HC Deb 21 May 1976 vol 911 cc2009-18

Motion made, and Question proposed, That this House do now adjourn. —[Mr. Thomas Cox.]

4.1 p.m.

Mr. Roger Moate (Faversham)


Mr. Alexander W. Lyon (York)

On a point of order, Mr. Deputy Speaker. I am sorry to intervene in the Adjournment debate of the hon. Member for Faversham (Mr. Moate). I have put down Question No. 9 for Written Answer today as a priority Question. As I understand the system of priority Questions, the answer must be given on the date on which the Member asks for the answer. The answer is of some significance for the debate that will take place on Monday, but I still have not received an answer from the Home Office. I was wondering, Mr. Deputy Speaker, whether I am correct in my interpretation of the rules and, if so, whether there is any way in which the Home Office could be persuaded to give me an answer at the earliest possible moment, and before the debate on Monday.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

I am under the impression that if the hon. Gentleman reads his Hansard tomorrow he will receive the answer. Mr. Moate.

Mr. Moate

The subject I wish to raise on the Adjournment concerns the charges imposed on owners of chalets on holiday sites. I shall say a few words about the background which has caused me to raise the matter in this way.

My constituency of Faversham includes the Isle of Sheppey. For many decades the Isle of Sheppey has been a favourite holiday area for thousands of Londoners who have found it a convenient, attractive and economical seaside resort to which they could escape quickly from the metropolis. This has resulted, as in many other holiday areas, in the growth of a large number of caravan sites and chalet sites. These sites have provided homes for many people who could not otherwise afford regular holidays, including many in the low-income group and many pensioners.

Although difficulties have now arisen to which I shall briefly refer regarding some sites, it is only fair to say that very happy conditions have prevailed on the majority of sites. It is only fair to pay tribute to most site operators, who have provided excellent facilities and reasonable security to the tenants and owners of chalets, creating a happy atmosphere for the tenants on their sites.

As I say, some difficulties have now arisen. I want to feel that the Government are sufficiently aware of the problems—they are real problems—to ensure that others do not suffer as some have suffered who have come to the Isle of Sheppey, and to ensure that reasonable protection—I emphasise the word "reasonable"—is available to those who sometimes part with very large sums to purchase a fixed chalet on a holiday site.

We are familiar with the Acts which have provided considerable security of tenure for people's rented homes. These holiday homes clearly do not come within their scope. We are also familiar with the Mobile Homes Act 1975, which provided security for permanent residential accommodation. Neither are we talking about that on this occasion. We are concerned now with holiday homes, and I do not think anyone would suggest that such dwellings, particularly those constructed of materials which are clearly not permanent, should merit the same sort of security as other forms of homes. It is clear to me, however, that those who have purchased chalets in the past are unprotected to an unreasonable degree.

The situation which brought all this to a head occurred at a camp called the Southbank Holiday Camp. Until 1974 the situation was quite happy. But the site was then sold to a company which immediately tried substantially to increase the charges. I referred the matter at the time to the Department of the Environment and the Department of Prices and Consumer Protection. It was clear then that, although the Price Commission was anxious to help, it was difficult for it to take any effective remedial action.

In 1976 the site changed hands again and was purchased by a company called Sheppey Investments Limited. The situation can best be described by quotations from letters sent by that company to the tenants. One letter said: We are very aware of your lack of security on the site as we are informed that until now you have only been granted annual licences. Another letter said: We therefore propose to issue a 15 year lease, at a premium. This lease will support a value of £1,200.… Many chalets have recently changed hands, well in excess of this figure with no security. Under the present licence arrangement the landlord may terminate all licence agreements immediately, and require vacant possession of the site. The letter goes on to offer a 15-year lease at a cost of £450 plus a survey fee of £50 plus an increased ground rent of £95 a year.

It was understood that if the tenant failed to accept he would have to quit the site and receive a payment of £150. It is interesting, but incidental to the argument, that the purchaser of the site would thus have achieved about £100,000 plus an increased income from the higher ground rents he was establishing, which was a clever operation. I am not suggesting that what he was doing was not absolutely within the law or that he was acting improperly. The point to grasp is that some of these tenants had already, perhaps only a year before, paid out substantial sums to buy a chalet on the understanding that their continuing obligation was simply to pay whatever charges were agreed annually with the site operator.

The people there had paid a substantial sum and were suddenly presented with a demand for another £500, and risked losing their property or being told that they could take their chalet away because the chalet was theirs. That, however, was clearly an impractical proposition. These people paid out sums of money and bought a chalet with no long-term security. It is reasonable to argue that people should be more careful with their money and take proper advice and not enter into such agreements, but a fairly easy-going approach has been rather traditional to the holiday business and many people who should have acted more prudently thought that they were on sufficiently safe ground in paying out substantial sums.

While people must accept responsibility for their actions, there is a strong case for consumer protection in many areas. Even if one buys a motor car on hire purchase, the Government dictate the form that the agreement should take. There is a case here for stressing that there should be model agreements so that if people pay out hundreds or even thousands of pounds the agreement they receive in return will follow a proper form which has been legally approved and offers reasonable protection.

Widespread publicity followed the receipt by the 200 chalet owners of the letters. This was right, because some people were put into an unreasonable position. Many people who had no resources were caused a great deal of anxiety and suffering. In the majority of cases they have accepted the terms, and with 15-year leases there is greater security, but security could have been obtained without the suffering which was caused to many people and without the damage which was caused to the image of the holiday trade.

On a number of occasions I have taken this matter up with the Government. The replies have been helpful and forthcoming. I should like to believe that the Government will take some action short of legislation, because I believe that we can achieve what we want without legislation, to ensure that there is greater security for these people who are paying out substantial sums. Such action can be taken by the Department of the Environment co-operating with the Director General of Fair Trading. It is not only the absence of security which worries these people. It is also the immense area of doubt about the ability of the site operator to impose annual charges without much control. I hasten to add that the vast majority of site operators operate quite happily in full agreement with their tenants, but the terms of the letter in this case with regard to annual charges are that the annual licence fee for ground rent, or whatever it is called, can be set by the site owner's own surveyor and that his decision shall be final and binding.

If the site owner is able to say "This will be the annual charge next year. This will be the licence fee. This will be the ground rent. This will be the service charge. This will be the fee for membership of the club, and we insist on club membership as a condition of your tenancy", an unreasonable landlord could impose such pressure upon a tenant that the tenant's position would become untenable and he might have to quit the property, for which he had paid a substantial capital sum.

The Government should press site operators to have a model agreement. I should like to think that this can be done by co-operation between the Under-Secretary's Department and the Department of Prices and Consumer Protection. If the Government were to take on board the need to get a model agreement, and if tenants and site operators generally determined not to proceed unless a model agreement applied in respect of their site, it would be a major step forward.

We also need to ensure that there is fairness in the assessment of annual charges. Everybody is subject to inflation—site operators no less than anyone else. Reasonable charges must be imposed. I suspect that at present a site operator can impose charges that give a chalet owner very little option.

It is not sufficient to say that reference can be made to the Price Code and the Price Commission, because that is not necessarily a permanent institution. Even the Government's intentions with regard to the Price Code are a little uncertain. The Price Code might not be in existence in a year's time. There needs to be longer-term certainty about the arrangements. A model agreement, to which I hope the Minister will give encouragement, would contain provision for an arbitration procedure—some system of reference to an outside independent body such as that which I believe is provided for in the Mobile Homes Act.

I hope that it will be agreed that I have described a situation that requires action. People have suffered unnecessarily, I am confident that if the Government will listen to this case sympathetically and undertake thoroughly to investigate the whole area to see whether action should be taken, a tidying up operation might result without the necessity for legislation, and that would be good for the holiday industry and for site operators. It would maintain the good image that, generally. these people have helped to create and it would help to ensure that hundreds of thousands of Londoners and people from other towns could continue to take full advantage of the fairly cheap holidays that have been made available through the existence of chalet areas in the coastal towns adjacent to our major cities.

I hope that the Minister will look at this matter sympathetically and consider the possibility of appropriate action.

4.15 p.m.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)

I am grateful to the hon. Member for Faversham (Mr. Moate) for drawing attention to the problems that have been arising in connection with the holiday chalet sites in his constituency. I assure him that I shall read very carefully what he said, and if there is anything constructive that we can do we shall certainly do it.

These problems represent a new variation on a familiar theme—that of what I might perhaps call mixed tenures, which are mainly found on mobile home and caravan sites, but, as we now discover, can be found on chalet sites as well. The essence is that the occupants own caravans or chalets, but rent the plots or pitches from the site owners. The rents they pay may include service charges, insurance premiums, or ground rents—or a combination of all three—and I understand that there is sometimes some doubt as to the exact status in law of some of these payments.

The occupants on some of these chalet sites appear to have been finding that these rents are rack rents, with all the overtones that that word carries. The occupants cannot move elsewhere, because the demand for plots or pitches is greater than the supply and they either have to accept the site owners' terms or forfeit their investment.

It might be helpful if I said a little about the present legal position. It may seem surprising that a Minister from the Department of the Environment should be replying to this debate. The hon. Member for Faversham has previously been in touch with my hon. Friend the Under-Secretary of State for Prices and Consumer Protection, since the whole subject of holidays and tourism falls to Ministers who reside in Victoria Street rather than in Marsham Street.

The position is that the Fair Trading Act 1973, which set up the office of the Director General of Fair Trading, applies at present only to prices and charges made for goods and services. It does not apply to rents or premiums paid under tenancies or leases of land, unless they include identifiable elements for services. The same goes for the Price Code, which was laid down under the Counter-Inflation Act 1973 as extended by the Remuneration, Charges and Grants Act 1975. The code applies to prices and charges made for goods and services, but only to rents where a service charge is included, and then only to the service charge.

The great majority of rents are, of course, rents for houses, business rents, or agricultural rents. The problem of a rent that is neither a rent for a dwelling, nor a business rent, nor a farm rent is a relatively new one. I need not remind the House that elaborate legislative codes, including provisions for security of tenure and for rent fixing, had to be developed many years ago for residential, business, and agricultural tenancies. The question now is whether we are going to have to develop yet more codes to deal with buildings let for holidays, or find some other way of dealing with them.

I understand that the hon. Member for Faversham is not proposing that occupants of chalets should be given full protection on the lines of that which the Rent Acts give to tenants of dwelling-houses. They do not have this protection, because the Rent Acts specifically exclude holiday lettings. I believe that there are planning restrictions that preclude the chalets in the Isle of Sheppey from being used except for holiday purposes. In any case, there is no letting of a dwelling, as the building is owned by the occupant. The hon. Gentleman is suggesting, instead, that the machinery that has been developed in the world of consumer protection to regulate trading standards and practices should be adapted in some way to cover the terms on which plots for holiday chalets are let.

I must say that there seems much to be said for that suggestion. Leaving aside the technicalities of the law, many people would regard occupation of a holday chalet as being more of a consumer transaction, even though a large capital sum is involved, than something like a tenancy of a permanent home. An apposite analogy—the hon. Gentleman mentioned the car owner—would be with the car owner who has invested a lot of capital in a good-quality car which he might expect to use for many years. If the manufacturers' agents refused to carry out servicing or to supply spare parts except on very onerous terms, he would be faced with the same dilemma as that which faces the occupants of the chalets to which the hon. Member referred. Everyone would, I think, agree that it would be a proper object of consumer protection legislation to try to bring the agents and the manufacturers to behave more reasonably.

The difficulty, as I have already explained, is that, under the law as it stands, consumer protection legislation does not extend to rents, leases, or tenancies of land, and these are outside the scope of the Fair Trading Act 1973 or of the Price Code, and it would require legislation to bring them in.

I am afraid that I can offer no promises about future legislation. Nevertheless, I can assure the hon. Gentleman and his constituents that Ministers in both the Department of the Environment and the Department of Prices and Consumer Protection will take note of what he has said today, and of the papers that he has sent to us, and that the Government will be watching what goes on and will be ready to consider the case for action if necessary.

The evidence about the practices of site operators that we have been collecting for the purposes of the mobile homes review, which includes monitoring of the working of the Mobile Homes Act, will no doubt help with the wider problem of other types of mixed tenures. The office of the Director General of Fair Trading is participating in the review, and he has also been looking at similar problems that have arisen with holiday caravan sites.

I cannot pretend that we yet have any final answers for mobile homes, holiday caravans or chalets, but I can give an assurance that if we do not find a solution it will not be for want of careful consideration of the facts and the issues involved.

I repeat that I am grateful to the hon. Member for Faversham for giving me this opportunity to outline our thinking about this distressing problem, and I hope that what I have said will be of some reassurance to his constituents. I say again that we shall read carefully the report of the debate this afternoon and see whether there is anything constructive that we can do to help.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes past Four o'clock.