HC Deb 22 February 1973 vol 851 cc838-50

(1) Where a local authority acquires owner-occupied residential property which forms part of an area of town development (as referred to in Part I of Schedule 1 to the Land Compensation Act 1961), and where the compensation payable is less than full open market value, then, subject to the provisions of this section, the local authority acquiring the property may (if so required by the vendor) provide an interest free loan to the vendor not greater than the difference between the compensation paid and the full open market value of the property acquired by the local authority.

(2) The said loan shall only be made if and when the vendor completes the purchase of a replacement residential property for his own occupation within two years of the completion of the acquisition of his property by the local authority.

(3) The replacement property shall be situate in the vicinity of the acquiring local authority.

(4) The said loan shall not in any case exceed 90 per cent. of the value of the replacement property which value shall be assessed and certified to and at the expense of the authority by a competent professional valuer to be instructed by the authority.

(5) The said loan shall automatically become a charge on the replacement property and must be registered as a Land Charge against it or, in the case of Registered Land, recorded in H.M. Land Registry.

(6) The said loan shall be repaid—

  1. (a) if the vendor ceases to reside in the replacement property;
    2. 839
  2. (b) on the death of the survivor of the vendor and his spouse:

Provided—

  1. (a) that if the vendor ceases to reside in the replacement property, in circumstances where he sells it and within 12 months completes the purchase of another replacement property within the vicinity then the local authority which first acquired the original property shall on request grant another interest-free loan within the terms of this section which shall thereupon become a charge on the property under this section and be subject to the other provisions of this section;
  2. (b) the replacement property may itself be replaced as contemplated in this proviso without limit to the number of occasions until the death of the survivor of the vendor and his spouse.

(7) In cases where the property acquired by the local authority is occupied by the vendor partly for business and partly for residential purposes the interest-free loan shall be granted in proportion to that part of the whole property which is occupied for residential purposes only.

Any apportionment of value for this purpose shall be decided in the manner provided in subsection (8) of this section.

(8) The full open market value of the property acquired shall be as may be agreed between the parties or in default of agreement as settled by an arbitrator under the provisions of the Arbitration Act 1950 (as amended at any time) or under any enactment replacing the same.

An Arbitrator under this section shall be appointed by agreement between the parties or in default of agreement by the President for the time being of the Royal Institution of Chartered Surveyors.—[Mr. David Mitchell.]

Brought up, and read the First time.

Mr. David Mitchell (Basingstoke)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

We can at the same time discuss new Clause 12—Compulsory Acquisition under Part III of Housing Act 1957. 'Notwithstanding anything in this Act to the contrary, where there is a compulsory acquisition of property under the provisions of Part Ill of the Housing Act 1957 and the value of that property has been reduced by the acquiring authority in exercising its discretion in favour of dealing with the property under section 43(l)(b), then the difference between the market value of the site cleared by the owner under a clearance order in accordance with section 43(1)(a) and available for redevelopment and the cleared site value shall be disregarded for the purposes of compensation'.

Mr. Mitchell

It has been a recent feature of population movement that people have moved from the city centres, partly through natural migration, partly as a result of new towns and partly because of expanded town growth follow- ing the 1952 Town Development Act. Perhaps I could describe briefly what the problem is, illustrate it with a constituency case and explain how this clause would work.

It is a fairly lengthy clause. I must express my gratitude to the solicitor concerned for helping me draft it. In an expanded town, as extra land is required, it is taken by the council and already contains houses. The compensation is paid out under the 1961 Act. The basis of compensation is upon what the value would have been if the town had not been an expanded town. That is, the increased value arising from the expansion is disregarded in arriving at the figure of compensation.

I can understand the justification for this. If a local authority suddenly gave planning consent for a farmer's field to be used for housing in a new town the value of the land could increase from perhaps £900 or £1,000 an acre to £40,000 an acre overnight. It is understandable that the owner ought not to get this sudden vast accretion of wealth as a result of something which the public had done, in which he had no part.

Here we are dealing not with new towns built in green fields but with towns which are expanded. The site on which most of the expansion takes place already has housing on it. This is where the injustice comes, because the amount of compensation would be sufficient, with a town such as Basingstoke, to buy an equivalent property in Salisbury or Shepton Mallet or perhaps Hope Cove, but it would not be enough to allow a person to buy a replacement property in Basingstoke. In Basingstoke it will cost probably £3,000 or £4,000 or maybe more, beyond the amount of compensation paid to buy an equivalent property.

The reality is that a large number of people find themselves with a lump sum of compensation which is totally insufficient to buy another house in the area. That is all very well for those who want to move, but often people do not want to leave their friends and their work. They may have relatives there, they may be on the verge of retirement. I do not subscribe to the poetic picture of retirement to a little grey home in the West, which means that a person is bereft of all his friends, familiar sites, the local pub and the like.

If a person wants to stay where he is, he may be unable to do so because of the procedure enshrined in the 1961 Act. The clause is designed to deal with this problem. It is designed in such a way that it will advance a loan to make up the difference. It is easy to argue that if people were given the whole of the money at full market value, enhanced by town expansion, they would probably buy a house somewhere else worth a great deal more. But if they want to stay in the area, it is right and fair to give them a loan interest-free, for as long as the householder or his spouse survives, to allow for the difference. It would enable them to buy an equivalent property to that in which they are living.

The clause has been carefully prepared and contains adequate safeguards. The amount to be advanced is to be not more than the difference which has been lost. The person whose property has been compulsorily purchased must buy another property within two years; it must be within the vicinity of the original property and in the same locality. The money will he secured by a charge on the property and will have to be repaid when the man moves out of the area altogether or dies, or when his surviving spouse has died.

A number of other safeguards have been carefully built into the clause, and I hope the Minister will be able to accept it. If an acquiring authority has compulsorily to purchase somebody's home the least it can do is to make sure that the person is no worse off for the rest of his life. No amount of money can compensate for the garden that has gone, the roses and fruit trees that have been cared for over the years—the sort of things that make a home a home and the memories that go with it. That cannot be replaced, but what society can do is to see that people are not worse off. And as the situation now stands, if somebody's home in an expanded town is compulsorily purchased, they will he worse off unless they move outside the area. Therefore, I hope the Minister will accept our suggestion.

There has been a slight difficulty since the clause originally appeared on the Amendment Paper. The present provision contains the word "may" and at one time it included the word "shall". Unfortunately, the word "shall" disappeared during the night, and we are left with the provision in the form in which it now stands. If the Minister prefers the version that is not on the Amendment Paper, I hope be will he able to give an undertaking to accept something like it when the Bill goes to another place. On the other hand, I shall he reasonably happy if he can accept it in its present form.

I turn to new Clause 12. I understand that new Clause 13 has not been selected. Perhaps the title "Prevention of Legalised Robbery" was a little too explicit for the liking of the House, and certainly of the Government, or perhaps "13" is just an unlucky number.

Perhaps I may explain the situation that has arisen. One of my constituents, a Mr. Albert Clifford, owns the freehold of No. 17 Jubilee Terrace, Frome, Somerset. I understand that he lived in this house when he worked as a dustman for the Frame Council some years ago. He got a better job and let the house to a lady who is 20 years older than himself——

Mr. Deputy Speaker

I am sorry to interrupt the hon. Gentleman, but does this refer to new Clause 12 or to new Clause 13?

Mr. Mitchell

It refers to new Clause 12. I am sorry if I did not make myself clear. New Clause 12 was carefully drafted on legal advice to cover the point which is expressed in layman's language in new Clause 13, a provision which we are not discussing. Therefore, I am speaking to new Clause 12.

It should perhaps be made clear that the two clauses cover the same ground. My constituent moved out of that house and let it to a lady 20 years older than himself. He knew that in the effluxion of time he would have the opportunity when he retired to move back into that house and spend the rest of his days there. The cost of the house would be in the region of £2,000, but that is not the point—it was the home he was looking forward to having. Then there entered on the scene the villain of the piece in the form of Frame Urban District Council. Let us be clear that the council acted quite legally. It was within the law, but I seek to have the law altered. Whether the council was morally right is a different question. At the end of the day my constituent, Mr. Clifford, has no house, but an offer of £66.75p. That is as near to legalised robbery as anything can go.

Mr. Deputy Speaker

Order. The hon. Member ought not to talk about "legalised robbery", because that is in the title of the clause which has not been selected.

Mr. Mitchell

New Clause 12 in fact covers a method by which a local authority is able to acquire land in the way I am about to describe in detail, and I believe the description to which you referred would fit very adequately the transaction I am trying to prevent by new Clause 12.

The council condemned the property. The reasons are interesting. It was unfit for human habitation. Some of the reasons given for that would be laughable if they were not serious—such things as a loose tread on the staircase and a broken sashcord—but there are matters of greater importance. The council satisfied itself that the best way to deal with the problem was to demolish the house under compulsory purchase. If the house were in Chelsea it would have been whitewashed and sold for £20,000.

Here is the rub. The local authority served a compulsory purchase order. Mr. Clifford offered to negotiate a fair price before compulsory purchase, but the offer was refused. Under the 1969 Housing Act he was entitled to "acquired site value", but the council then proceeded artificially to reduce the acquired site value by refusing to allow any rebuilding on the site and saying that since this site on its own was too small to be allowed planning consent for rebuilding it should be revalued on the basis of no future use at all. Any developer buying five sites, as the council was doing, would have assembled for himself a very valuable site.

I turn to the mechanics of this matter. The Council buys this land at £3,600 an acre, and demolition costs are, say, £10,000, so the total costs are about £13,600. Bearing in mind that the council stated its reasons for wishing to carry out this activity, I quote from the Frome (Jubilee Terrace) No. 1 Housing Compulsory Purchase Order: The council has been guided in its decision to purchase by such matters as the potentialities of the site for redevelopment, and the need for new houses in the district and the improbability of the area being satisfactorily redeveloped by private owners. It is the council's duty as local housing authority to consider housing conditions in their district and the needs of the district with respect to the provision of further housing accommodation and further to prepare and submit proposals for the provision of new houses. On that basis the council has purchased this site whose site value is about £25,000 per acre and is paying £13,600 and therefore making a cool profit of £11,400 an acre.

By a procedure which is legal, but which I believe the House should not allow to continue to be legal, the council has acquired a house, demolished it and paid the owner £70. It cannot be right that someone looking forward to a home to which to retire should, by this kind of subterfuge, find that he is without a home and only £70 in his pocket. If a local authority acquires property by compulsory purchase it ought not to be able to gain from any diminution in the value of that property which it has brought about by its own actions.

11.15 p.m.

Mr. R. A. McCrindle (Billericay)

I support the clause and recommend it to the Minister. I propose to underpin my support for it by raising a constituency matter. I represent a constituency where new town development in the past and potential Maplin motorways in the future have made the question of land compensation a burning topic and caused a great deal of heartache.

The main bone of contention is that open market values for what are often substandard properties are inadequate to allow the purchase of similar sized accommodation in the same area. I have no doubt that the main provisions of the Bill will be of considerable benefit by adding home loss payments to market value compensation, and I am sure that market value must remain the basic criterion, but I believe that it is desirable to draw the attention of the House to the situation where, largely because there are substandard properties to be considered, there is a substantial shortfall. My hon. Friend's proposal is for an interest free loan of the difference between the market value and reasonable replacement value, and I recommend to the House.

Mr. Maxwell-Hyslop

The clause would be a useful and just addition to a Bill which I welcome. I appreciate that my right hon. Friend has fought hard to have the Bill included in this year's legislative programme, and I take as genuine the observations made a few moments ago by my hon. Friend the Under-Secretary of State that it is important to get it on to the statute book with the maximum expedition.

As I understand the whole ethos of compensation, it is that people should make neither a profit nor a loss through the misfortune of society wishing to dispossess someone of his property. Working that out in practice is extremely complex, and I think that in his new clause my hon. Friend the Member for Basingstoke (Mr. David Mitchell) does it with becoming modesty. If my hon. Friend had phrased the clause so that the money was not a loan, or that the cash payment, at least for the life in residence of the affected party, enabled him to secure equivalent accommodation, that would have been justified. The proposal is not that he should receive the cash as a grant for life but that it should be a loan secured on the property. This means that the property becomes less negotiable.

A person's house is more than something in which he lives. It may be something that he needs to use as security for other purposes. I take my hon. Friend's point. It is not just a matter of whim or emotion. If someone's livelihood is in a given town, he has to live in that town if he is to maintain a business whose goodwill is unique to that town.

I recollect a case—not in my constituency, but next door to it—in which, owing to lack of compensation provisions of the kind provided by the clause, a major new dual carriageway stopped short of the cottage and started again on the other side of it. That situation lasted for a couple of years. The argument was that the purchasing authority building the road was not allowed to pay more than the market value of that not very grandiose habitation.

The house was close to the source of employment of its owner-occupier. The offer of a tiny sum of money which would not have enabled him to buy another habitation, let alone another habitation in proximity to his place of work, meant that the compensation was not doing what it was meant to do. It would not have enabled him to live in the way that he would have lived but for the accident that somebody wanted to put a road through his house.

It seems to me that the new clause far from doing violence to the effects of the Bill brings in a provision which ought to he encompassed in an important Bill such as this. It is unlikely that we shall see another compensation Bill for 5 or 7 years. It is therefore particularly important that we get the Bill right. Whether we do that by accepting the clause or by my right hon. Friend, who is extremely patient in listening to suggestions, undertaking to introduce in another place a clause which encompasses what my hon. Friend is seeking to do, is not of great importance.

I remember a debate in an earlier Parliament when one of my hon. Friends raised this kind of point with equal force and conviction, but he got nowhere. There was no useful response from the Minister. I hope that my right hon. Friend will be able to treat this second bite at the cherry by my hon. Friend the Member for Basingstoke with his usual grasp of the necessity of embodying as much fairness and equity as possible in this very important Bill.

Mr. J. R. Kinsey (Birmingham, Perry Barr)

Although the clause is very attractive, what would be its effect afterwards on the remainder of the Bill? The practical reason for my question is that I have a constituent who has moved from the line of the motorway as it comes through Perry Barr and has gone across the road, for all the reasons that my hon. Friend the Member for Basingstoke (Mr. David Mitchell) has mentioned: it is convenient, it is the right place for him to live and it is where he wants to be.

In these circumstances, how is my constituent placed? The authorities might in future—the risk is real, because the place is near to an area which has already been put at risk by blight—want to introduce an amendment which will take my constituent's home from him. Because he is doing what he wants to do, will he lose his right of compensation under the Bill because there is a five-year limitation on living in the area? Will he lose his right of claims to all the other things that are available in the area—for example, soundproofing—simply because he has moved across the road? If ultimately he will lose all those things, this is not quite the kind of provision that we should put into the Bill.

Mr. Graham Page

I shall deal first with new Clause 6, moved by my hon. Friend the Member for Basingstoke (Mr. David Mitchell). As a general matter of principle, we cannot give compensation on a replacement or reinstatement basis. The whole basis of compensation under the Bill is that it shall be at market value, the value which the owner of property who is having it taken away from him compulsorily could have got on the open market, and not the value of some other premises for which lie would have to pay to re-accommodate himself.

I know that there are many hard cases in which the money that an owner gets for the property which is taken away from him will not meet his re-establishing himself in the same area. We have, however, had to retain the market value basis throughout the Bill and not concede in general that there is any case for replacement value or reinstatement value.

My hon. Friend has potently argued a particular case which conies outside that general principle. It is a simple case to understand. In an expanding or a new town, one sells under a compulsory purchase order at market value minus. By law there are certain things that are not taken into account in calculating the market value when the property is taken away from one by compulsory purchase. If one then moves to somewhere else in the same area, either an expanding town or a new town, one can buy only at market value. In this case we are not dealing with compensating for something above market value but taking into account that the man has been deprived of his property at something below market value.

My hon. Friend is very modest in his new clause. He does not ask for the minus to be made a plus. He asks for a loan to be provided by the acquiring authority to enable the deprived owner to re-accommodate himself in another dwelling. He asks that the acquiring authority may be given power to make such a loan.

I appreciate that my hon. Friends amendment which would have been mandatory on the acquiring authority got lost in the wash somewhere, but the proposal which we are now discussing is merely permissive—that is, to permit the local authority to make a loan in such a case as he has described and to make a certain kind of loan, namely a loan free of interest.

If my hon. Friend turns to Clause 35 of the Bill he will find that precisely that permissive power is given to local authorities to lend on a fixed mortgage to a person who wishes to reinstate himself in a dwelling after his home has been taken away from him under a compulsory purchase order. Therefore, the power already exists for the local authority to provide such a loan so that the man can get his home. There is not power to grant a loan free of interest.

We discussed this matter fairly fully in Committee and I had to resist an amendment on that basis. I shall not rehearse the argument again. The position is, however, that apart from the interest point Clause 35 meets the requirements of new Clause 6 almost entirely. It is not mandatory, nor would the new clause make it mandatory, on the local authority to provide the loan but it gives the authority power to do so and to provide it on fixed mortgage, which it could not do under existing law, and by that means to enable the deprived owner to reinstate himself.

Mr. David Mitchell

Would not my right hon. Friend accept that to allow a mortgage grant to suffer interest at anything like existing ordinary commercial rates means that somebody in the situation which I described would find himself £200 to £300 a year worse off by reason of the added interest he would have to pay? Will my right hon. Friend look again at this to see whether he can do anything further to help?

11.30 p.m.

Mr. Graham Page

Of course, I will look again to see whether there is any reason for taking this case into the realm of a sort of indirect subsidy to the owner-occupier which no other owner-occupier receives under the Bill. My hon. Friend argues that this is such an exceptional case that we ought to make that form of subsidy of free-of-interest loan. At the moment I cannot agree with him on that, but I will certainly look at it again, now that he has explained it so fully to the House.

On new Clause 12 my hon. Friend gave a most interesting case in a very interesting manner. Where a local authority decides that property is unfit for human habitation and that the best thing to do is to clear the area and demolish the property, there are two ways in which the local authority can deal with that—either by a clearance order under Section 43(1)(a) of the Housing Act 1957 and then the owner has to demolish the buildings; or the local authority can acquire the land with the bricks and mortar on it, demolish the buildings under Section 43(1)(b) and take over the ownership of the land.

Normally there is not a good deal of difference between the compensation, whichever way the local authority chooses to act. There are very few cases in which a local authority takes the course of requiring a clearance of the land by the owner, leaving him with the cleared site, and later coming in with a compulsory purchase order. I think most local authorities think that that—to use my hon. Friend's words—is not a moral way of doing it. But normally the compensation is not very different.

There is the problem which my hon. Friend has put to the House—the case where the marrying of the sites increases the value of each, because it then makes it possible to carry out a substantial development of the whole. This has been a problem for many years—the question of the value; whether, in paying compensation, one can take into account the fact that the sites will be married into a developable site. In certain cases that can be done; in others there is some difficulty in the valuation.

My hon. Friend has now put before the House a specific case which I should like to study to see whether we can avoid this sort of hardship in future and whether we can in some way ensure that the acquiring authority takes the course which I am sure hon. Members would think is the right course for an acquiring authority to take in those circumstances—not to try to deprive the owner of an amount of compensation which to the acquiring authority may be quite insignificant in the scheme which it is undertaking, not to try to cheesepare the scheme in that way.

I will study the facts which my hon. Friend has given. I cannot at the moment see an adequate amendment in the law to avoid that hardship, but I will certainly see whether something can be done about it.

Mr. David Mitchell

I am most grateful to my right hon. Friend for the kindly way in which he has received the proposed clauses and for his undertaking to look further into the matter. I will, if I may, send him the papers referred to in connection with new Clause No. 12. I hope that he will be able to look again at the problem raised in new Clause 6.

I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Forward to