§ Order for Second Reading read.
§ 11.6 a.m.
§ Mr. Denis Howell (Birmingham, Small Heath)
I beg to move, That the Bill be now read a Second time.
A private Member in the House of Commons views with a little misgiving the winning of first place in the Ballot for Bills. It is, of course, a great piece of luck and a great privilege to win the Ballot. He is then immediately confronted with the extremely difficult problem of what sort of Bill to introduce. There are a large number of social discriminations and hardships that need to be put right.
Looking over the records of hon. Members who have been successful in the Ballot in past years, one finds that the pattern is usually to select a small matter, which, nevertheless, may be of importance, and to promote a Bill to deal with it, with the co-operation of the Government. This year, however, because of reasons affecting my constituency in Birmingham, I decided that I should try to introduce a Measure which, one would hope, would have the support of both sides of the House but which, nevertheless, would tackle one of the large and difficult matters which undoubtedly causes tremendous hardship to considerable numbers of people.
I have been attacked not least by the Economist, which, if I may paraphrase, said that it was rather an impertinence to bring into the House a Bill which was blatant in its political character for a private Member. This was, no doubt, on the new hypothesis that Parliament was the last place in which polities should be discussed. I do not, therefore, apologise for the contentious nature of the Bill.
1622 As far as my researches go, this is the twenty-ninth attempt to introduce a Measure of this sort into Parliament. The fact that there have been so many previous Measures which have not got very far does not deter me, because the problem, far from receding, is growing. I describe it not so much as a growing problem as a galloping one. This is the reason for my introduction of the Bill today.
When the twenty-seventh Bill was introduced in another place by a noble Lord who was formerly a Member of this House, a Government statement was made by Lord Kilmuir, then Lord Chancellor, on 28th July, 1959, who, in asking their Lordships' House not to press the matter further at that time, said:… I could not devise a scheme of enfranchisement which would operate fairly, overcome the many difficulties … and still be sufficiently simple in its operation and general in its application to be worthwhile.But he ended his speech by saying:But let us continue to examine the problem. … I hope that the noble Lord will believe that it is in a mental attitude of reasonableness … that I approach his problem."—[OFFICIAL REPORT, House of Lords, 28th July, 1959; Vol. 218, c. 659–60.]It is three years since the then Lord Chancellor was saying that he was examining the problem in an attitude of mental reasonableness, and, therefore, it is not unreasonable for me today to say that if the Government do not like my Bill and my formula they should have reached by now, at any rate, some conclusions which they can offer to the House about it. Certainly the country has a right to expect that by now, three years after that, the Government should be able to assure us that they will do something about the problem and produce some reasonable argument here today.
I have said that this is a growing problem. I have never before in my short Parliamentary history received so many letters, such an avalanche of letters, as I have received on this matter from all parts of the country, 85 per cent. of which, the Minister will be interested to know, come from people who either start or finish with the sentence, "I have always been a Conservative, but …" I leave that for the Minister to contemplate during the course of the day.
1623 Among the many different organisations which have written to me on the matter are such widely different ones as the London Apartments Association and a Welsh town council. The former tells me:The members of this Association, which is affiliated to the British Hotels and Restaurants Association, applaud your effort and hope that it will benefit the many and varied leaseholders who are among our members. Great hardship is being caused and threatened to many, and to their sub-tenants.Turning from that, which I would describe as a private enterprise organisation, to the local authority in Wales, the Town Council of Abertillery, the Clerk of the Council wrote to me only yesterday to say:
§ "My Council have had under consideration requests for ratepayers in the district for loans for the purchase of the freehold reversions of their properties. Some of the terms offered are considered by my Council to be excessive, and they are not prepared to advance public money in these cases. I have been instructed, therefore, to inform you of this and to say that my Council give their fullest support to the Private Member's Bill to be introduced by you in the House this week. On behalf of the Council I wish you every success.
§ Yours faithfully,
§ John Evans,
§ Clerk of the Council."
§ There is a local authority which is apparently overwhelmed by the problem so far as the national considerations are concerned and expresses the hope that something will be done.
§ There is no doubt that thousands of leaseholders in this country are in a desperate plight and have a real fear as to the future, and Parliament will be a very callous place indeed if it does not try to deal with this problem. It is not a new problem, not a new problem at all. During my researches I found, for example, that there was a Royal Commission on the Housing of the Working Classes in 1884. Among the members of the Royal Commission was Cardinal Manning. Ten out of the 15 members of the Royal Commission produced a majority Report on this problem. They included. I am happy to say, Cardinal Manning. The Report is very interesting, and I want to read the Commission's conclusion. It is interesting to see that the difficulties and the social circumstances about which they reported in 1884, seventy-five years ago, are not 1624 one whit better today than they were then.
This is what the Commission said:
The prevailing system of building leases is conducive to bad building, to deterioration of property towards the close of the lease, and to a want of interest on the part of the occupier of the house he inhabits … legislation favourable to the acquisition on equitable terms of the freehold interest on the part of the leaseholder would conduce greatly to the improvement of the dwellings of the people of this country.
It was in 1884 that those words were written. That is precisely what my Bill aims to do today, in 1962.
§ It has been said that it takes forty years to get a major Measure of social reform on to the Statute Book after a Royal Commission has pronounced in favour of it. By the law of averages this Bill is somewhat behind time and should go through, since it is seventy-five years now since that Royal Commission reported. Let us hope we can do now what was commended by Cardinal Manning, who is probably looking down on us from a great height and hoping that Parliament will carry out his recommendation.
§ I hope that my hon. Friends from Wales will not get involved in a theological argument because of the mention of Cardinal Manning. He was one of the members, but there were other members of the Royal Commission. I know that my hon. Friends are very interested in this problem and that they have other religious problems, too. I feel sure that Wales hopes for the Bill and that she will not he worried by religious susceptibilities in dealing with something whose aim is social reform.
§ However, there was an objection among a minority of the Royal Commission and one of the minority on that occasion was the then Lord Salisbury. He objected on the ground that he believed that such building lessees would be unsatisfactorily treated if the Report were implemented and that to end that system would bring to an end the housing of the working classes. An interesting comment to make on that is that, by and large, the people who are involved, and who are there described as the working classes, would probably not describe themselves as of the working classes: they would probably describe themselves as of the middle classes.1625
In 1889, shortly afterwards, we had a Select Committee on Town Holdings. This Committee said—and these are very important words, which, again, are as true today as they were in 1889—
evidence before us shows that there is a widely spread sense of injustice among lessees in having, it the end of their lease, to give up the building they or their predecessors have erected, or to pay a rent calculated on the principle that such buildings are the property of the landlord.
I say, in passing, that the Government did belatedly do something about it by introducing the Landlord and Tenant 1954, but it was precisely on the principles that the Committee condemned in 1899 that they acted. The Select Committee went on to say:
It is natural that such a lessee should feel that he is unjustly treated under such a system.
§ And so, of course, he is.
§ One of the things which my party did when it came to power in 1945 was to appoint the Uthwatt Committee, to see what could be done. This Committee brought in a very interesting and practical interim Report which particularly recommended that the hardships on business interests should be alleviated. In fact, largely that has been done, but, unfortunately, Mr. Justice Uthwatt died and Lord Justice Jenkins superseded him. In the second part of its Report the Committee dealt with residential leaseholds, which, of course, is what we are dealing with today. The Committee produced a Report which I shall refer to shortly, but on the whole completely departing, for those residential leases, from the principles which the first Report recommended in respect of business leaseholds. I shall refer to that shortly.
§ I want to go briefly through the arguments in favour and the leading arguments against the present system. First, there is the terrible business of dilapidations when a lease is coming towards its end. The ground landlord who provides the land certainly ought to get a fair return in money values for the land he provides, but he gets at the end of the lease a house to which he has contributed nothing, and, of course, the bill, for dilapidations and large-scale repairs which have to be done when the property is being handed back to the landlord, is very considerable indeed, and that is one of the things which brings 1626 uppermost all the vices of the present system.
I will quote just one letter from a man living at Kew Gardens. He wrote to me about this very matter. I hope that the Minister will listen, because I think that he will find this very interesting. He said:
Reference the article in the Evening News of yesterday, and to your campaign, the following is a perfect example of that which you are fighting for:—Lease 16 years to run. Today's value of house £4,000 to £5,000. For 40 years the ground landlords were Queen Anne's Bounty, who never worried us once. Lease sold by them to the Jovereen Development Company. Jovereen put in a bill of dilapidation for £1,500 three years ago and have persecuted us ever since. Most of the necessary work is now done, but it is impossible to satisfy them. They are now issuing a writ in the High Court for eviction, in which case Jovereen. having paid £300 for the lease, will he able to make a profit of £4.000 odd and two old people, aged 84 and 72, will he turned into the street. What have we done to deserve this robbery? Can you help, Sir?".
§ No hon. Member can have a more serious letter than that. There is a moral obligation on the Government to protect old people, of whom these two are only two of many. The unfortunate thing about the system is that it hits people towards the end of their lives, because they are generally pensioners when the lease is running out.
§ An interesting point from my correspondence is that because the expectancy of life in this country has increased many people who believed that if they entered into leasehold arrangements for forty or fifty years it would be enough to see them through find that because of the benefits of modern science, for which we are grateful, it is not enough. They find themselves on the street just at the moment when they are most vulnerable. That is another reason why the situation cannot be left as it is today.
§ One of the things that has been happening has been the large-scale change of ownership where there are large trusts, which generally behave reasonably but wish to capitalise on their assets and sell out to pure speculators. The letter I have quoted illustrates that point and I could mention many others. The Barber Trust, in my constituency, which was set up to produce money for the Barber Institute of Fine Art, in Birmingham University, decided to sell thousands of houses in 1627 my constituency and in other parts of the Midlands.
§ After representations, with the support, I am glad to say, of all parties in the city, we managed to get the right hon. Gentleman's predecessor to agree that a new trust should be formed, mainly composed of members of local authorities, to buy these houses just to stop their falling into the hands of speculators. The very fact that the Ministry recognises the need to do this with these trusts has been a matter of great comfort to thousands of people. It also shows the need to repeat the operation with many other trusts where there has not been so much publicity.
§ One argument for doing something about leaseholds is that the system is fundamentally undemocratic. It is the last vestige of feudalism that one can find in this country. I hope that the Minister will be helpful today, though I am not too optimistic. Any party which is returned to power on the slogan of "a property-owning democracy" has a tremendous obligation, because under this system at the end of the day the people have no property, no ownership and certainly no democracy. I therefore hope that the Minister, in terms of this political high-sounding slogan, will show us how he proposes to secure a property-owning democracy for the leaseholders.
§ My biggest argument in favour of doing something is that the system creates decay in many of the large houses where the leases are down to twenty or thirty years. We have this problem in large measure in Birmingham. Hon. Members opposite who represent constituencies in the city recognise this, as I do, and have spoken about it.
§ In Sparkbrook, Small Heath, Hands-worth, and even in parts of Edgbaston, when these leases get down to about twenty years, the tendency is for people to get out. And who can then raise the large amounts necessary to buy leases of twenty years? No building society, of course, will help. On this subject I should like to quote from an interesting report made to the members of the Council of the Wales and Monmouthshire Conservative and Unionist 1628 Association. Hon. Members will find a copy of it in the Library.
The report was presented, obviously, after a great deal of research, by Alderman Dolman. On the question of helping people to raise money to buy twenty-year leases, he said:
I have personally written to the Halifax Building Society, and have telephoned others, to find out what is the position about their making loans on leasehold property, and I have also written to Newport Corporation on the same subject. Their replies are set out in the third schedule to this Report. I have found, and have been informed by other solicitors, that these lending arrangements are similar to those of other local authorities and of other building societies. There can be no shadow of doubt that this has led to hardship … the repayments are so big that either the borrower cannot afford them, or he is refused as a borrower because his income is too small, or, at the best, he has great difficulty in making such repayments.
Members of Parliament representing Birmingham, in a survey on housing matters this summer, asked the same question. We found that only local authorities, among reputable bodies, would lend money on these short-term leases.
§ Some very shady operators are charging fantastic interest rates to advance money to buy these short leases. I have heard of 10 per cent. and 15 per cent. being charged. This means that people who have nowhere to go and who are desperate can hope to pay back these loans only by overcrowding the houses and virtually putting a family in each bedroom. This is why there are five or six families in these large houses, and the process of decay starts and is continued.
§ This is a tremendous problem, and when the leases are about to run out and nothing is done about it, it is the local authority that has the job of finding not one house to replace the large house, but five, six and seven houses to compensate for every house of which the lease runs out. This problem will face Birmingham in a very big way if some such Measure as mine is not supported.
§ The Jenkins Leasehold Committee, in 1950, recognised this aspect of the matter. Its solution to the problem was rather novel. It was not that the leaseholder should have the right to buy the freehold, but that the freeholder should have the 1629 right to buy in the lease when these conditions arise. That is hardly a way which would commend itself to us at this stage.
§ What is the Government's solution to the problem? They may not like mine, but what is theirs? They have an obligation to tell us how they intend to stop large areas of old property falling continually into decay, as they do under the present system.
§ I come now to the arguments used against a measure of reform. First, there is the argument about the rights of property, the sort of argument which Lord Salisbury advances. All I say about that is that it is an argument of sheer materialism. It puts bricks and mortar above human considerations, and I do not believe that it is the job of Parliament or any civilised assembly to do that Secondly, there is an argument advanced by the Conservative Party, that reform such as I suggest would give the private individual the right of compulsory acquisition.
In the manifesto which the Tories issued for the local elections of 1962—an up-to-date document—this is precisely what is said:
The Government, however, is not prepared to give compulsory purchase powers to individuals which is what leasehold enfranchisement would mean.
§ Of course, this is a very high-sounding argument. It would look all right, perhaps, if we had not had the Pipelines Act. That Act precisely sold out that principle. It gave private interests the right to buy land. I hope, therefore, that the memorandum of the Conservative Party will be hurriedly changed before the next municipal elections, and that we shall not hear that argument advanced today.
§ Thirdly, there is a very important argument which formed the pith of Lord Justice Jenkins' argument, that the system which I advocate, of allowing the leaseholder to buy his freehold in some way, militates against what Lord Justice Jenkins called the sanctity of contract. We hear the argument that Parliament must never interfere with the sanctity of contract. Of course, the first answer to that which comes to mind is that every Rent Restriction Act ever passed by Parliament has been passed in the face of the principle of sanctity of contract. Parliament is always having to interfere in contracts between one man and an- 1630 other to mitigate hardships. Because of hardships and social difficulties which arise, Parliament often has to take action which interferes in some way with contracts which have been entered into.
§ It is right that it should do so. The Government's own Landlord and Tenant Act, 1954, which, to put it roughly, provided that tenants should have the right to continue in occupation at the end of their leases at a rack rent based on market value—subject to one exception to which I shall come in a moment—was an infringement of the sanctity of contract. In fact, the argument about sanctity of contract does not stand up to a moment's examination.
§ Fourthly, we hear the argument that reform would do away with the opportunity for comprehensive redevelopment. I agree that there are grounds for this argument, but there are large areas of freehold land, the other half of property in this country, which, by the same token, can never be properly redeveloped.
§ Of course, the argument does not stand up. We all know that local authorities have powers of acquisition for the purpose of redevelopment. They ought to have such powers, and I am sure that we on this side should be happy to give them more powers if that is what is needed, provided always that, when redevelopment is under way, the existing tenants are properly taken care of, as, by and large, they are, in the provision of alternative accommodation by the local authorities concerned.
§ In any case, it is not beyond the wit of man, if we go over to a freehold system, to introduce a system of covenants adequately providing far these matters in regard to future redevelopment.
§ Mr. Philip Hocking (Coventry, South)
When the hon. Gentleman suggests that there should be a system of covenants in land tenure, does he suggest that a person should, in certain circumstances, be allowed to sell only to a local authority? Is that what he means by a system of covenants?
§ Mr. Howell
That is not what I meant at all. I meant that developers could get together and buy with covenants providing for the right of comprehensive redevelopment. Of course, there would 1631 have to be written into any such system protection for the tenants so that they would be given alternative accommodation.
I turn again to the report made to the Wales and Monmouthshire Conservative and Unionist Association. The man who made the survey wrote, as far as I can gather, to every reputable solicitor in the district of Newport, Cardiff and Swansea. He asked four questions. I emphasise that this document comes from a Conservative, not a galloping Socialist.
The questions and answers wore as follows:Are you in favour of legislation:I To entitle a lessee of a private house to renew compulsorily to buy his freedom at a fair price?Those in favour: 69; against, 20. That is what I propose to do. The second question was in the same terms, but in respect of business premises. The replies were: in favour, 54; against, 31. The third question was:Are you in favour of legislation to entitle a lessee of a private house to renew his lease at a fair ground rent?Those in favour: 64; against, 18. The fourth question was in the same terms as the third, but in respect of business premises. The answers wore: in favour, 55; against, 24.
Those figures speak for themselves. They are compiled on the basis of the opinions of professional, legal men in Wales who have to deal with this problem day in and day out. No doubt, they represent landowning interests also. Although they are concerned in representing both sides in their professional offices, when asked to give their private opinion they come down overwhelmingly in favour of the sort of Measure I propose or a suitable alternative.
What have been the suggested reforms we have had so far to deal with the matter? There was the Landlord and Tenant Act, 1954. This was better than nothing. It followed the Jenkins Report and it followed, also, the standstill, or moratorium, which was placed on leases of residential property running out by the Labour Government at the very end of their period of office. However, what it means in practice is that the tenant has to pay the market value not just for the land, but for his own house into 1632 which, over the years, he has poured thousands of pounds. The rack rent determined by the Landlord and Tenant Act, 1954, is not just related to the value of the land when the lease has run out but includes also the value of the tenant's own house which he has built and into which he has poured thousands of pounds.
Although it is better than nothing, it must be an unsatisfactory system. I do not know how any hon. Member could defend a situation in which a man who has put his life's savings and work into building and maintaining his house and home should, at the end of the lease, find himself having to pay what is regarded as the market value not just for the lease, but for his own house, too. It is a pernicious system.
By Clause 8 of the Bill we propose to deal with one of the great loopholes in the Landlord and Tenant Act. We say that section 12 (1) of that Act should be omitted. Under that Section, while a man can carry on in occupation of his house at a rack rent, if the landlord says that he needs the house for redevelopment purposes—and more and more landlords and speculators are saying this—the tenant is evicted without compensation and without alternative accommodation. I see the Minister looking puzzled at what I am saying, but that is so. It is a tremendous evil.
If no other part of the Bill gets through today, this is the part which is completely justified. Speculators working under the present system are saying to all sorts of people at the end of their leases. "You cannot have alternative accommodation. You cannot have protection. We want your house for redevelopment". Unfortunately, the system offers no redress to the tenant at all.
I will quote from two letters to show what is happening. I assure the House that, in presenting my case, I am trying to cut down the number of quotations which I make. First, here is a letter from a man in Hall Road, Handsworth, in the constituency of the hon. Member for Birmingham, All Saints (Mr. Hollingworth), a district which I have good cause to know. The writer tells me that a large amount of property in his road, previously known as the Grice Hutchinson Estate, has been sold. Houses are already being pulled down, and it is intended to pull more down. The purpose 1633 of the redevelopment is education, but that is what is happening. This is going on in Hamstead Road, Villa Road, Hall Road, Broughton Road and Welford Road, in the City of Birmingham, where, because the leases will be running out, there will be no alternative accommodation by right for the people there.
Here is a letter from Kilburn Priory, London, N.W.6. which illustrates the same sort of thing. He writes to me saying that he is grateful to me for bringing in the Bill, and adds:I am a leaseholder and I have been unsuccessful in several attempts to purchase the freehold of my house in the past 10 years. Recently, I had a visit from the freeholder representatives. Once again, I inquired about the possibilities of my purchasing the freehold. I was told nil.I hope that the Minister will listen carefully to this.When I mentioned that the Act will make me a tenant when the lease expires, they almost laughed at me, and said that the Act did not protect MC if the house was pulled down, and that is what they intended to do.
§ The Minister of Housing and Local Government and Minister for Welsh Affairs (Sir Keith Joseph)
Can the hon. Gentleman tell me when that lease does expire?
§ Mr. Howell
No, I cannot but I can find out. It is obviously running out very soon.
The point is that the man wants to buy the freehold before it expires, and he is told that, now that the lease is running out, they intend to pull down the house. I have many other letters which say almost exactly the same thing. This is a very distressing feature of the present system.
I turn to what I propose to do about this situation. I apologise to the House because I have lost my copy of the Bill.
§ Mr. Howell
Hon. Members may think it an omen that I have dropped my copy of the Bill. I regard it as a much happier omen that the fog has now dispersed.
Under Clause 5, we are giving people the right, provided that they bought the lease before ten years was up, to buy their freehold on the terms, normally, of 25 times the ground rent. But we 1634 recognise that this might cause hardship, so we are prepared to give the county court the right, in certain circumstances, to go above that. We say also that the lessor must exercise his right not later than five years before the lease is up. We regard that as fair. We then set out certain criteria to which the court will have regard if it is wanted to extend 25 times the ground rent.
On the criteria as regards to the value of the building, the Bill takes account of any premiums paid when the leaseholder took the land, the conditions in which he has kept the building, the money that he has put into it and, to be very fair to the landlord, which is most important, we think, the changing value of money today as compared with when the lease was first granted.
I do not think that if anyone wanted genuinely to tackle this problem, he could work out more equitable terms. I have been criticised by some of my hon. Friends for going too far, but in putting this Bill forward we have tried to be fair all round. That is why we recognise the interests of the landlord and do not want to be oppressive to him. This, very briefly, is what the Bill intends to do.
I think that these are reasonable provisions to put forward. If the Bill gets a Second Reading, it will be my intention, in Committee, to be extremely reasonable and as accommodating as reasonableness will allow in regard to the legal pundits on the Government Front Bench when they address themselves to the details of the Bill. There are one or two changes which, on further reflection and from letters which I have received, I would be prepared to accede to, but this is not the time to go into Committee points. We have tried to work out the outline in the Bill and that, I believe, is what we have done.
§ Mr. W. A. Wilkins (Bristol, South)
I want to ask my hon. Friend where, in Clause 5, reference is made to the ten years which he mentioned.
§ Mr. Howell
My hon. Friend has spent a lot of time travelling about in the fog, so perhaps he has not had time to study the Bill properly. The point to which I am referring relates to Clause 1. Clause 5 provides the method.
§ Mr. Wilkins
The reason I asked this was because in London, where this problem is as acute as in other parts of the country, I was told only this morning that for a long time some leases have been granted only for nine years, so these people would not benefit by the Bill.
§ Mr. Howell
I quite agree, but if my hon. Friend finds himself a member of the Committee on the Bill he can draw attention to that and hope to persuade us there. I appreciate that it is an important point, but it is one which I cannot deal with in detail at the moment.
I want to come to one of the exemptions which I would be prepared to make if the Bill goes to Committee. It is an exemption recommended to the House by the minority Report of the Jenkins Committee. The minority Report was signed by my hon. Friend the Member for Oldham, West (Mr. Hale) and also by Sir Lynn Ungoed-Thomas, as he then was, and who is now Mr. Justice Ungoed-Thomas, which dealt with a matter very dear to my heart. It specifically referred on page 138—I will not weary the House with a long quotation—to the question of the Bournville Village Trust, in Birmingham, and similar trusts.
The Bourneville Village Trust, for which I have a very high regard indeed, as, I think, all Birmingham Members have, is a non-profit-making trust, run exclusively in the interests of the tenants, and it goes in for the very finest estate management in this country. The big point is that it grants the leaseholder a 99-year lease with automatic option of renewal at market values, to be determined by the court in the case of dispute.
This is almost as good as a freehold and, as the minority Report said, if this system operated throughout the country there would be very little trouble. None of us would object to the granting of a lease on those terms from such a reputable body. I would, therefore, propose in Committee to move an Amendment to my own Bill to exempt such trusts run in the interests of the tenants on nonprofit-making lines, such as the Bourne-vine Village Trust.
§ Sir K. Joseph
Is the hon. Gentleman suggesting that renewal or the purchase of the reversion at market value, with the court to adjudicate on market value, 1636 is perfectly reasonable? That is what he seems to be saying.
§ Mr. Howell
That is not entirely what I was saying, but I think that there is some merit in that argument and we can examine it in Committee. What my Bill is saying virtually is that the conditions under which the court should be guided would be the reasonable market conditions in so far as we have regard to the fact that the house is provided by the landlord and not by the tenant. If I add that proviso to the general principle of market value, I think that we should be quite happy.
If it is asked whether my scheme is practicable, I reply that such a scheme has been in operation since the passing of the Places of Worship (Enfranchisement) Act, 1920—not passed by a Labour Government—under which 347 chapels have exercised their right to buy the freehold, and there has been no trouble since. A considerable volume of money is represented there, and the scheme works properly, so let no one say that my scheme is impracticable.
What about the Jenkins Report? Perhaps the verdict an that was given by a more impartial witness than myself in an article in The Times on 16th May last year. His verdict on a Report which has been the linchpin of Government policy ever since 1950 was:It can fairly be said that few reports have become so rapidly obsolete as the Jenkins Report. The Jenkins Committee leant heavily on the fact that at that time the balance of opinion amongst those professionally concerned with the working of the leasehold system was against leasehold enfranchisement. That is no longer true.That must be the true and proper verdict of anyone who has studied the facts.
The only time the Jenkins Committee got its facts right was when it said in 1950, the time of the Report, that the matter was not then pressing but could be expected to become much more pressing in ten years' time—now—and would be very important in twenty or twenty-five years' time. The ten years is up, the problem is much more pressing, and if the House does its duty it will look ahead to make sure that the problem caused by increasing number of leases due to expire in the next ten or fifteen years is anticipated.
1637 There is also the general question of ethics. I myself believe that there is little, if any, morality at all in the wholesale ownership of land in private hands. The land was here before the people. The land was created for the use of the people; the people were not created in order to exploit the land. Whatever may be the merits of the private enterprise system, no one manufactures land, and no one improves it. People tend it, of course, and care for it, but it is a commodity which was provided for the human race before the human race was started.
Those hon. Members opposite who do not like this idea should spend a few hours, as I have done, looking at the way in which land got into private hands. All I will say is that, in general, it was usually, and more respectably, given by kings for services rendered in the field of battle, and often, and more unrespectably, given by kings as a settlement on their illegitimate offspring. That fact should be borne in mind.
Chesterton, one of my favourite poets, wrote an interesting verse on the subject which I may perhaps be allowed to quote:The people they left the land, the land,But they went on working hard;And the village green that had got mislaidTurned up in the squire's back-yard;But twenty men of us all got workOn a bit of his motor car;And we all became, with the world's acclaim.The marvellous mugs we are:The marvellous mugs, miraculous mugs, The mystical mugs we are.I am justified in quoting that verse, because there is a tremendous mystique about land, and it is a mystique that this House has the duty to break down.
Hon. Members might feel that I have spoken on party lines, but I assure the House that I am very sincere in my wish to tackle this problem, and very sincere in my hope that the House will tackle it in an all-party manner. Thousands of people are hoping—indeed, praying, that we shall do so. What I seek to do today perhaps provides the last occasion for an all-party appraisal and tackling of this subject. I hope that we shall deal with it on an all-party basis, and in a spirit of reasonableness. If not, I rejoice, at any rate, to think that there are large numbers of people who will recognise that the 1638 Labour Party, to which I have the honour to belong, will not shirk the issue at the next General Election, but will be happy to fight with this reform as a cardinal principle of its programme.
§ 11.55 a.m.
Mr. Harold Gorden (Birmingham, Sally Oak)
I congratulate the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) on his choice of subject for his Bill, and on his presentation of the Measure. His belief being as it is, he has no reason to apologise for the terms of the Bill. Speaking for myself alone and, perhaps, not for many of my hon. Friends, I believe that a Government of the day should present their own Bill.
As there are several Birmingham hon. Members here today, perhaps I may be forgiven if I follow the hon. Member in referring to the city's concern over this issue, to the difficulties there are in it, and, indeed, to the good points of landowners in the Birmingham area.
I agree that there is a case for the House to consider, and for us to do something about, but I cannot accept the terms of the Bill, and I hope to show that it would not be reasonable to expect many hon. Members to vote for it as it stands.
The hon. Member mentioned the classic instance of the Barber Trust in Birmingham and the way in which the Minister dealt with that problem by deciding that the Barber Trust houses should be transferred to another trust that could give the same benefits to the leaseholders as had the Barber Trust without causing hardship to the tenants. I must, however, remind the hon. Member that his colleagues, the Socialist members of the Birmingham City Council, did not entirely agree with that course. They wanted municipal ownership, not a continuation of the trust.
I agree with the hon. Member that the decay of property is a problem that is causing considerable concern in Birmingham—he and I have had a talk on the subject—but I could not go as far with him as to say that this Bill is the answer either for the country or for Birmingham. I am sure, too, that the hon. Member would not ask us to take too seriously his parallel of the Pipelines Act in regard to breaching the principle of contract—
§ Mr. Gurden
The hon. Member has his own views. I shall not pursue the matter, but there is a wide range of argument against his view. I just ask him to examine that aspect for himself.
Another question that—
§ Mr. Raymond Gower (Barry)
Before my hon. Friend leaves that point, would he not agree that the Landlord and Tenant Act, as affecting business properties, provides a direct analogy, in that it does considerably break into the sanctity of contract?
§ Mr. Gurden
I agree with that, and hope a little later to show how much I agree with it. In the main I am in agreement with many of the arguments advanced for the case, but I am not so much in agreement with the terms of the Bill.
The hon. Gentleman referred to the Handsworth houses. I know nothing about these, and I accept what the hon. Gentleman said. He told us that this land was acquired for educational purposes. This is an indication that the local authority wanted the land.
§ Mr. Denis Howell
No. Although it has been obtained for educational purposes, this is not a local authority school.
§ Mr. Gurden
I apologise to the hon. Gentleman. I am seeking to show that it is often at the instigation of a local authority, and indeed a Socialist local authority, that people are displaced, and not at the instigation of landlords who are seeking to destroy the tenancy. It is odd that today a Socialist should depart from the accepted Socialist belief in the nationalisation of land, and that the hon. Gentleman should want to spread the ownership of land even wider. He suggests that thousands more should be enabled to own land. I always understood that a good Socialist believed in getting land into the hands of the nation or into the hands of municipal authorities. The hon. Gentleman's proposal is the very opposite of State ownership.
I believe the hon. Gentleman when he says that he is sincere in thinking that this Bill is an ideal solution to the problem. Further, I accept that there is a problem, but I do not believe that it is as widespread as the hon. Gentleman thinks it is. I am sure that he would not expect me and many other hon. Members 1640 to accept this drastic means of solving the problem. I accept that to many individuals this is a real problem, but I repeat that it is not widespread throughout the country, nor does it exist to a great extent in Birmingham.
The fundamental difference between us is the approach to the sanctity of contract. I do not believe that people should have the right to tear up contracts into which they have entered freely, knowing all their terms. I admit, of course, that some of the contracts have not been entered into by the people concerned themselves, but by their forefathers, but they are nevertheless fully aware of the terms of them. There must be few people in the land who have held a lease of property who do not know what contract they have made and what they have paid for. They have paid not for the bricks and mortar, but for the term of tenancy.
§ Sir Frank Soskice (Newport)
I am interested to hear that the hon. Gentleman is so moved by the question of sanctity of contract. Would he be in favour of repealing, on that ground, the Moneylenders Act, 1927, which provides that whatever the rate a borrower in distress has agreed to pay, the courts may say that instead of that rate he shall pay no more than a reasonable rate of interest? Would the hon. Gentleman be in favour of repealing that Act?
§ Mr. Gurden
I accept that. If the night hon. and learned Gentleman had waited a few moments he would have heard what I had to say about this. I said that the fundamental difference between us was the approach to the sanctity of contract. The hon. Member for Small Heath rightly cited instances of Parliamentary action to interfere with the sanctity of contract, but this should be done only as a last ditch move. When a contract has been freely entered into, and both parties have full knowledge of what it entails, we should try to see whether we can continue the contract and not interfere with it in law. The Government Should set an example in this—as should Governments throughout the world—and honour contracts instead of seeking to interfere with them.
§ Sir F. Soskice
If the hon. Gentleman is passing from the point about sanctity of contract, would he answer my question?
§ Sir F. Soskice
The Act provides that if a borrower has agreed to pay a moneylender a rate of interest which is extortionate, a court may say that, whatever he agreed by contract to pay, it is going to set aside that contract and reduce the rate of interest to a reasonable one. If the sanctity of contract is such an Overriding consideration, does not the hon. Gentleman agree that in conformity with that principle on which he sets such store it would be only reasonable for him to call on Ibis right hon. and hon. Friends to repeal that Conservative Measure of 1927 Which directly infringes the principle of the sanctity of contract?
§ Mr. Gurden
I agree, and I thought that I had partly, at least, answered the right hon. and learned Gentleman's point. In fact, I thought that I had made the position clear When I said that there had been cases—and the hon. Member for Small Heath cited some of them—in which Parliament had interfered with the sanctity of contract. Some contracts are not Wholly good, and we would therefor be entitled to interfere with them.
§ Dr. Alan Glyn (Clapham)
Would not my hon. Friend agree that the Moneylenders Act is different in that a moneylender knows the contract into which he is entering and therefore knows what he is up to before he signs it?
§ Mr. Gurden
I agree that under that Act the parties have their own reasons for entering into a contract which in some cases is not altogether a good one.
§ Sir Barnett Janner (Leicester, North-West) rose—
§ Mr. Gurden
Perhaps the hon. Gentleman will allow me to continue, because I think that this question of moneylenders is a little beside the point.
The hon. Member for Small Heath may ask what is the solution to the problem. The solution, and we already have an example, is to give the right, in certain justified circumstances, to extend the lease to make sure that tenants have full security of tenure, particularly in times of housing shortage. We would by this means preserve the rights of ownership and lessen the trespass on the contract. This should be done only 1642 in justified cases, because there are many instances in which interference with a lease is quite unnecessary. Many people have the money and the ability to provide themselves with homes upon the termination of their leases.
I am not clear why the hon. Member has sought to penalise only the private individual. Are we not talking today about the community landowners—people who let land to lease for the building of houses? Surely, if we are, we are talking about charitable trusts. We are talking about such organisations as the Bournville Trust, of the Cadbury family, and the Calthorpe Estates, in Birmingham. If I had taken the trouble I could have brought a list of hundreds of these types of landowner. They are reliable, honest and good people.
In the Birmingham area these leases are usually let out for ninety-nine years. We are attacking the very people in respect of whom, in the hon. Member's own words, no complaint has been made. They own the majority of land, but the Bill seeks to improve them in its provisions. On the other hand, the hon. Member has decided to exclude local authorities.
§ Mr. Speaker
Here observations are addressed to the Chair. It is not in order to address the Chair as "old boy".
§ Mr. Gurden
I understand that the Bill does not apply to local authorities, and since I have been questioned about it, let me explain why. If I have a lease of a property from the City of Birmingham—and I do happen to have one—and if I occupy that property, under the terms of the Bill I cannot go to the courts and force the local authority to sell me the land. Perhaps the hon. Member will correct me if I am wrong, but that is exactly what the position appears to be. But the Bill provides that I can do so in the case of a private landowner.
§ Mr. Denis Howell
I am grateful to the hon. Member for giving way. He is obviously grappling with the Bill. Perhaps he will be good enough to look at Clause 9 (2), which makes it clear that a local authority is exempt provided it wants the land in questionfor the exercise of its distinctive publicand that this has to be certified to be the case by a Minister of the Crown. The Bill could not be more reasonable than that. I submit that the normal ownership of land, where the local authority does not have a distinctive public function in mind, such as redevelopment, is not covered by the Bill.
§ Mr. Gurden
I suggest that the Bill's terms in this respect are drawn very widely. A "distinctive public function" is obviously housing, and the holding of land.
§ Mr. Denis Howell
If the hon. Member is hurt about this I will give him an undertaking that if the Bill gets a Second Reading and he finds himself on the Committee—as no doubt he will—I will be happy to consider any Clause that he cares to submit as an Amendment to mine.
§ Mr. Gurden
I am grateful to the hon. Gentleman for that offer. Nevertheless, he has agreed that to some extent the local authorities are in a privileged position. Are they so much better landlords than such people as the St. Dunstan's Trust and hundreds of other trusts, or the Calthorpe Estate and the Bournville Estate? Why not exclude all these good landlords, who can be trusted as much as local authorities can be trusted? These good landlords have never rendered people homeless, or sought to take advantage by charging high ground rents. They have offered alternative accommodation. Ground landlords are not all rich villains. As I have shown, the majority of land is owned by good and responsible people.
There is a case for dealing with decay, If we look around our cities we appreciate that the decay of houses is caused mainly by freehold owner-occupiers. The Bill will not cover them. In fact, it will give more people the power to allow their houses to decay. On the other hand, under the Bournville Trust and the Calthorpe ownership houses have not 1644 been allowed to decay. These landowners have had to keep their houses in reasonable condition.
I now move on to Clause 5. I realise that the Bill must lay down a period for the purchase of the freehold, but I suggest that, taking the matter on any basis at all, a period of 25 years is a very bad one. It penalises particularly the very good landowners who have charged specifically low ground rent. It is not always the freeholders who make big profits out of housing; very often it is the leaseholders. I say. "Good luck to them". Somebody entered into a contract for that land in order to build houses, for a few hundred pounds, and today the land is worth thousands. Good luck to those people. They have a good contract. But they must not now say, "The contract is all right for me to make my large profit, for my sons or grandsons, but the freeholder must not be allowed to have any benefit". This is a very loaded Bill.
It is not the good landlords who do damage in respect of redevelopment. The Calthorpe and Bournville Estates have carried out some very good development. The great thing about these good landlords is that they redevelop to house the people in greater numbers, whereas local authorities, who are favourably treated under the Bill, develop by erecting more and more commercial buildings and more and more offices that cannot even be let, while people are short of houses and the local authorities cannot satisfy the people on the housing list. In Birmingham, local authority redevelopment has consisted of office property. It has not helped to rehouse the people in greater numbers, as has been done by the Calthorpe Trust.
The Bill is based on the false premise that leasing is evil. It is not. After all, it enables the people to be housed at a very much lower price, at a very much lower capital cost, than would be the case if they had to buy the land in the first place. If we change over entirely from the leasehold system to a freehold system, the price of houses will rocket, unless, of course, we go completely over to the old Socialist principle, which is now abandoned, of the national ownership of land, and, instead of charging people a ground rent or the price of the land, we give it to them. If we do not do that the cost to young people 1645 to get their own house will be very high indeed.
The hon. Gentleman quoted some cases of hardship concerning which I agree with him. I said that there was a case for the House of Commons to do something about it. But let us look at some of the other cases of hardship—hardship to the landowner. Let us suppose that this Bill became an Act and that the House of Commons accepted all that had been said today by the promoter of the Bill. Let us take the case about which I heard of a beneficiary under a will going along to auntie, who is probably in her 70th or 80th year, and saying to her, "Look, you have been kind enough to make me the beneficiary under your will. Now in 20 years' time, or whatever the term may be, the house in which you are living will revert to the landlord. Will you please take advantage of this Measure and get compulsory purchase so that after you are gone I shall have the benefit of the house for nothing?"
Surely what we are discussing are long leases and low rents, and the rents are fixed low because the houses have been erected by the leaseholders.
§ Mr. Gurden
No. Auntie bought it at a very low price because she did not have to buy the freehold.
I know of cases where, perhaps, an aged widow is entirely dependent for her solvency on a piece of land which she owns next door and on which her husband erected a house. She may be the party who is hard done by now, because the beneficiary under her will may be very well off and quite able to afford to build a house and buy a piece of land. Therefore, the benefits which the hon. Gentleman mentioned are not all on one side. I suggest that there are many cases of people who are dependent for their income on a small plot of land which they have bought with their life savings.
I accept the hon. Gentleman's point about adjusting the Bill in Committee. I have considered that very carefully, and if I believed that there was any hope 1646 at all of covering the points in Committee in a way acceptable to many of us on this side of the House, I would vote for the Bill today. But I do not think that the Bill as drawn could satisfy us. It certainly could not satisfy me in Committee. I ask the hon. Gentleman to believe that I, too, am very sincere and want something done about the matter. I am repeatedly asking the Government to do something about it. I am very sincere in wanting a solution to the problem, but I do not have to go any further than to use the hon. Gentleman's own case in order to show how the Bill could have been designed so as to enable me and very many of my hon. Friends, if not all of them, to vote for its Second Reading. The hon. Gentleman quoted the case of the Bournville Trust which, he said, he was quite willing to exclude from the Bill in Committee. That really gave the game away.
I accept that the hon. Gentleman is sincere in believing that the terms in which he has framed his Bill should be according to his political philosophy. I now wish to show him that there is a way of dealing with this matter if we really want to, and if the designers of the Bill, not only himself, had really wanted to, so as to give the people a solution. I am suggesting that the hon Gentleman has laid himself open to the charge—
§ Mr. Gurden
The way out has been suggested by the hon. Gentleman himself. It is to give security of tenure by an extension of the lease in exactly the same way as is done by the Bournville Trust.
§ Mr. Denis Howell
I do not wish to interrupt the hon. Gentleman because he has spoken for a long time, as I did myself, but sitting two seats away from him is an hon. Member who introduced such a Bill as he is now suggesting. In the last three years three similar Bills providing for the extension of leases have been introduced, each one of which was voted down by the Government. It is precisely because the hon. Gentleman never supported such a Measure as he is now advocating that I thought it time to have a fresh look at the situation.
§ Mr. Gurden
Really, that is going too far. I am speaking for myself and not for my party. The hon. Gentleman must recognise that many of the things which I have said today would certainly not suit some of my hon. Friends. I repeat, I am speaking for myself, and, I admit, for one or two of my Birmingham colleagues. To charge me with not supporting the Bill is really quite unfair. I have never voted against such a Bill.
I suggest that my case still stands, that the hon. Gentleman has laid himself open to the charge that if he really desired to do what he suggests he would have presented a Bill that was acceptable to the House. We all know that in a Private Member's Bill one has to stretch one's case as far as possible in order to make it acceptable to the House, because we all know what happens to a Bill when this is not done. I am suggesting that the hon. Gentleman has laid himself open to the charge that what he proposes is being done for political propaganda.
§ Mr. Wilkins rose—
§ Mr. Gurden
I am suggesting that this charge could be levelled against the hon. Gentleman. I have already said that I believe that he is sincere in putting forward the Bill but that he has designed it in such a way that it will never reach the Statute Book.
§ Mr. Wilkins
Before the hon. Gentleman sits down, may I ask him whether he would agree that the reason why we have this Private Member's Bill today and why we had many of its predecessors is because the Government have not fulfilled the promise which they gave in 1953 that legislation would be introduced to deal with leasehold reform?
§ Mr. Gurden
I have made my speech, and I do not think it would be fair to take up more of the time of the House in commenting on what the hon. Gentleman has said because I know that other hon Members are anxious to speak in the debate.
§ 12.30 p.m.
§ Mr. James Griffiths (Llanelly)
I should like to begin by congratulating my hon. Friend the Member for Birmingham, Small Health (Mr. Denis Howell) on his luck in the Ballot, and upon the very good use he has made of it and the 1648 very convincing speech in which he has introduced the Bill. I hope very much that, at the end of the day, hon. Members on both sides of the House will give the Bill a Second Reading.
My hon. Friend has been most conciliatory already in stating that if the Bill reaches the Committee stage, which I hope it will, he will be willing to consider the many points which have been raised, including those that may still be raised during the course of the debate. For this reason, I hope very much that the House will give the Bill a Second Reading.
My hon. Friend said he was well aware that this was a contentious Bill, and it has already been made clear that it is contentious in Birmingham. It is no longer contentious in Wales. I hope that the Minister of Housing and Local Government, who is to reply to the debate, and who is also Minister for Welsh Affairs, has been adequately briefed, not only by his Department but also by the Western Mail, before coming to the debate today. It is interesting to me to find that now all the parties in Wales represented in this House—the three main parties—and all other parties are at one on this problem.
The other day, the Government, when confronted with a Welsh problem, sought what they thought was an easy way out and said, "We will let the Welsh people decide this question." Are they still of that opinion? I ask the Minister whether he will be prepared to have a referendum on this matter. I invite him to consider it, because What he would find would be that every single Member of Parliament for a constituency in Wales would be on the same side. I notice that two hon. Members on the other side of the House who represent Welsh consituencies are present, and I hope that they will support the Bill and vote for its Second Reading in order to make improvements in it during the Committee stage. Therefore, I begin by saying that, speaking for Wales, this is no longer a contentious matter.
I will explain why, and this will deal with the point made by the hon. Member for Birmingham, Selly Oak (Mr. Gurden) about the sanctity of contracts. Surely, when the hon. Member talks about equality as between the parties making the contract, he would agree that if there 1649 was no equality between the panties entering into the contract, what sanctity of contract could there be? The reason why all the parties in Wades are agreed on this matter is because of economic and industrial developments, particularly in South Wales. The period of the great growth and expansion in trade and industry in Wales dates from 1870 onwards, and for generations after 1870 the population of Wales increased, as coal production increased, by nearly a million a year. People came from the countryside in Wales and in England, and so we had a tremendous period of growth. They came to work in the pits, the steelworks and the tinplate works.
Their first task was to secure houses for themselves and their families. In those days there were no council houses at all. The only choice before them was to live in a company house, or to seek to build their own homes. Therefore, many of the Welsh people, with their radical traditions and their strong trade union feeling and loyalty, did not want to live in company houses. They recognised that if they did, and that if at any time they found the conditions of work such that they could stand them no longer, and went on strike, they were put out on the street. This must be well understood to all hon. Members opposite Who live in Wales.
To build their own homes they had to get land. They had no consumer choice, and, in most cases, there was only one landlord. They obtained leases for ninety-nine years. Now, these leases are all on the way out, and in the next ten, fifteen or twenty years, a great many of these leases will run out. Many of them are doing so now.
In most of these cases, the people concerned are owner-occupiers, who have inherited their houses from their fathers or grandfathers, who built them. My own sister and I inherited the house which my father built. Indeed, I remember it being built, and taking part in the building of it.
These people built their own houses, looked after and cared for them, and now their leases are running out. These people, who laboured in the mines and steelworks and tinplate works, managed to build their own houses, pay for them, look after them, improve them and cultivate their gardens. I should have 1650 thought that hon. Members opposite, who talk about a property-owning democracy, would recognise that these people are property-owning democrats. There cannot be a property-owning democracy without property-owning democrats. Enormous sentiment is, quite rightly, attached to these houses.
Now, all that these people ask is that they shall have the right to acquire on fair terms the freeholds of their houses which have a sentimental appeal to them, which they or their families built, and for which they have cared and about which they feel deeply. These houses are not just pieces of property for them, but hallowed ground. That is all they ask. Is the House of Commons to say "No" to them? We can be fair to the landlords, though my own view is that the proposal which we put forward is quite fair, indeed more than fair, to the landlords.
I know that a great many of my hon. Friends wish to speak and I want to be brief. The reason why I intervene in the debate at all is that during the last two years, I have had many examples which directly relate to many of the Clauses in the Bill and which we now ask the Minister to consider. I have had three cases in my constituency, and I shall be happy to send the Minister full details. These are cases in which, on the death of the former landowner and the passing of his estate to his successor, it was found desirable—they would say necessary—to dispose of some of the property in order to pay the Estate Duty.
I was asked to meet some of my constituents to discuss the matter with them, and they are the kind of people whom I have described already. In most cases, they were now getting on towards latter middle age and many of them were pensioners. Quite a number of them in the valleys were disabled, and they now found that the incoming landlord, for the reasons which I have already stated, to meet the charges which the nation imposed in Estate Duty, was proposing to dispose of some of his leases.
The new landlord exercises his right, and is picking and choosing. He is picking and choosing to whom to sell leases, and he is obviously not selling those which he thinks in x years' time will have a very much increased site 1651 value. But who creates that site value? The community. The men who live in the houses and who would like to buy them. They, by their work and industry, have created the value, and this increased site value is due to the efforts of the community, and rightfully belongs to the nation, and not to the landlords.
An increase in site value does not belong to the leaseholder; it does not belong to the landlord. I say that increases in site values because of community effort should belong to the community. I believe that as a principle. I will not develop it now, but it is part of my Socialism that wealth created by the community should belong to the community and should not be exploited by an individual.
In at least three of the cases with which I am concerned the prices asked for the reversion of the freehold—and I am now using measured words—were at least conditioned, qualified if not determined, by the value put upon them for Estate Duty purposes, although the amount varied between one house and another. If a constituent tells an hon. Member that he has been offered the reversion of the freehold, that he has been offered enfranchisement, and that the landlord has said that the price is that on which he has to pay Estate Duty, is the constituent entitled to know from the Treasury what is the value put upon it by the landlord for the purposes of Estate Duty and the value accepted by the Treasury?
Now we are geting to the sanctity of contracts and the equality of partners. If the landlord says that the price at which he offers the freehold is the price he has to pay, then, if the tenant is not entitled to make inquiries to establish the facts, he is negotiating under very great disadvantages—and I speak as one who has been a negotiator for very many years.
I hope that he Minister will advise the House to give the Bill a Second Reading. Like his predecessor, as Minister for Welsh Affairs he has promised that he will make investigations. At meetings of the Welsh Grand Committee, as well as during Welsh debates in the House, we have all pressed him to make a statement. I understand that he has not turned down proposals 1652 of the kind embodied in the Bill, but has said that his predecessor began investigations which are not complete and that when they are, he will make proposals to the House.
I must tell the hon. Member for Selly Oak that all hon. Members are now agreed that something must be done. I believe that the right thing to do is to give the Bill a Second Reading, send it to Committee, and discuss it there. I speak for the whole of Wales when I say that the people concerned are the best of our citizens. They are first-class men and women. They are the backbone of our communities, and we are pleading a just cause. I hope that the House will listen to our pleas and will give the Bill its Second Reading.
§ 12.44 p.m.
§ Mr. Raymond Gower (Barry)
I am glad to have the opportunity to intervene in the debate. What I have to say has not been entirely easy to say in the past. For that reason, I say to the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) that there was some substance in what my hon. Friend the Member for Birmingham, Selly Oak (Mr. Gurden) said. If the hon. Member for Small Heath wants support from people like me on this side of the House, and I am giving him that support today, he would have better left his peroration unsaid. Either he has come to the House with the object of getting a Second Reading for his Bill, in which case he should not have introduced a partisan, party note into the end of his speech, or he merely wants to make party points. It cannot be both. By that very partisan peroration he made it doubly difficult for people like me who are anxious to support the principle which lies behind the Bill.
Similarly, the right hon. Gentleman the Member for Llanelly (Mr. J. Griffiths) spoke about something quite irrelevant in this context, the enhancing of the value of sites by the community. Today we are concerned with the value to the freeholder or the leaseholder. By referring to a matter like that, the right hon. Gentleman made it more difficult for someone on this side of the House to support the Bill.
§ Mr. Denis Howell
I am grateful for the support which the hon. Member for Barry (Mr. Gower) promises me, but in 1653 my peroration I merely said a few words about the historical situation and about how land got into private hands. If the price of support from anybody is the submergence of the truth, that is a price which I cannot pay.
§ Mr. Gower
That, too, is irrelevant. I will not waste any more time on this beyond saying that today we are dealing with a different sort of landowner and with different sorts of bodies, with insurance companies, for instance, in whom ordinary people invest their savings. Introducing that kind of issue merely makes the matter unnecessarily controversial.
With the sort of constituency which I have, I have a special problem, and I am entirely in sympathy with any Bill whose broad object is the reform of the present leasehold system, and which is designed to provide for more reference to the courts when agreement between freeholder and leaseholder is not practicable. Hon. Members from non-Welsh constituencies will note that I use the terms "freeholder" and "leaseholder" rather than "landlord" and" tenant". That is because in South Wales, through sheer necessity, we have always regarded leaseholders differently from persons taking a tenancy, although in strict legal terms a leaseholder can be called a tenant. That is because in most of the industrial areas of South Wales and in the larger towns, the only form of ownership available to so many people has been a leasehold tenancy. That is why we see this matter against a different background.
The sheer incidence of leasehold tenure constitutes a special problem. As my right hon. Friend is Minister for Welsh Affairs as well as Minister of Housing and Local Government, I hope that he will accept that fact, and I am sure that he has already formed the estimate that the standing of this problem in South Wales is different from that in most parts of the United Kingdom. I am not a Welsh Nationalist, but the Welsh Nationalists have an excellent talking point on this issue, because they can rightly say that had Wales had a Parliament of its own, legislation of this kind would have been passed a long time ago. However, successive Governments have neglected to do what their supporters have sometimes promised they would do on obtaining office.
1654 How high the incidence of this tenure is can be ascertained only by visiting some of our towns. I could take hon. Members to Newport, Swansea, Cardiff, or Barry, into streets and districts where 80 per cent. and more of the houses are leasehold and where only occasionally will a freehold house be found where the purchaser has been fortunate enough to buy the freehold perhaps in recent years. Only in very few cases is the leasehold term 999 years. Usually it is the residue of an original lease of 99 years. In my professional experience as a solicitor, I have had constant proof of this. I see the hon. Member for Leicester, North-West (Sir B. Janner) present. With his recollection of South Wales, he will know that I am not exaggerating.
Except in cases of large houses in country villages and some newer suburbs, freehold tenure is the exception rather than the rule. The abnormally high incidence of leasehold has had several unfortunate consequences. Would-be purchasers of dwelling-houses have seldom the free choice which has been referred to—a free choice of buying a freehold or a leasehold house. In many districts the only houses available at the sort of prices they can contemplate are leasehold houses. To that extent, I submit to my right hon. Friend the Minister, that there is a very special problem.
Willy-nilly these people have been obliged to acquire the ownership of leasehold houses. It is among the ironies of the situation that people who have done so have not benefited financially because, until an unexpired lease reaches a figure of 35 or 40 years, the price one has to pay is not dissimilar to the price of a freehold house. Then suddenly, when the lease is as short as that, the value disappears. It is a curious fact that as the length of the lease drops to about 40 years the attendant difficulties in finding a purchaser become enormous.
I think that the hon. Member for Small Heath said that it is virtually impossible to acquire a mortgage on such terms. In our constituencies today —I speak for those who represent constituencies in the industrial part of South Wales—there are large numbers of houses on which the unexpired terms of the lease are 35 to 40 years, or less. The owners of those houses are in a truly unenviable posi- 1655 tion. With the passing of each year, the houses tend to lose value. On short terms of less than 40 years prospective purchasers are unable in most cases to raise the purchase price because of the difficulty of obtaining a mortgage.
Sometimes, but only sometimes, when these people try to buy the freehold they are in some cases offered a freehold—I want to speak moderately—on extravagant terms, but in many cases they are refused altogether. Of those two situations the more serious is refusal. On many occasions in my professional and constituency experience I have recommended to a person that he had better go for acquisition, although it is expensive, because only thus will he be able to ensure that a mortgage can be obtained. This arises when such a person has to move to another part of the country and wants to buy a house there but cannot sell the house he has because the lease is getting short.
The other difficulty is that only by acquiring the freehold can they salvage the value of the house. In my constituency I have encountered oases where private owners of freehold, sometimes companies and sometimes local authorities, have refused altogether. It is a serious omission, and a serious defect, that the Bill does not include local authorities. I know of a whole area in which the freehold is owned by Glamor-gain County Council. Every time I write to the council about it, I get a polite letter from the clerk saying that the matter has been referred to the appropriate committee and a decision has been taken not to sell.
It is no consolation to my constituents that the refusal has been made by a public body rather than by a private citizen. The problem is the same. The person who has failed to get the freehold from the local authority is, likewise, unable to raise any money on mortgage if the lease is short. It is a very serious defect in the Bill that local authorities are not included in the way in which private citizens are included.
Another unfortunate consequence is that persons with leases of less than 40 years are also prevented from benefiting from the special provision which enables something like £90 million to be 1656 advanced by the Government to building societies to facilitate the purchase of houses built before 1919. In cases where the leases were short those people were not able to borrow money from building societies in any case, so the benefit, which was widely spread in other parts of the country, was sadly limited in. South Wales because there are so many houses of this kind there.
Since the problem was last debated, there have been two important Reports based on information received from professional bodies. The first is Cmnd. Paper 1789, which was presented last July. That document in general—and of necessity I have to say "general"—suggested that there was no considerable indication of hardship. That was the general tone of the document. Yet even in that White Paper there was sufficient reference to South Wales to show that our problem is rather different from that in most parts of the country. Since then there has been an interim and a final report provided by Alderman Dolman of Newport at the request of the Wales and Monmouthshire Conservative Council.
Alderman Dolman's reports were based on information and replies received by him from solicitors and estate agents. In his final report, he tells us that of the professional bodies which replied to him 69 were in favour of entitling the lessee of a private house compulsorily to acquire the freehold at a fair price and only 20 declared their opposition to such a proposal. Much more serious is his suggestion on page 2 of the final report dealing with the earlier inquiries made of solicitors which were the basis of the White Paper. There he writes:I have no idea of the result of the earlier Law Society inquiries, but they appear to be selective and sent only to certain solicitors …This is a very serious matter. If this is the case, it certainly reduces the value of the report which went to the preparation of the White Paper because Alderman Dolman makes it clear that his inquiries were not on a selective basis.
I have spoken to solicitors in the Cardiff area who were approached by Alderman Dolman but who received no approach when the Law Society inquiries were made. He reports some definite hardship cases. I disregard cases which 1657 refer to business premises, which are mot material to this matter. I have never felt the same concern about business premises as about dwelling-houses. I shall quote the sort of case which Alderman Dolman states in his interim report. This, I submit, is quite a bad case; the sort of case which many of us have in mind. He refers to a war damaged private house on which the original lease was 99 years and the ground rent was £4 per annum. The new terms required were £30 ground rent and a premium of £730.
§ Mr. Gower
It is not reasonable in the context of the sort of place we are talking about. It may be reasonable in the central London area or the best site in Manchester, but it is not reasonable in a side street in the Cardiff area or a back street of Newport. Our case is entirely different from the sort of case which inspired that interjection.
I have had professional experience of similar cases and I do not believe that I am exaggerating in saying that they are not uncommon. I do not deny, as an hon. Friend of mine suggested, the value and usefulness of the leasehold system, but I do not think that a reasonable and fair reform would imperil the future granting of leases. That is why, if I vote for the Second Reading of the Bill, as I shall, I say that I do not like the details of the Bill entirely.
For instance, I object to the 25-year formula. It is far too ham-handed and too general. It is not adjustable in its operation. I agree with the idea of having a court or tribunal. The county court seems to me to be an admirable tribunal to judge most of these cases. In similar Bills which I have presented to the House I have suggested matters on which the court could base its judgment, but I could not agree to the 25-year period, which in some cases might be fair and in others wholly unfair.
I do not deny the usefulness of a system by which, if we had a reasonable reform, people would agree to grant leases in suitable cases. A leaseholder might prefer to take a lease rather than buy the freehold at a time when his resources were fully stretched in the acquisition of furniture and so on, and 1658 in later years he might wish to buy the freehold, which should be possible on reasonable terms.
I hope that a suitable formula can be evolved. I cannot believe that a Measure designed to give leaseholders some reasonable recourse to a tribunal would be at all damaging either to the proper ownership of freehold land, or, indeed, to the future granting of leases. The present Bill does not accord with my own ideas about the operation of such a system, but if we give it a Second Reading today I submit to those who are disposed to vote against it that we could surely iron out these details in Committee.
The hon. Member for Small Heath said that something like 27 Bills on this subject had been introduced.
§ Mr. Gower
The hon. Gentleman is underestimating the number. I have obtained from the Library a list of the occasions on which such Bills have been introduced since 1902. On 40 occasions in 60 years Bills have been introduced in this House attempting to reform this leasehold system. Surely that is some evidence that the system is not perfect. There is some evidence of a fairly widespread desire for this reform, not limited to any one party, because anyone who studies the documents in the Library will see that these Bills were introduced by Liberal, Labour and Conservative Members.
The fact that there have been so many of these Bills reveals a deep-seated and long-standing conviction that there should be some reasonable reform of this system. Few of these Bills went beyond the Second Reading stage; indeed, many of them were killed at earlier stages, but I sincerely hope that those who do not like this Bill will at least give it a Second Reading. Then we can have a reasonable debate on how best to achieve the objects which some of us have in mind.
I wonder how those of my hon. Friends who do not have a similar problem to that which we have in my part of the country would feel if they had a certain problem and their attempts to solve it were continually voted down by people from other 1659 parts of the United Kingdom who did not have that problem. That is what has happened in the last 60 years. Those who have experience of this problem and who have honestly been seeking a reasonable solution have been continually voted down by people who do not understand it and who have no idea what it is like.
I sincerely hope that the House will give this Bill a Second Reading, in spite of its imperfections—and I hope the hon. Member for Small Heath will not mind my referring to them. I do not accept the Bill as it stands, but I accept its broad objective, which is to ensure some reform of a system which is imposing a definite hardship in places which I know.
§ 1.5 p.m.
§ Mr. George Thomas (Cardiff, West)
Like the hon. Member for Barry (Mr. Gower), I am glad that this debate is taking place due to the good fortune of my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) in the Ballot. I am grateful to him for the forcefulness with which he introduced this subject today.
The hon. Member far Barry seems to me to be like a canary amongst a lot of other strange birds. He is quite out of place on the benches opposite, in view of his attitude to the leasehold question. The speech which we heard from the hon. Member for Birmingham, Selly Oak (Mr. Gurden) this morning was, from the point of view of leaseholders, an outrageous declaration once again that the Tory Party does not change its spots. Offence was taken because my hon. Friend has brought in a partisan note. It is very difficult indeed, as the hon. Member for Barry knows, when people have been fighting this issue for years, not to realise that the opposition always comes from the same source. The vested interest of the ground landlord is the obstacle that we have to overcome if justice is to be done for our people.
There was a time in this House, not so long ago, when leasehold affairs were synonymous with Welsh affairs. My hon. Friend the Member for Small Heath and the hon. Member for Selly Oak have today dispelled that idea once for all. It is no good saying any more that leasehold is a Welsh problem. This is a creeping disease. It has reached the Midlands and the north of England. It 1660 is a terrible burden in London. Therefore, this problem is now far wider than that of South Wales alone. But it is more acute with us in South Wales because we have the problem of monopoly land ownenrship. My hon. Friend has reminded us that the present laws were made by ground landlords for ground landlords, and they operate every time to the advantage of the vested interest of the ground landlord.
I have been disappointed today as I have listened to the debate because I had thought that we would have a better attendance and a better spirit on the other side of the House. We are missing some well-known faces today. We are missing the present Home Secretary, who told us when we last discussed this matter that he could find no evidence of hardship in the leasehold system. We miss the face of the present Lord Chancellor. I must say that I grew accustomed to him, when he was Attorney-General, defending with ardour the Landlord and Tenant Act, 1954.
On 29th June last year I asked the present Lord Chancellor, when he was then Attorney-General:in view of the recent evidence of the inadequacy of Part I of the Landlord and Tenant Act, 1954, in protecting owner-occupiers of leasehold property from unreasonable demands by landlords for the purchase of freehold, whether he will introduce legislation to remedy the situation.The reply was:No. The tenant can refuse any offer of the freehold at an unreasonable price, in the knowledge that the Act of 1954 gives him security of tenure. No further legislation is called for."—[OFFICIAL REPORT, 29th June, 1961; Vol. 643, c. 63–3.]That attitude has prevailed for far too long.
Since that time I have had the honour Of presenting to the predecessor of the present Minister of Housing and Local Government and Minister for Welsh Affairs a petition signed by 60,000 people in Wales—not 20,000, as was erroneously stated in yesterday's Western Mail—including the most prominent people in the public life of the Principality, people not limited to one political party but representative of all shades of opinion in Wales, of the Church, industry, local government and university life. There is, as my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) said, undoubted agreement 1661 among responsible people in Wales that there is a major social grievance which no Government ought to ignore.
As this is the first opportunity which I have had since I presented the petition, I want to pay my tribute to the hardworking people who went from door to door in many parts of South Wales collecting names for that petition. When, in the city of Cardiff, outside the market, a stall was established, thousands of people flocked to sign.
§ Sir K. Joseph
I hope that the hon. Member will explain to the House what expectation he aroused in the people who signed this petition as to the price which they would be required to pay to enfranchise their leasehold.
§ Mr. Thomas
I will go briefly over the history. I endeavoured to get a national petition, supported by both sides of the House. Unfortunately, those efforts broke down because hon. Members opposite did not feel inclined to support a national petition. I then drew up a petition in which I used the words of the hon. Member for Barry, asking for "a fair and reasonable price." On this basis, the hon. Member for Barry and the hon. Member for Cardiff, North (Mr. Box) signed the petition, along with the public.
§ Sir K. Joseph
The hon. Member is, therefore, presumably going along with the proposer of the Bill, the hon. Member for Birmingham, Small Heath (Mr. Denis Howell), who, in his reply to me, broadly accepted market value.
§ Mr. Thomas
No, not at all; and I do not think that my hon. Friend intended to accept market value, either.
§ Mr. MacDermot
I should like to scotch this at the outset. My hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) is not at present in the Chamber. I discussed this point with him at the time of the Minister's first intervention, because I feared that there might be some misunderstanding. At that time my hon. Friend was asking about the Bournville Trust, in Birmingham. That Trust does renew leases at market value. The Minister seized on this point. But what the Minister failed to realise was that it is the market value of the ground rent alone, not the market value of the 1662 rack rent. In other words, the basis upon which the lease is renewed is a ground rent lease and not a rack rent lease.[HON. MEMBERS: "No."] My hon. Friend was quoting from the Jenkins Report. Let me read from paragraph 56:The revised rents were not to be rack rents, but ground rents.This is in relation to Bournville Estates Ltd., which case was being discussed. I know that it is the view of my hon. Friend the Member for Small Heath that compensation should certainly not be at market value based on a rack rent.
§ Sir K. Joseph
I do not want there to be any misunderstanding. Is the hon. and learned Gentleman saying, therefore, that the market value should be of the land alone and not of the house?
§ Mr. Thomas
No doubt my hon. and learned Friend, who is winding up the debate for the Opposition, will be able to deal with the right hon. Member's intervention.
I want to continue by saying that we have been very fortunate in the Principality in the support of the Press and television, both B.B.C. and T.W.W., and in the way in which they have exposed this grievance. I am particularly grateful to the South Wales Echo, the Swansea Evening Post and the Western Mail. I know that the hon. Member for Cardiff, North gets upset when we thank these people, but if it were not for the Press the petition would not have been the success that it was, and I am grateful for their help and for the article which I saw yesterday in the Western Mail.
In our last debate my hon. and learned Friend the Member for Cardigan (Mr. Bowen) appealed to the Minister to take some action about bad landlords. He had referred to them as swindlers with regard to the Rent Act, 1957, and undoubtedly although there are good ground landlords, as we have had evidenced in recent days in the Whitchurch area of South Wales, there are bad ground landlords, too. What does the Minister intend to do about these bad ground landlords? We are missing today the two directors of Western Ground Rents. No doubt they will be here for the vote, but we miss them from our discussion.
1663 I want to tell the Minister that what he says today on this question will be weighed very carefully in the Principality. I listen very carefully to him in the Welsh Grand Committee. Of course, I listen to everyone carefully, but with particular care to the right hon. Gentleman. He has told the people of Wales that he is bringing a fresh approach to this subject. One of the advantages of a change in personnel in the Government is that it gives the Government a chance to take a different line and yet save their face. It does not embarrass anybody if the new Minister says, "I have looked at this matter again."
I hope that the Minister realises that the Jenkins Committee's Report, on which his predecessors in office always rested their case, has been completely outmoded by developments. The legislation of the Conservative Party in taking away control over the price of land, resulting in the present leap-frogging in the price of land to an incredible level, is a new factor about which the Jenkins Committee knew nothing; it had not happened then.
The 1957 Rent Act has sent up the value of property all over the place because the rents which may be charged has increased out of all proportion. This is a factor in my mind. I believe that even if this Bill had not been introduced, it would have been vital for the Government to take action to control the present soaring price of land, which is having a devastating effect on the cost of obtaining freeholds.
The Bill strikes at the root of ground landlords' privilege. It removes the blackmail potential by transferring to owner-occupiers the choice now exercised by the ground landlord. The power to purchase a freehold at a fair and reasonable cost means that for the first time owner-occupiers would deal with ground landlords as equals, with the law protecting them if this Measure went through. They would not be there cap in hand, asking for favours, but would be demanding their rights. The freehold would be granted for less than half the premium which Western Ground Rents are demanding to renew leases at the present time in the City of Cardiff.
There are some conditions in the Bill which I do not like. I have reservations, 1664 and I hope that in Committee we can improve the Measure. I suppose that it is inevitable that leases with less than five years to run should not be included, but these are the very people who are most exposed to blackmail at present. These are the people who, more than anybody else, require our careful protection. I think that there should have been a forward date after which it was said that any house with less than five years to run would not be covered by the terms of this Measure.
I agree with what was said in the leading article in the Western Mail:There would be some basis for saying that the present system worked well if landlords always agreed voluntarily to renew ground leases on fair terms, or, better still, to sell the freehold to a householder at a reasonable price. Unfortunately, some landlords take full advantage of their unchallenged legal right to charge whatever price they feel the market will stand, and who is to say what a man is not prepared to pay to keep his own house?".I have been involved in the problem of leasehold ever since I entered the House of Commons, eighteen years ago, and I realise what immense personal hardship is caused by the continuation of the problem. I believe that the Minister's predecessor was thinking of a scheme for giving tenants or owner-occupiers the right to an automatic renewal of the lease on terms to be decided, without, I imagine, the premium which the worst ground landlords demand. This would be a tremendous step forward. Not only do certain ground landlords increase the ground rent to current economic values, but, in addition, on a basis which nobody knows, they calculate a premium which they demand from people.
After the war, we in the Labour Government found that bad landlords were charging a premium for key money. A short Bill put that right and premiums became illegal. Only the worst ground landlords are demanding premiums. I hope that when he replies to the debate the Minister will tell us that he is considering whether he can stop the demand for additional premiums on top of a revised economic ground rent. I hope he will tell us whether he holds out hope for an automatic renewal of leases, because this certainly was in the mind of his predecessor.
1665 Above all, in a civilised community it should be an elementary right for people to own their own homes and to be safe in their own homes. This is not the rule in South Wales and in an increasing number of places. The privilege which was claimed, stolen or acquired by people in other years is an anachronism in 1962. We see on the distant horizon the prospect of a General Election, with the Government on the defensive. That is putting it mildly.
Great hope was aroused in South Wales when the present Minister assumed office. He has been cautious in his public statements on this question, but today he must be forthcoming with a statement of Government intentions, for the people have a right to know whether a change in the law is likely during the lifetime of the present Parliament.
§ 1.24 p.m.
§ Mr. Donald Box (Cardiff, North)
It is always a pleasure to follow the hon. Member for Cardiff, West (Mr. G. Thomas), particularly on a subject such as this on which we find, not entire agreement, but a fair measure of agreement. I am sure that the House is grateful to the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) for bringing up this subject for discussion today.
I notice that the Bill has the support of several prominent right hon. and hon. Members from the Opposition Front Bench. I wonder, therefore, whether it can be construed as the official Socialist plan to which we have seen passing reference in recent election manifestoes and more recently in the policy statement "Signposts for the Sixties." It is fair to say that leasehold reform, if not leasehold enfranchisement, is a subject on which there is broad agreement between all hon. Members representing Welsh constituencies, although, obviously, there is a considerable difference in the way that we think it should be approached. What we are all aiming at, however, is finding a fair solution to what is generally admitted to be a complex and complicated subject. In the light of those remarks, therefore, I can give only qualified support to the Bill.
Whilst I should certainly like to see the leaseholder given the opportunity of 1666 acquiring his lease on fair terms at various times during the life of the lease, no fair solution to the problem has yet been forthcoming. I feel, therefore, that in its present form the Bill cannot by a wide margin be considered fair, first because it appears to give the leaseholder the right to acquire his freehold at any time during the period of the 99-year lease with the exception of the last 10 years. This seems to me to be an unreasonable and one-sided provision, for whilst it would give the leaseholder the opportunity of acquiring his freehold at any time, it apparently denies the ground landlord the right to sell the freehold at any time during the period of the lease—[HON. MEMBERS: "Why?"]—because if the owner-occupier does not wish to buy it, the ground landlord apparently cannot sell it.
Secondly, Clause 5 of the Bill suggests that the purchase consideration should be based on 25 years' purchase of the annual ground rent. Admittedly, there are qualifications, and these are fairly broad. They are so comprehensive that I wonder why the 25-year period was mentioned at all. In some cases, I suggest, 25 years' purchase of the annual ground rent is too much to pay, particularly when there is a long period of the unexpired lease still to run. It might have been better, therefore, to have used the current market value.
§ Mr. Ness Edwards (Caerphilly)
What would be the hon. Member's view concerning Trelewis, a village in my constituency, where 60 leaseholders are being asked to pay 90 years' purchase for leases which have 27 years to run?
§ Mr. G. Thomas
Surely, the hon. Member has submitted cases like that himself, as I have done, to the Minister's predecessors, but it does no good at all.
§ Mr. Box
I certainly agree with the provision in the Bill for reference to a court, but even this has its snags. No account appears to be taken of the 1667 position if the court fixed a price which was not acceptable to the purchaser. What would be the position if this happened? Would the purchaser be bound to pay the price fixed by the court? What would be the position if he said, "I am very sorry, but I simply do not have the money"? This seems to me to be a grave omission from the Bill.
Thirdly, I have the strongest possible objection to the exclusion of Government Departments and local authorities from the provisions of a Bill of this kind. The local authorities already have ample powers of compulsory purchase if they require to buy property for redevelopment of a civic centre, a new ring road or something of that nature. It seems to me, therefore, that this quite unnecessary provision is included in the Bill purely to provide a sop to those Socialist local authorities who consistently refuse to sell freeholds to owner-occupiers. I recognise, of course, that this is entirely consistent with Socialist policy as stated in "Signposts for the Sixties" which proposes a massive increase in the leasehold system if the Socialists are returned to power.
§ Mr. Denis Howell
I am sorry that the hon. Member's colleague the hon. Member for Barry (Mr. Gower) is not here—oh, he is almost here—to chide him on the partisan nature of his speech, but if the hon. Member will look at Clause 9 (2) he will see that land is to be excluded only if it is for a distinctive public purpose, and that is up to a Minister of the Crown to decide, and a Tory Minister of the Crown at that—in other words, redevelopment or something like that. In the normal case the estate management and the local authority would be on all-fours with everybody else. If the hon. Member thinks that this provision is not strong enough and needs amending I shall be happy to meet his position in Committee.
§ Mr. Box
I am glad the hon. Member has raised that paint, because we have a number of bad examples in South Wales of how Socialist-controlled councils behave in these matters. I would cite, for example, the town councils of Swansea and Newport and the county councils of Glamorgan and Monmouth, all of which refuse to follow the good example of Cardiff City Council— 1668 which, until recently, has had a Conservative majority, I would emphasise—which has been selling freeholds consistently to owner-occupiers with conspicuous success.
§ Mr. G. Thomas rose—
§ Mr. Box
I will give the hon. Member a chance to intervene in a moment.
Now the control of Cardiff City Council is in the balance, and it really would be instructive to know whether the Socialist councillors on the Cardiff City Council intend to stop the sale of freeholds to owner-occupiers if they gain control. Some Socialist councillors have already indicated that they would intend to stop that right, and it really would be instructive—and here I want to give way to the hon. Member for Cardiff, West—to know what his reaction to this declared policy of the Socialist councillors on Cardiff City Council would be.
§ Mr. G. Thomas
I am grateful to the hon. Member for giving way at last. Although we do not usually fight the May elections as early as this, I would say to him that his history is a little at fault. It was when we obtained a Labour majority, which we had only two years, that Cardiff City Council first granted selling of leases in Cardiff. I happen to know because it was in my constituency. I led a deputation of the riverside leaseholders. The hon. Member need have no fear, therefore, since we started the example, that we should be likely to undo that, when, after many years of Tory rule, we are returned.
§ Mr. Box
I am delighted to hear what the hon. Member has to say, and I hope that he will use his good offices with his colleagues on Cardiff City Council who have declared themselves so diametrically opposed to this policy in the recent past.
In fairness, it must be pointed out that a good measure of voluntary leasehold enfranchisement exists in a city like Cardiff at the present moment. The two biggest landlords, Cardiff City Council and Western Ground Rents, are willing to sell freeholds except in the most exceptional cases, but other ground landlords, like the Mackintosh Estate, the Crawshay Estate, the Plymouth Estate, and the Murray-Threifland Estate are also not only willing in some cases to sell the 1669 freehold to sitting tenants, but they are willing to loan the money so that the owner-occupier can borrow the money on mortgage to buy.
§ Sir B. Janner
I know the position there very well indeed, as the hon. Member knows. Would he say art what rates these various inducements to purchase are being made, at how many times the ground rent, and in how many cases these people have been compelled to purchase because they have no other place to go?
§ Mr. Box
I only wish I knew the answer to the hon. Member's question. It is a point I am going to make later in my speech.
However, there are some good ground landlords, as has been mentioned in this debate today. For example, I have a letter before me from the agents of what is described as the Former Tredegar Estate, Watkins and Francis. They state that their clients arecontinuing their policy in allowing lessees or those about to acquire any of the leasehold properties to purchase their freehold interest.
§ Mr. Box
They do not mention prices. That is not the purpose of my reading this letter. The purpose is to show that some ground landlords are willing to be helpful. In the last paragraph they say:Provided that there is no existing mortgage on your leasehold property we can offer you 100 per cent, mortgage advance to enable you to purchase the freehold. In the event of your proposing to sell your property we are prepared to arrange for the freehold interest to be made available to the ultimate purchaser, which would result in a saving to yourself of approximately 7½ per cent. of the purchase price of the freehold.I would suggest that that ground landlord goes a long way towards trying to resolve what is admitted to be a very difficult problem.
To me, there seem to be several fundamental objections to the present position, and I would list them like this: first, that an offer of the freehold is invariably at the whim of the ground landlord; second, that there always seems to be a mystery as to how the price asked is arrived at; and third, that when the offer is made it is invariably on a take it or leave it basis. No recourse can be made to the courts or a referee or 1670 even the district valuer, and for this reason there is a great sense of injustice among leaseholders in Cardiff. I am afraid that it is known in some parts of South Wales as the scourge of South Wales. Thus, I think that the pendulum has swung far too much in one direction, too much for the benefit of the ground landlords, and appropriate legislation is required to bring some balance, some equilibrium, back to the situation.
For the reasons I have already stated I believe that leasehold enfranchisement is not a practicable solution, but I must say that I am very attracted to the principle which was mentioned by my hon. Friend the Member for Barry (Mr. Gower) of the extension of leases, to give owner-occupiers a statutory right to extend their leases at current market value. A former Minister said on several occasions that he had this scheme under examination, and I hope that my right hon. Friend has it in mind, too, for it would seem that there is some basis here for providing a solution which is fair to both parties.
With respect, I would suggest that my hon. Friend the Joint Parliamentary Secretary would do well to examine the position in Cardiff, for, after all, in places like Cardiff we are seeing some of the snags and difficulties which arise when leases get near their end. With the widespread increase of the leasehold system throughout the length and breadth of the country, it is spreading its tentacles like a great octopus over the country. If we are not careful we shall be building up a massive problem for the generations of the future. We shall be building up for them a legacy of woe.
§ Mr. Denis Howell
May I point out what seems to be a massive contradiction in the hon. Member's speech? A few minutes ago he was castigating local authorities for failing to allow their leaseholders to buy the freeholds. Now he is himself advocating a solution to the problem which would stop anybody from buying a freehold and allow only another lease. This seems a tremendous contradiction.
§ Mr. Leo Abse (Pontypool)
I understand that the hon. Member is complaining bitterly about the fact that the leasehold system is spreading its tentacles around the country. Now he presents a scheme the object of which is to make certain that the tentacles are completely wrapped round South Wales. Why does the hon. Member not have the courage to say what he really thinks? Although he has been compelled by public opinion to pretend that he is in favour of the abolition of the leasehold system, he is advocating in this House its continuation.
§ Mr. Box
The hon. Member, with respect, is mixing up two things. I am criticising the system as it stands, and I am suggesting an alternative to alleviate the situation. Some people tend to defend the position because so many new 99-year leases are now being created. But can this be a healthy phase? In most of, if not all, the cases one party to the contract, at least, knows full well that he will not be allowed to complete it.
Evidence shows that at the Llandough Estate in Penarth, in the constituency of the hon. Member for Cardiff, South-East (Mr. Callaghan), where between 350 and 400 new houses are now being built, the would-be purchasers have the choice of buying freehold or leasehold. Out of the first 40 houses built and sold only one purchaser has elected to buy freehold.
§ Mr. Box
On the Lakeside Estate, in my constituency, 750 houses have been completed out of 900, and out of the 750 owner-occupiers only 10 have so far approached the ground landlords to inquire about the price of the freehold.
If this proves anything, it proves that the people prefer to buy leasehold rather than to pay the extra £400 to £500 which is required if they buy freehold. The £400 to £500 which they pay for the freehold is based not on 25 years' purchase but on 20 years' purchase of an annual ground rent of between £20 and £30. I think that this confirms that where people are 1672 willing to enter into a contract they know full well that they will not be able to complete it.
§ Mr. Abse
Is it not a fact that within the Lakeside Estate and in Llandough these ground rents are being carved up because of land speculation at the moment causing the price of land to be so high? Is it not a fact that the prices of these houses for the poor people in your constituency in which I live—
§ Mr. Abse
I am sorry. I meant the hon. Member's constituency. Is it not a fact that land speculation has gone on to such an extent that the prices of the houses are so extortionate that the constituents of Cardiff, North are unable to pay for the freehold? They have been driven to buy leasehold because of the high prices of the freehold. Would it not be doing something more for his constituency if the hon. Member spoke up against the system instead of defending it?
§ Mr. Box
The hon. Member takes advantage of one's willingness to give way to make silly party points about my constituency and to suggest that I am defending the present system. I deplore the position not only in my constituency but also in other constituencies in Cardiff.
I am strongly opposed to the leasehold system in its present form, although I realise that there are some fundamental objections to its abolition at present. The main one is the one mentioned by the hon. Member, namely, the shortage of land and the acute shortage of houses as well. In its present form the leasehold system presents a deceptively cheap and convenient way of selling houses on the "never-never", never paid for and never one's own, yet guaranteed to create friction between the ground landlord and the leaseholder when the lease nears its end.
We know that mortgages on houses with leases of 30 years or less are becoming increasingly difficult to obtain. If the present trend continues I fear that it will not be long before we see a huge section of Cardiff becoming a frozen asset as leases get shorter and shorter. If we 1673 have to retain the present system I should like to see some compulsory amortisation introduced into leasehold contracts. I have investigated this and found that at a cost of 1s. 3d. a week, or £3 5s. a year, £1,000 can be amortised over 99 years.
There is nothing very original about this suggestion. The Jenkins Committee turned it down in its Report, on the ground that it was possible to take out insurance like this on a voluntary basis. But, as we know, since the Jenkins Report was published there has been a tremendous increase in compulsory saving throughout the country. We save for old age, adversity, sickness and injury. Why not, therefore, have compulsory saving to purchase one's freehold and so insure a roof over one's head?
I hope that my right hon. Friend will tell us his reaction to giving the statutory right to owner-occupiers to extend their leases. This still seems to me to be the best solution to what is generally admitted to be a very complex problem. If he has still not reached a definite conclusion, I urge him instead to initiate a new committee to bring the Jenkins Report up to date. Twelve years have elapsed since the submission of that Report. During that time we have had the Landlord and Tenant Act, 1954, the Rent Act, and a tremendous rise in property values. Perhaps most important of all, a further 12 years of these too brief leases have elapsed.
As I said earlier, I look upon this as a bad Bill. It is inconsistent, unfair and to a large extent confiscatory. For these reasons, I obviously cannot vote for it. At the same time, I am so anxious to see the leasehold position clarified and some solution found for this problem that I do not intend to vote against it. I shall therefore abstain if a vote is taken later in the day.
§ 1.49 p.m.
§ Mr. Emlyn Hooson (Montgomery)
I listened to the speech of the hon. Member for Cardiff, North (Mr. Box) with considerable astonishment. It seems that the hon. Member is against the leasehold system in general but he is for it as against this Bill.
The hon. Member has used what I have always understood to be the traditional method of those who want an excuse to vote against a reform of the 1674 leasehold system. He is prepared to vote for a Bill which is not before the House, but is not prepared to vote for the Bill which is before the House. Surely the only test that can be applied fairly here is to ask whether this Bill, even with its imperfections, would result in a more just and equitable system than if the present system remained? If the answer is "Yes", then, after the general sentiments which he has expressed, the hon. Gentleman should vote for the Bill.
§ Mr. Hooson
The hon. Gentleman has not answered the question. Does he consider that the result of passing this Bill, even with its imperfections, would be to give a more just and equitable system?
§ Mr. Hooson
The only other argument advanced against the Bill was put by the hon. Member for Birmingham, Selly Oak (Mr. Gurden). He said that the sanctity of contract, so dear to the English lawyer's heart, would be interfered with by the Bill. That is an argument which was widely used in the House in the nineteenth century in the early days of ameliorative social legislation. It has seldom been heard even from the benches opposite, as I understand it, during the past 20 years. I am surprised to hear it advanced today.
The House of Commons has often taken the view that interference with the sanctity of contract by social legislation is justified where the original bargain was unconscionable because of the inequality of bargaining power of the parties. If the hon. Member for Selly Oak were in the House at this moment, I should recommend him to read the judgment of Lord Atkin in the case of Morgan v. Liverpool Corporation in 1927. The argument was advanced at the Bar in that case that the provisions of the Housing Act should be given a very limited interpretation. That Act introduced certain implied conditions into contracts of tenancy below a certain level of rent, and it was argued that, because 1675 of the sanctity of the original contracts, those ameliorative conditions should be given very limited interpretation.
In his judgment, Lord Atkin totally rejected that argument and then gave, if I recollect aright—for I have not read the Report for many years—the great justification for legislative interference with contractual rights where the intention or an Act was to provide, for example, better conditions in cases where the bargaining power of the parties to the original transaction was quite unequal, and he held that such an Act should be liberally interpreted.
The problem we are discussing results in hardship in different parts of the country. I believe that the only reason why we have this protracted history of attempted reform which has never succeeded is that the hardship caused by the leasehold system is generally experienced only in certain places. It is a hardship which has affected individuals rather than classes and has not, therefore, commanded priority of place among reforms coming before the House. Many attempts have been made to introduce reform, and they were, in my view, completely justified.
The crux of the problem can be stated by posing two questions. Is one in favour of the enfranchisement of the leaseholder? If one is in favour, on what terms? To the first question, I give an unqualified "Yes". I am entirely in favour of the enfranchisement of the leaseholder. I do not see that any objection can be taken to the proposals in the Bill, which is, after all, very limited in scope, limited to long leases at small rents and aimed at dealing with only one section of the leasehold problem.
On what terms? I invite the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) to consider very carefully Clause 5 when the Bill goes to Committee, as I dearly hope that it will. I do not believe that the terms suggested in Clause 5 are sufficiently precise. Clause 3 provides thatThe said notice shall upon service take effect as a contract between the tenant and the person upon whom the same is served. …From that stage, therefore, there is a contract. But what is it? It is a contract of enfranchisement at an unascertained price.
1676 Let us suppose that the matter goes to court and, under Clause 5, the county court judge then has the task of deciding what price should be paid. Save and except that it is said that the price shall be just—and what is just varies even in the county courts—the county court judge, apart from certain minor limitations, is virtually given a free hand to decide what the price should be. The county court judge may, in the end, assess a price which the leaseholder is not prepared to pay. However, the notice being a contract, he is bound to pay. I suggest that this Clause, therefore, needs very careful re-examination.
Clause 9 (2) provides thatThe said sections shall not apply where such superior interest or any superior interest is held and reasonably required by any local or public authority or statutory undertaking for the exercise of its distinctive public functions …".In my respectful submission, this, again, is far too vague. If a local authority is exercising a function simply as a landlord, as many do, there is no reason why it should be in a more privileged position than any private landowner. It would be easy to interpret "distinctive public functions" to cover merely the local authority's function as a landlord and no mope. I suggest that this provision, also, needs to be carefully examined when the Bill goes to Committee.
I will take no more of the time of the House. There is here a very serious problem which causes great hardship to many, particularly in certain pockets of the country. Many attempts have been made to bring reform in order to ameliorate the hardship. All such attempts have so far failed. It is time that something was done. There is no defect in the Bill which cannot be remedied in Committee to make it an extremely effective Act which will bring considerable happiness to many people.
§ 1.57 p.m.
§ Dr. Alan Glyn (Clapham)
The hon. Member for Cardiff, West (Mr. G. Thomas) said that our party had won the cup three times in succession. Will not he agree that, on his basis of assessment, we have, therefore, acquired the freehold interest in the cup and should retain it permanently?
The problem before us is one which both sides of the House must eventually 1677 face. Hon. Members opposite will know that, in our debates about housing, I have on most issues supported them and have even voted with them. On this Bill, however, I am not so willing to give my consent, because I consider that it has several disadvantages.
There have been many references to Wales. I recognise that there is a special problem in the Principality because of the many people who had no alternative but to acquire a leasehold interest in their homes. That is part of the history of leasehold. The land was owned in large parcels and the owners were not prepared to do more than lease it. However, it should be understood that the problem is not restricted to Wales. Very much the same thing happened in London. Over a long period of years, many big estates were unwilling to carve up their interests, not so much to preserve their property but for other reasons.
The very fact that on 28 or 29 occasions this subject has been brought before the House must, I think, illustrate two points. First, that it is the genuine desire of many Members of Parliament to see something done about it. I think that there must also be a genuine recognition that there are very real difficulties attendant on legislating for the extraordinary great variety of leasehold interests.
If we look back, I think that one of the great difficulties is that the leases that were granted are all maturing in and around now. This is because most landlords who had no other means of investment at the time granted 99-year leases[Laughter]. Hon. Members opposite may laugh, but if we look into history we find that the only forms of investment open to trusts were Government stock, which, if I remember aright consisted entirely of consolidated stock at 2½ per cent., land and property. Those where the restrictions that so many estates had placed upon them until the Trustee Acts recently released them. They were, therefore, bound to invest in this type of property.
The problem which faced them at the time was in a different category from that which faces us today. Had they been able to invest in other interests, their capital would have been protected and 1678 have probably increased in value. That is exactly what has happened. The hon. Member for Derby, North (Mr. Mac-Dermot) looks doubtful, but I am sure that he will agree that under the Trustee Acts they had no alternative but interest in mortgages, leasehold interests and Government securities.
§ Mr. MacDermot
The way in which the building leases were created 100 years ago was very clearly explained by my hon. Friend the Member for Llanelly (Mr. J. Griffiths). They were people who already owned the land and they used their monopoly power to refuse to sell the land and to extract ground rent on the basis of the building leases. They were not looking round for somewhere to invest their money. They had already got land which had an agricultural value and they were cashing in in that way on the expansion of the towns.
§ Dr. Glyn
Not the overwhelming majority. It is the great variety of leasehold interests which have been granted which presents us with one of the great difficulties in legislation, so as to give equitable treatment not only to the leaseholder but to the freeholder.
I do not believe that hon. Members opposite really wish the Bill to be of a confiscatory nature. We want a solution which will give equity to the leaseholder and, at the same time, to the freeholder. Hon. Members opposite criticised us for not doing anything about it when we said earlier that we would continue to investigate.
I think that one of the first steps was the 1954 Act which allowed the tenancies to be continued on certain terms. Earlier, it was suggested that perhaps in some cases people desired leaseholds. Personally, I detest them, but it is an unfortunate thing, as one of my hon. Friends said, that even in this day and age people are prepared to accept a lesser interest when perhaps for £500, or the annual interest thereon, they could have acquired the freehold. I would submit 1679 that this was not the incentive originally. One must be fair about it. The incentive originally in purchasing the leasehold was in most cases because there was no other form of tenure available.
Many hon. Members had referred to the sanctity of contract. It has already been breached in many other fields. Restricting ourselves to the field we are talking about today, any Landlord and Tenant Act has breached that sanctity. If we attempt to do it again in the form of leases, we must be absolutely certain that a fair deal is given to the ground landlord.
§ Mr. Hocking
I am not a lawyer, but is it not true to say that the sanctity of contract has not been breached where the contract has been registered?
§ Dr. Glyn
I think that it has been breached in this sphere. I am always reluctant, as I think all hon. Members are reluctant, to see breaches of contract. After all, in international affairs we are very set against anybody who fails to honour his contract. It is with great reluctance in any sphere—I am sure that hon. Members opposite would agree—that we have to legislate for a breach of contract, not that it will not be necessary if, in fact, we have some sort of enfranchisement of leasehold interests.
One of the other great problems is, I think, one with which my right hon. Friend is already familiar. That is that in the past—hon. Members opposite may not agree with me entirely, but I think that I have some measure of support in saying this—most of the good, large estates were owned by people who showed a reasonable attitude towards their tenants. For one reason and another that is not true today. All over the country we are getting what I make no apology to the House for describing as "spiv" landlords coming in, looking for reversions, purchasing them at very low prices in comparison with what they are worth, and then individually getting rid of leases here and leases there.
My right hon. Friend knows well that I raised a similar matter to this in the House concerning my own constituency where the Peachy Group bought property and then exploited the tenants 1680 almost immediately. This is happening all over the country. It may well be that some of the better landlords had to part with their estates because of death duties, fear of the future, or because of the partition of great estates, but, nevertheless, this is something that we have to face.
I do not know whether hon. Members will agree, but I think that, even in this day and age, the better and the older landlords are still far more reasonable with their tenants. Many of them say, "You have been on this large estate and have paid a certain amount towards it." Many of them are prepared to grant freeholds to their sitting tenants at prices far lower than they would be to an outsider who comes in ab initio with no other thought but speculation. There is a difference between speculation and investment. The older landlord is far more willing to regard it as property investment, spread over one or two generations, whereas the speculator comes in, and all that he wants to do is to make quick money. I think that it is an even harder task for us in this House to legislate specifically for the bad landlords without in some way destroying all the good will and faith which has been built up by the good landlords.
Earlier, it was said that the profits have not gone to the freeholder. I think that is a fair comment. Many of the freeholders who parted with their leasehold interests some 60, 70, 80 or 99 years ago have, in fact, not benefited except for the ground rents which have remained the same as when granted, so they are only now receiving a small fraction, owing to devaluation of currency, of what they originally granted the lease at. The person who has benefited is the person who has come in between, bought the leasehold interest and made a considerable sum of money. This is another problem which makes it extremely difficult.
Today, we have discussed almost exclusively the large estates in Wales, but I would submit that there are quite a large number of people in this country, small people, who have bought leasehold interests for their own investment. A practice at one time was for a man to build two houses, and to live in one and lease the other. We must, therefore, be quite clear that we are trying not 1681 only to legislate against the bad landlords who refuse to co-operate in any way at all, but for the small man who has an interest in only two or three properties.
It has been said several times today that over a period of years the leaseholder has bought his house many times over, but is not that the case with anything one hires? If one hires a car over a period of years, one buys it many times over. We must also look at the present value of the property, and I do not think that it is at all reasonable to base that value on the ground rent. In many cases, ground rents are merely tokens—some are almost peppercorn rents—and do not in any way represent the value of the property.
We must somehow relate our legislation to the market value of the property, taking into consideration, however, the fact that if the freeholder would not have acquired possession for, perhaps, twenty years the market value would have to be reduced by the number of years that the lease had still to run. It will not be easy to formulate leasehold enfranchisement in this way.
Wales is not the only place involved. I have a large number of leases in my constituency, some being owned by charities, and some by Oxford and Cambridge colleges. They are all reasonably good landlords, and give their tenants a fair deal in every respect. Some of them, when leases have run out, have extended them. That does not mean that I defend all landlords, because I have others who are extremely bad. It is those whom we should have in mind.
Far too much has been made of amenity covenants in leasehold interests. The right hon. and learned Member for Newport (Sir F. Soskice) will correct me if I am wrong, but I believe that there is no reason why such restrictive covenants should not run with freehold interests, and I am sure that in the event of legislation, the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) would agree that beneficial and reasonable covenants should be legally transferred to the freehold acquired by the tenant.
I do not bring it in as a party point, but I am a little mystified as to why local authorities should be excluded—
§ Dr. Glyn
I should like my right hon. Friend to clear this up. As I read it, Clause 1 of the Bill applies to people affected by the Landlord and Tenant Act, which means that this Bill is restricted, and would not affect public authorities. I am a little mystified by those hon. Members opposite who advocate public ownership in one sphere, and, at the same time, advocate that the State should be allowed to retain its interests and that individuals should not be allowed to purchase freehold interests from various corporate bodies.
One of the great disadvantages of the Bill is that it does not deal with the case of the large block of property of which all the leases run down in, say, fifteen years. By the purchase by one leaseholder of the freehold interest, a man can completely destroy any attempt to pull down and redevelop the block. The freeholder will say, "I have this property right in the middle. I shall hold out for the highest possible price". The Bill would allow an individual leaseholder to purchase a freehold and benefit quickly by being able to block a redevelopment by someone whose reasonable wish was to pull down all the property and redevelop the site.
Up to the beginning of the last war, the code for the purchase of a lease was to multiply the rent by the number of years and divide the answer by two. That was the capitalisation figure generally accepted, but it was accepted on the assumption that, at the end of the period, the property reverted to the freeholder.
One has, to some extent, to be guided by such principles, and remember that even though a person may have lived in a house for a long time and paid annual rent or ground rent, the freeholder, when granting the lease, took into consideration that at the end of the period he would have some reasonable capital reversion. He might not otherwise have embarked on a building programme. One has to be reasonable with the person giving up the freehold interest.
I should like to see the leasehold system very much reduced in size. It saddens me that we still continue with 1683 it. There is probably a case for restriction. France does not have the system, and Scotland is finishing with it, and I can see no reason why we should not now determine not to have any more of it. That would solve the future problem to some extent, though we need to protect those unfortunate tenants who still have a leasehold tenure.
How best can we protect those people? Some extension of the 1954 Act may be called for so that they may have a reasonable extension of their leases, although that would merely put off the evil day when the leases fall in for the second time, so to speak. Possibly, a better way would be some farm of purchase of the freehold, and I am only sorry that that aspect is not made more specific in this Measure. The terms suggested in Clause 5 are not reasonable.
This is an immense problem and one that is not confined only to landlords and tenants. We are all jointly responsible for this system, and I am not at all sure that, in this instance, the State should not help in the solution of the landlord and lessee problem. After all, we had the same problem with tithes, and solved it under the Tithe Redemption Acts. It took a long time to redeem the tithes, but it was done by an annual amortisation payment. Perhaps leaseholds could be dealt with in the same way.
This is not an easy problem, and I cannot believe that the Bill will solve it. The hon. Member for Small Heath has given a great deal of thought to the subject, but, with the greatest respect to him, it is so complicated that I genuinely do not believe that it can be dealt with by a Private Member's Bill. The interests are so deep and different and difficult that we must have Government legislation. It might be possible in some way to make the mortgage system more favourable, so that more money would be available for tenants to buy leases at a reasonable figure. At the same time, we have in some way to protect the possibility of isolated freeholders in various big blocks purchasing their freeholds and thereby blocking future development.
I am sorry that local authorities do not follow my hon. Friend's suggestion and sell some of their interests and allow 1684 people to purchase the freehold of their flats. I have advocated this on many occasions, and I think that I have the sympathy of my right hon. Friend. I would like to see many municipal flats being purchased by individual owners.
§ Mr. Hocking
Surely my hon. Friend means municipal houses and not flats. It is rather difficult to support the purchase of a freehold flat six storeys up.
§ Dr. Alan Glyn
I am grateful to my hon. Friend for his intervention, but that it is not so. For centuries in France people have been allowed to purchase individual flats.
§ Dr. Glyn
Yes, in France they have the system of copropriétaire whereby each person owns an individual unit —there is no leasehold in France—and he has a corporate responsibility for such things as drains, the roof, and parts of the fabric, shared by all those living in the block.
I hope that my right hon. Friend will take note of what has been said by my hon. Friends and myself, and that at a later date have something which is more concrete and more specific than the terms of this Bill. If we are to do this, and if the Bill is to have the good will of all concerned, it must not be in the nature of a confiscatory Measure, which this is. It must be based on sound principles of equity and market values of property, and give a fair deal to all. After all, if we want to give the leaseholder a fair deal, we must give the freeholder a fair deal too.
§ 2.22 p.m.
§ Sir Frank Soskice (Newport)
My hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) introduced the Bill in what I should have thought one must concede was a wholly admirable speech, and since he spoke there have been many excellent and well-informed speeches from both sides of the House. The tone and thoughtfulness of these speeches reflect the circumstances that this problem is admitted to be one which exists on all hands. It has, so history shows, afflicted the conscience of hon. Members from all three parties for no less than six decades, and going back to the 1880s there were recommendations that 1685 legislation on this topic was desirable. So we come to confront a problem which has no novelty about it. It is deeply rooted in our social life, and has produced serious and urgent social strains.
Every hon. Member, and particularly those who sit for Welsh constituencies, has met the problem in his constituency. It rears itself in different forms according to the different circumstances. I, through the vagaries of public life, have a slight political distinction to which I can lay claim, that of representing my fourth constituency, Newport, but in each of the previous constituencies for which I have sat I have from time to time found myself face to face with this problem.
What is its general form? Two elderly people, perhaps on the verge of retirement, and perhaps in infirm health, come to see one, very often having recently become conscious of the fact that the house in which they have lived for 50 years, and which may have been handed down to them by their forebears, is in no sense their house at all. The lease will come to an end in a few years. They have been paying a ground rent of £1, £2, or perhaps £5 a year. It is in every sense their home, and, as my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) said, one cannot discard sentiment in these cases.
Quite apart from pecuniary considerations, it is a grave spiritual hardship for people suddenly to realise that the house in which they were born and have brought up their children really belongs to someone else, and that in the course of a few years they will have to move out unless they can find the money to purchase a house, which, in many cases, is wholly beyond their means.
It is no good referring them to the Landlord and Tenant Act, 1954, and saying to people who have lived for decades in a house, and who, as I have said, have adjusted their circumstances upon the basis that they are likely shortly to retire, that if they go to the county court they may be allowed to stay on in the house but will 'have to pay a market rent far it, which may be anything from 30s. to £3 or over.
Rightly or wrongly, disregarding perhaps legal sophistications which are more present in the minds of other people, they have come to think of the 1686 house as their own. The house in which they have Lived for years, and for which they have paid £1 or £2 a year ground rent, is regarded by ordinary people as their house. More important, they are not only the owners of the bricks and mortar, but it is their home. It is the centre of their family association, and it is that about which their affections and their family history has become entwined. This is the problem, and I should have thought that every hon. Member—and some more than others—had met it over and over again.
Reference has been made to the extremely valuable memorandum prepared by Alderman Dolman. My second political distinction is that I am privileged to count him as one of my constituents. There are certain differences of political approach between us which makes me think it unlikely that I shall receive his vote, but I hope that I am not being unduly presumptuous if I say that the high personal esteem in which I hold him is perhaps not altogether unreciprocated on his side.
As my hon. Friend pointed out, Alderman Dolman's memorandum is particularly valuable because it reinforces the expedience of a Member of Parliament in his constituency "surgery" by the experience of a large number of professional persons whose professions have brought them directly into contact with the problem we are discussing, and so it is that all who have spoken in this debate start from one common ground. Not only is there a problem, but everyone who has spoken has agreed that some legislative step should be taken to remedy it. What we disagree about is the form which the legislation should take.
In that situation, can one pick out some common ground between us as to the form which might be appropriate to deal with the problem? I should have thought that with the exception of a few Members it was accepted that to deal with the problem some right should be given to a lessee—end I use that neutral term deliberately for the moment—to acquire from the reversioner the freehold of the house in which he lives. Probably most, though not all, could start from that common ground.
We also have this point of agreement. I am sure that having started from that 1687 common ground one immediately runs into formidable difficulties which so far have bedevilled the efforts to overcome this problem. One runs into formidable difficulties because one then has to consider what leases one is talking about, what right is to be available to the lessee, when must he exercise it, and, perhaps more difficult than all the others, what is the appropriate formula for compensation which will do reasonable justice to the lessee, and art the same time reasonable justice to the reversioner of the premises he wishes to acquire.
§ Mr. John Barter (Ealing, North)
In dealing with the points one meets in considering this problem, the right hon. and learned Gentleman has not included in the list what to my mind is the vital problem, namely, that this measure may prevent absolutely future development of the properties concerned. I hope that the right hon. and learned Gentleman will include this in the items that he is to consider.
§ Sir F. Soskice
I agree that there are varied problems to be dealt with. I do not exclude that. I was seeking to fasten attention upon what seems to me to be the basic problem. As the hon. Member for Barry (Mr. Gower) said, the leasehold interest falls in value as it approaches its term. Therefore, if we are seeking to buy when the leasehold interest has only one or two years to run the reversioner, broadly speaking, has the ownership practically of a freehold house. If we say that the lessee may at that time compulsorily acquire that reversion, at the market price, we are saying no more to the lessee than that if he can put his hand into his pocket and bring out the total price necessary to buy the freehold of the house he can acquire the reversion.
In nine cases out of ten that is very cold comfort to the lessee. I have already referred to the case which frequently comes to the notice of hon. Members, of elderly persons who have not put by that amount of money, or who have not those resources. It may be that such a person merely has his retirement pension, and perhaps a small Post Office savings account to draw upon, which he has probably designated for some other purpose in his retiring years.
1688 If we say to him, "If you can pay the market price for this house—£300, £400, £500, of even £2,000—you have the right to buy the house", that is no comfort to him at all. He cannot afford it, and he is left in the position of being allowed to stay on for two, three or four years and then having to leave, unless he wishes to avail himself of the provisions of the Landlord and Tenant Act by staying on and paying the market rent, which may be anything up to £3 or £4.
§ Mr. Dudley Williams (Exeter)
Surely, under Clause 5, that is just what happens now. Surely there is practically nothing left in the last two or three years, as the right hon. and learned Gentleman says. There then has to be a negotiated price, or a price laid down by the court, which will be practically the full value of the house.
§ Sir F. Soskice
If that is the practical effect of the Clause, it is not my understanding of what my hon. Friend intended it to be—and he was good enough to communicate to me his intentions in the matter before he introduced the Bill.
If the effect is as the hon. Member suggests I hope that the suggestion will be made in Committee that it should be amended, to make it less favourable to the reversioner than it is at present I am simply saying that we are trying fairly to balance the interests of the reversioner and the lessee, and if we make the lessee pay too much we are giving him no advantage. On the other hand, if we so pitch our formula that he can acquire the reversion at a nominal price we are being unfair to the reversioner. The problem confronting any person who drafts this sort of Bill is the problem of working out a fair formula which will do neither one nor the other, but will result in the fixing of a price between the two extremes.
It is sometimes said that we should leave it to the courts to fix a reasonable price. That has been said in various legislative debates from time to time. But it is hardly fair to the courts to leave the matter at large. The court must be given some guidance as to the norm by which it is to assess compensation or a price. My hon. Friend has, therefore, said to himself, "If we take an absolute figure, such as 25 times the value 1689 of the ground rent, it will sometimes be fair and sometimes grossly unfair to one party or the other. Therefore, we cannot merely fix an absolute figure of that sort. At the same time, we ought to have some starting standard, to which a court, or those negotiating a price, can look when seeking to asses compensation."
My hon. Friend says, "I will take as my starting standard the figure of 25 times the ground rent. As in many cases, that will produce an unfair result I will give the courts"—and that starting standard will be reflected in negotiations which do not go to the courts—"the right to say that they may take into account certain specific circumstances set out in paragraphs (a) to (g) of subsection (2) of Clause 5 and if, looking at those various considerations there detailed, the court thinks that 25 times the ground rent is not enough, and that it should be increased, it will have the power to increase it."
I know that my hon. Friend would seek to commend the Clause—and I commend him in this—on the basis that it provides a measure of flexibility for assessing compensation, designed to help the courts to arrive at a reasonable figure appropriate to individual cases; it is flexible, but it starts from a given norm to which the court can look, and then tells the court, by way of guidance, what other things it may take into account in order to vary the formula as necessary. That may be a right or a wrong approach. If it is wrong, I hope that it can be corrected in Committee, if the Bill is given a Second Reading. That is how the Bill tackles the initial and probably by far the most difficult problem.
My hon. Friend then takes those leases which are within the scope of Section 1 of the Landlord and Tenant Act, 1954—leases of more than 21 years—and incorporates two more safeguards. He provides that the right to purchase will be available only to a person who acquires the lease not less than 10 years before its expiry, and does so for money or money's worth. In other words, if a person inherits a lease and lives on in a leasehold house which belonged to his parents, he is not prohibited by that bar. It is only if a person buys for money, and buys the fag-end of the lease, that he finds the bar erected against him. The final consideration is that the 1690 tenant who wishes to exercise his right must do so by notice not more than five years before the lease expires.
I am not urging upon hon. Members that they should necessarily do so, but they may conclude that this is at any rate a workmanlike effort to try to meet the problem, and to produce a result which, in its general working out, will contain a measure of flexibility to meet individual cases and also a general safeguard to see to it that the Bill cannot be used as a measure of oppression by one party against the other.
I express the fervent and earnest hope that, noting that the whole House agrees that this problem should be met by some legislative action, of whatever form the Government decide, the Minister will at least recommend right hon. and hon. Members to give the Bill a Second Reading. We may disagree with him in his political beliefs, but we all recognise him as a Minister of vision and determination. But I take him to task in one respect. I thought that his intervention, when he asked my hon. Friend the Member for Small Heath whether he was conceding that market value was the right test, was just a little below the standard that we have expected from him.
I agree that if we concede that the market value is the only test we might as well put a pen through the Bill, and tear it up. But my hon. Friend has pointed out that he does not concede that. I refer the Minister once again to Clause 5, the purpose of which I have endeavoured to explain, which may be faulty but can at any rate be said to provide the basis of a blueprint upon which we can work. I ask the Minister to say that he will defer to the wishes of the House—or, at any rate, a great many hon. Members, and not all on one side—to the extent of agreeing that the Bill raises an issue of first-class importance, and purports to deal with a problem which everybody agrees must be tackled. It has a great deal of learning behind it upon which to call, in the form of the Uthwatt Report and the Jenkins Report.
The years have gone by. As the hon. Member for Cardiff, North (Mr. Box) pointed out, 12 years have elapsed since the Jenkins Committee was set up. The problem relates largely to the building 1691 leases in the 1860s, and 12 more years of these leases have run out. I beg the Minister to say that at any rate the Bill is a workmanlike attempt, that it should be given a Second Reading, and that when it goes to Committee he will use all the expert advice at his disposal, and his own personal desire, I am sure, to deal with these urgent social problems so that the Bill gets on to the Statute Book bereft of defects which, quite rightly, hon. Members have pointed out. I greatly hope that the House will give the Bill a Second Reading.
§ 2.40 p.m.
§ The Minister of Housing and Local Government and Minister for Welsh Affairs (Sir Keith Joseph)
This Bill has been gracefully proposed by the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) and I have absolutely no illusion whatever about the strength of the feelings which have been raised by the whole subject. I shall try to cover everything and to go systematically through the points made. I shall not try to scamp or avoid any particular charge.
Of course, as the right hon. Member for Llanelly (Mr. J. Griffiths) has said, it is for me to redeem the promise given by my predecessors and confirmed by me. The Government have embarked upon a study of the whole system and I think that the House would welcome a candid and frank statement, even if, in parts, it is unpopular. It is time that such a full statement was made. I think, also, the House would wish me not to pick on small points in the Bill to criticise them, because the hon. Member for Small Heath showed, in general, that we could amend this or that in Committee. Therefore, I shall deal with the large issues which lie behind its purpose.
First, the subject of leasehold in general. I think that it would be generally agreed that in its time the leasehold system has been useful. Of course, there was no alternative in those times. I hope that it will be generally agreed that properly used the leasehold system still has its uses. We are all in favour of planned development and redevelopment, and I cannot accept that leasehold is properly called the "last stage of feudalism". After all, as hon.
1692 Members on both sides of the House are well aware, it is a technique widely used by local authorities and used, I am sure, from their point of view in the best interests of their citizens. It is certainly not the last stage of feudalism.
As, in fact, my hon. Friend the Member for Clapham (Dr. Alan Glyn) pointed out, landlords who committed themselves to fixed and very small rents sometimes nearly a century ago have not exploited the tenants or the occupants who have seen the value of money fall steadily over the decades and who still have only to pay a fixed rent. However, in this context, that is a relatively small point. I hope, without any prediction, that the leasehold system may still have a valuable part to play in this country in serving our purpose of more houses and houses with decent environments and amenities.
We must face, and the right hon. and learned Member for Newport (Sir F. Soskice) frankly faced it, that one of the results of compulsory enfranchisement would be to discourage, if not finally to abolish, the leasehold system. That may be an advantage in the eyes of many hon. Gentlemen, but it is bound to be a result.
Turning from the historical basis of the leasehold system, may I examine briefly its present merits and demerits. I think the House will agree that a leasehold system can often incorporate covenants that are to the benefit of all the inhabitants of an estate. I think that the House will agree that, in proper hands, a leaseholding landlord can redevelop an estate to the benefit of all. We all know noble names, noble in service to the community, like Bournville, like Letchworth, and like the redevelopment estate of Calthorpe, in Birmingham, where I think it would be agreed that the people who live on the estate, and the community generally, benefit greatly by the enforcement by the landlord of the covenants for the amenity and the planning of the area.
Moreover, turning from the landlord to the tenant, there are still people who, in a situation of free choice, prefer to take up a leasehold rather than a freehold. Hon. Members may deplore this, but it is a fact. People do this presumably on the perfectly hard-headed grounds that they save money in that 1693 way. I agree that in doing so they may not contemplate what their grandchildren might think about it, but I hope that they leave a letter explaining why. But in the free choice, some people prefer leasehold rather than freehold occupation of land or a house.
As the right hon. and learned Gentleman made clear, however, no matter how obvious the position is at the start, misunderstanding creeps in. The right hon. and learned Member for Newport spoke of an elderly couple, to whom I shall revert later, as a typical example of what may happen to a couple who, having lived in a house for 50 years, have recently become conscious of the fact that the house is not their own. I find this hard to believe. I entirely understand that they have come to think that the house ought to be their own, but I do not accept that they really could be ignorant of the fact, however unsophisticated they may be, that the house is not their own.
Surely, few people go in for the major capital outlay of having a house built, or buying one, without some legal advice or awareness of what they are buying. But I admit that they may forget that during their years of occupation. Of course, I agree that in many cases the occupants feel that the house belongs to them. Equally, of course, by the original bargain, it belongs to the landlord, as the right hon. and learned Gentleman has agreed.
Of course—I am sorry to use so many "of courses" but there are certain straightforward facts on which we can agree—the tenant or his predecessor built the house. Of course, as the right hon. Member for Llanelly said, the men and women who live in these houses are first class. They happened at the time to buy or occupy a house built on this system. Hon. Members opposite say that the tenant or his predecessors built the house. That is true, or if they did not, or if their immediate predecessors did not, they bought it from somebody who did. So they seem to think that it belongs to the occupant today.
Had the landlord built the house they seem to imply that there would be no argument about who morally owns it. But had the landlord built the house, the situation in which they confess there would be no moral argument, the 1694 occupant and his predecessors would certainly have paid a higher rent. So the position now is, it is true, that the house reverts to the landlord on the expiry of the lease, but that during the entire lease the tenant's payments have reflected the fact that the tenant or his predecessor built the house.
The tenant can have his choice it seems—either a low ground rent and build or buy the house himself, or a high rent and hire the house as well as the site. In this situation of free choice today many people choose the former course. That is to say, the low ground rent and the building of the house themselves.
I have tried to cover a large amount of ground and I make no apology for building up to the moment when I refer to the Bill and how it proposes to handle the situation. The basis of the leasehold system is that landlords should retain the power to redevelop the estate at the right time. I want to admit at the start that many landlords, the majority of them—probably the large majority of them—do not wish to redevelop. I want to admit that straight away so that there will be no argument about it. Then it is said that if the leasehold system has such virtues, why do not the Government urge the conversion of freehold into leasehold?
We have, of course, to reconcile two interests here. We have the interest of the individual family who own their own house, and that is a paramount interest, but we also have a very strong interest in seeing that, where there is a benevolent or beneficent landlord with capacity to redevelop, such as at Bournville, or Calthorpe, or Letchworth, we shall not take power away from them. I am still cleaning the ground before coming to the Bill.
Many hon. Members have raised the question of the sanctity of past contracts. The sanctity of contracts is a high moral obligation wherever there is not some overriding need to break into it. It has been said that the contracts which lie behind the problems about which hon. Members have talked today were entered into in a situation that did not reflect a free choice, or which reflected the exploitation by the sophisticated of the 1695 unsophisticated. Perhaps I can best summarise the position on this argument, as I see it, by saying that the sanctity of contracts can be overridden, and properly overridden, if there is a clear case of widespread hardship or overriding public interest. The right hon. and learned Gentleman called attention to this, and I am not disputing anything that has been said about it.
§ Sir B. Janner
In this particular context, is it not a fact that our present rent control Acts are based upon the very fact that it was felt that the sanctity of contracts, as the right hon. Gentleman calls it, or as other hon. Members have referred to it, has to be overridden by the Act? Indeed, the first Act says:any contract to the contrary notwithstanding".Does not this come within that category?
§ Sir K. Joseph
I am not resting my views on the Bill on the sanctity of contracts. I am trying to reconcile the views of both sides. I admit that there is a right in the public interest, or if there is grievous hardship, and this is in legislation passed by the House in a very limited number of cases in which the overriding public interest was clearly demonstrated. I do not believe that there is such an overriding public interest in this matter. I do not believe it. I am following, I hope, a systematic line of argument which will lead me only too soon to the Bill.
What the House should now do is to consider systematically the alleged evils of the present system, and, first, I will list the evils that are alleged, but which I do not accept, and will come later to some evils, some alleged and some not, which I do accept. To deal, first, with those which I do not accept, there is the much-talked-of evil of decay. Certainly, there is grave decay and obsolescence in our houses, but I do not believe that it derives predominantly from the leasehold system. There are legislative powers to deal with decay. The 1961 Housing Act gave local authorities much stronger weapons than they have ever had before. I am not suggesting that it will be easy for them to cure squalor and decay quickly, but they have the weapons, and I shall be asking them if they have found them satisfactory.
1696 I accept that there may be a problem at the ending of leases, namely, dilapidations, and I come now to the second alleged evil, which is that dilapidations can impose very severe burdens on an unsuspecting or unsophisticated individual. The ideal thing is that the occupant should keep the house in order through the years, and this is what should happen. In many cases, for understandable reasons, it does not happen. I should like to pick up the case instanced by the hon. Member for Small Heath, because it was a very dramatic example.
The hon. Gentleman quoted a correspondent, writing from a London address, who said that he had had a very happy experience for many years of being a tenant of, I think, a charitable trust, but the reversion had been sold to a company which had immediately sent him a large bill for dilapidations. That bill had been pursued in the courts, and now the tenant was faced with eviction for failing to pay the full £1,500 in respect of dilapidations. I hope that the hon. Gentleman will get the address of his correspondent and ask him to write to me, because unless there is some very peculiar circumstance explaining that oddity which has escaped through a loophole, this situation should not arise.
Under the 1954 Landlord and Tenant Act, if the occupying tenant gets an order for enforcement of dilapidations, he can stay on as a statutory tenant, and the order cannot be enforced except under the stringent conditions supervised by the courts. Perhaps the hon. Gentleman will get his correspondent to write to me. I am not satisfied that dilapidations, as such, with the protection given by the 1954 Act, are an evil.
Now I come to the other alleged evil which I do not accept—insecurity. I do understand and accept that people feel insecurity, but I am arguing that they do not have the need to feel insecure. Today, no hon. Member has listed the number of leases that are expiring in the near future. There are some that will be expiring over the next few years, and I have said that this is true in South Wales. I do not know about the situation in Birmingham, but there are probably relatively few leases 1697 expiring there in the next 10 years. I have not got the figures before me, but no hon. Member has given any figures suggesting that there are large numbers.
There is very little evidence—and now I come near to the heart of the matter—that, even when the tenant wishes to secure a longer term than he has still outstanding, landlords are unwilling to sell or to renew. I shall come to the price question later, but we all know that if the tenant wishes to renew or to buy, he is free to approach the landlord. In most cases, as I shall argue, the landlord is willing to renew the lease or to sell the freehold at a price to which I shall come in a moment. If the landlord quotes a price to the tenant which the tenant is unwilling to accept, and the tenant is coming towards the end of his lease, he is protected by the Landlord and Tenant Act, 1954.
The right hon. and learned Member for Newport disposed of that by saying that it is no good saying to an elderly couple who have been living in the house for 50 years, "You Cain stay on as a statutory tenant". I think that there are many people in big cities who would dispute that view of the right hon. and learned Gentleman. It seems to me a large measure of security, and, in the case of the smaller houses which come within the Rent Acts' control, the occupant stays on as a statutory tenant at twice the gross annual value, and not at the market rent. It is true that if the house has a rateable value higher than that, he would pay the market rent, with a right to go to the county court if there is a dispute about what the market rent is. I do not think that the right hon. and learned Gentleman should dismiss as valueless the security offered by the 1954 Act.
§ Mr. G. Thomas
The right hon. Gentleman will be aware that we have ground landlords who own a considerable amount of property in South Wales. I think of a lady in Penarth who will neither renew leases nor sell the freeholds. What is the Minister to do with such people?
§ Sir K. Joseph
I accept that my whole argument falls down on the lady in Penarth ! I believe that she has 100 or 200 houses.
§ Sir K. Joseph
We all know of the lady in Pertarth, but I have had very few instances of landlords who, except when they want to redevelop, refuse to renew or to Sell.[HON. MEMBERS: "What price?"] I am coming to that. I shall not be accused of ducking anything.
The right to stay on as a statutory tenant can be defeated by proof of an intention to redevelop, but the hon. Member for Small Heath painted a vivid picture of speculators buying reversions and then telling the tenant, "You have not got a hope of saying on as a statutory tenant". What the hon. Member did not tell us, and did not have in his documents, was how long the occupant had before his lease expired, and that is very relevant.
Even supposing that a landlord wishes to quote his intention to redevelop against the claim of the occupant to stay on as a statutory tenant, it cannot be done just by the landlord, be he speculator or not, saying, "I propose to develop". The court would wish to be satisfied that it was a firm intention, coupled with all the preliminary preparations to redevelop, something like obtaining planning permission, drawing up plans, Or the letting of contracts[Interruption]. I did not think that hon. Members would disagree that the right to redevelop could be of great benefit to a community if the landlord redeveloped the estate in modern vintage, so to speak.
I now come to the most serious matter at dispute between me and those hon. Members on both sides of the House who feel strongly about this subject—the question of price. The price which is quoted by the landlord who is willing to renew or sell is often at a level which the occupant regards as excessive. Of course, it is true that some landlords are more generous than others[Laughter]. I will explain that. I have come to the Box with only two pieces of typescript fully to explain—because I have had to take some care in getting my words exactly right—what I mean, when I refer to relative generosity. In the first stage, perhaps I should refer to the elderly couple of whom the right hon. and learned Member for Newport spoke, 1699 the elderly couple who cannot afford to buy a freehold reversion.
I say again to the House that when the expiry of a lease comes soon or early, such a couple must depend, and will be able to depend in nearly every case—there are a few redeveloping landlords—on the security given to a statutory tenant under the 1954 Act. But in most cases we are dealing not with elderly couples, but with people who can conceivably raise the money to renew the lease or buy the freehold—not all, obviously, but in many cases.
There has been a good deal of complaint about the prices claimed by some landlords and, in particular, about the policy of Western Ground Rents, and it is as well that we should name the company so as to get the facts clear. Many of the letters I have received have been complaints about the terms offered by Western Ground Rents. I have had these complaints examined carefully and I will explain what they amount to.
The reversion to a long lease has two different values. It has one value to another landlord who is thinking of purchasing it, subject to the existing lease, as an investment. It has a different value to the lessee occupying the house. The second value is higher than the first. That is because, having bought the reversion, the lessee is able, if he wishes, to sell the house freehold with vacant possession. He is the only person who can do so, because the landlord cannot get vacant possession. because he does not have the power to prevent the occupant from staying on. That is why the reversion is worth more to the occupant than to anyone else.
The alleged complaint is that, whereas most landlords charge the lessee something midway between these two values, Western Ground Rents' charge is nearer the top of the bracket, that is, nearer the higher value. That is only to say that Western Ground Rents ask stiffer terms than other landlords, not that they are terms which are unreasonable in themselves.
On the careful examination which has been made, it is impossible for me to say that Western Ground Rents ask the lessee to pay more than the reversion is worth to him. I will not quote cases, because I do not know them in detail, 1700 but the test is whether, having bought the reversion from Western Ground Rents, individuals can obtain, in theory or practice, by asking a price or actually moving out, more for selling the vacant possession of their property than it has, in total, cost them.
Even if we were prepared, as a Government, to concede enfranchisement at market value—which, as I shall explain to the House, we are not—we should have to tell the arbitrator or the county court what we mean by market value. This would not be easy. The idea of market value imports the notion of a willing seller, but we know in advance that he is not willing. If we pretended that he was willing, what else would we have to pretend?
I am sorry to burden the House with this little bit of technical talk, but it is necessary to put it on the record here. Are we to assume that the lessee himself is in the market to buy, or not? This raises the question of the two different values which I mentioned in connection with Western Ground Rents. An argument can be made for the proposition that either of these values is fair and the other one is not. or perhaps we dodge the point and leave it to the arbitrator in which case he might select whichever he thinks fair, or he might split the difference. Most landlords split the difference. That is, in fact, what most landlords do.
I have no evidence that landlords are asking more than is justified by the value being transferred to the purchaser. Any occupant can consult his valuer and complain to his Member of Parliament—and, through him, to me—and say that, in the light of this, the landlord is charging too much.
§ Mr. Abse
The right hon. Gentleman has said that he regards the rents of Western Ground Rents—to use his own words—as "not unreasonable". Are we to understand that he means that, because it would be a grave matter for South Wales? I think that it would be giving the open door to every ground landlord in the whole of South Wales to adopt the Western Ground Rents' system of valuation and telling them that the terms, although stiff, are not unreasonable. If he is doing that he is doing a grave disservice to South Wales and he needs to reconsider it.
§ Sir K. Joseph
Hon. Members should pause before making charges—which have been made in the House—about a company if they think that the answer to those charges will be damaging. It is not for me to open the door. It has been opened by history for landlords to make what claims they want on the occupants. What I am talking about is whether valuers would claim that the particular charge asked is unreasonable.
§ Mr. J. Griffiths
The right hon. Gentleman knows that up to now he has refused to commit himself upon these problems until he has made an investigation. He is now committing himself—and committing himself, I understand, before he has completed his investigations. I therefore ask him, as Minister for Welsh Affairs, to realise what repercussion this will have in Wales.
§ Sir K. Joseph
The right hon. Member for Llanelly is wrong. I would not be making a statement so full as I am making if I had not completed my investigation.
§ Sir K. Joseph
Hon. Members asked for a frank and full explanation. Hon. Members 'have made charges about the policy of certain landlords and they must accept the answer to them. It is on their heads if the answer upsets them.
I shall be told that to refuse compulsory enfranchisement is a denial of a property-owning democracy. My case rests on this, that almost any occupant can buy or renew the right to stay on in his dwelling. So, although the Government wish to avoid enfranchising compulsorily those landlords who wish to redevelop, we are not in any way discouraging ownership of property by present occupants.
Those alleged evils I have been listing I do not accept. Some I do, but I shall come to them later. I shall try to put the issue between the two views as clearly as I can. Should the developing landlord be compelled to sell? The Bill says "Yes", although now the hon. Member for Small Heath says that he would be willing to accept an Amendment which would allow Bournville, for instance, to carry on. In general, the 1702 Bill says that the redeveloping landlord should be compelled to sell.
The second issue is at what price should he be compelled to sell? I had thought that Clause 5 (2) was an attempt to spell out market value. That is why I asked the hon. Member what he meant, in order to remove any obscurity. It has now been made plain that it is an attempt to arrive at something that is considered fair to both the landlord and the leaseholder, but is not market value. That, above all, has been made abundantly clear, that it is not market value.
§ Mr. Denis Howell
My formula starts on the premise of market value for the land, which the landlord has provided, of course, but not for the work which the leaseholder has put into the house which he has provided.
§ Sir K. Joseph
But, as I tried to explain earlier, if the landlord had provided the house the occupant would have paid a larger rent, rack rent, for the lease.
I apologise for the long preparations, but I now come to the Bill itself. I cannot advise the House to give it a Second Reading. If the Government were prepared to concede the principles of compulsory leasehold enfranchisement they could not accept these terms, because the Bill does not include market value. I have studied the compensation terms as well as I could, and I could make a large number of comments on them, but I think that that would be redundant.
The main point between us is that market value appears to us the only basis upon which compulsory enfranchisement could be possible, and market value is the one thing which the right hon. and learned Member for Newport has told us this Clause does not provide. I suggest that this Clause may provide less than market value in nearly every case, but might conceivably provide more than market value in some cases, which would not be the intention of the Government at all.
The hon. Gentleman seems to think that 25 years' purchase of the annual ground rent must be a fair price. If it is charged very early on in the long lease, it might be excessive, so I hope that he will take careful advice before thinking that one can so easily solve a 1703 difficult valuation problem. If hon. Members want to give compulsory purchase power to any individuals, the terms must really be clear. The Land Compensation Act, 1961, spells out those terms. Moreover, the second objection to the Bill, apart from price, is that the landlord is given no right to resist enfranchisement on any ground whatsoever. As the House now knows, the Government believe that it is right to protect a landlord if he wishes to redevelop so that the benefits of the redevelopment may be kept for the community.
I would add a further danger arising from any Bill such as this. If landlords are forced on to their rights, they may well be less generous than they are now, since the implication of what I have said is that some landlords are very reasonable in the charges they make to their tenants, and, reminded by the Bill of their rights, they could not be counted upon to be so always.
Another defect of the Bill is that, as drafted, it does not touch local authority housing activities and I cannot see why local authorities should be exempt if the leasehold system is as evil as the hon. Gentleman says it is. I am leaving out a lot of technical comment on the Bill, since I have made clear the principles of my objection to it.
The Bill enforces purchase against a redeveloping landlord, even if the landlord has an intent to redevelop for the benefit of the community, and even if the landlord is already enforcing, and wishes to continue to enforce, the benefits of covenants which are of no use to him but are of great use to those who live on the estate.
My hon. Friends the Member for Birmingham, Selly Oak, (Mr. Gurden), for Cardiff, North (Mr. Box) and for Barry (Mr. Gower) in, I thought, very vigorous and strong speeches, have urged that if the Government could not look kindly upon compulsory enfranchisement they should encourage some form of compulsory renewal. I am sure that my hon. Friends' will agree that this would only be thinkable at market value, and I hope that they will agree that it would only be thinkable if it could be overridden by the landlord's intention to redevelop. But the freedom of occupants 1704 to renew or to buy is already available at market price in nearly every case, and it seems to me that it would be a wrong use of legislation to introduce a Bill solely to force the hand of the Lady of Penarth and a few others who may, without any intention to develop, refuse to sell at the moment.
I now come to the two things that seriously worry me. There are two evils, one of them having been alleged and the other not, and I must look into them. The first is the strong disincentive of the present system towards the improvement of houses because the use of improvement grants demands that the landlord or the tenant shall have 15 years' foreseeable in possession of the house. Towards the expiry of a lease, that may not be possible and, therefore, may stand in the way of the use by the occupant of improvement grants. I shall have to look into this, but it is a narrow point in the context of the debate.
§ Mr. Iorwerth Thomas (Rhondda, West)
The Minister has promised to look into this last point concerning improvement grants for houses in the situation which he has described. How soon will we have to wait before a decision is taken? This affects thousands of people throughout the whole of South Wales.
§ Sir K. Joseph
I have promised a complete review of the improvement grant system within six months from last month, so it will be within the next few months.
My hon. Friend the Member for Barry made a strong point, which was echoed by other hon. Members, about what is called the fag-end of leases, and the danger that an occupant who wishes to move elsewhere cannot find a purchaser who, with the short number of years remaining to the lease, can raise the money to buy him out. This is a quite serious difficulty and I am grateful to Alderman Dolman for making it plain in his Report. I should like to look at this, too, to see what can be done about it. I will be grateful if hon. Members will be good enough to send to me any cases which give examples of this defect.
§ Sir K. Joseph
I hope that the hon. Member will give me credit for being frank. When I say that I have studied something, and have come to a negative conclusion, surely that should not reduce the force when I say that I wish to do something about something else and would like to have evidence.
Compulsory enfranchisement, which is behind the Bill, could only be seriously considered at market value and when the landlord does not want to redevelop. The defects urged against the present situation do not stand examination. It has been said that unless compulsory leasehold enfranchisement is allowed, the security of the tenant and the roof over his head are in danger. During this whole debate, we have had no example of that being true because of the statutory tenancy which is provided under the 1954 Act to guard against precisely that situation.
We have been told that compulsory leasehold enfranchisement is necessary to enable an occupant to enlarge his ownership, but we have had no evidence that this is frequently denied except in the case, which the Government hold to be important, where the landlord wishes to redevelop. In nearly every case, the occupant can already renew his lease or buy the freehold at, or less than, the market value.
Even if compulsory leasehold enfranchisement were to be allowed at market value, and redevelopment still be made feasible, it must end the leasehold system. That would Jose for the public the chance, which is often taken in conditions of free choice, of finding a house without having to spend money to buy a freehold interest in the land concerned.
I very much value the strong and sincere speeches which have been made from both sides of the House. I regret that I cannot give satisfaction to the hon. Member for Small Heath and particularly to my hon. Friends who have spoken with such force. I can sum up the Government's attitude to the Bill in two final sentences. Those landlords who do not want to redevelop are almost always willing to sell or to renew the lease at what the Government believe to be justifiable and reasonable prices.[HON. MEMBERS: "What are they?"] I withdraw "justifiable", since it is not for me to justify. If landlords are not 1706 being oppressive, there is no reason for tying the hands of the redeveloping landlord who would benefit the community.
§ 3.20 p.m.
§ Mr. Arthur Skeffington (Hayes and Harlington)
We are approaching the festive season, when generous impulses are sometimes generated, and we certainly hoped today, from a Minister who has a reputation for being progressive, a very much more forthcoming statement than that we have heard. The Minister's statement has been one of the most shocking and reactionary which it has even been my sad experience to hear.
When we were dealing with the Landlord and Tenant Bill in 1954 the Home Secretary at the time, now Lord Kilmuir, at least said that it was the duty of the Government and the Minister to try to hold the shield fairly between the landlord and the tenant. Most of us thought that the shield was tilted towards the landlord even then, but at least there was some pretence of fair play between the two partners in this matter. It appears from the Minister's speech this afternoon that we have completely departed from that position. The Minister has made a speech which will bring joy to the hearts of the landlords and certainly to Western Ground Rents. I hope that every leaseholder in Wales will study the Minister's speech in detail.
§ Mr. Dudley Williams rose—
§ Mr. Skeffington
The hon. Member might at least wait until I have finished the paragraph. He comes here only to try to stop Bills going through, and I do not intend to have my speech interfered with until I am ready to give way.
The Minister has apparently given his approval to the extortionate rents policy of one of the companies which has a reputation all over the country for charging the most extortionate rents, and this is surely a reflection on his office. I will give way to the hon. Member for Exeter (Mr. Dudley Williams) now if he wants to defend the Minister.
§ Mr. Dudley Williams
I should not have thought that there was any necessity for the hon. Member to be so offensive, even if he never does turn up on a Friday to do his duty by his constituents. The attack which he has made on my 1707 right hon. Friend is quite unjustified. If this were sub-legal, why did not the Labour Government who were in office between 1945 and 1951 do something to eradicate it, instead of messing about with nationalising road transport?
§ Mr. Skeffington
That is the kind of intervention which makes one very sorry that one has given way. I like to follow the custom of the House, but I have something else to do than to correct the abysmal ignorance of the hon. Member for Exeter. In fact, it was a Labour Government who set up the Departmental inquiry into leasehold. It was a Labour Government, with a majority of only six, when they were being harried by people like the hon. Member for Exeter, who, despite the complexity of the subject, brought in the Landlord and Tenant (Temporary Provisions) Bill. The record of the Labour Government on this issue is absolutely clear and in favour of the leaseholder and the person who wants to remain in his own home. I hope that before the hon. Member intervenes again he will choose a rather better subject than this one.
I want to pick up three points which the Minister made before I come to one or two matters in my brief intervention. First of all, the Minister said that the Bill did not deal with local authorities and ask why they should not be covered. This is a red herring, and I am sure that the right hon. Gentleman knows it. In any case, local authorities are subject to public opinion in their locality. They have to face elections, and they have to justify the actions which they are taking week in and week out with their electors. Further, the Minister has considerable powers certainly of influencing and sometimes of instructing a local authority in this matter. Thirdly, where there is a local authority lease, generally speaking the local authority has provided the house; it has not been built by somebody else or the occupier. The obnoxious thing about the present system of leasehold tenure is that the house which has been built by the occupier or by his predecessor in title goes to someone who has not contributed a penny to it. Generally speaking, that is not the case with a local authority lease. Where a 1708 building is acquired, as I have known happen, generally quite generous compensation is paid for the building too. For the right hon. Gentleman to make that point is misleading the House by suggesting that there is a comparison between that type of lease and the occupying private leases with which we are dealing today.
The right hon. Gentleman said that he did not accept the point about dilapidations. I hope that he will get further information about it. His Department ought to be able to give it to him. We have had examples time after time throughout the country that this subject has been of concern to the House.
There was the famous case which was quoted not very long ago in a Political and Economic Planning pamphlet, a case in Which the Borough of Paddington was concerned where the following interests were all pyramided together in one holding: the Ecclesiastical Commissioners, who had the freehold; the Paddington Estates Trustees who had a 2,000-year lease; the Grand Junction Carnal Company Which also had a 2,000-year lease; W., a sub-lessee; W's mortgagee; there was another sub-lessee and his mortgagee; W. managing the property for one of the sub-lessees; and finally the occupiers. The pamphlet goes on to say:In such circumstances it is not surprising that the property is allowed to drift into a shocking state of disrepair.This kind of holding is quite common, there is nothing unusual about it. Indeed, it is very rare to find only two interests actually involved. There is usually a number of intervening interests. Consequently, I was surprised to hear the Minister say that. I hope that he will get some further information before he feels it is appropriate to come to this House and make a statement of that sort.
Next he turned to the 1954 Act, and I aim bound to say—and I think most hon. Members who have experience of this will agree—that the protection which that Act was supposed to have given to the ordinary residential occupier has been very largely illusory. I will give the Minister three or four reasons why. In the first place, in a large number of these cases the ultimate rack rent which is demanded is the rent governed by market considerations, even if one goes 1709 to the court. Even when in fact the full market rent is not chargeable it is considerably in excess of what the tenant has been paying, and, as has been pointed out, the occupiers of this sort of property are very often the elderly and retired and, therefore, any increase—particularly when it is about 20 or 30 times what the occupier has been paying—is a very heavy burden indeed.
Will the right hon. Gentleman take note of another fact—that when any tenant remains under the provisions of the 1954 Act he is also responsible for his dilapidations? It is true that this cost can be spread over a number of years in weekly instalments, but when the property in the case is this type of early Victorian property, these weekly instalments often add £1 or £2 a week to the actual rent, and it is this type of property of which the older people are, in the great majority, the residential leases. They cannot afford the new rack rent plus dilapidation charges.
Of course, there are a large number of people who do not even get this chance. I think that the Minister is quite wrong in saying that generally speaking landlords do not want to develop. Except where there is an old, long-established estate company with a family interest, nearly always now the ground landlords are either developing themselves or selling out to somebody who does want to develop, and the fact is that in a large number of cases I know about in London, when the term of the lease is up, development is taking place, and as a result the tenants do not have a chance to remain in their homes.
The last reason why the 1954 Act was illusory is this. Any breach of the Rent Restriction Acts or contract is a cause for not renewing the lease. I put it to the then Home Secretary and to the present Lord Chancellor when the 1954 Act was going through—and it was never contradicted—that one simple failure to pay the required fire insurance premium under the lease would be a valid ground for not extending the statutory tenancy when the term of the tenancy was ended. This has never been denied, and I believe it to be the position today. The result is, as I know from experience, and as other hon. Members know—I am sure that the hon. Member for Dulwich (Mr. Robert Jenkins) knows it to be true— 1710 that when the terms of the leases are reached large numbers of people, even when there is not redevelopment taking place, cannot stay on.
Then I was not only absolutely astonished at the way the Minister dismissed the case against the high rents and prices being charged by Western Ground Rents and some of the others as well, but I was surprised that in general he seemed to think that those very high prices, when freeholds were being purchased, could be completely justified. Of course, prices are much higher because of the policy which has been followed by the Government, but the fact is, as the minority Report of the Leasehold Committee pointed out, that great increases in the values of estates have nothing whatever to do with the freeholder at all, since they are due to services being put in by local authorities, like roads and lamps, by the building of churches, schools, and so on. An example is given in the minority Report showing how the present annual ground rents have gone up to £1 million per year and at the end of the period the company would get at least £5 million additionally, towards which the company had not contributed one penny.
No wonder many of us say, and public opinion outside now believes, that this is legalised robbery. The fact that a modern Conservative Minister, one of the advanced school so we are told, can make a speech a good deal more reactionary than anything we have heard in the last 20 years even from speakers on the benches opposite is quite astonishing. I hope that it will be known by leaseholders throughout the country.
§ 3.31 p.m.
§ Mr. Philip N. Hocking (Coventry, South)
I should like to congratulate the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) on being fortunate in the Ballot, but that is as far as I can go with my congratulations. The hon. Member had a wonderful opportunity in this matter, but I regret very much the form in which the Bill has appeared. No doubt he has a great constituency interest, but I think that he could have introduced a Bill which would have satisfied all his constituency cases more or less on the tines of the closing paragraph of his speech, when 1711 he referred to the Clauses in the leases given by the Bournville Housing Trust which is so near to his own constituency.
The debate has been most interesting. It has been tinged with a good deal of passion. The hon. Member for Hayes and Harlington (Mr. Skeffington) attacked my hon. Friend in a passionate sort of way. We are dealing with a question which should not be dealt with from a passionate point of view but rather from the common sense of the head point of view. This subject obviously arouses great sentiment.
As is customary in the House, I ought to declare that I have a certain amount of interest in this matter. As is well known to the House, I earn my living normally as a building contractor. From time to time we have to give leases by way of normal business. I want to make it clear, however, that I think that these leases are dealt with in a benevolent sort of way. In a few moments I shall explain my reasons for saying that.
During the last few weeks I have noticed at Question Time that a number of Questions have been addressed to my right hon. Friend on this subject, and I have been staggered from time to time at the lack of knowledge among hon. Members as to what they were questioning him about. On one or two occasions I have noticed that it has been said—and I think it was said again here today —that someone who has a lease on a piece of land comes to the end of the time to find that the house was not his. We must face the facts as they are. These people never have owned the house. They have only owned a title which permitted them to rent a piece of land for a set period of years and they have built or have had built for them a house on that land. If we face these facts surely we can get to the root of the problem much quicker. As my right hon. Friend said, had the house been there in the first place considerably more rent would have been charged for that property.
A point which has come out to some extent in today's debate is the question of how much should be paid by way of compensation if it is agreed that there should be leasehold enfranchisement. In reading, as I have done, the recent debates on this subject in the House, I noticed the references which occurred 1712 from time to time to the annual ground rent of properties in South Wales and, in some cases, in the Midlands. A figure of £4 or £5 per annum for the ground rent seemed to be fairly general for an average house. When that ground rent was fixed, it represented quite a large proportion of the annual income of the person who took the lease. Eighty years ago, a man was very lucky to earn £2 a week, and a ground rent of £4 or £5 a year out of it was a large slice of his income, far more than the sum which is being asked today by various ground landlords, so we are told.
In my view, the Clause which provides for the sort of compensation to be given is totally inadequate and does not pay proper regard to the facts as they were 80 or 90 years ago when the leases were granted. I should have expected a Bill dealing with leasehold enfranchisement to take that matter into account.
During the past two or three years, hon. and right hon. Members opposite have advocated a leasehold system as a method of overcoming the high cost of building land. I read a very long document published by Transport House on this subject. What it amounted to was a proposal that the entire freehold should be owned by the country and that there should be a national leasehold system. That is as I understand it. It seems strange, therefore, that hon. and right hon. Gentlemen should be supporting a Bill today which, in effect, would give people the chance to take an interest—
§ Mr. Skeffington
The hon. Gentleman his misunderstood. In the scheme to which he refers there is no proposal whatever that, at the end of the term, the buildings erected by a developer or occupier should go without compensation to the State. It is that element which we object to in the present system.
§ Mr. Hocking
I can only say that my understanding of the scheme put forward by the party opposite as a means of overcoming the high cost of building land is that the whole area of undeveloped land in the country should be taken over by the State and that leases should be granted to people wishing to build.
§ Mr. Hocking
I have read it time and again. Several of my constituents have served on a committee concerned with the matter, and I am fully aware of the point of view which they express from time to time. I do not think that I have misunderstood in any way.
It seems strange that, in the light of that proposal by the party opposite, hon. Members should suggest today that a comparatively small number of people in the community should be given the right to purchase their freehold, whereas, presumably, if the Labour Party ever attained power—I doubt very much that it will—they would be prepared to go back to this very old-fashioned system.
One of the great weaknesses of the Bill is that it does not take into account present trends in housing development. It has been urged by my right hon. Friend and his predecessor that we should obtain a higher density in the number of houses and flats put into residential districts. It has become uneconomic for various reasons to build flats to let, and it has now become necessary to build flats for sale. I have some experience of this. It is impossible to build flats for sale except on a leasehold basis. As hon. Members on both sides of the House know, unless the flats are let on a leasehold basis it is impossible to tie up-the various covenants.
There is also the trend in recent years for the more open type of development—fewer garden fences—and again it is possible to enforce the covenants which must necessarily be made only by developing these sites on a leasehold basis. The Bill does not take into consideration modern, present-day tendencies. It does not consider at all present-day needs.
I believe that if the hon. Member far Small Heath had introduced a Bill rather on the lines of the closing two paragraphs of his speech, he would have received the support of many hon. Members on this side of the House.
§ 3.41 p.m.
§ Mr. Niall MacDermot (Derby, North)
; I have been asked to wind up the debate on behalf of my hon. Friend the Member far Birmingham, Small Heath (Mr. Denis Howell) who introduced the Bill. In doing so, I shall seek to restrain the somewhat passionate feelings which were evoked in me on hearing the Minister's speech on this occasion. I want to 1714 try, as far as I can in the time available, to reply to the arguments which have been put forward.
This is a problem which has been discussed in this House and in another place for a great many years on many different occasions. It is a problem which is known to be a difficult one, almost an intractable one. We hoped, however, that on this occasion we would receive a more constructive approach and a more constructive answer from the Government than on previous occasions.
My hon. Friend referred in opening to the very interesting speech made by Lord Kilmuir, then Lord Chancellor, when this matter was last discussed in the House of Lords. The basis of his speech then was to accept that this was a problem which was desirable of solution, but he said that the difficulty was to find any formula for compensation on which to base the prices at which the leaseholder should be allowed to buy the freehold which would be fair and just both to the freeholder and the leaseholder. He put forward some cogent arguments against the formula contained in the Bill then under consideration.
We certainly hoped that the Government would have used the last two and a half years in trying to assist in resolving this problem and to improve the formula. We were greatly encouraged when we heard from the Minister shortly after he took office that he and his Department were considering this problem actively, and we hoped that they would find some constructive proposals and suggestions.
What do we get? We get the most reactionary speech on this subject that many of us have ever heard. The Minister made no attempt to resolve a problem with which hon. Members on both sides of the House have been grappling for many years We are right back where we started because, as a result of the inquiry he has made, the Minister is rejecting out of hand the desirability of finding any formula.
He says quite clearly that he, speaking as a member of the Government, and on behalf of the Government, completely rejects the idea of enfranchisement even at full market value. Nobody has suggested that full market value would be just both to the freeholder and to 1715 the leaseholder. It is the highest possible valuation there can be from the freeholder's point of view, but the Minister says that he rejects the idea of enfranchisement even on that basis, and that clearly means that he rejects enfranchisement completely—
§ Sir K. Joseph
But the hon. Gentleman will remember that my views also contained the point about redevelopment.
§ Mr. MacDermot
I shall come to that but, first, I want clearly to establish the paint, so that there may be no misunderstanding, that what the Minister said—and I have his words—was "I am not prepared to concede enfranchisement at market value". That means, "I am not prepared to concede enfranchisement", because the highest possible basis on which it could be conceded would be at market value. I shall, in a moment, come to his reasons for making that astonishing statement, and try to deal with them.
The Minister was remarkably frank in conceding the facts that are the basis of our case. He concedes that what we are dealing with—long leases at low rents—relates to places where, when the house was originally erected, all that the freeholder provided was the bare land; that the house has been erected by the leaseholder or by his predecessor in title; that it is the leaseholder who has built it, who has paid for it, who has maintained it, who has repaired it and kept it in condition, and that the freeholder has never spent one penny towards the house. That is what we are discussing.
The basic question is: was that at the outset a fair contract, which ought to be supported, enforced and maintained? The whole basis of our argument is that it is an unconscionable and unfair contract which was imposed on leaseholders at the outset only because of the freeholder's monopoly power as owner of the land. If it was not an unfair but a perfectly fair contract to impose, when the freeholder said "I will give you the land an which to build the house only on the understanding that in a given number of years"—perhaps 99 years—"the house will cease to be yours and become mine,"—if that is a fair contract then the Minister's argument is perfectly sound, there is nothing for us to 1716 discuss. But if it is accepted—and virtually every hon. Member taking part in this debate, except the Minister, has accepted—that this was something unfair and unconscionable, that the State should intervene, and that the situation should be rectified, the whole basis for the Minister's argument goes, and the sole question becomes: what is the fair contract to put in place of this one?
I wish that the Minister could visit some of the places where there are these leasehold properties, and find out the realities of the situation. As hon. Members will know, I used to represent the division of Lewisham, North, which has a very great deal of leasehold property. I remember an one occasion going to a house where there lived a lady, perhaps 60 years of age. The house had been built by her father, and she had been born in it, and brought up in it. Her father had spent all the money needed to build the house. That lady was threatened in a few years' time with having to pay a rack rent, under the so-called security of the 1954 Act. She was quite unable to afford that rack rent, and was faced with eviction from the house that had been her home since her birth. Is that just and fair?
Let us turn now Ito the Minister's arguments about the evils, which he rejects. The first was that this system causes decay in the houses. He gave the lie to that himself by saying at the end of his speech that this was one of the evils he wanted to look into because it was a strong disincentive towards the improvement of houses.
He then said that he did not consider the burden of dilapidations a serious one. What the Minister fails to realise is that this burden of dilapidations under the 1954 Act is imposed over and above the rack rent which the tenant now has to pay to be allowed to stay on in the house.
He then said that there was no real problem of insecurity. This is one of the major facts on which the Minister is completely misinformed. It is an illusion to think that the 1954 Act has given security from eviction, because many of these leaseholders are elderly people who have lived in the houses all their lives, they are living on pensions, many of them perhaps on National Assistance, and they cannot conceivably pay a rack 1717 rent. How can they conceivably pay it with the dilapidations bill imposed on top of it? It is precisely because these people know that they are not going to be able to pay that they are in such fear and anxiety when their leases are coming to an end.
The second major ground for insecurity is one which the Minister dismissed airily, namely, the position of the leaseholder in a case where the freeholder intends to redevelop. This astonished me. The Minister seemed to find nothing unjust in a leaseholder of a house that has been his home all his life being ejected without any kind of alternative accommodation being provided for him because the freeholder wants to redevelop the property. This does not happen to the tenant of a local authority when it redevelops. The local authority provides alternative accommodation. This does not happen to the tenant of a private landlord, who is a rent-restricted landlord, when he wants to develop.
This is happening all over the country. Rented property, privately owned, is being bought by private developers with a view to redevelopment, and a very good thing too, but to get vacant posession they have either to reach some monetary agreement with the tenant, or provide alternative accommodation. They cannot go to the courts and say, "We are going to do a great public service and redevelop, and therefore we can chuck these tenants into the street without providing alternative accommodation." Surely the right hon. Gentleman has been Minister of Housing and Local Government for long enough to realise the facts of the problem? How can he airily say that we all want redevelopment and there is therefore no problem of insecurity here?
This is surely the true answer to the Minister. We are very disappointed. We looked on him as a progressive man who would bring a progressive mind to bear on this problem, but, as he must know all too well, there is an inherent contradiction for a person who genuinely wants to see a property-owning democracy, and a person who has to be the defender of a property-owning party. If one is going to give primacy to the interests of the property-owner in the way the Minister is advocating in 1718 the case of Western Ground Rents, how can one conceivably advance the interests of a property-owning democracy?
The Minister even chose to defend the hoary old argument of the sanctity of contract. The last time this question was debated in this House at any length with a statement from a Minister on behalf of the Government, was in 1955 and at that time the then Attorney-General made it perfectly plain that he was not seeking to defend the Government's position on the basis of sanctity of contract.
The Minister and a number of hon. Gentlemen opposite expressed concern that this Bill excluded local authorities. Perhaps I might say a word about that on behalf of my hon. Friend. It is true that, inadvertently, the Bill has been so drafted that the provisions of Clause 1 would not apply to local authorities. This was certainly not my hon. Friend's intention, as is clear from Clause 9, in which he seeks to make clear the occasions upon which local authorities should be excluded. If the House will give the Bill a Second Reading he will introduce a Clause in Committee to make it clear that the Bill is intended to, and will in the normal case, apply to local authorities. The only circumstances in which it will not are where a local authority is proposing to redevelop—and then there is no occasion for it to do so and where a local authority requires the property for some other housing purpose of its own.
The hon. Member for Cardiff, North (Mr. Box) asserted that the Bill would in some way deprive a landlord of his right to sell the reversion. He is under a complete misapprehension as to the terms and consequences of the Bill. It is certainly intended to do nothing of the sort, and I do not think that it does. Hon. Members opposite spoke of compulsory amortisation as being a desirable way to deal with the problem. Interesting as those points are, they are hardly relevant to the question that we now have to consider—the position of people towards the end of their leases. It may be a useful provision to include in a general leasehold bill dealing with future leaseholds being created.
Some hon. Members referred to the question of covenants, and the Minister 1719 also dealt with the point. It is an important point. Many estates are built and developed on a leasehold basis, with covenants for the mutual benefit of the different occupants. It is suggested that one result of enfranchisement would be to get rid of those covenants, so that one owner would not be protected from an undesirable user by his neighbour. I have spoken with my hon. Friend on the point, and, again, if the Bill goes to Committee, he will gladly introduce a Clause to deal with the point. It is not impossible of solution. As lawyers know, there are circumstances in which freehold owners also can have mutually enforceable covenants, arising under a building scheme, and there is no reason why, if a leasehold estate is enfranchised, it should not be possible to provide that mutually enforceable covenants should take the place of the existing covenants.
These and many other points which were raised in the debate can be dealt with in Committee. My right hon. Friend the Member for Small Heath introduced the Bill in a most moderate fashion, and made it plain that it was his desire
§ to be accommodating and reasonable in every way. Hon. Members on both sides of the House have displayed a most reasonable and accommodating attitude —and I pay tribute to the speeches made from the back benches opposite. The only intractable speech—the only one which has shown no willingness to grapple with the problem at all—was the Minister's speech. It is to be regretted that on what was a brave private Member's attempt for the last time to reach agreement on this problem the Minister should have adopted an attitude designed to prevent any kind of agreement taking place.
§ I hope that although we have not been able to reach agreement about the Bill at least we shall be allowed to divide on it, so that it can be made plain to the country what are the views of hon. Members on the respective sides of the House.
§ Question put, That the Bill be now read a Second time:—
§ The House divided: Ayes 96, Noes 109.1721
|Division No. 14.]||AYES||[4.0 p.m.|
|Abse, Leo||Gunter, Ray||Morris, John|
|Albu, Austen||Hale, Leslie (Oldham, W.)||Moyle, Arthur|
|Allen, Scholefield (Crewe)||Henderson, Rt. Hn. Arthur (Rwly Regis)||Mulley, Frederick|
|Bowden, Rt. Hn. H. W. (Leics, S.W.)||Holman, Percy||Padley, w. E.|
|Bowen, Roderic (Cardigan)||Holt, Arthur||Paget, R. T.|
|Boyden, James||Hooson, H. E.||Pannell, Charles (Leeds, W.)|
|Bradley, Tom||Howell, Charles A. (Perry Barr)||Pargiter, G. A.|
|Butler, Mrs. Joyce (Wood Green)||Howell, Denis (Small Heath)||Parkin, B. T.|
|Cliffe, Michael||Hughes, Hector (Aberdeen, N.)||Pavitt, Laurence|
|Collick, Percy||Hunter, A. E.||Pearson, Arthur (Pontypridd)|
|Cordeaux, Lt.-Col. J. K.||Hynd, H. (Accrington)||Prentice, R. E.|
|Dalyell, Tam||Hynd, John (Attercliffe)||Probert, Arthur|
|Darling, George||Irving, Sydney (Dartford)||Redhead, E. C.|
|Davies, G. Elfed (Rhondda, E.)||Janner, Sir Barnett||Rhodes, H.|
|Davies, Ifor (Gower)||Jenkins, Robert (Dulwich)||Robinson, Kenneth (St. Pancras, N.)|
|Deer, George||Jenkins, Roy (Stechford)||Skeffington, Arthur|
|Delargy, Hugh||Johnson, Carol (Lewisham, S.)||Sorensen, R. W.|
|Diamond, John||Jones, Elwyn (West Ham, S.)||Soskice, Rt. Hon. Sir Frank|
|Donnelly, Desmond||Key, Rt. Hon. C. W.||Stewart, Michael (Fulham)|
|Dugdale, Rt. Hon. John||Langford-Holt, Sir John||Stress, Dr. Barnett (Stoke-on-Trent, C.)|
|Ede, Rt. Hon. C.||Lever, Harold (Cheetham)||Thomas, George (Cardiff, W.)|
|Edwards, Rt. Hon. Ness (Caerphilly)|
|Edwards, Walter (Stepney)||Lewis, Arthur (West Ham, N.)||Thomas, Iorwerth (Rhondda, W.)|
|Evans, Albert||Lipton, Marcus||Thorpe, Jeremy|
|Fernyhough, E.||Lubbock, Eric||Warbey, William|
|Finch, Harold||Mabon, Dr. J. Dickson||Weitzman, David|
|Fletcher, Eric||MacColl, James||Wigg, George|
|Foot, Dingle (Ipswich)||MacDermot, Niall||Wilkins, W. A.|
|Foot, Michael (Ebbw Vale)||McKay, John (Wallsend)||Williams, Ll. (Abertillery)|
|Gaitskell, Rt. Hon. Hugh||Mackie, John (Enfield, East)||Woodburn, Rt. Hon. A.|
|George, LadyMeganLloyd(Crmrthn)||McLeavy, Frank||Yates, Victor (Ladywood)|
|Gower, Raymond||Mellish, R. J.|
|Griffiths, Rt. Hon. James (Llanelly)||Millan, Bruce||TELLERS FOR THE AYES:|
|Grimond, Rt. Hon. J.||Mitchison, G. R.||Mr. Marsh and Mr. Taverne|
|Allason, James||Biffen, John||Braine, Bernard|
|Ashton, Sir Hubert||Biggs-Davison, John||Brooke, Rt. Hon. Henry|
|Atkins, Humphrey||Bishop, F. P.||Brown, Alan (Tottenham)|
|Barber, Anthony||Black, Sir Cyril||Bullus, Wing Commander Eric|
|Batsford, Brian||Bourne-Arton, A.||Butcher, Sir Herbert|
|Butler, Rt. Hn. R. A. (Saffron Walden)||Hughes Hallett, Vice-Admiral John||Price, David (Eastleigh)|
|Carr, Robert (Mitcham)||Hughes-Young, Michael||Price, H. A. (Lewisham, W.)|
|Chichester-Clark, R.||Hulbert, Sir Norman||Pym, Francis|
|Clarke, Brig. Terence (Portsmth, W.)||Iremonger, T. L.||Rawlinson, Sir Peter|
|Cooper, A. E.||Jackson, John||Redmayne, Rt. Hon. Martin|
|Corfield, F. V.||Johnson Smith, Geoffrey||Roots, William|
|Craddock, Sir Beresford||Jones, Arthur (Northants, S)||St. Clair, M.|
|Crawley, Aidan||Joseph, Rt. Hon. Sir Keith||Sandys, Rt. Hon. Duncan|
|Cunningham, Knox||Kerans, Cdr. J. S.||Scott-Hopkins, James|
|Curran, Charles||Leavey, J. A.||Sharples, Richard|
|Doughty, Charles||Lewis, Kenneth (Rutland)||Shepherd, William|
|Drayson, G. B.||Linstead, Sir Hugh||Smith, Dudley (Br'ntf'd & Chiswick)|
|Elliot, Capt. Walter (Carshalton)||Litchfield, Capt. John||Smithers, Peter|
|Emery, Peter||Longden, Gilbert||Smyth, Rt. Hon. Brig. Sir John|
|Errington, Sir Eric||Loveys, Walter H.||Stevens, Geoffrey|
|Finlay, Graeme||Lucas-Tooth, Sir Hugh||Tapsell, Peter|
|Fisher, Nigel||McArthur, Ian||Taylor, Frank (M'ch'st'r, Moss Side)|
|Fletcher-Cooke, Charles||McLaren, Martin||Thatcher, Mrs. Margaret|
|Fraser, Ian (Plymouth, Sutton)||Macleod, Rt. Hn. Iain (Enfield, W.)||Thompson, Richard (Croydon, S.)|
|Gammans, Lady||McMaster, Stanley R.||Tilney, John (Wavertree)|
|Gardner, Edward||Matthews, Gordon (Meriden)||Turner, Colin|
|Goodhew, Victor||Mills, Stratton||Vaughan-Morgan, Rt. Hon. Sir John|
|Hamilton, Michael (Wellingborough)||Miscampbell, Norman||Vosper, Rt. Hon. Dennis|
|Harris, Reader (Heston)||Neave, Airey||Wakefield, Sir Wavell|
|Harvey, John (Walthamstow, E.)||Nugent, Rt. Hon. Sir Richard||Walder, David|
|Harvie Anderson, Miss||Orr-Ewing, C. Ian||Williams, Dudley (Exeter)|
|Heald, Rt. Hon. Sir Lionel||Page, John (Harrow, West)||Wolrige-Gordon, Patrick|
|Hill, J. E. B. (S. Norfolk)||Page, Graham (Crosby)||Woodhouse, C. M.|
|Hobson, Sir John||Percival, Ian||Woodnutt, Mark|
|Holland, Philip||Peyton, John|
|Hopkins, Alan||Pitman, Sir James||TELLERS FOR THE NOES:|
|Hornsby-Smith, Rt. Hon. Dame P.||Powell, Rt. Hon. J. Enoch||Mr. Barter and Mr. Hocking|