LANDLORD AND TENANT (WAR DAMAGE) (AMENDMENT) BILL. (Hansard, 17 July 1941)

§ THE LORD CHANCELLOR (VISCOUNT SIMON)
My Lords, this Bill comes to your Lordships' House from another place, and is, as its title shows, a Bill to amend the Landlord and Tenant (War Damage) Act, which was passed into law at the very beginning of the war; indeed, I think it was passed a day or two before war actually broke out. That Act was based on a most elaborate and thorough investigation of the problems with which it was to deal, an investigation over which Mr. Justice Uthwatt presided. That Act, the principal Act, dealt with the relations between landlord and tenant in cases where premises suffered from war damage. I dare say your Lordships will remember that, among other matters, it did three principal things. It removed war damage from the ambit of any covenant to repair; war damage was no longer included in any covenant to repair, and the provisions under which war damage to premises becomes the responsibility of the State are of course contained in that Act
The second thing which the principal Act did was to confer on the tenant of premises, if those premises became unfit owing to war damage, the right to disclaim the tenancy. As a result of that disclaimer the tenancy might come to an end 838 and there would be no further responsibility on the tenant to pay any rent. There was, however, a complementary provision that the landlord might there-upon exercise the opportunity given by the Act to avoid disclaimer by giving a counter-notice, and the result of that counter-notice was that the landlord undertook to make the premises fit after the war damage which had been suffered, and so the tenancy would continue, although the tenant would pay no rent until the landlord had effected the repairs. That was the second of the provisions in the main Act to which I must refer.
There was a third provision in the Act, which gave the tenant, if he preferred it, another option; as an alternative to disclaiming his lease, the tenant had the right to give notice to retain the premises. In that event it lay upon the tenant to effect the necessary repairs, and he was relieved of paying rent until he had done so. As your Lordships will appreciate, and as many of our fellow citizens now know by experience, this is a very important option; because, if the premises are held at a rent which is substantially less than a rack rent, then, even though they have been knocked about by German bombs, it still may be the preferable course for the tenant to hold on to the premises. He might be unwilling to surrender the advantage of the lease, and it might therefore suit him to accept the burden of the repairs and keep the lease alive.
That was the nature of the principal Act, under which a vast number of matters have been adjusted since the war began. I believe that on the whole these provisions are working well in the case of leases of a certain length of term. In point of fact, however, by far the greater number of tenancies in this country are of very short term—a week, a month or a quarter—and I think that experience shows, and indeed a little reflection will show, that the arrangements made in the principal Act are not necessarily quite suitable for these short tenancies. A weekly tenant, for example, does not want to go through the rather elaborate form of giving a notice to disclaim, because all he has to do is to give notice to end his tenancy and it will end in a week. There are other considerations which show that these tenancies should be rather differently treated. The object of this Amending Bill, to which I am asking 839 your Lordships to give a Second Reading, is to deal, amongst other things, with these short tenancies. In Clause 1, subsection (10), your Lordships will find that a "short tenancy" is defined as one which can be determined by not more than three months' notice. For such short tenancies there is a new provision made, and it is this, that if the house has become unfit for habitation owing to war damage, no rent is to be paid by the tenant so long as the house is unoccupied and so long as it remains unfit.
The humble citizen whose modest four-roomed or six-roomed house has been smashed by an enemy attack cannot live there for the time being. He has to move elsewhere—to friends or where he can—and under this Bill, as long as the premises remain unoccupied, and as long as they remain unfit, there is no rent to pay. If he wants to come back, assuming the tenancy continues, he will be able to do so as soon as the premises have been rendered fit for habitation either by the landlord or, as in a great many cases it will be, by the local authority. Questions at once arise: What do you mean by "fit"? Who is going to decide which particular house is fit for habitation, having regard to the injuries it has suffered? In Clause 1, subsection (4), there is a provision that a house shall be deemed fit that is to say, shall be deemed to have been made fit— if it has been repaired to such extent as is reasonably practicable at that time, having regard to the circumstances prevailing in the locality, and sufficient to render the dwelling-house reasonably capable of being used for housing purposes. … The phrase, "having regard to the circumstances prevailing in the locality," points to this. If you have an urban area that has suffered with exceptional severity from a series of enemy attacks, the extent to which small houses can be made all right again is likely not to be so high as if it were a country district where, perhaps, only a few houses have been damaged.
Moreover, by the Bill, the local authority may issue a certificate that the dwelling-house has been repaired to this extent. This certificate of the local authority is to be treated as sufficient evidence until the contrary is proved. The object of that, as your Lordships will 840 see, is to limit, as far as possible, disputes that are taken into the County Court. The local authority is a responsible body. It has its own officers and means of information. It maintains a standard which it thinks in the circumstances is reasonable, and upon its giving a certificate that the dwelling-house has been repaired so that it is now to be regarded as fit, that certificate will stand, the duty of paying rent will begin again, and the tenant will be expected to go back. That is all subject, of course, in cases where there is controversy, to the right of going to, and having the matter settled in, the County Court. There is a further proviso I should like to mention. The local authority also has the power to revoke a certificate it has previously given if it is satisfied that further repairs have now become reasonably practicable owing to additional supplies of materials being available or to a higher standard being now commonly attained. Again, it can revoke its certificate that the place is fit if the works of repair already carried out arc not maintained in a reasonably efficient state.
I have given your Lordships this much detail because it is a matter of very great importance, as to which your Lordships' House is just as much sensitive and concerned as any other representative body of people in the country, that we should frame our legislation on this most important matter so that it should really serve the needs and requirements of the poorer members of the community. The broad effect of Clause 1 is to secure, in cases where houses are let on short tenancies—a week or a quarter—that the tenant, who for the time being has had to leave his house because of war damage, shall pay no rent in the meantime, but to secure that as soon as the house is rendered fit for habitation, the tenant can return with a liability thenceforward to pay some rent, though it will not necessarily be the whole of the previous rent, because there will be cases in which a portion only of the house has been rendered habitable. That is Clause 1, and I hope I shall not detain your Lordships too long if I mention two other clauses, dealing with different matters which are of great importance.
The first of these is in Clause 2. This clause has become necessary owing to the enactment of the War Damage Act under which, as your Lordships know well, the War Damage Commission, when premises 841 have been smashed up, may, in their discretion, award either what is called a value payment, which is a sort of award if the house is not going to be rebuilt or repaired, or, on the other hand, a cost-of-works payment if the house is going to be repaired. That provision has created a serious difficulty in connection with the Landlord and Tenant (War Damage) Act. That Act gave to the tenant of the house which was rendered unfit owing to war damage, as I have said, a choice between disclaiming his lease or retaining his lease. When that provision was enacted, if the tenant decided to retain his lease, the expense of repairing the house fell upon the tenant. Under our War Damage code, the expense of repairing the house by means of a cost-of-works payment falls, not upon the tenant, but upon public funds. Cases, therefore, will arise—cases have already arisen—where a tenant is put in great perplexity because he does not know whether the War Damage Commission, when the time comes, will decide to make a cost-of-works payment or whether they will decide that the ease is one for a value payment. If they decide that there shall be a cost-of-works payment, that means that the tenant will get his repairs done for nothing, and this is a very strong inducement in many cases for retaining the lease. If, on the other hand, he is not to get the money to do it then that might be a reason why he should decide to disclaim, because value payments do not go merely to the tenant, and in any case would usually only be paid at the end of the war. As the tenant cannot know, he has the greatest difficulty in determining what to do. Clause 2 is a clause which provides for meeting that by giving what is called a conditional notice of retention—that is to say the tenant may give a notice of retention conditional on the making by the Commission of a cost-of-works payment in respect of the damage to the premises. I do not think your Lordships would desire me to go further into details on this point.
Lastly Clause 10 is a clause which deserves special attention. It deals with the case of ground landlords and ground lessees. Under the original Act, the principal Act, in the case of ground leases the ground lessee was treated as the owner, and even though the house which 842 was the security for the ground lease was seriously damaged, or destroyed it might be, by enemy action, the ground lessee had to go on paying the covenanted rent to the ground landlord. That was, therefore, an exception to the general rule which had been laid down, and on reflection it has been felt that is not a justified provision. The ground lessee may be forfeiting a very substantial rent as the result of the house that has been built upon the plot of ground having been destroyed and the actual tenant having been unable to pay his rent. The new provision is one which treats the situation created by enemy destruction of premises let on a ground lease as involving a loss in which the ground lordlord should shoulder a share. As I have said, the ground lessee himself may be faced with a very severe loss, and in substance Clause 10 gives to a ground lessee the same advantages as under the previous Act are at present available to lessees under ordinary leases and the further advantages that are conferred on all lessees by this Bill. Another reason for making this change which has faced those responsible for this complicated legislation is this. It is an extremely difficult thing to get a satisfactory definition of what a ground lease is. There are infinite variations and it is not easy to draw a line between a ground lease proper and a lease that is rack-rented. That difficulty disappears if the general rule is applied from one end of the scale to the other.
There are other provisions in this Bill which may interest your Lordships from one point of view or another, but the three matters I have mentioned are, I think, the cardinal points to which attention should be directed. I commend the Bill to the House because it is really necessary in these respects to amend the main Act. By taking this step we shall, I believe, considerably improve the machinery which has been devised to meet this difficult situation which, considering its novelty and the difficult problems which arise out of it, is one which has been most carefully and satisfactorily handled by Parliament in the previous Bill and now in this. I beg to move that the Bill be read a second time.

LORD PHILLIMORE
My Lords, may I trouble the Lord Chancellor with one small aspect of this Bill? I gather that ground lessees are to be placed in the same position as other lessees, and ground landlords, therefore, will also be in the same position as other landlords. Has the Lord Chancellor reflected on how this step relates itself to the proportion of the payment which the ground landlord has to make to the war insurance fund? The nearer the reversion may be the higher the sum payable by the ground landlord. There is a very steep gradation as a result of which, I think I am right in saying, the ground landlord may be called upon to pay 85 per cent. of the insurance premiums. What will be his position under this Bill when a considerable portion of the rent upon which he had relied to pay that contribution is taken away from him? Are the two matters not in some way connected, and, if so, have they a reaction one upon the other?

§ THE LORD CHANCELLOR
My Lords, as no other noble Lord wishes at this stage to speak, perhaps I may be allowed to say a word in answer to what has been put to me by my noble friend Lord Phillimore. I am speaking without the book and I am glad that there will be an opportunity in Committee, if the noble Lord so desires, of considering this particular matter further at that stage. But speaking merely from my impression of the legislation I think the matter stands thus. Of course the noble Lord is referring to contributions that have to be made to what has been called sometimes the Insurance Fund, contributions under the War Damage Act. He is quite right when he says the scale of contribution runs up very steeply according to the period which must elapse before the reversion falls in. That provision, I think, is contained in a Schedule to the War Damage Act. But is not my memory right when I say that there is no payment to the Insurance Fund and no contribution due in respect of the period when a house is still suffering from war damage? If my memory serves me aright, the contributions are subject to this, that you do not call for contributions in respect of premises that are for the time being in ruins. That is my impression, though it is a dangerous thing for anybody—especially for a Lord 844 Chancellor—to make shots in the dark. Possibly, therefore, the noble Lord will agree that it would be better for both of us to consult the actual text of the legislation, and, if necessary, the point should be dealt with on the Committee stage of the Bill.