TENANCIES GRANTED BY RESIDENT LANDLORDS (Hansard, 30 July 1974)

§ Mr. Graham Page
I beg to move Amendment No. 26, in page 15, line 34, leave out 'flats' and insert: 'self-contained flats or maisonettes capable of exclusive possession'. The amendment relates to new Clause 5A, introduced into the Rent Act 1968 by Schedule 2 of the Bill. That is the clause which provides that there is to be no protected tenancy where a landlord's interest belongs to a resident landlord. However, there is an exception in that it shall not apply—that is, it shall be protected—if the building is a purpose-built block of flats". In Committee I endeavoured to refine that phrase because I was not certain what it meant. If it means something more than an originally purpose-built block of flats, I think that it needs some such refinement as the words in the amendment.
I am not sure whether "purpose-built" means houses which are converted into flats. There is some purpose-building about a conversion which produces 706 several dwellings or flats where there was only one house or dwelling before.
I have suggested in the amendment some words which I think define the position rather better. I suggest that instead of a purpose-built block of flats", we should describe it as a purpose-built block of self-contained flats or maisonettes capable of exclusive possession". If I understand the principle of new Clause 5A in the Rent Act, it is that the landlord, where there is another tenant in the same house and inconvenience can be caused by incompatibility between the tenant and the landlord, should have the right to evict the tenant without necessarily proving the legal ground for eviction, such as nuisance, which is difficult to prove. I suggest, therefore, that the landlord should have the right to choose his tenants in that way.
If there is a conversion where the new flats within the building are not completely self-contained—to put it another way, where they do not have their own front doors—the situation may arise in the same way in that there is that intimacy between the tenant and the landlord which should give the landlord the right to evict his tenant if there is incompatibility between them.
To some extent, this is a probing amendment. If I have got the right words I hope that the Government will accept them, because the schedule as it stands will cause some confusion to those who will have to apply it.

§ Mr. Douglas-Mann
I do not propose to detain the House for long, but I think that the right hon. Member for Crosby (Mr. Page) is right in saying that the definition in the schedule is likely to cause confusion. If the amendment is accepted the confusion will become even worse confounded, but I wish to place on record that some of us feel some degree of concern about the definition of the resident landlord in Schedule 2.
I do not think that the amendment will improve matters—in fact it will make them worse—but there is in the Bill a provision that it will be necessary to inquire whether the premises were constructed in a particular way. Bearing in mind that a large part of the furnished 707 tenancies are in premises that were constructed some time in the nineteenth century and converted during the last 20 bears, a provision that requires us to inquire into the way in which the premises were constructed but to ignore the way in which they have been converted is disregarding reality.
I do not think that at half-past two in the morning before Parliament rises for the Summer Recess it is appropriate to suggest that the Bill should be amended. I am only too anxious to see the Bill become law, and I shall accept the provisions as they stand, but I hope that when we have the measure that has been suggested by the right hon. Member for Crosby—the corrigendum measure, as he called it—to correct any faults in the law relating to landlord and tenant we shall consider again the provision defining the resident landlord exemption.
I urge the Government to look with favour upon the test that would give exemption from the full protection of the Rent Acts to the landlord who has no more than two tenancies in his premises. Where a landlord is letting to more than two tenants, his tenants should have protection, whether or not the premises were designed as a purpose-built block of flats. This is a change which I hope we shall be able to achieve in later legislation.
I accept that because we are legislating in this way we must ensure that any landlord who lets on the basis proposed in the Bill in the period before the law is changed does not lose as a consequence of any change that we may make later. We should not at any future time change the situation at this stage, but I hope we shall have the opportunity to ensure that such faults as there may be in the Bill are corrected. I assure the Opposition that the faults are not of the kind that they have suggested, namely, that it goes too far and does too much harm. The fault is that the Bill has left too many loopholes, and I hope we shall ensure at some future time that these loopholes are plugged. I repeat my view that if landlords let in the period between this Bill coming into operation and any future legislation they should not be put at a disadvantage.
I hope that landlords will take that as an encouragement to use the exemption provided by the Bill to ensure that 708 more lettings are achieved in the interval before further legislation is passed. But it is wise to accept that there are still loopholes in the Bill and that we shall seek to correct them in the future.

§ The Solicitor-General
Perhaps at this late hour one must be thankful for small mercies. I am grateful to my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) for expressly disclaiming any intention that the Bill should be amended at this stage. As I understood him, he was rather suggesting that the test of whether flats are purpose-built was not the appropriate test. But certainly, I should have thought that, given that test, then by definition purpose-built flats are distinguished from converted flats and the test must be applied as at the time when they were originally erected. That is what is meant by saying that they are purpose-built.
The right hon. Member for Crosby (Mr. Page) will not have overlooked subsection (6), which states For the purposes of this section a building is a purpose-built block of flats, if as constructed it contained, and it contains". Therefore, the test begins when they were first constructed and is then continuous.
Perhaps it was the lateness of the hour affecting the normal clarity of the right hon. Gentleman or simply my capacity for understanding, but from that point on I was left still at a loss as to the purpose of the amendment.
The resident landlord exemption is intended to apply where the landlord occupies part of a building which is not purpose-built. As I understand it, the purpose of the amendment is that the exemption should still apply even where flats are purpose-built if they are not self-contained. What I was rather hoping to hear from the right hon. Gentleman were examples of the kind of situation that he has in mind. Presumably there are still tenement-type blocks of flats, built as flats, where they are not self-contained. But I did not follow why, in that situation, there should be a resident landlord exemption and what was the essential distinction between them and any other purpose-built blocks of flats.

§ Mr. Graham Page
Neither the hon. and learned Gentleman nor I need pursue this matter any further. He has answered 709 my question. I understand now what is meant by "purpose-built" and this settles the point I had in mind in these probing amendments.

§ The Solicitor-General
I am grateful to the right hon. Gentleman. I shall subside into silence.

§ Mr. Rossi
I beg to move Amendment No. 32, in page 15A, line 24, leave out '12' and insert '24'.

Mr. Deputy Speaker
With this we may take Amendment No. 33, in page 15A, line 33, at end insert: 'and (d) any period between the death of the landlord (whether before or after the commencement date) and the date upon which his estate becomes vested in his personal representative'.

§ Mr. Rossi
These amendments were raised in Committee. The Minister was kind enough to say that he would look at them again because they raised some legal difficulties and that he would consult the Law Society or some appropriate bodies to see whether the questions raised in Committee were valid.
The first amendment, in which we seek to substitute the figure 24 for the figure 12, relates to the period between the date of death and the time when the personal representatives of a resident landlord will have dealt with and administered the estate and are able to pass on the landlord's interest to someone else who may become a resident landlord. In other words, we are dealing quite literally with a moratorium period.
The figure "12" relates to 12 months, which is the normal executors' year. It is a matter of practice that many estates take more than 12 months to deal with adequately and properly. Therefore, in Committee it was suggested that a longer period might be more appropriate and would be fairer to personal representatives. It was that point which the Minister undertook to take up with professional bodies to see whether the moratorium should be extended.
Amendment No. 33 raises a more difficult legal situation. The assumption in the Bill appears to be that there is an automatic vesting in personal representatives of an estate of a person who dies. With intestacy there is the provision of 710 the Administration of Estates Act, where the vesting is in the probate judge. But where a will is left, some authorities assume that the will, because it automatically operates from the time of death vests the estate in the personal representatives. There is a line, however, which indicates that this is not the case. Problems could arise. The Scots have been wise, because they have a Succession Act which states that on the death of a person the estate vests automatically in the personal representatives. We have no such statutory provision under English law as regards wills. There is an area of doubt. It was to avoid any difficulty that Amendment No. 33 was posited, to ensure that no difficulty could arise because of legal uncertainty.

§ The Solicitor-General
I am grateful to the hon. Member for Hornsey (Mr. Rossi) for putting the two points so succinctly. He was right in saying that an undertaking was given in Committee to have certain consultations as to the 12-months' period. It is important to get the balance right, if we can. We do not want a longer period than is necessary: only a reasonable time should be allowed during which a tenant does not know whether he is protected.
My hon. Friends have undertaken consultations with the Law Society and the Scottish Law Society. I am instructed that the consultations were informal but genuine and that neither learned body has expressed the view that one year is unduly short. In these circumstances, I hope that the hon. Gentleman will accept that the period of one year should be retained.
The other matter relates to the very narrow point of the vesting of leaseholds in the case of a will. It is true that at one period there was a line of cases which suggested that a leasehold did not vest immediately on death, unlike other types of property. Those cases were all before the Law of Property Act 1925. The hon. Gentleman will recollect that Section 149(2) of the 1925 Act provides that leases can now take effect in possesssion without actual entry, and that was why previously it had been thought that they did not immediately vest on death, because the administrator was not deemed to be in possession as from the moment of death. In consequence of that, the 711 learned authors of Williams and Mortimer on Executors take the view that chattels real of a testator now vest immediately on his death; and the same principle would apply to the whole of his estate.
The perfectly genuine point which the hon. Gentleman raised is satisfactorily settled by the Law of Property Act, as I hope the hon. Gentleman will accept.

§ Mr. Rossi
I am grateful for the guidance which the Solicitor-General has given. In my recent experience a leaseholder under the Leasehold Reform Act fell into great difficulty because of advice received from learned counsel on the basis that a vesting did not take place in executors automatically on death. In Committee I recited the circumstances of that case. I shall not detain and bore the House by quoting the details, which are rather complicated. The circumstances were sufficiently unclear to deny a tenant inheritor a right of enfranchisement of the leasehold interest because there was not a succession in terms. It was because of that case which came to my attention that I felt it only right on this Bill to try to ensure that a similar situation did not arise.

§ The Solicitor-General
I cannot comment on the facts of that case, as I have not had an opportunity of studying them.
But it may be an additional assurance to the hon. Gentleman that in Biles v. Caeser the Master of the Rolls used these words when referring to a tenancy which was in question: It has to be remembered that the title of the executor derives from the will and speaks from the will". So the learned Master of the Rolls appeared to have no doubts on the subject.

§ Mr. Rossi
I beg to move Amendment No. 28, in page 15A, line 42, at end insert or (c) that interest is (or if it is held on trust for sale, the proceeds of its sale are) held on trust for beneficiaries any one of whom occupies as his residence a dwelling-house which forms part of the building referred to in paragraph (a) of that subsection". 712 Here again I am broaching a subject which we discussed in Committee. It relates to the situation of resident landlords who hold as trustees for sale for themselves and as beneficiaries at the same time. The situation could arise, possibly between married people—although we can deal with married people on the next amendment—where people buy a house in joint names. This is a frequent practice amongst professional people. Then, for some reason or other, one of the partnership disappears, and the question might arise whether or not the remaining trustee for sale and beneficiary is a resident landlord within the meaning of the Act.
We were nervous lest there might be an area of doubt here, and I am therefore moving the amendment so that the matter can be investigated by the Law Officers, and in the hope that an explanation can be given.

§ The Solicitor-General
The real point which the hon. Gentleman has raised is whether the situation which he has described is covered by the existing paragraph (b) of subsection (3). Paragraph (b) relates to a trust for sale on trust for any person who occupies as his residence a dwelling-house which forms part of the building …". The hon. Gentleman has in mind the situation where there is more than one beneficiary, one of whom occupies it. All I can usefully say is that it appears to us that that case is covered. The case of a number of beneficiaries one of whom occupies it is covered by the words for any person who occupies".

§ Mr. Graham Page
I did not read it quite as my hon. Friend seems to have read his amendment, nor as the Solicitor-General did. In the new Section 5A(1)(b), on page 15 of the Bill, the necessity is that the tenancy was granted by a person who … occupied as his residence … If the property is held on trust for sale of a beneficiary, it will be the trustees who grant the tenancy, and the beneficiary is the occupier in residence in the building. I understood that to be the intention of my hon. Friend's amendment. In that case, the landlord will still have the benefit of an unprotected tenancy in the house, even though he 713 does not fit in exactly with the words in paragraph (b) that the tenancy was granted by him.

§ The Solicitor-General
I am sure that it is my fault, at this hour of the morning, but I fail to follow the right hon. Gentleman's argument. I should be happy to pursue it with him, but I doubt whether other hon. Members would be. Perhaps we can exchange correspondence.

§ Mr. Graham Page
It is an extremely simple point. I am sorry if I did not put it simply. In the new Section 5A(1)(b) the condition is that the tenancy was granted by a person who … occupied as his residence …". In the case of a trust for sale, where the beneficiary is allowed to occupy the premises which are on trust for sale, as is frequently the case when a widow takes under a will, the person who grants the tenancy will be the trustee. The person who occupies the house will be the widow in the example which I have given. It will, therefore, not be the same people as are required under paragraph (b) to be the same people.

§ Mr. Rossi
I beg to move Amendment No. 29, in page 15A, line 45, at end insert: '(3A) During any period when—

(a) the interest of the landlord under the tenancy referred to in the subsection (1) above is held by a married person; and

(b) that married person or his spouse or both of them occupies as his or her residence a dwelling-house which forms part of the building referred to in paragraph (a) of that subsection,

the condition in paragraph (c) of that subsection shall be deemed to be fulfilled and accordingly no part of that period shall be disregarded by virtue of subsection (2) above'. The intention here is that if the resident landlord goes away, leaving his or her spouse in occupation, the spouse may be deemed for these purposes to be the resident landlord, so that the position of the resident landlord as such vis-à-vis the tenant is preserved.

§ The Solicitor-General
The situation to which the hon. Member for Hornsey (Mr. Rossi) refers is from time to time encountered in practice, and I think that 714 the answer is to be found in subsection (7) of the new Section 5A, the intention of the draftsman being to attract the case law relating to the statutory tenant of a dwelling house to this kind of situation where, for example, the tenant's wife remains in occupation.
But subsection (7) goes wider than that so that, in addition to this amendment's not being necessary since it is subsumed in subsection (7), the amendment might have the effect of casting doubt on the other situations caught by the subsection, since one might have to cover other circumstances—the owner who is absent owing to illness, and so on.

§ Mr. Rossi
I am grateful to the Solicitor-General for drawing our attention to subsection (7). The Under-Secretary took us round the houses with that in Committee. First, he told us that we have to go back to the 1968 Act to see what conditions are by virtue of section 3(2) required to be fulfilled by a statutory tenant of a dwelling house When we turned to that Act, we did not find anything there, so the hon. Gentleman referred us back to the 1920 Act, which is repealed. Then, having got a note from the Box, he said that we should look not at the 1920 Act but at Skinner v. Geary. We understood that Skinner v. Geary was the repository of all wisdom, although the hon. Gentleman had been telling us that we needed the Bill because one could not rely on court decisions such as Woodward v. Docherty and everything must be enshrined in statute.
Thus, we have subsection (7) relying on a decided case. We found ourselves a bit confused after that explanation in Committee, and we wonder now whether the Solicitor-General is satisfied that subsection (7)—after all the highways and byways ending in a decided case—does what he thinks it does and covers the situation which we want covered, whatever may have been the intention of the draftsman.

§ The Solicitor-General
Subsection (7) provides that a person shall be treated as occupying a dwelling house as his residence … if … he fulfils the same conditions as … are required to be fulfilled by a statutory tenant of a dwelling house". 715 If one wishes to know what conditions are required to be fulfilled by a statutory tenant one looks at the whole of the case law and the various situations in which it has been held that a statutory tenant is in occupation of a dwelling-house. I was not a member of the Standing Committee, so I did not follow the course to which the hon. Gentleman refers, but that is the intention, and, in my view, the desired effect follows.