HC Deb 26 October 1966 vol 734 cc1222-8

Amendment made: In page 18, line 38, leave out from "which" to "could" in line 39.—[Mr. Willey.]

Mr. Skeffington

I beg to move, Amendment No. 33, in page 19, line 22, to leave out from "that" to "and" in line 25 and to insert: no tenancy of the land comprised in the disposition (in this section referred to as 'the crownhold land') or of any part of that land shall be granted except with the consent in writing of the Commission".

Mr. Deputy Speaker (Mr. Sydney Irving)

I think that with that Amendment it might be convenient to discuss the Amendment to it in the name of the right hon. and learned Member for Hexham (Mr. Rippon), in line 4, at the end to add such consent not to be unreasonably withheld". and Amendment No. 232, in line 25, to leave out "two" and to insert "three".

Mr. Skeffington

This Amendment springs from a review of this Clause because if the crownholder lets his home for a term not exceeding two years he is not in breach of his crownhold covenant by reason of the fact that he is unable to obtain possession at the end of that period because of the operation of the Rent Act, and it makes no difference that he might have availed himself of Section 14 of the Rent Act, 1965, which enables owner-occupiers who rent their homes for a short period to recover possession at the end of it, but failed to do so.

The right to let his house for less than two years therefore provides someone who wishes to exploit the cash value of this concession with an easy way to do it. He can lease the house at full value at what is, in fact, a permanent arrangement because the lessee knows that he is safe in possession and the Commission would thereby effectively lose its right to recover the concession.

It would be possible for the Commission to insert in a crownhold disposition taking the form of a tenancy a covenant, not being a crownhold covenant, forbidding any subletting. But this would produce the surprising result that if the crownholder let for more than two years he would breach a crownhold covenant for which the penalty would be the compulsory purchase of his interest at full market value, less the concession, while if he sublets for less than two years he is liable to forfeiture with no compensation. This would obviously be quite indefensible.

The right answer, therefore, which the Amendment seeks to achieve, is to delete the two-year exemption. The crown-holder always has to get permission to let, and the Commission can be relied upon to act reasonably and generously in deserving cases.

1.45 a.m.

It might be convenient for me to say a few words about the Amendment to Amendment No. 33, put down by the right hon. and learned Member for Hexham (Mr. Rippon) and a number of his hon. Friends. I must ask the House to resist the Opposition Amendment, for several technical reasons, which those familiar with the Landlord and Tenant Acts will recognise. The Amendment to the Amendment provides that such consent shall not be unreasonably withheld. It would have the effect of preventing the Commission from stopping a crownholder converting his concession into a cash profit.

Clause 18(4)—as I hope it will be amended by Amendment No. 33—and subsection (5) prevent a crownholder who wants to sell his interest from doing so without offering to sell it back to the Commission at a price equal to the market price less the amount of the concession. In other words, the Commission is in a position to make a crownholder who wishes to dispose of his interest repay the value of the concession. I am sure that this will be regarded as common sense and good policy by hon. Members on both sides of the House.

But it is necessary to go further than this, because a crownholder, without selling, could very easily cash his concession by granting a lease for a sufficient period at the full economic rent. It is therefore necessary for the Commission to be able to refuse a crownholder consent to the granting of the lease unless he repays his concession to the Commission. This condition could not be imposed upon him if the Amendment to Amendment No. 33 were carried. It has been held on a number of occasions that where a tenant's covenant not to assign or underlet the property let to him is qualified by a proviso that such consent shall not be unreasonably withheld—a proviso which the Opposition seek to insert—the only valid grounds on which consent can be withheld are grounds relating to the character or financial responsibility of the tenant or the use to which he wants to put the premises.

This good intention of the Opposition would defeat the whole object that the Commission should be in a position to recover the concession in certain circumstances, and I therefore hope that the Opposition will not think it unreasonable of me to ask the House to resist the Amendment to Amendment No. 33, but will think it right that tenants should all be put in the same position, and that an unscrupulous tenant should not be able to exploit the position, as he can now.

Mr. Allason

It was very valuable to have the remarks of the Parliamentary Secretary. He gave some explanation for having sought to amend the Clause in answer to our questions in Committee. But although we asked him to make it less oppressive he has made it very much more so. The reason, apparently, is that tenants are likely to cheat. The Commission will never be unscrupulous, but tenants may be. It is a great pity always to legislate for the very worst case. The effect of the change which is proposed here is that if the tenant goes away for a fortnight's holiday and wants to let his house for that fortnight he must obtain the permission of the Commission.

It becomes a little ludicrous when we get down to such short periods. It was for that general reason that the Bill provided for a term not exceeding two years, in order to allow reasonable latitude, but we recognise that there may be unscrupulous tenants. Without delving very deeply into the Clause, I have a feeling that if a crownholder did behave in an unscrupulous manner the Commission would have powers to cope with the situation. It is much better to legislate for the good tenant, and to have a saving Clause for the unscrupulous tenant who will be the exception. We should like to provide that such consent should not be unreasonably withheld: this is the common form in leases.

We are here drafting conditions of leases by legislation, and this condition would be an important protection for the tenant. If a sub-let is refused, the tenant would have the right to have the courts decide whether his landlord, the Land Commission, was being unreasonable. This is surely a reasonable protection for the tenant. The crownhold tenant is denied equitable treatment simply because the Commission is his landlord. Therefore, we have also put down Amendment No. 232, which would, assuming that Amendment 33 falls, extend the term to three years. This is to emphasise that we believe that reasonable treatment should be accorded to reasonable tenants. I hope, therefore, that the Minister will think again.

Mr. Graham Page

If there is to be no further comment on what my hon. Friend has said, perhaps I might give the Minister time for more thought. We are talking about concessionary crownholds and about what the crownholder may do about letting his property. He is the "blue-eyed boy" who has been chosen to have this concession—we do not know how: presumably by having his name pulled out of a hat, or by what we called "bingo" in Committee. He then has shackles put around him and cannot even let the property weekly without asking the Commission's permission.

This is supposed to be his home. If Government policy continues to keep private builders out of the supply of housing, there will be no freeholds to be bought and the only way anyone will find a home in future will be under the feudal system of crownhold, under which he cannot even let his house while he goes on holiday without permission. This is fantastic, but it is the future which the Government offer.

Mr. Eyre

Referring to the inferior form of ownership which is to be granted under the concessionary crownhold, and the dreadfully restricted form of letting which will be permitted, perhaps the Minister would explain how the mortgaging quality of the property will be adversely affected by the restriction of this letting right. One assumes that, when crownhold leases are granted, the building societies will be called upon to finance some part of the purchase, if this is to operate on anything like the scale described so often by the right hon. Gentleman who is now Leader of the House.

If that is so, what will be the position of the building societies as mortgagees? Their rights will be heavily limited by the nature of the crownhold holding, and they will not be prepared to advance on this kind of security. The Government will have excluded from this kind of finance the great organisations which have helped so much in respect of home ownership. In other words, by this unreasonable and unnatural restriction, encouragement to home ownership will have received a setback. I press the Parliamentary Secretary to say what will be the position of mortgaging rights as a result of this restriction.

Mr. Skeffington

The hon. Member for Crosby (Mr. Graham Page) first referred to the lucky person who becomes a Crownholder and went on to denote that position by saying that such a person would be shackled. The common-sense factor is that nobody need become a crownholder. I need not rehearse all the arguments again, but we have explained the general way in which crownhold will operate; through housing associations, co-operative societies, local authorities and so on. There may be other circumstances in which such concessionary dispositions could be made.

The concession will be valuable in many cases. It is, therefore, right that the Commission and the community should see that it is not exploited. That is all we are trying to secure, and it is not unreasonable. I have already said that the Commission will be a reasonable body and will act reasonably. In the overwhelming number of cases the concession will operate as I said, through the sort of association I mentioned. It will be tenants and crownholders making their own arrangements because they desire to operate the concession. With respect, the suggestions of the hon. Member for Crosby are rather grotesque.

Amendment No. 232 suggests that we leave out two years and insert three. The arguments I have used so far are valid for that Amendment, for if it were accepted a number of people could exploit the value of the concession. That would defeat the object of the operation and I hope, therefore, that hon. Gentlemen opposite will support the line we are taking.

Mr. Clegg

The Parliamentary Secretary said that a crownholder chose to be a crownholder and that it was his choice when he bought the land. But under the Commission's powers it is possible for it to buy land from a freeholder and offer it back to him on crownhold terms. There would not be much choice if that happened.

Amendment agreed to.

Mr. Willey

I beg to move, Amendment No. 34, in line 31, to leave out from "pre-emption" to "a" in line 37 and to insert: in accordance with the following provisions of this section. (5) The right of pre-emption under such a covenant as is mentioned in paragraph (b) of the last preceding subsection shall be such that—

  1. (a) where the disposition proposed to be made by the person for the time being entitled to the crownhold interest in the whole or part of the crownhold land is to extend to all the land in which he has that interest, the right of pre-emption will be exercisable in respect of the whole of the last-mentioned land, and
  2. (b) where that disposition is to comprise only part of the land in which that person has the crownhold interest, the right of pre-emption will, at the option of the Commission, be exercisable either in respect of that part or in respect of the whole of the last-mentioned land.
(6) The price to be paid, on the exercise of such a right of pre-emption in respect of the whole or part of the crownhold land, shall be".

Mr. Deputy Speaker

It might be convenient for the House to discuss, at the same time, Amendments No. 35 and 36.

Mr. Willey

That is convenient, Mr. Deputy Speaker, because the purpose of these Amendments is to make it clear that the Commission's right to pre-emption under a covenant contained in a crownholder's disposition extends to the whole of the interest, even though part has been sold.

Amendment agreed to.

Further Amendments made: In line 40, leave out "referred to in that paragraph" and insert "conferring the right of pre-emption".

In line 44, leave out from "of" to "as" in line 45 and insert: the crownhold interest in the crownhold land or in that part of it".—[Mr. Willey.]