HC Deb 21 June 1960 vol 625 cc377-88

Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]

11.10 p.m.

Mr. R. W. Sorensen (Leyton)

Though it is fairly late at night, I feel that this topic, on which I desire to raise a few points, is sufficiently urgent to justify me claiming the time of the Minister for the next quarter of an hour. I intend to raise a matter of importance, not only to my constituents, but also to any other tenant householders throughout the country.

It concerns, in particular, the purchase of an estate of working-class dwellings by a property investment company and subsequently, initially at least, the demand for substantial increases in the rents for all decontrolled tenants. I have sent information to the Minister. I have presented a petition to the House and sent to the Minister another petition with 3,500 signatories. I have also put Questions to him, so he is now fairly familiar with the problem.

The facts are these. In my constituency and the constituencies of my hon. Friends the Members for Walthamstow, East (Mr. J. Harvey) and Walthamstow, West (Mr. Redhead) there is a large estate, which has been run by Warner

Estates, Limited. That company has been a very good landlord, and still is. I make no complaint about it. For some reason or other it saw fit a short time ago to sell 750 houses of its total estate in the two areas.

Forthwith the company to which it sold the block of 750 working-class dwellings proceeded to raise the rents—in the case of controlled tenants to the utmost permissible under the Rent Act, and in the case of decontrolled tenants, amounting to about 100, it proceeded initially to demand as much as twice, or even three times, the rent that had prevailed until then. Intimation of this increase was sent to all tenants, and inevitably they became very alarmed.

There were many other proposals in the original intimation by the new company, Peachey Properties Corporation. For instance, there was an offer of £200, or even more, to tenants if they would leave their property and go elsewhere. This was an inducement to them to clear out. In the case of decontrolled tenants, there was an offer of £25 if within three months they were prepared to go elsewhere for accommodation.

Apart from that, anyone looking at the demands made by the new investment company must have been alarmed at the amount it was demanding. I will anticipate later remarks by saying that it was induced ultimately to modify those demands very considerably through the efforts of a tenants' association formed in my locality.

I will give four typical instances of what was demanded originally. In the case of a small unmodernised flat the old rent was £1 0s. 6d. The new rent demanded, plus rates, is £3 15s., a difference of £2 14s. 6d. I will give another example of a small modernised flat. Incidentally, most of these flats are in buildings, with one flat up and one flat down, and consist of three or four rooms, plus a scullery or kitchen. In the case of this small modernised flat the old rent was £1 7s. 6d. The new rent is £3 12s. 6d., a difference of £2 5s. In the case of a large unmodernised flat the old rent was £1 4s. 6d., which was raised to £3 19s. 2d., representing a difference of £2 15s. 6d. Another instance is of a large modernised flat, the original rent of which was £1 8s. 6d., and the new rent demanded is £3 10s. 10d., a difference of £2 2s. 10d.

I give these illustrations in order that we should be familiar with what this meant to the tenants. It meant in many cases great alarm, and indeed a meeting was hurriedly called. Some 1,000 tenants and their wives filled to overflowing the school hall where the meeting was held. Later on another hall was hired and 700 to 800 people crowded into that hall, all standing, to listen to the recital of facts and possible remedies.

I am glad in this instance that the tenants formed an association. I am glad, in particular, that one of my young friends in the district, Councillor Robinson, is a tenant on this estate. He has been able to give the other tenants very considerable guidance. I am glad also that as a result of the organisation of the tenants, their firm yet courteous demands, and their explanation of the grievous harm that had been done to many of them, substantial concessions were secured from the new company. I congratulate them on being wise, shrewd or expedient, as the case may be, and certainly the tenants appreciate the fact that the original threat is not so menacing as it was.

However, that does not alter the fact that what has taken place in my own constituency, although now modified, is taking place in other parts of the country, and, indeed, in certain cases even in my own constituency. I am sure that many hon. Members have had letters bitterly complaining that they are now having a demand for £3 or £4 a week for a two-roomed flat, and that is by no means exceptional. Some of my colleagues tell me of the tragedy that occurs in their own area where, because of decontrol, there is a sudden demand made by some new company that has purchased a property, with the result that the tenant does not know which way to turn and in the end decides to remain in the accommodation, although doing so, perhaps, at the cost of his own nourishment.

That is why I was rather surprised at what I can only call the cynical observation of the Minister of Housing and Local Government when I asked him a Question a short time ago. He said that What matters is not the percentage increase in rent and that if the owners were to ask for an excessive rent they would not get tenants. Either the right hon. Gentleman is appallingly ignorant of circumstances such as prevail in my constituency or other constituencies, or else he has reached a depth of cynicism which I do not think is really characteristic of him.

We know that tenants have nowhere else to go but to live in the places where they have lived for some years, or where they have been able to enter in the last three or four years through some good fortune. Where can they turn? There are no places to let in my constituency or for miles around. Therefore, they are compelled under duress to pay these excessive rents—excessive in comparison with their incomes. Even though wages in many respects are better than they were, there are a large number drawing meagre wages, and even in the case where the wages are not so meagre, the fact remains that they have ordered their budgets for the coming year, and to find enough money to meet these substantial increases is appalling to them. I hope the Minister will appreciate that the tenants I have particularly in mind, and similar tenants in other parts of the country, are paying excessive rents. They are paying them because, of course, the demand for accommodation at present is still far beyond the supply.

I recognise that it is contended that if there is to be an economic rent £4 or £5 a week would not be excessive from that standpoint in order to secure at least a 4 per cent. return. I understand, also, why it is that the shares of property companies appear to be booming today. For instance, in the Evening News of 25th May this year, it was stated that the Peachey Property Corporation, Ltd. reported a surplus of £4,166,000 which had been placed to capital reserve, the group net profit for the eighteen months ending June 24th, 1959, being £114,827 after deduction of tax at £113,303. One can understand why some of these companies are making these substantial profits. They are able to do so by taking advantage of the relative scarcity of dwellings today.

In the circumstances, the Minister should appreciate that his Rent Act has failed to secure justice and equity for thousands of tenant householders. I submit to him that, if he did not expect that the-e would be these substantial rises of 150 per cent., 200 per cent. or even 300 per cent. in the rents previously paid, then he should frankly recognise what has happened and bring in some kind of amending legislation. Further, I suggest that, in order to ascertain or declare what is a fair rent, it might be possible for his own Ministry either to appoint several officers who themselves could arbitrate and then announce the criteria for a fair rent in particular instances or, at least, to give power to the local authorities so to do not only in regard to their own property but in regard to private property as well.

There is no need for this to be coercive. It may be highly desirable, a fair rent once having been determined, that it should then be imposed; but what I suggest can exist without that imposition. Certainly, it would help considerably if both landlords and tenants could have before them an objective, impartial and impersonal judgment of what a fair rent was in regard to certain properties. I ask again that the Minister should think over that suggestion. I do not understand why he should reject it. The reasons or excuses he gave previously seemed to me to be quite insubstantial. Even though it might be better if the power of imposition were to accompany the assessment of a fair rent, I should be prepared for that qualification not to exist provided there was some means by which the public generally might know, and landlords and tenants might know, what a fair rent was in the estimation of an impartial assessor.

Although this matter has to be ventilated by me tonight in no more than ten minutes or so, its importance is far greater than the limited time available would indicate and far greater than the concern of my constituents only. My constituents, through their agitation and organisation, have been able to secure certain substantial concessions. If they had not had someone to lead and help them to agitate and organise, they would have been facing very hard times now. Although my constituents may have been fortunate, I am thinking of tens of thousands of tenants elsewhere. In order to be sure of introducing the principles of equity and justice among those who are today becoming alarmed and even desperate, I ask the Minister to think seriously again about my suggestion and about the possibility of bringing in amending legislation.

11.25 p.m.

Mr. Michael Stewart (Fulham)

My hon. Friend the Member for Leyton (Mr. Sorensen) has mentioned one striking instance of a problem which is cropping up all over the country. I quote another instance, that of the tenants of Kew Bridge Court, which recently has been brought to my notice. Situated in Chiswick, it is the property of London Property Services. The tenants there had their rents doubled in 1957. With the expiry of a three-year agreement, they face having them doubled again. The landlords have shown already that they are quite prepared to let flats stand empty, often for long periods, rather than moderate their demands, judging that in the long run that will pay them best, no matter how much hardship and insecurity it creates.

I ask the Parliamentary Secretary, therefore, to beseech his right hon. Friend to take the course of action which my hon. Friend has urged and, possibly, to do two other things. The first of these is to issue some kind of circular, directive or public statement making it clear to landlords that they are supposed to negotiate rents, not simply to stand pat and demand the last penny they can get. It ought to be made clear to them that that was supposed to be the intention of the Act.

Secondly, will the Minister circularise local authorities pointing out some of the ways in which they can help people who may be rendered homeless by the Rent Act? In Acton, I believe, the local authority has rendered considerable help to tenants, with the approval of the Ministry. A general directive to local authorities suggesting useful action that they might take would help to mitigate this evil.

11.26 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph)

First, I should like to say how grateful I am to the hon. Member for Leyton (Mr. Sorensen) for his courtesy in sending me details in advance of the main outline of his case. Secondly, what is said tonight, on both sides of the House, will be of wider interest than merely to the hon. Member's constituents. I notice that not only the hon. Member for Fulham (Mr. M. Stewart), who has just spoken, but my hon Friend the Member for Walthamstow, East (Mr. J. Harvey) is also here as one many of whose constituents are at least neighbours of what is going on in Leyton.

Mr. Sorensen

And my hon. Friend the Member for Walthamstow, West (Mr. Redhead).

Sir K. Joseph

Yes.

I hope that the hon. Member for Leyton will permit me to state without dispute at this stage one of the main purposes for which the Rent Act was brought in. It was to bring back private enterprise into the field of housing to let, or, at least, to create the essential conditions in which we might hope that private enterprise might return to urban housing to let. Any such hope is in no way to discredit or decry What the local authorities are doing. They are the principal agent for housing to let. We all recognise that in nearly every part of the country local authorities are going just about as hard as they can in building. They have all sorts of restrictions in the way of land. Their officers are fully extended in tackling the task, and they would be the first to say that if private enterprise can be brought back into this field, using sites which, perhaps, are smaller than those that local authorities can effectively use, it can only be to the benefit of all.

The fact is that long years of controlled rents plus, during the last few years, a boom in building for sale has driven private enterprise builders, that potentially great source of capital and enterprise, out of the cities on to the green fields. We hope that decontrol, coupled with the general rise in prosperity and standards, will bring them back into the cities to help the local authorities in the task of providing wage earners with dwellings to rent. I must, however, stress that this will take place only if the profit incentive is allowed to operate.

With great sincerity, the hon. Member for Leyton has put forward a plea for some sort of tribunal. He says that there is no need for it to have coercive powers and that it could use moral influence. I ask him to recognise, however, that the idea of a fair rent is just about as helpful as what is a fair wage or fair income, for these are matters of opinion. They introduce into this matter uncertainty and obscurity, which is the sort of atmosphere which must kill the incentive to private enterprise, which we so much want to encourage to return to this sort of market. The sad fact is that the long-term interests of all require that business should find the redevelopment of dwellings to let in the cities a profitable enterprise, else it will not return, and if we want the work of the local authorities supplemented in this way we must let the market work.

I am grateful to the hon. Member for Leyton for permitting that general statement of case to begin with. I shall keep away from the particular for only one more passage, and that is to emphasise that since rents were decontrolled various other things have happened as well. After all, control of rents permitted that the 1939 average rent could be donbled, and when rent decontrol occurred, in most cases there had been increases of rents by about 100 per cent., even in the controlled sector of rented dwellings. It is from that basis, namely, double the 1939 rents, that the rent increases which the hon. Member has been describing have to be judged.

But, since 1939, price levels in general have increased three times and earnings levels have increased about four times. Compared with 1939, when there was quite a lot of unemployment, there is now the fullest of full employment on the whole and most households now have not only one, but one and a fraction wage earners, so that the income position of tenants cannot be judged by looking at the rent alone.

Of course, I do not deny for a moment that when decontrol occurs and rent is jerked up in one instant from below market level right up to market level, it can be a desperate and frightening shock to the people concerned. I am not minimising that for a moment, but I ask the hon. Gentleman to recognise that the adjustment which is taking place suddenly would not have been intolerable if it had taken place steadily over the years because of the rise in income levels and because of the increased number of wage earners in most households.

If I were in the hon. Gentleman's place, I would want to know from me, as it were, about the people who are not earning, and here I say that if there are people who are not earning or who are earning extremely little, or who have large families, the National Assistance Board stands ready to supplement rent. If the hon. Gentleman then attacks me and says that the National Assistance Board is limited and quite rightly limited in the rent it can pay, I remind him that in a debate on 3rd December, 1959, the position of the National Assistance Board was set out by my hon. Friend the Parliamentary Secretary to the Ministry of Pensions and National Insurance. It was explained that National Assistance at least avoids the shock of a sudden increase on anybody who is faced with a rent demand which he cannot meet and does not think it proper to meet, and that at least it gives him time to find a place of his own.

Mr. Sorensen

Does not the hon. Gentleman agree that except for low wage earners the Board cannot help?

Sir K. Joseph

I was trying to fill in the gap for old-age pensioners. Time is running short and I must make speed.

I distinguish between controlled and uncontrolled tenancies, and first I will deal with controlled tenancies. The vast bulk of those tenancies have been preserved and are still controlled. The hon. Gentleman said that landlords have offered £250 to individual tenants to give up their controlled tenancies. There is no law which prevents a landlord from doing that, but equally there is no law which forces the tenant to accept. If the tenant refuses, he can suffer no possible pressure, and I have seen from the documents that the landlords fully accept the right of tenants of controlled tenancies to refuse the offer.

Mr. Sorensen

Does not the hon. Gentleman realise that if the tenant accepts the place becomes decontrolled?

Sir K. Joseph

I am simply saying that he has no obligation to accept it. He has only himself to blame if he does.

It appears that the landlords of these controlled tenancies have offered long leases at fixed rents with an option to break at five-year intervals held by the tenant only, with the rent fixed somewhere between the present rent and the market rent. No doubt, tenants will consider the offer. A fixed rent security without a long-term obligation may have attractions if the property is structurally sound and proper advice is taken about the property and repairing and tax obligations. That is not for me to advise. I point out that real incomes will almost certainly rise. The Government Actuary has been instructed to assume a rise in real incomes of 2 per cent. per annum. Therefore, a fixed rent would in all probability bear a lower proportion to income. But that is for the tenants to decide.

Now I move to the issue of uncontrolled tenancies. The hon. Gentleman (lid not mention what is the most unfortunate factor in this situation, namely, those people who gave up their controlled tenancy in order to help the previous landlord to carry out a modernisation programme. It is very sad indeed that because of this these tenants should have lost their controlled status. Also, it was completely unnecessary because had they been well advised at the time they would, before they moved out, have invoked Section 17 of the Rent Act, 1957, which provides that where people move to suit their landlord and with his approval into other tenancies of the landlord the controlled status can move with them. I hope that one value of this debate will be to bring out that important fact.

As it is, they are faced with substantially higher rents. I must agree that the contingency of higher rents was foreseen when the Rent Act was passed. We still believe that it is absolutely right to try in this way to bring back private enterprise to help authorities to provide dwellings for urban wage-earners.

My right hon. Friend has always stressed that tenants in this situation should organise themselves into an association and negotiate with the landlords. He has always stressed that the landlords should take up a negotiating posture, too, and that the two sides should meet to negotiate.

It is interesting that the hon. Gentleman should be the first to say that in the event of these negotiations the extreme rent demands which the tenants faced at first have been moderated. There are one or two surprising features in the landlords' proposals in this case if the figures given by the hon. Gentleman can be taken as typical. It appears that the landlords are asking the same rent for large or small flats, modernised or unmodernised. One would have thought that they would charge less for the smaller and for the unmodernised, and would offer transfers so as to enable tenants to suit their purse.

Secondly, one is surprised that landlords who are so experienced as these should not be willing to consider raising the rents to market level over a rather longer period than three months. I recognise that they are voluntarily extending the four weeks provided by the Act, but might they not, perhaps, consider spreading the increases over a slightly longer period, benefiting themselves by getting some increase earlier than they now propose, but benefiting the tenant by deferring the last part of the increase to reach market level for a year or so?

I must finish by saying that there are several encouraging features in this case. I do not deny the shock that it must have been to the tenants. Firstly, the newly-born tenants' association has procured some concessions. Secondly, the landlords say that they are perfectly willing to consider individual cases of hardship. Thirdly, the landlords say that they are ready to meet the association to discuss further. Fourthly—and this is perhaps the most important fact of all—these dwellings are still being offered to rent.

But for decontrol, I think it is absolutely certain that the new landlord would have been selling these dwellings if he possibly could; and if he had got vacant possession of any of them, as he has the legal right to have vacant possession in decontrolled cases, he would have been able to sell them. The Rent Act has retained these dwellings in the market to rent, and that is some comfort.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes to Twelve o'clock.