LIMITS ON RENT INCREASES (Hansard, 11 June 1980)

§ Mr. Millan
I beg to move amendment No. 249, in page 33, line 7, after ' Act ' insert 'and in relation to rent agreements (whether made before or after the commencement of this section) where no rent is registered under a regulated tenancy'. The first subsection of clause 36 repeals sections 7 to 9 of the Housing Rents and Subsidies (Scotland) Act 1975. As the Minister knows, we are opposed to the repeal of these provisions which provide for limits on rent increases in the private sector and phasing arrangements when rent increases take place. Clause 36(2) provides, however, certain amelioration. It allows the Secretary of State to impose maximum increases over an annual period by order. I notice that this applies only to tenancies at present covered by section 7 of the 1975 Act—regulated tenancies where a fair rent has been registered. It does not apply to section 8 of the 1975 Act where the rent is payable under a rent agreement. I believe I am right in saying that the provisions about the maximum increase of £78 a year equally apply.
The 1975 Act involved complicated drafting, but the effective result was the same. The £78 increase applied to rent agreements as well as to registered tenancies. Subsection (2) will apply only to registered rents and not to rent agreements. The purpose of my amendment is to add the protection to rent agreements where there is no rent registered under a regulated tenancy. If the Government defend subsection (1) of this clause by saying that there is some protection under subsection (2), I cannot see why such protection is not extended to rent agreements where there is no regu- 726 lated tenancy. I hope that the Minister will accept the amendment.

§ Mr. Rifkind
This amendment relates to a situation where the tenant and the landlord have freely and without statutory control reached agreement on the appropriate rent.
The right hon. Member for Glasgow, Craigton (Mr. Millan) said that under the 1975 legislation the limit for other forms of tenancy was applied to this form of rent agreement. He is correct about that, but it is worth pointing out that 1975 was the only example when there was any statutory interference in rent agreements reached between landlords and tenants.
The Government's view is that it is inappropriate to have statutory rules and controls on rent agreements, because by definition they are voluntarily agreed between landlords and tenants. If a tenant is unhappy with any proposal put to him by the landlord and if there is any disagreement, it is possible for either party to go to the rent officer or the rent assessment committee to get a fair rent registered. Therefore, there is an absolute protection for both parties in the event of a disagreement in a manner which ensures that one party cannot impose on the other terms which are unacceptable to him.
If we are to continue with rent agreements on a voluntary basis, and if the parties to such agreements are content with what has been arranged, they should be free to have the agreements implemented. If, on the other hand, either party, but particularly the tenant, is unhappy, he can apply to have the fair rent system applied. That matter is preserved under this legislation.
For that reason, I hope that the right hon. Gentleman will agree that, although there was the one exception to the normal rule, it is more sensible that there should not be statutory intervention in rent agreements which are voluntarily reached. I cannot recommend the House to accept the amendment.

§ Mr. Millan
I do not find that a satisfactory explanation. One difficulty in this area is that, although legally what is at issue is a voluntary agreement, in many circumstances the agreement is not in the real sense voluntary in that the landlord and tenant are on all fours and have equal rights and interests in reaching the 727 agreement. Often a tenant who is desperate for accommodation may commit himself to undesirable terms and be unwilling to exercise his legal rights in the legislation. The established precedent of rent increases being controlled in the 1975 Act is being removed without any protection for those who are subject to rent agreements as distinct from regulated tenancies.
Even if the Government had wanted to draw a distinction, which the Minister is drawing, between these agreements, it would still be possible under this clause for the maximum amount in rent agreements to be specified at a different level from the maximum amount in regulated tenancies. I regret that the Government are not willing to do that.
I hope that the Minister will think about this matter again. What I have suggested is logical in terms of what the Minister is doing under the clause. If the end result were different limits for the one category—perhaps higher for one than for the other—I would regret that, but it is a possibility. I should prefer some protection to be written into the legislation. However, I beg to ask leave to withdraw the amendment.

§ Mr. Rifkind
I beg to move amendment No. 157, in page 33, line 11, leave out 'after the commencement of this section ' and insert 'with the relevant date for the purposes of sections 40 and 41 of that Act or with any subsequent anniversary of that date'.

Mr. Deputy Speaker
With this it will be convenient to take Government amendment No. 158.

§ Mr. Rifkind
These amendments are designed to specify that the 12-month periods for which the maximum annual increase is to be prescribed date from the date of registration and each subsequent anniversary of that date. The Bill in its previous form required the clarification that these amendments provide.

§ Mr. Rifkind
I beg to move amendment No. 159, in page 33, line 22, at end add— '(3A) For the purposes of subsection (2)(b) above "rental income" does not include sums paid to the landlord in respect of the provisions of any services.'. This is a minor technical amendment designed to make it clear that the service element in any rent is exempt from the maximum increase limits. That means that it is recoverable in full in the same way that it is exempt from the current phasing limits.

§ Mr. Rifkind
I beg to move amendment No. 160, in page 33, line 29, at end insert— '(5) The 1971 Act shall be amended in sections 19(2), 21(2)(b), 31(1), 31(4), and 43 (3)(a) by substituting for every reference to any of sections 7 to 9 of the 1975 Act a reference to section 36 of the Tenants' Rights, Etc. (Scotland) Act 1980.'.

Mr. Deputy Speaker
With this it is convenient to discuss Government amendment No. 161.

§ Mr. Rifkind
These are minor technical amendments to substitute for references to the rent increase phasing provisions of the 1975 Act references to the rent increase provisions of clause 36.