IMPROVEMENT GRANTS (RESTRICTIONS ON ELIGIBILITY) BILL (Hansard, 13 March 1973)

§ Mr. A. W. Stallard (St. Pancras, North)
I beg to move, That leave be given to bring in a Bill to restrict the eligibility for improvement grants to local authorities, owner-occupiers and housing associations, and for certain other approved schemes: to make provision for the repayment of any grants so made in the event of the property being re-sold; and for purposes connected therewith. The Bill is not an attempt to prevent improvements. It tries to return to the position outlined by the then Minister of Health, Aneurin Bevan, when introducing the Housing Act of 1949, which included provisions for improvement grants, when he said: The purpose of the grant is to enable the occupant of the house to enjoy modern amenities, and therefore there are strict conditions under which the grant is given. He had earlier said: If the house is sold, the remaining portion of the grant must be returned to the local authority because there is no justification in taking money from one citizen merely in order to make another citizen richer."—[OFFICIAL REPORT, 16th March 1949; Vol. 462, c. 2131.] That Bill was passed without opposition.
My Bill seeks to legalise the restrictions that many local authorities urgently need, particularly in inner London, to enable them to try to prevent the exploitation of grants by greedy landlords and speculators, whilst encouraging and assisting applications for grant.
A recent conference of the Association of Public Health Inspectors drew attention to some of the exploitation of the improvement grant scheme. A warning was given that Landlords are forcing tenants out of their houses so that properties can be improved and sold. Those of us who live in the inner London area know the tragic stories that lie behind that warning. The Bill will contain a clause allowing local authorities powers to safeguard existing tenants and will enable authorities to recoup the grant in full with interest if the owner wishes to sell within a specified period.
An analysis in my local borough showed that last year almost 65 per cent. 1130 of discretionary grants were going to companies or non-resident owners. When we consider that in that year over £1 million was paid out by that borough in grants, we begin to see the size of the problems facing inner London boroughs, and certainly the amount of public money which is involved in this exercise, quite apart from the repercussive effects of this kind of speculation.
Hon. Members will recall that I recently mentioned in this Chamber the example of a house in my constituency which had risen in value in less than 18 months by just under £100,000. The developer had obtained a grant of just over £9,000. That example was seized upon as though it were the exception. I want to say that it is by no means an isolated case. I could spend some hours this afternoon, if I had the time, giving detailed examples of similar cases, but I hope there will be other opportunities.
I would just like to mention, however, the most recent case that has come to my notice. Again, it is a house in the London Borough of Camden—a semidetached, four-storey house, purchased in January 1972 for £13,500. It was sold in June of the same year for £64,000 and the profit on that deal was £51,500 —and for what? All the new owner did, at best, was to empty the property before reselling with vacant possession. After being resold for £64,000, this house is being converted into as many self-contained units as can be crammed into the space—in this case it is eight self-contained flats. The estimated cost of conversion is just over £40,000 and a grant of £9,600 has been made from public funds. The total estimated cost of the house after conversion is approximately £150,000. Therefore the new owner, after all expenses, makes another £50,000. So the price of this property has risen in just over 12 months from £13,500 to £150,000, and nearly £10,000 of that was public money. I cannot justify that kind of expenditure and I doubt whether anyone else can.
This Bill, by safeguarding existing tenants, as well as by its other provisions, will help to stop this scandalous, obscene, speculative process.
I should like to make one other quotation from another publication which has come into my possession. It is a 1131 "Property Letter" which is apparently sent to potential investors, one of whom was so disgusted that he passed it to me. It is dated February 1973—last month. It says, after its introductory blurb: For the first time since the early sixties it's possible to make real money out of property. Both for the expert developer and for the small man who wants to get in now and produce a useful private income for himself. It goes on with some glee: Since the Tories returned to power:

1. House prices have boomed as never before, giving dealers a rising market to profit from. What's more, loans for once are readily forthcoming.

2. Office development restrictions have been shot away. Birmingham has become a capital place to operate in. … And Leeds and Bristol are following fast.

3. Landlords have started to cash in on the new bedsitter boom.

4. Converting properties of every type to flats for sale has become a big business. The Government is exceedingly generous with improvement grants, which makes this operation very profitable."
Someone is going to make a killing out of all this, and it might as well be you. Thousands of investors did so in the last property boom —most of them were armed with the shrewd inside information provided by the … Property Letter.' And it says, of course, that the information in the letter is confidential to subscribers or it might lose part of its value —in case anyone is getting bothered—and it is therefore not available except on subscription terms.

§ Mr. Stanley Orme (Salford, West)
Name the firm.

§ Mr. Stallard
My Bill is intended to make that kind of speculation less attractive by taking away the public contribu- 1132 tion, which will go to owner-occupiers, local authorities, housing associations and those landlords—and there are some —who are genuinely trying to improve their properties, with the help and encouragement of local authorities, for the benefit of their tenants, so that properties for rent can be retained in areas such as inner London where there is a serious shortage of and an ever-increasing demand for rented accommodation.
Finally, this Bill will help all genuine applicants to make a valuable contribution to the solution of the housing problems of areas like mine and will help to stabilise houses and rents in the process. I therefore seek the leave of the House to bring in this Bill.