HC Deb 24 February 1975 vol 887 cc200-13

Lords Amendment: No. 9, in page 7, line 7, leave out "paragraph" and insert "paragraphs".

Mr. Kaufman

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. George Thomas)

With this amendment it will also be convenient to take the following Lords amendments:

No. 11, in page 7, line 18, at end insert: (bbb) any deterioration after the material date in the amenities of the locality (including the disappearance of any of them) other than a deterioration attributable to any act or omission of the landlord or a superior landlord or a predecessor in title of the landlord or a superior landlord; and No. 12, in page 7, line 21, after "(3) (bb)" and insert "and (bbb)".

Mr. Kaufman

The effect of these amendments is to make Clause 9 work in both directions. Under the clause as amended rent officers and rent assessment committees will be required, in fixing fair rents, to take certain action—[Interruption.] The hon. Member for Yarmouth (Mr. Fell) has graced us with his presence. I hope he will continue to grace us with his silence. [HON. MEMBEHS: "Oh."] Rent officers and rent assessment committees will be required in fixing fair rents to disregard not only provisions of and improvements in neighbourhood amenities since the material date to which the landlord has contributed nothing, but also deterioration in or disappearance of such amenities for which he is not to blame.

Mr. Bruce Douglas-Mann (Mitcham and Morden)

I wish to oppose these amendments. [HON. MEMBERS: "Oh."] On Report amendments were tabled to require the rent officer in assessing a fair rent to disregard improvements in the locality. There is an apparent—and I submit only an apparent—equity in making the provision operate in both directions so that one should equally disregard the deterioration in the locality. I submit that this is a false analogy.

One finds the situation where a tenant gets into a specific house and after houses opposite are pulled down and the area is turned into a park a number of richer people may wish to live in the house. Should such a person have to pay a higher rent because there is stronger competition to live in the house? I submit that the answer is "No".

For this reason I supported the amendments in the Bill as it left the House, but it is not a fair analogy to say that if the tenant moved into a house because there was a school round the corner, or a shop at the corner of the road, when the benefits for which he had contracted have disappeared, he should not be entitled to a reduction. The question is whether the tenant should be entitled to say, "I wanted this house because it had these amenities".

When an amenity has disappeared it is reasonable for the tenant to say that he is entitled to have a rent reduction. When the matter was discussed in another place the withdrawal of transport services from a locality was the example which was given. That is a serious ground for contending that the rental values in an area should be reduced. That should apply if a tenant has to travel great distances without public transport facilities or if there is a decline in the adequacy of the shopping facilities. Those are the facilities for which tenants would look when moving into an area. In effect, they were the covenanted facilities. If they disappear it is reasonable to argue that the rent should be reduced. If a benefit accrues for which the tenant had not looked and which he may not have desired—for example, there is frequent gentrification—I do not think it is reasonable that the rent should be increased because of that. Rental values may go up but the amenities the existing tenant wants may have disappeared.

I favour the provisions in paragraph (1)(bb) but not in paragraph (1)(bbb). It is unfortunate that we have to refer to them in that way. I accept the taking together of the two paragraphs, but the whole clause is now becoming so complex and unsatisfactory that it would have been preferable if the initial proposal had not been introduced.

From the very beginning Section 46 of the Rent Act imposed almost impossible problems on rent officers in trying to determine a fair rent in circumstances in which one of the factors which clearly would normally be taken into account in assessing the rent has to be disregarded. As we know from the Francis Report and from other investigations, and particularly from the previous report, they have evolved a mode of operating the provisions of the Act. That has been settled over the years. We now, however, find in recent House of Lords cases—principally the case of Mason v. Skilling—that it has been accepted in determining a fair rent that the rent officers and the rent assessment committees are entitled to have regard to the capital value of the premises and to consider what would provide a reasonable return to the landlord on his investment. It was further decided that regard should be paid to the return that could reasonably be expected on the capital value of the premises with vacant possession.

Then there arose the situation in Palmer v. Peabody Trust in which it was held that the fact that a tenant of a housing association has no security of tenure should be disregarded. In short, we are having a series of decisions from the courts which are reinforcing the pattern of rent assessment committees in hoisting rents and the basis upon which they are determined higher and higher.

I submit that what is needed is not so much further qualifications and sub-qualifications to Section 46 of the Rent Act but new patterns of selection for rent assessment committees. We do not want the committees, which by their constitutions are inevitably dominated by those who have a specific interest, to be engaged in raising property values generally.

If there is someone who makes his living from commission on sales of property, it is inevitable—and I say this without in any way suggesting that he is acting improperly—that he will tend to be advantaged by rental values rising. It is reported to me that not only in London but all over the country rent assessment committees, as distinct from rent officers, are substantially increasing rent levels while the courts, particularly in these recent decisions, have been reinforcing the decisions of the rent assessment committees.

11.30 p.m.

I had hoped that the effect of the paragraph as it was on Report would be to put at least some check on the justification to go on raising rent values in areas subjected to gentrification. If one is not to be allowed to argue that the amenities of an area have deteriorated, we shall find that these provisions are at best a nullity and at worst provide nothing more than a licence for an even more rapid acceleration in the levels of rents.

Mr. Frank Allaun

My hon. Friend will remember that in Committee and on Report Labour Members were critical of the Bill for failing to restrict rent increases in the private landlord sector, but that, as a very slight concession to us, it was provided that a rent officer should not take account of the fact that the rents of surrounding property had gone up and so increase the rent. That concession went a very little way towards satisfying us. Is not even that slight concession now being removed, because although rents are prevented from going up, they are also prevented from going down?

Mr. Douglas-Mann

I entirely agree. I think that in practice not only that little concession will be taken away, but the tenant will lose far more, because he will not be able to complain about loss of the amenities for which he looked in the locality.

Although the landlord will not be able to charge an old-age pensioner more rent just because an ice-skating rink has been built around the corner, that old-age pensioner will not be able to claim a reduction of rent because the local shop on which she relied for her food supplies has gone; nor will the other tenant who relied on a bus service that has now been withdrawn and who chose to live in that specific house just because of that bus service. There is a logical distinction between the two cases.

I urge the Government, if it is not too late for them to do so, to reject the amendment.

Mr. Michael Latham

I had not intended to intervene in this debate and it is for the Minister to reply to his hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann). However, the hon. Member's remarks about rent assessment committees should not go entirely unchallenged.

I listened very carefully to what he said. He used the word "advantaged" He said that he did not impute any improper motive, but that it was to the advantage of the rent assessment committee, because they included chartered surveyors and so on, that there should be steadily rising levels of property values and rents and so on. It does not matter how he meant that to be interpreted, for the only meaning in which it can be interpreted is that they will judge the level of rents that they will impose according to their professional and commercial advantage. I regard that as a most unfortunate remark to be made by any hon. Member, particularly when there is no evidence to support it, and he made no attempt to do so.

Mr. Douglas-Mann

I am grateful for the opportunity of making it clear that I am not imputing anything improper to the members of rent assessment committees. I am suggesting that the fundamental attitude of mind of somebody whose income depends on a steady increase in property values is to cause them to think that, in the same way as what was good for General Motors was good for the country, what is good for landlords is beneficial for the community at large. I am not suggesting that rent assessment committees are acting improperly, but that it would be preferable if they did not have that opportunity.

Mr. Latham

I do not think that the House has been greatly advantaged by that intervention. I respect the hon. Gentleman's expertise in these matters, but I listened to him with some gloom. Rent assessment committees and rent officers have a statutory duty under the Rent Act—that was the Act piloted through the House by the late Richard Crossman—to carry out their extremely obscure duties under Section 46 and to define a fair rent under the terms laid down by Parliament. That is their duty. They have no duty other than to define a fair rent under the terms laid down by Parliament. I am far from heartened, despite the gloss put upon it, to hear the hon. Gentleman use the word "advantage". The House should defend public servants who are doing their best to do the job laid down by Parliament and not impute to them, however indirectly, motives which have nothing to do with their statutory duties.

Mr. George Cunningham (Islington, South and Finsbury)

I will not follow the point made by the hon. Member for Melton (Mr. Latham). I support my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) in opposing the Lords Amendment.

If the amendment is carried, the effect will be that, for example, any great increase in traffic along the road on which a house stands will not be allowed as a factor to diminish the rent when it comes up for review, any decrease in parking facilities would not be admissible as a ground for reducing the rent, and I presume that the giving of planning permission for a fish packing factory nearby would also not be a ground for permitting a reduction in the rent. Yet these matters and all the other illustrations which one could give would be relevant for the purpose of establishing rateable value. Therefore, in my view it would have been logical to allow them to affect the rent. Such matters are relevant to the market price of a property. In the most extreme or even moderate case one could, to some extent, have the rental value of a property higher than the equivalent of its market price because the market price would go down with the disamenity.

I accept that the point that I have just made is equally applicable to the amendment introduced by the Government on Report in the opposite direction. I did not participate in that debate, but I have been reading it tonight. I find myself in agreement with the former leader of the Islington Borough Council, the hon. Member for Northampton, South (Mr. Morris), who opposed the introduction of that amendment.

I agree with my hon. Friend the Member for Mitcham and Morden that we must have both or neither. I should prefer that we had neither. It is possible, and my hon. Friend has done it, but difficult to separate the two. The Rent Act 1968 in its principle provision relating to thise matter, Section 46, makes it quite clear that rent officers and rent asssessment committees are to take into account the locality. Indeed, part of the wording refers to the age, character and locality of the dwelling house". "Locality" can be relevant only for the physical atmosphere of the locality—the amenities which are generally available in it. What we are now saying is that rent assessment committees are to take into account the locality except those features of it which are not the result of the action of the landlord, whether positive or negative.

Very few features of a locality are the result of the action of the landlord. Parking spaces, road traffic, fish factories, and so on, which are nice or nasty about an area, are the result either of communal action or of individual action. They are not under the control of the landlord, and certainly they are not decided by the landlord himself. Rent assessment committees which have an impossible task but which have got into certain habits—not to say ruts—in how they decide rents will have to find a new rut to get into, because we have mucked up the old rut good and proper with these two amendments.

The problem tonight is which is it better to do: to have logic on one side and have both these provisions in the Bill, which will clearly disadvantage many tenants in my area which is subject to gentrification, or throw the logic out of the window and admit the amendment which was introduced by the Government in this House, only because it is not before us tonight, and reject the amendment introduced in the Lords and accepted by the Government in a fit of absence of mind.

My intention is to vote against the Lords amendment on the ground that I should rather give up a bit of logic than see tenants suffer a disadvantage in an area such as mine.

Mr. Hugh Rossi (Hornsey)

I propose to intervene only briefly, because of the lateness of the hour, to invite my right hon. and hon. Friends to support the Government in approving the amendment. I do so with some reluctance, because I believe that the introduction of a concept such as amenity into the calculation of rents is a complete nonsense and an absurdity that will cause nothing but trouble for rent officers and rent assessment committees in the future. It is a concept which it is scarcely possible to quantify, and it will lead to a great deal of heartache on the part of landlord and tenant alike in trying to determine how this will affect them.

Having accepted the situation, as the Government did in their Bill before they sent it to the Lords, that amenity has to be taken into account, in one direction, when considering rent, it is only logical and right that that factor should be considered also in the other direction. If an improvement of amenity is to affect the rent, it follows automatically that the reverse of an improvement in an amenity must also affect the rent.

Given this wretched, miserable concept which the Government have put in in a moment of aberration we are forced, in the circumstances, to support them on this amendment.

Mr. Kaufman

I am grateful to the Opposition for supporting us in our aberration, and I should like to take this opportunity to welcome the hon. Member for Hornsey (Mr. Rossi) back to the Opposition Front Bench as the spokesman on housing.

My hon. Friend the Member for Mitcham and Morden (Mr. Douglas- Mann) in opposing the amendment presented the House not so much with a criticism of the amendment as with a critique of the fair rent system. I have a good deal of sympathy with him in that critique, and these are matters to which we shall have to return later, but, meanwhile, it seems to us, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) said with his customary trenchancy, that we are in a situation which is logical both ways or neither way, but not in the middle.

My hon. Friend the Member for Islington, South and Finsbury pointed out how constituents could be compensated for the deterioration of amenities by applying for a reduction in the rates.

11.45 p.m.

Mr. Arthur Latham (Paddington)

The question is academic. In an abstract sense, because of our knowledge of the background to the amendment, we can accept the case. However, it may well be that the Lords were somewhat obtuse in the matter. The Government introduced Clause 9 to meet a set of difficulties that they could find no other way of meeting. Is not there a similar case to be made to show that taking account of the deterioration of amenities in some localities has led to excessive rent reductions, in the same way as taking account of improvements has led to excessive rent increases? Since I know of no evidence of that kind, is there any justification for the amendment, other than accepting this as an academic and abstract exercise, without any knowledge of the housing problems behind it?

Mr. Kaufman

My hon. Friend is right. The original amendment was introduced in response to a case which he made and which the Government accepted. An amendment may be introduced to deal with a specific case but it becomes general legislation. The original amendment will help to resolve the problems of my hon. Friend's constituents in St. Mary's Mansions, but this is not simply a St. Mary's Mansions' amendment. It will be available for people all over the country to take advantage of. We cannot introduce hybrid amendments. However, this amendment fits in with the concept we introduced in an effort to make a concession to my hon. Friend.

My hon. Friend the Member for Islington, South and Finsbury was right in saying that we should include neither or both of the concepts. We believe that, just as the landlord should receive no benefit from the appearance or enhancement of amenities to which he has contributed nothing, neither should

he suffer through the diminution or disappearance of amenities where he is not to blame.

Question put, That this House doth agree with the Lords in the said amendment:—

The House divided: Ayes 407, Noes 42.

Question accordingly agreed to.

Lords Amendment: No. 10, in page 7, line 15, after "landlord" insert: or a predecessor in title of the landlord or a superior landlord".

Mr. Kaufman

I beg to move, That this House do agree with the Lords in the said amendment.

This is a technical amendment. Its purpose is to make clear that improvements in the amenity of a neighbourhood at the expense of a predecessor in title of the landlord or a superior landlord are not to be disregarded in the determination of a fair rent. A predecessor in title is a previous owner of the interest which now belongs to the landlord. If the previous owner spent money on improving the amenities of the neighbourhood then the present owner should not be denied a rent reflecting this.

Lords amendment agreed to.

Subsequent Lords amendments agreed to.

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