HC Deb 30 April 1973 vol 855 cc909-18

9.27 p.m.

The Minister for Local Government and Development (Mr. Graham Page)

I beg to move That the Furnished Lettings (Rateable Value Limits) Order 1973 a draft of which was laid before this House on 16th April, be approved. This is an order which will enable the tenants of furnished flats and furnished houses first entered into the valuation list on or before 1st April this year to have access to the rent tribunals and to the protection which those tribunals give as regards security of tenure and stability of rent. The order affects only new furnished lettings—that is to say, premises which have been valued for rating after 31st March this year.

The order arises in this way. Section 71(1) of the Rent Act 1968 sets out the rateable value limits above which dwellings are excluded from the protection which rent tribunals can give to tenants of furnished dwellings—as I said, the security of tenure and the amount of rent payable—and below the limits tenants can apply to a rent tribunal for consideration of security of tenure and rent. The rent tribunal will confirm, reduce or increase the rents and can grant up to six months security of tenure at a time. This is often done by deferring a notice to quit which has been served on the tenant.

Those periods of security can be extended or renewed, and the rateable value limits set out in Section 71(1) of the 1968 Act are £400 for dwellings in Greater London and £200 elsewhere in England and Wales on the appropriate day. The appropriate day is either 23rd March 1965 or whatever subsequent date the dwelling was first entered into the valuation list.

When a dwelling is entered into the valuation list subsequent to 1965 it is entered on what is called the "tone" of the valuation list. That is, it is entered in the list as if it had existed in 1965. By that means, until 1st April this year a similarity was maintained between those dwellings which were in existence in 1965 and so rated in the valuation list and those which came on to the list later. Revaluation has taken place with effect from 1st April. On average it has increased rateable values of residential accommodation by a factor of 2.56. Thus a dwelling which, if first entered in the list on 31st March of this year, would have had a value of say, £400 will typically, and taking the average figure, have a rateable value of £1,000 if first entered in the list on 1st April of this year or after.

To bring properties first entering the valuation list on or after 1st April within the protection of the rent tribunals, if they are similar to those already protected, the rateable value limits in Section 71 of the Rent Act 1968 need to be amended from 1st April. To maintain this comparability the new limits effective from 1st April should be £1,000 in Greater London and £500 in the rest of England and Wales in place of what I will call the old limits of £400 in London and £200 elsewhere.

I stress that making this order to deal with new dwellings has no effect on existing protected tenancies. They retain the protection they have always had. The order will maintain the status quo for dwellings newly entered in the valuation list by amending Section 71(1) of the Rent Act 1968. Power was taken in Section 89 of the Housing Finance Act 1972 to alter by order the rateable value limits for protection.

I must mention one other point within the order, namely the transitional provision. This is contained in Article 4 and simply allows a continuation of Section 79 of the Rent Act 1968 under which owner-occupiers letting their property furnished on a temporary basis may, if they give notice in writing before a certain date, be exempted from the security provisions. In these circumstances the tenant is not permitted to apply to the rent tribunal for consideration of security. This transitional provision is merely maintaining the same position as before in relation to new properties coming on to the valuation list on or after 1st April this year.

There is a considerable market in furnished accommodation and it is common for newly-converted flats within the new rateable values to come on to the market and to be let for the first time. Although this order is a narrow one dealing only with furnished dwellings newly entered on the list after 1st April, it is important. It ensures that the tenancies I have mentioned will receive the same protection as similar existing tenancies.

9.35 p.m.

Mr. Bruce Douglas-Mann (Kensington, North)

I accept, as the Minister said, that the order is narrow, but it is also mean. It seeks to limit the raising of the rateable value limits for furnished tenancies to £1,000 in London and £500 for dwellings elsewhere. However, the Government have accepted in Section 14 of the Counter-Inflation Act 1973 that rateable value limits which prevailed under the Rent Acts prior to the passing of that Act were inadequate and unsatisfactory. Section 14 provided for an extension of the rateable value limits for unfurnished tenancies to the sum of £600 in respect of old rateable value limits or £1,500 for new rateable value limits in London and £750 elsewhere. The fact that new furnished tenancies are to be protected only to the extent that they come within lower rateable value limits is simply one of the many ways in which tenants in furnished accommodation are discriminated against by the law as it stands.

The House will be familiar with the arguments advanced by my hon. Friends and particularly by myself about the disadvantages of furnished tenancies. These were well illustrated by the Francis Committee's Report. Furnished tenancies already suffer disadvantages. There is practically no security of tenure. Security is limited to the fact that a tenant can apply to the rent tribunal for a suspension of the notice to quit and the tribunal may suspend that notice for up to a maximum of six months Although the tenant may go back once and conceivably twice, ultimately he has no real security in his home. Inevitably he can be evicted. The Francis Committee found that of a hundred cases which had been before the rent tribunal only 20 of the families were still living in their homes a year later; and 10 of the 20 were under notice to quit and five were trying to move.

I am glad to see the hon. Member for Hampstead (Mr. Geoffrey Finsberg) present tonight. Considerable credit is due to him for mobilising middle-class pressure on behalf of those suffering from irresponsible landlords in upper-middle-class accommodation. But it is not only in the unfurnished sphere that people are suffering. As the hon. Member has emphasised, wherever there is a situation involving a private landlord with a private tenant defending his home, conflict is bound to result in extreme social un-happiness and the law must intervene if serious social hardship is not to result.

Unfurnished tenancies now have protection extended to them in the higher-income levels by the Counter-Inflation Act. Furnished tenants within the same rateable value limits will not get this protection. The Government are proposing to extend the protection to furnished tenancies to dwellings according to rateable value limits of £1,000 instead of £1,500 in London and of £500 instead of £750 elsewhere. That would be bad enough, but it is being added to a succession of disabilities for furnished tenants. These include a lack of security and a lack of an effective right to reasonable regulation of the tenant's rent.

The tenant in furnished accommodation cannot go to the rent tribunal without knowing that he is liable to be evicted, and consequently he continues to pay the extortionate rents being demanded of tenants in such accommodation. The furnished tenant, even if he goes to the rent tribunal, receives no protection in the level of rent assessed to take account of the scarcity value of the property. We have in the Furnished Let-tings (Rent Allowances) Act an inferior form of rent allowance to furnished tenants.

The only consolation I have in the fact that the measure does not raise the rateable value limits for furnished tenants to the same level as had been set for unfurnished tenants is that, for the great majority of furnished tenants, the entitlement to go to the rent tribunal is a snare and delusion. In fact, that theoretical protection largely deprives the great majority of furnished tenants of the protection that the law is designed to give and should be giving to them, protection which, if they knew their rights, the law would give them. Section 2 of the Rent Act 1968, which merely re-enacts legislation that has remained the same since 1920, provides that a tenant is deprived of his protection as a furnished tenant only if the rent attributable to furniture or attendance represents a substantial proportion of his rent.

Both in my capacity as a Member and as a solicitor I have had great experience of the problems of furnished tenants faced with notices to quit and threatened with eviction. In the course of a long professional experience I have seldom found a genuine furnished tenancy, one that would stand up to arguments in the courts if the question whether the premises were sufficiently furnished to take them outside the Acts was challenged. Unfortunately, it is challenged by only a minute proportion of furnished tenants.

Thousands of landlords are deliberately, with full knowledge of what they are doing, ignoring the law which this House has passed. They are creating what they call furnished tenancies by providing a certain amount of furniture and a rent book with "furnished tenancy" on the front page, calling it a furnished tenancy and demanding a rent often two to five times what a rent officer would assess as a fair rent for the premises.

How long can the House or the Government continue to tolerate a situation in which the law is completely and deliberately flouted in that way? It is flouted with full knowledge of what is being done by a substantial number of the landlords concerned. Many others think that simply by providing some furniture they are entitled to ignore the Rent Act, to charge what rent they like and to evict their tenant as soon as they wish.

The only consolation I have from the order is that many of the tenants who might otherwise be misled into thinking that their protection would lie in going to the rent tribunal will find that their rateable value limits are too high, and instead they will challenge the issue in the county court. Whether or not they wait for eviction proceedings, they should challenge in the county court whether then-tenancy is furnished or unfurnished.

The most essential point I want to make is that very few tenancies with the "furnished" label attached would stand up to examination in court to discover whether they are sufficiently furnished and whether the standard of furnishings and service provided causes the proportion of rent attributable to that furniture or those services to be sufficiently substantial to deprive the tenant of protection under the Rent Act. If they only knew it and argued the point, the vast majority of furnished tenants are as fully protected under the law as unfurnished tenants. Unfortunately, they do not know it. Not only do they not know it, but it appears that the great majority of rent officers and rent tribunals do not know it, and a large proportion of local authority housing officers and so on do not know it.

I have today had the opportunity of discussing the question with a county court judge, whose sphere of jurisdiction includes a substantial area of central London where the problem is perhaps at its most acute. It is an area where landlords are anxiously seeking to evict their tenants because they know that their property values have risen sufficiently to enable them, if they can get their tenants out, to convert the premises and sell them as flats to the middle class. I am anxious that the middle class should be housed, but it is even more important that those living in their homes should be protected from eviction.

The county court judge told me that when cases involving furnished premises came before him, in the majority of cases the tenant was not represented. He said that even if the tenant was not represented he usually only asked whether there was an issue about whether the premises were furnished, and that usually the tenant said he accepted that the premises were furnished. But that is not the issue. The issue is whether the proportion of rent attributable to furniture is substantial, and where the tenant was not represented and sometimes even when he was, that issue which could have saved the tenants home, was allowed to go by default.

Given the enormously high rents which are charged today and the very low level of the quality of the furniture provided in the majority of furnished tenancies, there are few tenancies which would satisfy the test. When Parliament passed the 1920 Act it intended that the proportion of rent attributable to furniture should be substantial if the tenant was to be deprived of Rent Act protection. It had in mind to exclude from rent control only such cases as transient families— for example, the man who came to London for a short time for a job and when the premises involved were more or less boarding houses.

Landlords are using this apparent loophole—it would not be a loophole if the situation were properly known—to ignore completely the intention of the Act. Consequently there are hundreds of thousands of households—there are at least 200,000 in London—where the tenant thinks that he has no security for his home. There are few situations short of going to prison in the near future which can be quite as distressing as the knowledge that a person can be evicted from his home. That is something which is contrary to the intention of Parliament.

It lies within the power of the Government, if they will not legislate and extend security to furnished tenants, if they will not lay down precisely a definition of a furnished tenancy, to ensure that county court judges, rent officers, rent tribunals and local authorities know the test to apply to a furnished tenancy. Instead, the Government leave the matter to a handful of lawyers, neighbourhood law centres and community workers to establish the matter with immense difficulty, but with immense success in almost every case when a threatened eviction comes before them and the question of whether the proportion of rent attributable to furniture is raised.

There are now thousands of families— certainly tens of thousands if not 100,000 or more—who are faced with a real risk of being evicted from their homes as a consequence of ignorance of their legal rights. That is something which I urge the Government to remedy as quickly as possible. But, given the inadequacy and the shoddiness of the measure proposed in the order, which only raises the rateable value limits for furnished tenancies to two-thirds of the level to which the rateable value limits for unfurnished tenancies are to be raised, I am not optimistic that the Government will take such an elementary step as to ensure that publicity is given to the test that the law provides for a furnished tenancy, and to ensure that families are not needlessly and cruelly evicted against the intentions of the law.

Given the terms of the order, I can only hope that the Government will nevertheless at this stage accept that there is need to give this matter publicity and will take steps to do so.

9.50 p.m.

Mr. Reginald Freeson (Willesden, East)

In pursuit of what my hon. Friend the Member for Kensington, North (Mr. Douglas-Mann) has said, I must put now a question which I had every intention of putting in the first instance. What is the reasoning of the Government in making the distinction between limits for unfurnished accommodation in relation to security of tenure and rent regulation and the position with regard to furnished tenancies as set out in the order?

This is a narrowly-based order. The right hon. Gentleman has not told us any of the Government's thinking about this part of the housing situation. The Opposition and some hon. Members opposite have been pursuing the subject for some time throughout the weary stages of the Housing Finance Act 1972 and on the Furnished Lettings (Rent Allowances) Act 1973. We were assured time and again that the Government were concerned, that the measures being put forward, particularly with regard to rent allowances for certain classes of furnished tenancy, were modest improvements and intended as such, and that the Government were looking into the questions raised in the Francis Report and by hon. Members and others about this housing sector.

We wait and we wait, but are given no indication of what the Government think—or if, indeed, there is any Government thinking at all on changes in policy. Like it or not, and do as we may, it is clear that the Government will not, at least at this stage, accept what we propose in terms of security of tenure for furnished tenancies. But there are lines of action which the Government could take. My hon. Friend has indicated some of them. In implementing this narrowly-based order, for example, the Government should take the opportunity without further delay to undertake further steps. As my hon. Friend also said, one of these would be to make clearer, presumably by advisory circular, to the local authorities, rent tribunals and others concerned the law with regard to the definition as between security for unfurnished tenancies and security for furnished tenancies and that it may well be the case that allegedly furnished tenancies are in reality within the scope of security granted for unfurnished tenancies.

Other clear advice could be given and backed up by the Government—for example, a recommendation to local authorities that they should themselves undertake referrals to rent tribunals. I shall ask one or two questions—now that we have the opportunity—about rent tribunal actions.

The Government should advise local authorities that they have, and should use, power to refer cases to rent tribunals for rent registration where there is a genuine fear by the tenant that he will be evicted, or a genuine threat by the landlord, and that in such cases the authorities should undertake the purchase of the property, with the backing of the Government if need be by a compulsory purchase order. It should be possible for the Government to indicate the city stress areas where that policy should be concentrated.

It should be possible for the Government to advise rent tribunals to use their powers to extend security of tenure by six-monthly periods rather more frequently and for longer periods. Has the Minister any information on this subject? What is the rate of extension of security of tenure by tribunals where applications are made by tenants or where referrals are by local authorities? How many referrals to rent tribunals have local authorities undertaken annually?

Are there any figures of the rate of growth of furnished tenancies particularly in the inner London area, where there is the biggest concentration of furnished tenancies? How many furnished tenancies are being taken out of the rental market and being held for business, tourist and other similar lettings? There have been increasingly worrying reports about this development in certain parts of inner London, and there are reports that it is beginning to spread to other parts of the country.

The order is intended marginally to add to the area of a tenant's legal right to apply to a rent tribunal for registration and limited security. We are advised that there are about 600,000 furnished tenancies throughout the country, of which at least 250,000 are in London, primarily concentrated in the inner areas. If that is the figure, what is the current proportion subject to rent registration and limited security? The figures that the Government gave me some time ago showed that only about 100,000 of the 600,000 were subject to rent registration and limited security. The make-up of that 100,000 varies with the passage of time because of the limitation of security of tenure. Is it the Government's desire that that proportion should increase? If so, do they intend to issue any advice?

This subject is causing growing anxiety. As the Minister hinted, increasingly properties are being converted into expensive lettings. I wonder how long that, as distinct from conversion for sale—an increasing practice in inner London—will continue. We know from experience that it is becoming an increasing problem for people of limited means, not just poorly-paid working-class families, but people with higher incomes. We are entitled to know the Government's thinking.

When the Government are marginally extending the scope of security and rent registrations, here is an opportunity once more for them to give an indication of their general policy on a subject about which there is more and more concern and which is important socially and economically in the inner city areas, especially London. To sum up, I ask the Minister to indicate why there has been this distinction—

It being Ten o'clock, the debate stood adjourned.