HC Deb 18 April 1967 vol 745 cc438-40

Lords Amendment: No. 29, in page 78, line 37, at end insert new Clause "B": B. Section 73(1)(xiii) of the Settled Land Act 1925 (under which capital money arising under that Act may be applied in the redemption of improvement rentcharges) shall, in its application to any charge created under the Improvement of Land Act 1864 in respect of an improvement benefiting agricultural land, and its application by virtue of section 3(3) of the Agricultural Credits Act 1932 to the repayment secured by any mortgage, have effect as if the reference to redemption included a reference to discharging as it falls due so much of any periodical payment as represents repayment of capital.

Mr. Peart

I beg to move, That this House doth agree with the Lords in the said Amendment.

As the law stands at present, the wording of Section 73(1)(xiii) of the Settled Land Act, 1925, prevents the use of capital money arising from a settled estate for the repayment of improvement rentcharges by instalments.

It was represented to the Government in another place that this provision has a particularly unfortunate effect so far as agriculture is concerned. When a loan for an agricultural improvement is secured by a mortgage which is repayable by instalments it can, under Section 3(2) of the Agricultural Credits Act, 1932, be treated as an improvement rentcharge.

The 1925 Act allows capital money to be used for the redemption of a rent-charge of this kind, but the word "redemption" has been held to refer only to a compounding of future payments and not to the repayment of the capital element by normal instalments. The tenant for life must, therefore, repay both the interest and the capital element of such instalments either out of his income or with free capital. This can have the effect of discouraging tenants for life from borrowing money in order to carry out agricultural improvements.

Parliament may well have intended Section 73 of the 1925 Act to reproduce the effect of Section 1 of the Settled Land Acts (Amendment) Act, 1887, which covered both redemption and any other provision for the payment of rentcharges. If it had done so, there would, of course, have been power to use capital money for repaying rentcharges by instalments.

It is not possible to remedy this defect for all purposes in an Agriculture Bill, but we consider that it would be an advantage to do so as far as agricultural estates are concerned. That is what this new Clause aims to do. It will enable capital money arising from a settled estate to be used for meeting the capital element in repayments when a rent-charge relating to an improvement for the benefit of agricultural land is paid off by instalments.

I hope that I shall be forgiven for delaying the Committee, but I thought that it was right to put that on the record so that people should understand the purpose of the new Clause. I commend the Amendment to the House.

Mr. Godber

I rise merely to thank the Minister for explaining the new Clause so lucidly, but express surprise that he did not explain it to us earlier in the passage of the Bill.

Question put and agreed to.

Subsequent Lords Amendment agreed to.