HOUSING, SHEFFIELD (RENTS) (Hansard, 26 February 1960)

§ Mr. George Darling (Sheffield, Hillsborough)
I want to raise an aspect of the workings of the Rent Act which I regard as thoroughly deplorable and which I am sure must be causing as much concern to the Parliamentary Secretary and his right hon. Friend as it is to hon. Members on this side of the House. I refer to the buying of residential properties by investment companies, which seem nowadays to be springing up like mushrooms, and which are exploiting local housing difficulties by demanding of tenants extravagantly unreasonable rents under threats of eviction. I want to deal today with one specific case of this highly questionable behaviour—that of a block of flats known as Regent Court, in my constituency. It is a block of about 200 private flats.
Let me say at the outset that I shall not waste any time talking about the Rent Act. My views on that Act must be well known to the Parliamentary Secretary, and his views are well known to me, and there would be no profit in raising the old controversies. I will take the Rent Act at the Government's valuation and on the Minister's terms as to how he thinks the Act should be operated.
I want to be perfectly fair about this. The Minister has frequently referred to what he calls the spirit of the Act, and I take that to mean, in a case like this, that where the landlord is 793 permitted by the Act to obtain increases in rents, the increases demanded should be reasonable. In other words, the higher rents should have some reasonable relation to the rateable value of the property, to the location of the property and to the general level of rents in the district, and the landlord should at least make an effort to negotiate the new rent reasonably and fairly with his tenants. I do not want to quote any speeches which the Minister or the Parliamentary Secretary have made about this. I hope that the Parliamentary Secretary agrees that in those few words I have given a fair summary of his views and those of his right hon. Friend.
It is against that expression of opinion that I want to look at the behaviour of the landlords of the Regent Court flats in Sheffield. They are new landlords. They bought the property in 1958. This block of flats was built before the last war and, unfortunately, is not situated in a residential district. The flats are surrounded by small steel works and other factories, and the tenants have to put up with noise, because many of these works continue operating through the night, some of them for seven days and seven nights a week. They work round the clock and the tenants have to put up with noise, smoke and fumes from the works. I think that it is because of the location of this block of flats and the general values of the property in the district that the rateable values of the flats are within the controlled limits.
The previous landlord, a Sheffield businessman, tried to get round the fact that the rents were controlled by attempting to double the service charges which the tenants had to pay for central heating, hot water, and so on. The tenants got together, when faced with this demand, and briefed a very good solicitor, who fought their case in the courts and won. The service charges were not raised. Unfortunately, in a series of court actions dealing with the matter of the service charges over a period of a few years, the tenants were landed with legal costs exceeding £700. I will come back to that in a minute.
The property was then sold to an investment company, which has either changed its name or resold the flats to the present owners, a firm which calls itself Barbridge and Company and 794 operates from an office in north-east London. The Parliamentary Secretary will understand that not only do most of the tenants pay controlled rents but their service charges are fixed by the court decision which I have mentioned. If Barbridge and Company, the landlords, whoever they may be, want to make a profit—I think an excessive profit—out of their investment in this property, they have to take it out of the new tenants, who are unprotected under the Rent Act.
In this type of property in provincial towns there is generally more movement of tenants than there is among house holders. Householders tend to be stationary. It is the tenants, who move in and out of flats like this, who are the mobile people. At the moment, there are about thirty unprotected tenants. Barbridge and Company demand that they shall provide the profits. Each of the unprotected tenants has had a notice to quit. There have been no negotiations for rent increases, no effort by the landlords to be reasonable, and no regard to what the Minister and the Parliamentary Secretary have called "the spirit of the Act". The first move has been a threat of eviction, and with it comes another letter demanding a higher rent—in every case a rent tremendously higher than the previous one.
I want the Parliamentary Secretary to take note of the arithmetic of the demands, because the arithmetic is important. There are one-bedroomed, two-bedroomed and three-bedroomed flats. The controlled rents, including local rates and service charges, are 27s. 6d. a week for a one-bedroomed flat, 33s. a week for a two-bedroomed flat, and 38s. 6d. for a three-bedroomed flat. I shall refer from now on to the two-bedroomed type. If the rates and service charges are deducted, the controlled net rent is 14s. 7d. a week, the gross rateable value of the flat being £19. That is the figure worked out under the Act. Barbridge and Company demand that the net rent shall be increased for the unprotected tenants from 14s. 7d. a week to £3 6s., namely, five times the present rent. The Parliamentary Secretary knows that when we have asked what a reasonable rent increase should be in cases like this we have not been told officially. I do not want an official figure, because it is difficult to lay one down. Circumstances vary in different 795 places. As a guiding figure we have been given in the past the figure of two and a half times the gross rateable value. I do not want to tie the Parliamentary Secretary to that figure, but I am sure that he will agree that seven times the gross rateable value is an excessive rent to demand. In the larger flats the demand is higher than seven times the gross rateable value.
I do not know whether compulsory purchase orders would apply in a case like this to keep a landlord under control. Perhaps the Parliamentary Secretary will comment on that. At any rate, what is happening now is that for a flat with a controlled rent, plus rates and service charges of 33s. a week, the landlords now demand four guineas. They have the colossal effrontery to say in their demand notes that they have been advised that that figure is well below the current reasonable rent. I do not know who has been advising the firm—perhaps some others who have got into this get-rich-quick business and have had some success in it. It is a grossly incorrect statement.
The rents the firm is demanding are completely out of line with the rents which are paid for slightly better and even uncontrolled properties in industrial areas. The Parliamentary Secretary represents a constituency in a city not far away from Sheffield, and he will have a good idea of what the standards are. He will know the type of people who live in blocks of flats in this type of industrial area. They are salaried and better off wage-earners. Some are well-to-do. Some are old-age pensioners. There are some tragic cases of old-age pensioners living in this block of flats which are uncontrolled. They came to the flats because they wanted to give up the larger houses in which they lived. They cannot afford to pay the demanded rents and they have nowhere else to go.
I want to raise another aspect of this case. It is important because it gives a guide to what the rents ought to be on past practice even in this block of flats. Some of these new and, therefore, unprotected tenants made contracts with the previous landlord after the passing of the 1957 Act. They came in in late 1957 or in 1958, and were, therefore, unprotected from the word "go". 796 In effect, they had to negotiate new rents with the landlord after the passing of the Act. Under the Act, therefore, these new rents applied.
In the example I have taken, that of the two-bedroomed flat, the increase for which the landlords asked, and got, was £1 a week; in other words, four times the rateable value—an overall rent of about 53s. a week. That is the kind of flat for which the new company is now asking four guineas. If we take as being reasonable the decision made by the previous landlord under the 1957 Act, the reasonable rent would be 53s. a week. I must say that the tenants concerned do not consider even that to be reasonable, but let us not argue about that. The new landlords want to put the rent up to four guineas, and I cannot think of anything that has happened since 1958 to justify such an increase.
When I raised this matter at Question Time a little time ago, the Minister told me that if the tenants felt that they were being asked an exorbitant rent he would advise them to get together, consult a solicitor, and negotiate better terms. But, of course, it takes two parties to negotiate a settlement. Barbridge and Company will not negotiate, and will not even reply to the tenants' letters. All that the tenants can do, and this is what their solicitor has advised them to do—I think, quite properly—is to sit tight and make the landlords take them to court for payment of the higher rents.
That, however, is a repetition of the costly and, as I think, unsatisfactory and thoroughly unreasonable way of dealing with these rent cases. There are only 200 of these tenants and, as I have said, they have already paid out during the last few years over £700 in legal fees. There must surely be a limit to that kind of expenditure.
I do not want to put the question in a crude way by asking the Parliamentary Secretary how much he thinks the tenants should go on paying in legal fees until they get satisfaction. I am sure that he does not want me to approach the subject in that spirit, but the tenants are approaching it in the spirit of asking, not the hon. Gentleman himself in person but the Government, how much they think that the tenants should go on paying in legal fees until they get satisfaction.
797 I am sure that neither the Parliamentary Secretary nor the Minister want the Rent Act to operate in this way. In an Adjournment debate I cannot suggest that the Act be amended, but I invite the hon. Gentleman to comment, not specifically on this case—that, perhaps, would be wrong—but generally on this kind of behaviour of landlords who are diving into the property market in order to get quick and rich returns.
I should like him to tell us what he thinks of landlords generally who offend against what he and his right hon. Friend have called the spirit of the Act. His words may have a useful deterrent effect on other landlords who may be thinking of behaving like this. If he could tell us how tenants such as those that I have mentioned can deal with the exorbitant demands of unreasonable landlords without incurring heavy legal expense, I am sure that he will be doing thousands of poor tenants a very great service indeed.

§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph)
The hon. Member for Hillsborough (Mr. Darling) has spoken in terms of the greatest moderation, and I thank him for the precise and reasonable way in which he has put a rather worrying situation. He has denied himself any discussion of the Rent Act, and I only mention that Act in order briefly to rehearse the facts, and two of its objectives. As the House knows, the Rent Act lifted the control of rents from properties with a rateable value of more than £40 in London or £30 in the provinces. It also lifted the control of rent from any previously controlled property which, after the passing of the Act, changed tenancies. It is because of that second provision of the Rent Act that this situation has arisen in Sheffield.
The objects of the Rent Act include these two that I shall now mention. First, it aimed gradually to unfreeze rented property so that dwellings now held, because their rent was such a bargain, by people who could perfectly well look after themselves or who needed less accommodation, might be made available for those who needed them more. The second objective was, by making rents nearer to the economic level, to 798 encourage landlords to re-let vacant property instead of, as became the practice before the Rent Act, selling it. Both these trends are now in process.
It is, however, a fact that owing to the long operation of the Rent Acts, large numbers of the population have come to expect rents well below the market value. Even if certain people are able to afford rents much higher than those which they have been paying—able even to afford market rents—any approach of the rent to the market level brings them a great sense of shock. This is not surprising. They have not been trained to a market rent. But, as the hon. Gentleman has made plain, the bulk of landlords, or certainly very many of them, seem to recognise this and in carrying out the Rent Act have increased rents either progressively or in moderate steps at a time. This, as the hon. Gentleman has justly pointed out, is what my right hon. Friend has always urged. It is what he calls the spirit of the Rent Act.
It is possible to inquire in a situation of decontrol what my right hon. Friend could ultimately do if the spirit in any particular case was sufficiently broken. The hon. Gentleman mentioned the possibility of a compulsory purchase order. I can speak about the general position by saying that a housing authority has power to make such an order in relation to any houses within its area if, in its opinion, it needs those dwellings for the purpose of providing housing accommodation. Orders of this kind have no effect unless confirmed by the Minister, and before reaching a decision he would have to consider all the facts of the case and any objections made to the order. The Minister has in the past confirmed an order submitted to him where the action of owners threatened to make the local housing problem more acute and where the housing authority had taken action on grounds that I have mentioned. I have no doubt that my right hon. Friend would be prepared to entertain such an order again if similar circumstances should prevail.
Now, if I may leave the general and come to the particular, it is, as the hon. Gentleman said, the problem of the thirty decontrolled flats in Regents Court. May I say in particular how 799 sorry I am to hear that some of the tenants in these decontrolled flats are old-age pensioners who have done just what the Government want them to do and have given up surplus space to move into smaller space. It is admirable. It is just what we want, and it is a very sad result that they should now be in this situation. I say this in no attitude of condescension or patronage. I hope that they will not despise the help of 'the National Assistance Board which can be of use to them in this situation. Old-age pensioners can often get that help, particularly since the disregards were raised so recently.
The hon. Gentleman's constituent, Mr. Seaton, who is one of the tenants, has set out the facts in an unusually lucid and clear letter which I have seen, and in general the facts are as the hon. Member said, except that I think there may be some confusion in his mind about deducting the rates and services so as to arrive at comparable net rents. I am a little way from his figures, by a few shillings a week. My own reckoning is that the controlled rent on a lunar monthly basis was £2 18s. 4d. and that now the landlord demands £11 7s. per lunar month. But in principle there is nothing between us.

§ Mr. Darling
It is £15.

§ Sir K. Joseph
No, the £15 is gross and includes service charges and rates. I have deducted those in both cases from the controlled rent and the demanded rent.
It may possibly be true—I am sure the hon. Gentleman is not in a position to deny this—that the figure demanded is the figure that the market can bear. Perhaps, if Mr. Seaton and the other tenants were to move out, their places might be taken at the rents the landlord demands. Even if that is true—these are modern flats, though admittedly in an intensely industrial environment—sudden increases of this nature do shock tenants. Landlords would do far better, as so many of them do, to increase the rents towards the market rent gradually and progressively.
800 This, however, will be very little comfort to the tenants now concerned, and I come now to what recourse they have. It is easy for me to say—I say it only in passing—that they can rent other properties. I realise that this is very difficult. But they can buy. Admittedly, perhaps many of them do not want to buy. In case any of them do want to buy, I must, to do justice to the situation, explain that not only can they nowadays go to the building societies to borrow money on new houses, but they can take advantage of the fact that, as a result of Government action, the building societies have now been encouraged and enabled, by Government guarantee, to advance money on older houses. This means that the buying of older houses more within the purse of people approaching house purchase for the first time has been facilitated. Also, I understand that Sheffield lends money for house purchase. Some of the tenants might be willing to look at that. Otherwise, their only course is to negotiate.
The hon. Gentleman makes great play of the £700. It is not easy to judge how heavy a burden this is without knowing how many tenants have spent that money over how long a period. It may well be that it has brought them good returns. I cannot say. But I am sure that the short debate we have had today may, perhaps, in some way strengthen the hands of the tenants in any future negotiation they may decide to enter upon.
My right hon. Friend stands by the objectives of the Rent Act. There is evidence of property coming on the market to let. It has offered a new incentive to let rather than to sell vacant property. But my right hon. Friend equally deplores the occasional abrupt and inconsiderate clutching at the last penny, of which, perhaps, the hon. Gentleman has this afternoon given us a sad example.