§ (1) No conveyance or transfer of land in a housing action area shall operate to convey a legal estate and no contract for the sale of, or declaration of trust affecting such land shall be enforceable unless it shall be accompanied by a certificate signed on behalf of the local authority which has declared the housing action area that it does not itself wish to acquire such land.
§ (2) Unless the local authority concerned shall supply a certificate in accordance with the provisions of sub-paragraph (2) of this section relating to any land in a housing action 1268 area within four weeks of being requested to do so by or on behalf of the owner then the owner or other person on his behalf may, by notice in writing served on the local authority at any time after the expiry of four weeks from the date of the request require the local authority to purchase his interest in the land in accordance with this section.—[Mr. Douglas-Mann.]
§ Brought up, and read the First time.
§ Mr. Douglas-Mann
I beg to move, That the clause be read a Second time.
The object of the clause is to give effect to provisions which originally appeared in the White Papers heralding the Conservative Government's Housing and Planning Bill, which were urged by my hon. Friends when that Bill was 1269 debated in the House in February, and which we on this side of the House unanimously wished to see effected. I refer to provisions to ensure that the local authority has the right of preemption of housing in housing action areas.
The clause provides a legal mechanism under which no conveyance or transfer of land in a housing action area would operate to convey a legal estate unlessaccompanied by a certificate signed on behalf of the local authority which has declared the housing action area that it does not itself wish to acquire such land.The clause also contains a provision that if the local authority does not give such a certificate within four weeks the owner will be entitled to serve notice on the authority requiring it to purchase the land.
Although the Government suggested in Committee that an identical clause that I moved there contained defects, I believe, having re-read the debate in Committee, that the defects are not particularly serious and that the provision is workable. I had hoped to be able to withdraw the clause in favour of a Government amendment which would achieve the same objective.
It is common ground, certainly on our side of the House, that to hope that private landlords will be able to resolve the problems of housing stress areas would be to cry for the moon. It is not practicable for a private landlord, even a landlord with the best will in the world—and I accept that there are few such animals—to carry out improvement to reasonable standards of the poorest type of property, which is basically what we have in the areas that are likely to be housing action areas, and then to let the property at fair rents. Given the entire structure of our housing law, coupled with interest rates of 15 per cent. and the present grossly inflated property values, it is not possible. We should emphasise that the situation has been brought about by the immense inflation in the levels of property prices and the immense return that the owner of land can obtain from it. Given those prices and present interest rates it is impossible for the private landlord to provide good housing at a fair rent.
Therefore it is essential, as the Conservative Party acknowledged in its White 1270 Paper, that a mechanism be devised as quickly as possible to ensure that land in housing action areas is brought into local authority or other socially responsible ownership quickly.
When the Government suggested in Committee that my new clause contained certain defects, my hon. Friend the Under-Secretary first asked,what property is to be subject to the scheme? … the clause covers all property transactions, but exemptions for owner-occupiers and for non-residential property are needed.I do not accept that. I think that it is desirable that for all property in a housing action area that is being transferred, owner-occupied or otherwise, the local authority should have the option to purchase. It would be purchasing it at market value, and would not need to buy it if it did not want to. Whether the property is non-residential property or owner-occupied, it is desirable in those areas at least that the local authority should have the option to exercise the control that it needs to carry out the changes necessary in those areas.
The second point raised by my hon. Friend waswhat rights of appeal will an owner who wishes to establish that his property is exempt have, and when will he be able to exercise them?It may well be desirable that the Secretary of State should issue regulations as to the circumstances in which a local authority should normally issue certificates to the effect that it did not wish to acquire the premises. There may well be cases in which it would be desirable for local authorities not to acquire. Those cases can be outlined in regulations. In general, I can see no reason why the local authorities should not have the option. The owner's right would be to argue about the compensation he should receive.
Thirdly, my hon. Friend askedwhat price will the authority pay to whom when it exercises the option?It would have to be market value.
Fourthly, my hon. Friend askedWhat additional easements, including rights of access and support, will the authority be able to acquire …?But nobody proposing to sell property in a housing action area or anywhere else is selling it without the appropriate 1271 easements of rights of access, otherwise there would be no purchaser for the property anyway.
Fifthly, my hon. Friend askedwhat transfers and conveyances of property are to be covered? Should mortgages or gifts be excepted, since both involve conveyances?I accept that it would be desirable for the Secretary of State in regulations to indicate that a local authority should normally give a certificate that it does not wish to acquire the property when the property is simply being tendered for mortgage.
Sixthly, there was the questionwhat is to be done in cases where the property is owned by a company and ownership changes by a sale of the equity and not by a conveyance?That is an artificial problem. There are very few companies which own only one property, so that it would be transferred by transferring the shares. If the property is to be transferred to a single company the option provision would operate.
My hon. Friend next askedFinally, what time limits, if any, are needed under subsection (2)?"—[OFFICIAL REPORT, Standing Committee B, 13th June 1974; c. 551–552.]The time limit is set out in the clause.
My hon. Friend said in Committee that the Government proposed to introduce a notification system which would provide that anyone other than an owner-occupier disposing of an interest in housing accommodation in a housing action area would have to give notice to the local authority, which might, if it wished, use the compulsory purchase powers. My hon. Friends had to prepare the Bill in a very short time, and the drafting difficulties involved in setting up a suitable and satisfactory mechanism have been considerable. I do not accept that a simple notification provision, which would merely give the local authority the option to put into operation the fairly cumbrous machinery of compulsory purchase within four weeks, or whatever time limit is imposed, will be satisfactory.
I urge my hon. Friends, if they cannot accept the amendment, at least to use the opportunity of the debate on the clause to indicate to the House and to the public what they propose, how they hope 1272 to make it effective, and the timing of their proposals.
The Bill as it stands, and the whole concept of housing action areas are, without such a provision as I suggest, likely to be damaging rather than beneficial. The concept of housing action areas, if limited to concentration on improvement grants, is not likely to accelerate the process of increasing the supply of satisfactory rented accommodation. The housing action area concept will work only if the attention of public health officials, the legal staff of local authorities and others is concentrated on getting rented housing in which there is local authority or some other form of socially responsible ownership. Without that the whole structure of housing action areas is likely to make the situation worse rather than better.
I urge my right hon. and hon. Friends to accept the new clause, or, alternatively, to give an assurance that they will introduce in the House of Lords an amendment which will achieve the same object, though possibly more effectively.
§ Mr. Freeson
I wish I could satisfy my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann), not just because he has once more spoken in favour of this particular policy but also because it is a policy which I would wish to see introduced.
If I were in a position to spell out what the Government would wish to do to achieve what is described as the first option purchase system it would be fairly certain that I would be able to introduce appropriate drafting of legislation either here or in the House of Lords, but I am not in such a position. This does not mean that we do not intend to take action when the opportunity arises. Indeed, we may wish to go much further than both the idea indicated in the previous Government's original White Paper on this matter and what my hon. Friend is rightly once more putting to the Government. However, to achieve the sort of system which he proposes would require considerable drafting of legislation, and that could not be achieved in the time available. I could go into detail—I shall do so, if required—to indicate the areas where problems arise, but perhaps I may illustrate the point usefully in a way in which 1273 I did not illustrate it in Committee, although I may then have implied it.
I illustrate the point by referring to that aspect of policy which my hon. Friend has discussed to some extent—compulsory purchase powers. It is easy to state the proposition that local authorities should have compulsory purchase powers in certain circumstances as a means of achieving housing policy, or aspects of other policies, such as those involving school building and road construction. I was not, until so advised, aware that the basic Acts which provide for compulsory purchase contain, when taken together, about 50 sections and 15 schedules. All this is needed to establish a policy which could be stated in one sentence—a policy that there should be such power by local authorities to carry out their functions when authorised so to do by Ministers, whether in housing or in other matters.
Even now it is from time to time suggested—it was suggested in Committee, to a degree—that these powers, in certain circumstances, do not go far enough, and do not in certain stress areas meet the situation which local authorities face and which they should be tackling.
Perhaps what I have said will give some idea of the scale involved in seeking to draft legislation to achieve even the limited objective stated in the previous Government's original White Paper which led to their abortive Housing and Planning Bill. I make this point now to avoid having to go over some of the ground which I covered in Committee and to avoid having to repeat the arguments about the difficulties of achieving what we want to do within the time available if the Bill is to be enacted before the long Summer Recess.
I realise that I have tired some hon. Members by constantly repeating, formally in Committee, on the Floor of the House and in private discussions and conversations, my reference to this constraint of time, but I assure the House that it is a real constraint. I have not been using empty words when I have said that this is not the Bill which I would have wished to introduce, in the sense that it does not go anywhere near far enough along the road of establishing in legislation the basis of a more coherent and dynamic urban renewal policy in the stress areas of our cities. 1274 The fact remains that I simply cannot get the drafting done in time.
My hon. Friend overstated the position in saying that if we do not have the first option system, which I say would take too long to prepare in order to get the Bill through before the long recess, the whole concept of housing action areas would collapse—
§ Mr. Freeson
Since we have not yet tried this concept, surely we cannot be so vigorous in saying "Hear, hear".
I am the first to say that we need these powers and that even more drastic powers are needed in housing action areas, as well as in relation to other matters, but I do not accept that we cannot get a housing action policy to work if we do not have the first option purchase system introduced into the Bill at this stage.
Because of pressure of time the notification system which we are proposing will have to be introduced when the Bill goes to another place. But when the Bill returns to the House hon. Members will have an opportunity to examine this matter in detail, assuming, hopefully, that it has been approved in another place.
However, I can indicate at this stage, so that hon. Members may be aware of what is in our minds in preparing this more limited drafting legislation for another place, that the notification system which we intend to introduce will provide that anyone other than an owner-occupier disposing of an interest in housing accommodation in a housing at lion area or a safeguard area—whatever nomenclature is used—will have had to give notice to the local authority at least four weeks before the contract, and to have declared his present interest in the property.
Further, anyone giving a tenant notice to quit will likewise have to notify the authority within seven days of giving the notice. In either case, failure to notify or the giving of false information will be a summary offence punishable with a fine of up to £400. The authority thus warned would then be able to offer to buy the property or to make a compulsory purchase order, or indeed take action under any of its other powers, if it thought fit.
1275 We would have preferred to introduce the necessary amendment relating to this in Committee, or on Report, but time has not permitted, and so we must await consideration of this in another place.
With regard to purchase policy, we must see it not solely in the context of the Bill but also in the context of the circular which was discussed earlier in the debate. A large part of that circular is devoted to indicating priority in areas in which the Government want local authorities to submit programmes to bring rented housing into social ownership. The circular was deliberately designed in that way—it was not done by chance when Ministers were drafting or redrafting parts of it. We deliberately phrased the circular so that it would line up with the prospects of the Bill's becoming law shortly and the establishment of housing action areas, further general improvement areas and larger priority safeguard areas, to which we have already referred. They will also have to be dealt with by amendment in another place, because of lack of drafting time.
So this is part of a broader policy. There is no policy resistance here. I want to do what we said, in opposition, we would do. The difficulty is simply mechanical. I have said that I might wish to go further than the first option purchase system, which is based on the original White Paper. I have in mind the prospect—I put it no more strongly—of relating this policy to some of the policy area that we discussed on the previous clause. The aim is to try to enfranchise groups of tenants in blocks of flats or groups of houses which landlords seek to sell over their heads, to allow them to form associations or co-operatives with the statutory right to purchase, backed up by local authorities.
This is the thinking. It has not been given legal form, or even thought through in policy terms. If this is a viable policy proposition it opens up wider prospects on drafting. I have stated my thinking now in response to my hon. Friend's plea for some indication of when we shall do this. It cannot be done in the Lords in this Bill, but the policy will be introduced. It has to be formulated and legislation drafted as part of another move down the road towards more effective 1276 city policies in the older areas, on which the Bill is a useful measure but only a first step.
In this spirit, I hope that my hon. Friend will accept that it is not necessary or desirable technically to have the new clause, and that we can continue to work on these ideas with the clear intention to introduce the more radical legislation that we both want.
§ Mr. Douglas-Mann
With some reluctance I shall adopt my hon. Friend's suggestion. I emphasise that I do not accept that this proposal is not necessary or desirable, although I accept that it is not practicable at this stage. The time scale of getting the housing in housing action areas and much wider areas into municipal or housing association ownership is immensely important. This stock is diminishing fast. Every month that passes in which that stock is allowed to diminish means less and less housing to rent. However, with the constraints within which the Government are operating and in the light of what my hon. Friend has said, I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.