. H. (Stoke-on-Trent) White, Henry (Derbyshire, N.E.)
Mulley, F. W. Smith, Ellis (Stoke, S.) Whiteley, Rt. Hon. W.
Neal, Harold (Bolsover) Smith, Norman (Nottingham, S.) Willey, F. T.
Oldfield, W. H. Soskice, Rt. Hon. Sir Frank Williams, David (Neath)
Orbach, M. Sparks, J. A. Williams, Rev. Llywelyn (Abertillery)
Pannell, Charles Summerskill, Rt. Hon. E. Williams, W. R. (Droyleden)
Parker, J. Taylor, Bernard (Mansfield) Williams, W. T. (Hammersmith, S.)
Parkin, B. T. Taylor, John (West Lothian) Winterbottom, Ian (Nottingham, C.)
Paton, J. Taylor, Rt. Hon. Robert (Morpeth) Wyatt, W. L.
Plummer, Sir Leslie Thomas, George (Cardiff) Yates, V. F.
Popplewell, E. Thomas, lorwerth (Rhondda, W.)
Price, J. T. (Westhoughton) Thomson, George (Dundee, E.) TELLERS FOR THE NOES:
Pursey, Cmdr. H. Turner-Samuels, M. Mr. Holmes and Mr. Arthur Allen.

11.30 a.m.

Mr. William Wells (Walsall)

I beg to move, in page 26, line 9, after "has," to insert: or his predecessors in title have.

Sir D. Maxwell Fyfe

If the hon. Member will allow me to say so—and prepare himself for a great shock—I am ready to accept this Amendment.

Mr. Ellis Smith (Stoke-on-Trent, South)

The best speech this morning.

Mr. Wells

I am grateful to the right hon. and learned Gentleman, but I do not think he should give us shocks of this kind after so many late nights.

Mr. Speaker

I think the right hon. and learned Gentleman ought to second the Amendment.

Amendment agreed to.

Sir D. Maxwell Fyfe

I beg to move, in page 26, line 15, to leave out paragraph (c), and to insert: (c) any effect on rent of any improvement carried out by the tenant or a predecessor in title of his otherwise than in pursuance of an obligation to his immediate landlord. This Amendment fulfils an undertaking which was given in Committee by my hon. Friend the Joint Under-Secretary to consider the reference to improvements in Clause 34, the Clause prescribing the basis on which the rent is to be fixed. At present, the Clause provides that in assessing the rent the court is to disregard improvements for which compensation would: have been payable to the tenant if he had quitted the holding. The effect of the Amendment is that all improvements are to be disregarded except those carried out by the tenant in pursuance of an obligation to his landlord. The purpose of disregarding improvements is to prevent the tenant having to pay a higher rent by reason of his own expenditure on improvements. In the ordinary way obligation to do improvements has the effect of reducing the rent and in our view such improvements ought not to be disregarded when the rent under the new tenancy is fixed. For the other improvements we think it ought to be made quite clear that they will not result in the tenant having a higher rent and that is the purpose of this Amendment.

Mr. Glenvil Hall (Colne Valley)

I am inclined to support this Amendment, which, of course, we accept. At the same time, we sadly reflect that while we are glad this provision is being made more satisfactory from the point of view of the tenant, it is a pity that when we were pleading hard late last night for consideration for the tenants of residential properties the right hon. and learned Gentleman hardened his heart and refused to listen. However, half a loaf is better than no bread.

Mr. Weitzman

May I ask the right hon. and learned Gentleman whether I have the right understanding of this Amendment? Does it mean that if a tenant has carried out an improvement in pursuance of an obligation to his landlord the fact that there is an improvement can be taken into account in fixing the rent; in other words, his rent may then be increased? It seems an extraordinary state of affairs. Supposing that under the terms of a lease or agreement with his landlord, or in some way, because of what the landlord obliged him to do the tenant has done something to the property which improves the property. Is the landlord then to be entitled to say to the county court judge, "The tenant has done this because I obliged him to do it. He was obliged to do it under his contract to me and, therefore, you have to take that into account and increase the rent because of it."

Sir D. Maxwell Fyfe

One has to go back to the original letting. If at that time the lease contained obligations to carry out improvements on the general higgle of the market the tenant would say, "I must pay a lower amount, because you are obligating me to carry out improvements which will cost me, say, £250." It would be an adjustment of that kind. Then, when the lease comes to an end, and the premises are standing with the improvement made, they will be valued as they stand, and with that improvement which has been carried out under the contractual obligation. But if the tenant has done any further improvements of his own volition, they will be ignored in fixing the rent, and therefore the rent will be kept low. I am sorry if I did not make that clear originally.

Mr. Turner-Samuels

I cannot accept this with the same equanimity as my right hon. Friend, particularly because I do not agree that it will have the effect which the Home Secretary has mentioned. He will insist on suggesting that a provision of this kind would be a benefit to the tenant and I cannot see where the beneficial process comes in. I wish the Government would appreciate the fact—I am sure they must be advisedly closing their eyes to the obvious consequence of this matter—that the open market rent will be charged to the tenant, and that the effect of this is to shut out any other consideration. It is expressly clear that the advantage lies with the landlord. This effectively and designedly clears out of the path of the landlord any obstructive considerations of advantage to the tenant, including the particular consideration to which I have referred. How, therefore, this can be described as a benefit to the tenant completely baffles me.

No statement from the benches opposite has clarified this matter. If the Government wish to put this into the Bill, and to make the path easier for the landlord to get his open market rent without consideration for anything the tenant has done, why do not they say so candidly and straightforwardly? Why should they clutter up the matter with all these self-righteous expressions about benefit to the tenants, when that is just the very thing this Clause expressly excludes?

Amendment agreed to.

  2. cc2475-91
  4. cc2491-501
  5. Clause 42.—(TENANCIES EXCLUDED FROM PART II.) 5,080 words, 2 divisions
  6. cc2501-2
  8. cc2502-4
  10. c2504
  11. Clause 57.—(COMPENSATION FOR EXERCISE OF POWERS UNDER SS. 55 AND 56.) 15 words
  12. c2504
  14. c2504
  16. cc2504-5
  17. Clause 67.—(INTERPRETATION.) 79 words