§ No person shall be entitled under Part I of this Act to acquire the freehold or an extended lease of property if the landlord is a housing association (as defined by section 189(1) of the Housing Act 19571.—[Mr. Allason.]
§ Brought up, and read the First time.
§ Mr. Deputy Speaker (Mr. Sydney Irving)
We can discuss, at the same time, new Clause No. 8 entitled "Saving for housing societies":A person shall not be entitled under this Part of this Act to acquire the freehold of property or an extended lease of the property where the freehold is vested in a housing society as defined by section 1(7) of the Housing Act 1964 and where the cost of acquisition or construction of the property has been financed by a housing society in whole or in part by means of loans from the housing corporation or from a local authority and but for the redemption of such loans the rent ordinarily and reasonably paid by a tenant of the property to the housing society would not he a low rent.
§ Mr. Allason
New Clause No. 5 excludes from the operation of the Bill housing associations and the tenants of housing associations. I call in evidence paragraph 16(d) of the White Paper, which reads: 1450Housing Associations normally let houses on short leases, so they will seldom have leaseholders qualified under the Bill. But in any case, since Housing Associations exist only for the benefit of their tenants, it would not be appropriate to give rights against them under this scheme.Throughout the Bill's passage, the Minister has shown great devotion to the White Paper. Whenever he has been tempted to go away from it, he has always been led back to it, whether it be in Committee or occasionally on reconsideration after the Committee stage. It would, therefore, seem that he would wish to take account of the White Paper in this case.
There are three principal types of housing association. There are the charitable housing associations which, in general, let short tenancies at low cost. It is very unlikely that they would in any circumstances let a long tenancy, but it is conceivable, and one would think that it should be covered.
Secondly, there are the cost-rent housing associations which, again, normally let on short leases, but there is nothing to stop them letting on long leases. It might well occur that there was a long lease. That is paid for by the housing association taking a mortgage over a long period. The cost of the mortgage is collected by way of rent and at the end of, 1451 say, 40 years the house belongs to the association and is available in the association's housing pool in order to reduce rents generally of the rest of the association's houses. It is, therefore, fairly clear that it is not desirable that there should be enfranchisement.
Lastly, there are the co-ownership societies. In this case there is joint ownership, but, in general, there is a mortgage over 25 years to be paid off. When it has been paid off, the tenant has the balance of a long lease of probably 99 years which he enjoys. At the end of that time the house reverts to the housing society. Therefore, again, it hardly seems desirable that the tenant should be entitled to enfranchisement.
All three types of housing association are covered by the definition in the Housing Act, 1957, and, therefore, new Clause No. 5 covers all three. The cost-rent housing associations and the co-ownership societies are covered by the definition in the Housing Act. 1964. Therefore, new Clause No. 8 would substantially cover the same ground, but it would omit the charitable housing associations which I should have thought it was desirable to leave in. Clearly, under the White Paper, the Government's intention is that all types of housing association should be included from the Bill.
Therefore, I suggest that new Clause No. 5 fulfils a great need in the Bill, and I hope that the Government will accept it.
§ Mr. Skeffington
We are grateful to the hon. Member for Hemel Hempstead (Mr. Allason) for raising this point. There is no doctrinal difference between the two sides of the House on this matter.
As the hon. Gentleman said, the White Paper specifically excludes housing associations. There is no provision in the Bill for them for the simple reason that we have not been able to find any associations which have long leases at low rents which would bring them within the terms of the Bill; and we have made fairly extensive inquiries. I am aware that in certain co-operative housing societies houses are available to members on long leases, but in all the cases which I have seen the lease terminates on the death of the tenant. That would exclude them from the definition of a long lease under Clause 3.
If the hon. Gentleman would be prepared to withdraw the new Clause, my 1452 right hon. Friend the Minister will think about the matter further. It may be desirable to make provision, even though we know of no cases. I suppose that a co-operative housing association might let houses on long leases and that, in the course of time, the rent might become two-thirds of the rateable value and therefore would be brought within the terms of the Bill, particularly if there was not a provision saying that the lease terminated on the death of the tenant.
I cannot commit my right hon. Friend to say that we shall introduce a new Clause in another place, because if it is not absolutely necessary there is no point in making the Bill longer. We should like an opportunity to have second thoughts about it. In any case, the Government could not accept new Clause 5 or new Clause 8 because, inevitably, it would be necessary to cover a number of other instances, such as how the new Clause would be operated in the case of a housing association which might buy leasehold property with a sitting residential tenant who would be qualified under the existing law to enfranchisement, or the case of a housing association which, as a commercial operation, might possess itself of a leasehold property with a tenant and sell the freehold elsewhere. Once one is committed to legislation, one has to tie up all the loose ends, and the resulting Clause always becomes a good deal longer than one would wish. It would be no use putting forward legislation if it were not effective.
To summarise what I have said, we have not found specific cases where housing associations would be harmed by the provisions of the Bill. A situation might arise in the future, however, and we should like to have further thought about it. My right hon. Friend will undertake to think about it, and, if it seems necessary to make provision for it, we will add to the Bill in another place.
§ Mr. John Fraser (Norwood)
We have listened to a rather sketchy response to the arguments in favour of exempting certain housing associations from the provisions of the Bill, and I hope to show that there are circumstances which call for a much clearer assurance that some exemption will be given.
1453 I do not lend my support to new Clause No. 5, because I can see defects in its drafting. For example, the housing associations which are defined by Section 189 of the Housing Act, 1957, include those associations formed for the construction and sale of dwellings. It is for that reason that in my new Clause No. 8 I have chosen the definition in Section 1(7) of the Housing Act, 1957, which refers specifically to housing associations incorporated under the Industrial Provident Societies Act, and formed specifically for letting so as to exclude those associations formed for some other purpose.
It is common ground that there should be a third arm in the housing sphere and that the Government should encourage the building of houses to let. To that end, the Housing Act, 1961, provided for £25 million for housing associations, and the 1964 Act extended that to £300 million, provided jointly by the Housing Corporation, the building societies and other associations.
The arrangements for letting which take place under these schemes are generally financed by the Housing Corporation or by local authorities, which the Minister has encouraged to lend money to housing associations. But a new concept of a tenancy was introduced on advice given by the Government. Instead of having tenancies running from week to week or month to month, housing associations were encouraged to grant tenancies for a period of 99 years.
The purpose of that was to institute a new feeling of ownership and responsibility so that the tenant of a housing association had more pride and longterm interest in his property than perhaps a person living in a council house, renting it from week to week and only thinking of repairs and improvements in those terms. The Housing Corporation has followed the Government's example and submitted 99-year leases to housing associations. These have been taken up by co-ownership housing associations, at any rate.
The rents for 99-year leases—though some are for shorter periods of, say 21 or 35 years—are made up of the services of the association, the cost of repairs and insurance, and matters like that. But, of course, the principal part of the rent 1454 is the proportion of mortgage repayments which the individual tenant makes. It does not matter while the mortgage is being repaid because, in most instances, the rent will be more than two-thirds of the rateable value at the time that the lease was granted. But the Government have introduced Amendment No. 16, which exempts from the calculations of rent any charges for services, repairs, and so forth. Consequently, when the longterm mortgages of 40 or 60 years have been paid off, the rent payable, ignoring services and repairs, will be nil. These long leases of 99 years will be enfranchise-able in 40 or 60 years' time, when the mortgages have been paid off. The Government have advised this type of lease, and the Government must take responsibility for keeping these dwellings for letting and not make them available for enfranchisement when the mortgages are paid off.
If I can anticipate some comments which may be made, it will be said that these leases are determinable upon death and, therefore, do not qualify for enfranchisement. However, it has been found proper to say that a lease, though determinable upon the death of the tenant, in certain circumstances can be assigned to a member of the family. If a 99-year lease has been given to a man, and he dies, the lease can be transferred to his widow or perhaps to his children living in the same house. Following the precedent set by the Government, this has been done, and these leases will be enfranchiseable.
It may be said that housing associations have it in their power at the moment not to grant leases which would become enfranchisable. But when the mortgages have been paid off, the Government and local authorities will have no influence over future operations of housing associations, and the beneficiaries of those predecessors who by hard graft have paid the mortgage will be able to take those premises out of the sector for private letting and enfranchise them. Furthermore, I have evidence from certain local authorities in the north of England that they are now thinking of refusing loans to housing associations because of the risk that, at the end of the period of repayment, enfranchisement may take place. This is probably a matter which has been overlooked, but it is a situation which is 1455 exacerbated by the Government's Amendment No. 16, because clearly that will make any long lease enfranchiseable.
I ask the Government to look at the effect of their Amendment No. 14, because where there is a series of leases going over a total of 21 years, again enfranchisement can take place. It is quite common and, in other circumstances, both the Housing Corporation and the Government have thought fit to recommend provisions in the rules or tenancy agreements of associations that, at the end of a period of a three or seven-year lease, it ought to be renewed and renewed again to assure tenants that they have a reasonable period of security and that a majority of tenants should not gang up upon any one tenant. Once again, under the provisions of Amendment No. 14, these leases would be subject to enfranchisement.
To anticipate another argument which may be put forward, it may well be that my drafting is defective. I realise that I have missed out Section 7 loans and building society loans. However, the argument will not be about the drafting, but about the spirit of the Clause. I ask the Government to look at the situation which they are likely to create as a result of the leases which in the past they have themselves prescribed, and give the assurance that the provision of housing for letting will not be diminished in 40 or 60 years' time when these loans are paid off.
§ Mr. Graham Page
I have to declare an interest as a member of a committee of management of a housing association. If the Parliamentary Secretary had to declare a similar interest, he would not have made such a silly speech. He has completely missed the point. It was irrelevant, and he should have corrected his brief before reading it.
To begin with, we have the White Paper, which says clearly that it is not intended that tenants of housing associations should enfranchise. The only excuse which the hon. Gentleman put forward for not keeping that promise in the White Paper was that he could not find any housing association of which there were long leasehold tenants.
The extremely clear speech of the hon. Member for Norwood (Mr. John Fraser), explaining how the Bill may affect hous- 1456 ing associations, was more telling. I know these documents which have been sent to housing associations advising them to let on 99-year leases, including the services as part of the rent, and that this rent for services ceases after a period of time. These will undoubtedly eventually be caught by the Bill, particularly, as the hon. Member for Norwood said, having regard to Amendments Nos. 16 and 40. I am glad the Parliamentary Secretary said there was no doctrinal difference between us, but if this is so, why wait for another place? Why not accept the Clause now, and put on the trimmings in another place?
The hon. Gentleman said that he accepts the principle that housing associations should not be within the Bill, and his hon. Friend has shown that they may come within it. I assure the hon. Gentleman that we come even closer than that, as a number of housing associations are already seeking to purchase houses subject to long lease with a view to development in due course; tenants of such houses may be able to refuse that development. Housing associations have to go through an elaborate business before they are allowed to purchase. They have to get the consent of this, and the consent of that. It takes months. The lists of properties available for them to purchase are sent out by the housing corporations, and the lists include long leasehold property. Housing associations are encouraged to buy this type of property for the purpose, for example, of turning it into flats.
The Parliamentary Secretary said that he cannot find any housing association which is holding long leasehold properties. I do not know whether at this very moment there is one which is holding leasehold property, but I know that the one with which I am concerned has considered houses subject to long leases on the lists supplied to it by the housing corporation. I know that housing associations have been encouraged to let their own houses on 99- or 40-year leases which may become leases at a low rent. I therefore ask the hon. Gentleman to accept the Clause now, and to tidy it up later. This matter can only come back to us if there is a Lords' Amendment. We get only that chance, and if their Lordships do not make an Amendment we do not get another chance to discuss this.
§ Mr. Skeffington
Perhaps I might try to reassure both sides of the House. I am sorry if my assurances were not acceptable before. There is really no point of division between either the Government and the Opposition, or between the Government and my hon. Friend the Member for Norwood (Mr. John Fraser) who has written to us about housing associations, and we have carefully considered what he has said.
I start by saying that there is no provision in the Bill because—and I ask the House to accept this; I do not say it lightly—after fairly extensive research, we could not find any examples, nor have any been supplied to us. I did not refer to housing associations not having long leases. I was talking about long leases which would be qualified for enfranchisement under the Bill because they were long leases at a low rent.
Because of that, and the fact that no specific example has been sent to us, we have not put a provision into the Bill, but it may be, and I suggest that it could be, that by a combination of circumstances this risk might arise in the future. I still think that it is very unlikely, but because of this we would like to consider the position further and to deal with it comprehensively in another place.
As my hon. Friend said, the proposed new Clause No. 8 is much more restricted in that he uses the definition in the 1964 Housing Act, which is very much narrower than that in the 1957 Act, and he gave his reasons for it. But if it were necessary to legislate we should need a proper definition to include a rather wider category of societies. I think that it would be fair and proper to do this. I make no complaint about it, but new Clauses 5 and 8 would not answer the purpose, as I tried to suggest in my first speech, because we have to make provision not only for the main principle, but for the number of contingencies which will arise in respect of property which is in the course of transfer to the associations. In its present form Clause 5, in particular, would be much too narrow to carry out the undertaking in the White Paper.
In view of what has been said, I give an undertaking that the matter will be thoroughly reconsidered. I feel fairly 1458 satisfied on the evidence that there is no danger, but if it seems that a contingency may arise in the future, we will take steps to put the matter right in another place.
§ 5.15 p.m.
§ Mr. W. S. Hilton (Bethnal Green)
I, too, would like to declare an interest in this subject in that I am on the board of the Co-ownership Development Society. I speak not only for myself and the members of that board, but for thousands of people of all political persuasions who, without reward, have put their time and energies behind the development of the co-ownership idea.
The Minister has made a placatory statement about the Clause. He has said that he may do something about this problem, but already there is apprehension in the minds of those who are trying to promote co-ownership that because of the implications of this Bill the end result will not be what they want, and therefore they will not enter into co-ownership schemes as of now. I therefore think that the matter should be considered urgently.
Most of the speeches today have been couched in legal terminology. Mine will not be along the same line, for I do not understand this terminology as well as it is understood by my hon. Friend the Member for Norwood (Mr. John Fraser) and the hon. Member for Hemel Hempstead (Mr. Allason). Too often the bleak phrasing of a Clause leads to the destruction of a humane and ideal concept, and as far as I am concerned the finest type of housing in this country at the moment is not council administered property or owner occupation but co-ownership. It is not a property-owning democracy, but a democracy which owns property and tries positively to ensure that it is used as beneficially as it can be.
We have had meetings of people who now inhabit dwellings erected by co-ownership schemes. These meetings, which have sometimes lasted for two or three hours, are devoted to considering how the landscaping should be carried out, what should be done about general amenities, and so on. This responsible attitude is what we should be trying to to encourage, and if there is any possibility that the Bill might discourage this, the Minister should take steps to ensure that it does not happen.
1459 Every speaker has been writing the Minister's reply for him and anticipating what he would tell us. I think that he might give two replies, apart, of course, from saying that he will accept my hon. Friend's new Clause! First, he might say that it is not possible legally. Secondly, that it is not desirable. I defy anyone to say that it is not desirable to promote co-ownership schemes. Nor do I think it can be said that it is legally impossible to provide for meeting these Amendments and I ask my hon. Friend to give us a definite assurance, something rather more than he has done so far, that he will look at this matter with care, and within a short time will bring in some method by which he can circumvent what we see as a possible problem in the future.
§ Mr. Allason
The Parliamentary Secretary said that he had not been able to find any examples, and, therefore, he saw no need for this Clause. That was the main burden of his speech, that he could riot find any examples, but he went on to say that he would reconsider the whole matter. It is a poor case to say that because it has not been possible to find examples we should not introduce any legislation. This is clearly a developing subject. At the moment leases can be granted to terminate on the death of the tenant, and that this provision carries leases outside the terms of the Bill seems to be a bad argument. I hope that these leases will not continue for very long.
We have also heard from the hon. Member for Norwood (Mr. John Fraser) that there are variations. I hope that this will become the rule rather than the exception. It is highly undesirable that the lease should terminate on the death of a tenant when it is a beneficial lease to his family. A case is clearly made out for the Clause. The argument is reinforced by the speeches made by the hon. Member for Norwood and the hon. Member for Bethnal Green (Mr. Hilton).
I agree that there are difficulties, which cannot be met by the drafting of new Clause No. 5, in the case of tenants who already have the right of enfranchisement leaving a house subsequently taken over by a housing association. They clearly need protection. I hope that we can have a clear understanding from the Parliamentary Secretary that he intends to meet the problem. On that under- 1460 standing, I beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.