OWNER-OCCUPATION (HELP FOR PRIVATE LANDLORDS' TENANTS TO PURCHASE) (No. 2) (Hansard, 10 March 1971)

§ Mr. Frank Allaun (Salford, East)

I beg to move, That leave be given to bring in a Bill to give tenants of private property owners the right to purchase their dwellings at a reasonable price before the properties are taken out of their present rent control; to encourage local authorities to offer low-deposit or no-deposit mortgages at low interest rates to sitting tenants wishing to buy their homes from their landlords; and to permit authorities to buy such dwellings at the same price if the tenant declines the opportunity to purchase. By fortunate coincidence, this Motion falls on the very day on which the Minister for Housing and Construction has made a statement on the Francis Report, which many of us regard as the most reactionary, most biased, most anti-tenant document since the 1957 Conservative Rent Act.

I intend, first, to show the ugly shape of things to come for masses of tenants, particularly in the form of drastic rent increases; and second to explain this Bill, the alternative to these rent increases, and how it would work. Unlike most Ten Minute Rule Bills, this Bill has already been drafted and printed and is available in the Vote Office.

The tenants of this country have not yet realised what is in store for them. They are in for the heaviest caning in housing history. The Government are about to make war on 5½ million council tenants and 1½ million private tenants. With their families, this means that 21 million men, women and children will be affected.

The Government, elected on the promise to reduce prices at a stroke, are about to increase prices deliberately. They will increase the cost of the main item in most families' budgets, which is rents. As regards council tenants, the Government intend to reduce, not just to redistribute, subsidies, which will mean a doubling and trebling of vast numbers of rents. This removal of subsidies will result in bringing new council house building to a complete halt in many areas, despite the desperate need for it.

For private tenants, the threat is the Government's declared intention to remove from their existing rent control all those dwelling at present controlled by 434 the 1965 Rent Act. The Minister announced this several months ago, even without awaiting the recommendation of the Francis Committee.

These rents will be taken into regulation and the new rents will be fixed by the rent officers and, above them, by the rent assessment committees. When this occurs, rent increases on average will be 2–6 times the previous rent. Thus, for example, a controlled rent of £2 a week, plus rates, will go up on average to £5 4s. a week plus rates. But I could quote far more serious increases. Controls on other rents, those affecting private houses, may even be ended entirely.

As a result, some property companies will have their profits increased by hundreds of thousands of pounds a year. The Freshwater Property Group has made a fortune of more than £9 million out of the Rent Acts, but that is nothing to what we are going to see. The real bonanza is about to begin.

The Labour Government were not blameless. In the 1969 Act they allowed the transfer from control to regulation—of houses into which a landlord proposed to install a bathroom, inside W.C. and hot water system, and even of houses where the landlord did not need to spend a cent, since they already possessed a bathroom. A number of Labour M.P.s have the right to criticise, because they voted against the obnoxious Clause of the Bill.

That provision was bad enough. But what the Conservative Government are doing is far worse. They intend to decontrol all houses, including those without bathrooms and those which are so structurally unsound as to be unworthy of introducing them. Even the worst slum houses are going to be taken out of rent control, as the Minister knows. The Government do not even have the excuse that it is to induce landlords to install bathrooms.

It may be argued by hon. Gentlemen opposite that they have some scheme in mind for subsidies to private landlords' tenants. I warn such tenants, "Your rent will be raised sharply. Most of you will receive no subsidy at all. And if you do receive one, it will not be big enough to cover the increase in rent". In the end it will be the landlord and not the tenant who will be subsidised.

435 Part of my reason for introducing this Bill is to ward off the intolerable rent increases which I see ahead. The purposes of the Measure are stated in the long title: To give tenants of private property owners the right to purchase their dwellings at a reasonable price before the properties are taken out of their present rent control; to encourage local authorities to offer low deposit or no deposit mortgages at low interest rates to sitting tenants wishing to buy their homes from their landlords; and to permit local authorities to buy such dwellings at the same price if the tenant declines the opportunity to purchase. I pay tribute and offer my warmest thanks to the hon. Member for Erith and Crayford (Mr. Wellbeloved), with whom I do not always agree. He has thought a great deal and for a long period about this problem. Much of the idea and formulation of the Bill came from his brain.

This is how the Measure would work. At the point when the house or flat is about to be taken out of rent control the owner would be required to offer it for sale to the sitting tenant at a reasonable price. If the tenant could not or did not wish to purchase the local authority would have a similar option at the same price. If, however, the landlord did not wish to take the house out of control and did not intend to raise the rent in this way, then he would not be required to offer it for sale.

What is meant by a "reasonable price"? The formula is stated in Clause 2. It should be clear that, as things are today, if rents of houses are sharply increased, as they will be, the price of those houses will also rise steeply. The intention of the Bill therefore is to give the landlord more than he would get if the house were sold today with controlled rents and a sitting tenant, but less than he would be able to charge following decontrol.

A tenant paying a controlled rent of £1 15s. 9d. plus rates would be living in a house worth £1,400—this has been worked out by Professional experts—on the basis of 15 times the net annual controlled rent. On the open market, without a sitting tenant the house would, it has been estimated, be worth £3,600. Thus under my formula the selling price to the tenant would be £2,133.

436 Some landlords complain that they wish that they could be free of the burden of their properties. Here is a way they can do it and obtain a fair return. They could then invest the sum realised in more lucratice undertakings.

My second main motive for proposing this Bill is that I have long advocated along with some other hon. Members, the improvement of old houses by the installing of baths, hot water systems and inside W.C.s. There are generous grants available to property owners to improve their houses. While owner-occupiers have sensibly taken advantage of them, most private landlords have not.

Ministry statistics show that for every landlord who has improved his house in this way five owner-occupiers have done so. The Bill will, therefore, greatly increase the number of houses being improved.

Not only would improvements be accelerated, but so also would much needed repairs. Go down any back street and, even from the outside, one can tell which is owner-occupied and which is landlord-owned. One can tell from the way the outside is kept, from the re-painting, the state of the window frames or the new doors and windows which have been put in. Owner-occupiers are keener on maintaining their houses in good repair.

Many landlords say that they cannot afford to do the repairs and improvements and that they cannot afford to pay even their half of the cost, the other half coming from the Government. Very well. If that is so, let the tenants or councils buy them out and do the improvements themselves.

Hon. Gentlemen opposite profess to be the upholders of the little man, the owner-occupier, and that my hon. Friends are their enemy. This is utterly untrue. But if hon. Gentlemen opposite claim to be the friends of owner-occupation, let them show it by supporting the Bill.

Briefly, therefore, the advantages deriving from my proposal are, first, that it would protect tenants from the savage rent increases which will otherwise be inflicted; secondly, that it would encourage the improvement of great numbers of old but structurally sound houses and, thirdly, it would be widely and immensely popular.

437 I must deal with one objection: the argument that it would reduce the number of dwellings available for letting. We have heard this argument put by the Minister of Housing today. The fact is that this reduction is already taking place. When houses come out of control today they are not let. They are mostly put up for sale. Private landlordism is rapidly dying out, with only one in six houses now being owned in that way. I weep no tears for that. Private landlordism is being replaced by owner-occupation on the one hand and by council housing on the other, and both forms are infinitely preferable.

Housing is not a suitable sphere for private profit-making. Like education and health, it is a social service which is better undertaken without commercial motives.