§ Motion made, and Question proposed, That this House do now adojurn.—[Mr. Harper.]
§ 11.32 p.m.
§ Mr. R. C. Mitchell (Southampton, Test)
It is not my intention this evening to ask for any amendment to existing legislation, as I realise that this would be out of order, but I contend that existing legislation is being very widely abused and that many thousands, perhaps tens of thousands of tenants, are paying premiums in one form or another which are illegal.
It is my contention that they are paying these premiums because they are unaware of the provisions of existing law, and that many local authorities are likewise unaware of their duties under the law. I want the Minister of Housing and Local Government to do everything in his power to publicise, to tenants and local authorities, their rights and duties.
Before doing so I had better refer to the events leading to this debate. Section 2 of the Landlord and Tenant (Rent Control) Act, 1949 states:A person shall not, as a condition of the grant, renewal or continuance of a tendency to which this section applies, require the payment of any premium in addition to the rent.The term "premium" is defined in Section 18 as including:… any fine or other like sum and any other pecuniary consideration in addition to rent,Section 2 of the Act was amended by Schedule 5 of the Rent Act, 1965, so as to make it also an offence to receive a premium in addition to the rent.
It came to our notice about a year ago, in Southampton, the city I represent, that a number of tenants had been charged premiums of one kind or another. The city corporation decided to prosecute a firm of landlords and a firm of estate agents for this. I wish to pay tribute to two people, Mr. Burns, former chairman of Southampton Housing Committee, and Mr. Norman Schofield, Town Clerk of Southampton, for the persistent way in which they carried out their duties and initiated this prosecution.
401 The prosecution took place at Southampton Magistrates' Court on 14th June, 1967. Three different kinds of premiums were involved. The first was called an agreement premium. A firm of estate agents asked for a fee of five guineas for the preparation of a tenancy agreement on the grant of a controlled tenancy. The agreement was in printed form. The estate a rents filled in the date, the names of the parties, the address of the premises and details of the tenure. It was held by the magistrates' court to be an illegal premium.
The second type of premium was known as a returnable security deposit. The firm of estate agents in question had been asking the tenant to deposit £20, which would be returnable when he vacated the tenancy. It was held by the magistrates' court that because there was a compulsory element since the tenancy of the flat would not be granted unless it was paid, this also was a premium within the meaning of the Act and, therefore, was illegal.
In the third case, the estate agents asked for a commission for finding the flat and charged 10 per cent. of the first year's rental. This again was held to be an illegal premium.
The result of the prosecution was that the landlords were fined £50 and costs, the estate agents were ordered to repay the sum of £47 1s. 9d. to the tenants for the illegal premiums paid, and in all three cases the estate agents were fined £50 and costs. The landlords and the estate agents gave notice of appeal but abandoned the appeal a few months later.
The publicity arising from the case has resulted in a large number of inquiries from all over the country coming to Southampton. Several local authorities have asked the Southampton Council for details of the case and there have been letters from individual citizens, so much so that the town clerk prepared a brief on the subject which he issued to the various people. My contention is that this should not be left to a town clerk but should be done by the Ministry of Housing and Local Government. The first thing that the Ministry should do is to issue a circular to all local authorities drawing attention to the result of the Southampton case and to the duties of local authorities under the various 402 statutes, informing them of their powers and what they can and should do.
A large number of individual cases have come to light and details of some of them have come into my possession. In one case, a person living in London claims to have paid an illegal premium of £350. It may be too late to do anything about it now because it happened two years ago and the Act requires that prosecution must be undertaken by the local authority within six months. The fact that about 80 cases have come to light in Southampton alone means that there must be thousands, possibly tens of thousands, of cases throughout the country in which illegal premiums are being charged to tenants.
I ask the Ministry to take some action to give wide publicity to people's rights, bearing in mind the Southampton prosecution. How that should be done I must leave to the Minister, but one way might be to issue a revised version of the booklet issued at the time of the coming into law of the Rent Act. A revised edition could be issued stressing this aspect, which was not given such wide publicity originally. Another suggestion is that, as happened in the case of option mortgages, my hon. Friend might apply for a Ministerial broadcast or something along those lines.
The situation as it now stands should be made as widely known as possible to the public, so that people know their rights and the law in this respect. If that is done, there will come to light large numbers of cases throughout the country of tenants who have paid premiums of the type which have been held to be illegal, and they will be able to claim back their money from their landlords and estate agents.
I hope that I have said enough to underline the urgency of the matter, and I ask my hon. Friend to set in train some sort of action such as that which I have indicated.
§ 11.41 p.m.
§ The Joint Parliamentary Secretary, Ministry of Housing and Local Government (Mr. James MacColl)
My hon. Friend the Member for Southampton, Test (Mr. R. C. Mitchell) is to be congratulated, as are the town clerk and the councillors of Southampton, on having taken this opportunity to draw attention 403 to a very interesting case in his area and, by so doing, to obtain for it the kind of publicity for which he asks.
It is a very interesting case though, of course, it is only one case in one magistrates' court and is not binding on other courts. At any time, it could be upset by a decision of a higher court. Each case depends a great deal on the actual facts about the amount of work done in return for the premium charged.
Nevertheless, it is only fair to say that the Estates Gazette, which is expert in these matters as the organ of the profession, has commented on a number of occasions, particularly on 11th November, when it indicated clearly that it thought that the decision was right on the facts of the case.
This debate has been a very useful one. I do not think that I could reasonably ask my right hon. Friend to issue a circular founded merely on this case, 404 because that would throw the spotlight on one case, with its facts. However, in any future information which we issue about the Rent Act, in this respect as well as in respect of harassment and other matters, further details could be made known by circular or by bringing up to date our pamphlets. We will look again at what we have said in the past about premiums and see whether it requires tightening.
In the meantime, my hon. Friend has done a great deal to draw attention to this case, and I am certain that other town clerks will be encouraged by what Mr. Schofield has done and advise their own authorities about cases in which they can take legal proceedings.
I would congratulate my hon. Friend on having taken this action tonight.
§ Question put and agreed to.
§ Adjourned accordingly at sixteen minutes to Twelve o'clock.