TERMINATION OF FEU DUTIES, MULTURES, AND LONG LEASES (SCOTLAND) (Hansard, 22 February 1967)

§ Mr. James Davidson (Aberdeenshire, West)

I beg to move, That leave be given to bring in a Bill applicable to Scotland to enable vassals under a Feu Charter, occupiers of agricultural property liable for the payment of multures, and lessees or sub-lessees occupying residential property under certain long leases, to commute their financial obligations; and for purposes connected therewith. In asking the leave of the House to bring in this Bill, I wish to make it clear that my main reason for doing so is that we on the Liberal bench, and, I believe, many other hon. Members in other parts of the House, consider that the feudal system is not only a relic of an outdated social system, but that it is one of the three main obstacles to development in Scotland.

The other two major obstacles to development are the lack of capital investment and the poor system of communications, but these are hardly matters for a Ten-Minute Rule Bill.

I realise that this is not the first attempt to introduce a Bill to terminate feu duties. The hon. Member for Rutherglen (Mr. Gregor Mackenzie)—I am sorry that he is not here this morning—was successful on 22nd June, 1965, but 1637 Parliament was prorogued before his Bill could make any progress. In his speech the hon. Member for Rutherglen ably outlined the history of the feudal system.

It is sufficient for me to say that the origins of the system are lost in the mists of time. Originally the Sovereign was the owner of all the land. Land was granted to vassals in return for goods or services—military services; agricultural service; or part of the crop, perhaps. In the Guthrie Report of 1952, the Sovereign is said to be the paramount superior of all feudal land in Scotland while the "proprietor" who is the same as a "vassal" under the feudal system, is defined as the person holding the estate at the lowest point in the vertical chain. To quote from paragraph 10 of the much more recent Halliday Report: The technical language of the system, perpetuated from an earlier era, has marked psychological disadvantages today. The terms 'feudal', 'superior' and 'vassal' and the obligation to make payment of 'feuduty' in perpetuity all tend to suggest to a proprietor or vassal that his status is inferior. It is evident that the use of those archaic terms detracts from a sense of full ownership and is a disadvantage of the system. Incidentally, my Motion to introduce this Bill was put down before the publication of the Halliday Report.

Apart from being an anachronism in a property-owning democracy, and an immense complication in the legislation relating to conveyancing, the feudal system provides a "second planning permission", which may or may not be wisely used. I would like to illustrate these points with three actual examples from my own experience.

First, a lady who owned an unlicensed hotel on the main street of a well-known tourist town in Scotland was told that she would have no difficulty in getting a licence. On the strength of this information, she unwisely carried out some expensive improvements to her property, applied for the licence, and got it. However, her "feudal superior" objected and used his powers under the law to have the licence revoked. He objected, not because he was a teetotaller or had religious scruples, but because he was a director of, and principal share- 1638 holder in, the very large hotel which was—and as far as I know still is—the only licensed hotel on the main street of that town.

Secondly, a blacksmith wished to expand his premises into a light engineering works to serve the farming community over a wide rural area. He is one of the efficient ones who has survived the fierce competition of the age of farm mechanisation. He had even had the plans prepared and had been informed by the Board of Trade that the extension would be eligible for grant. However, the feudal superior, which was in this case a trust, withheld permission on the grounds of amenity.

Thirdly, a man bought one eighth of an acre and built a house on it, under the false impression that the land was freehold. Having built the house, he discovered that there was a feu to pay and sought to purchase it. He came to terms, only to discover that the man he had bargained with was only the "mid-superior". A wrangle then started between the superior and mid-superior as to who was entitled to the cash for redemption of the feu. One wanted approximately ten times as much as the other one. I am glad to say that in this case the less greedy "superior" won, and the proprietor now has the freehold of his little property.

Perhaps these three cases from real life will serve to illustrate just how anachronistic the system is. I have no intention of becoming entangled in the provisions of the Conveyancing Acts and Acts relating to entails, but it is broadly true that there is no limit to the number of times land can be "fued" and "subfued" again and again, with iniquitous effect on planning and development.

I will refer only briefly to multures and long leases. Multures are "mill dues", payable for the use of a mill, which, in every case what I have been able to discover, no longer exists— or, if it does, it no longer performs the service for which the multure was the fee.

As for long leases, as long ago as 1914 the Scottish Liberal Land Enquiry Committee, referring to them, said: … as this system of tenure is not very common in Scotland it is felt to be the more unreasonable where it in fact obtains. There are instances where industry has been handicapped … 1639 It went on to recommend powers for the conversion of long leases into feus—a recommendation which was not finally enacted until 1954.

But the Long Leases (Scotland) Act, 1954. which gave opportunity for tenants to convert to feu charter, merely helped to perpetuate the system.

It is sometimes argued in favour of the feudal system that it makes building land, and therefore houses, cheaper by spreading the financial burden, but in fact, houses are dearer in Scotland, a fact which was referred to only yesterday by the Minister of State, Scottish Office. In any case, a house purchaser can obtain the same advantage by using a building society or insurance company.

Long leases or ground leases mostly arose in the first place from prohibitions against "sub-infeudation", but the iniquity of the system is that any improvements carried out by the tenant, and usually the house itself, revert to the landlord at the end of the long lease, without any compensation to the tenant.

The time has now come for a further step towards the systematic termination of these burdens and injustices, and I am proposing that for the purposes of this Bill both multures and ground rents should be treated as feu duties. I am not suggesting their abolition without compensation, except that I agree with Halliday's recommendation that from and after the date to be prescribed, all continuing payments of feu duty and ground annual which do not exceed 5s. gross per annum should cease to be payable. Obviously feu duties of this value are just a nuisance to "vassal" and "superior" alike. But there would be an injustice in simply abolishing feus altogether. There are certain insurance companies, for example, which have made a practice of purchasing feus as a form of investment, so that the money of third parties is involved.

What I am proposing is that within five years of the enactment of this Bill all feus, multures, and long leases with over 21 years still to run, should be terminated, but that, until the five years have expired, the proprietor, mid-superior, or vassal, should be entitled to allocation of a feu duty if appropriate; 1640 and that in any case he should be entitled, in his option, to redeem any feu duty, allocated part of a feu duty, multure, or eligible ground annual, at any term of Whitsun or Martinmas, after one month's written notice.

Whilst I have read the recommendations of the Halliday Report and am broadly in agreement with many of them, if all the recommendations of the Report are enacted the feudal system will merely be perpetuated. Nor am I happy about the recommended financial basis for redemption.

I am proposing that if the "proprietor" has not taken advantage of his right of redemption within the specified period —and I am suggesting five years, in line with the Guthrie Committee's recommendation regarding ground lease—the feu should automatically terminate, and that the local authority should, in effect, become the temporary "superior". Former feudal superiors and mid-superiors would submit claims for compensation to the appropriate local authority. Relevant feudal conditions should remain at the discretion of the local authority, with a right of appeal to the sheriff by those affected.

Whichever way the feu duty is redeemed, before or after the statutory termination date, I propose that the basis for redemption should be to treat the feu duty, multure or ground rent as the interest at current Bank Rate on the capital sum payable as compensation, the effective date being any term of Whitsun or Martinmas after one month's written notice, or the terminal date of the five year period during which redemption was optional, whichever comes first.

The local authority could pay the compensation either in a lump sum, if capital was available, or as an annuity on a sound actuarial basis spread over a number of years. I propose that the cost of compensation should then be recovered from the proprietor or former vassal, at the discretion of the local authority, by an appropriate supplement on the rates of the property concerned. This would have certain outstanding advantages. Unlike the recommendations of the Halliday Report, my proposals would in due course terminate feu duties once and for all time, and I believe that they are simple enough to confound even the most devious lawyer. 1641 To summarise: First, there would be opportunity for voluntary redemption within a specified period; the amount of compensation would be calculated by treating the feu duty as interest at current Bank Rate on a capital sum. Second, at the end of the specified period of five years, there would be automatic termination, with compensation by the local authority financed by means of a supplement on the rates. Third, planning permission would come to rest with the statutory authority, which would be responsible to the community through its elected representative. It would no longer depend on the whim of a feudal superior who may be good or bad, wise or unwise, but who is answerable to no one for his decisions.