§ VISCOUNT BUCKMASTER had the following Notice on the Paper: While accepting the present necessity for the restriction of rent, to call attention to the manner in which the Rent Restrictions Act of 1915, as subsequently re-enacted, operates inequitably towards those whose property is still controlled by its provisions; and to move for Papers. The noble Viscount said: My Lords, I beg to move the Motion standing in my name. In doing so, I am only too conscious that many of your Lordships have far wider knowledge and experience of this matter than I have, but, if I feel some reluctance on that account, I hope that none is necessary in defending the rights of those who own house property. It would in my view, if I may say so with respect, be an unfortunate day for this country if an apology were needed for defending in your Lordships' House the rights of any section of the community where in- 934 justice is involved. I may perhaps add that my personal interest in this matter is very slight indeed.
§ In putting the facts before your Lordships, it will unfortunately be necessary to make some reference to the law. I shall be as brief as I can, and therefore I shall present the case only in broad outline. Rent was first controlled by an Act of 1915, which was repealed and reenacted in an amended form by the Act of 1920. This Act controlled property not exceeding £105 rateable value in London and, I think, £78 elsewhere. It fixed as the standard rent the rent payable on August 3, 1914, or, if the house were not then let, the rent on the last letting. It gave power to make certain increases of rent if structural alterations or improvements were made, amounting to 8 per cent. per annum on their value. If the landlord paid the rates, he was entitled to charge any increase in the rates. He was also entitled to put 15 per cent. on the net rent, and to add another 25 per cent., making 40 per cent. in all, where he did the repairs.
§ By the Act of 1938, decontrol was extended to houses in the higher range of values—that is to say, houses exceeding in rateable value £35 in London and £20 elsewhere. The last Act—and then I have finished troubling your Lordships with these Statutes—was the Act of 1939, which carried the principle of control much further, extending it practically to the limits of the Act of 1920, so that once again 98 per cent. of our houses are controlled. It also repealed the provisions for decontrol. This is the point to which I am endeavouring to take your Lordships. It follows, therefore, that those owners of property in the lower range of values— that is to say, up to £35 in London and £20 elsewhere—if they never obtained possession of those properties, have never been able to decontrol their houses or to adjust their rents to an economic basis, and they are tied in their standard rent to a figure fixed nearly thirty years ago. It is with those houses only that I propose to deal.
§ The position of the owner of property of this kind has never been an easy one. Many of your Lordships, like other people, may have accepted it as a social obligation, taking pride in providing homes for the people and keeping them in a proper state of repair. Others of humbler means, 935 however, have sought to find in property of this kind an investment which would bring them some small but secure income in their declining years. The position of the first class of owners has now become, I think, intolerable, and the position of those of the second class is, to say the least of it, unfortunate, for the demands made on the owners of property are great, and seem to be ever growing. The Housing Acts, 1930 to 1936, have greatly increased the standard of maintenance. It is right that they should do so, but the demands are heavy and are not easily satisfied out of the rents where these are small. Again, there is the War Damage Contribution. As your Lordships know, no relief in regard to Income Tax is permissible in this connexion. Whilst in the case of damage by enemy action it is true that the local authority may do firstaid repairs to render the house habitable, it is none the less true that under the War Damage Act the landlord may find himself liable for other repairs up to a value of £5, and that is an amount not so easily met when we are dealing with rents expressed in terms of shillings.
§ On what basis are the rents fixed in the cases with which we are dealing? We have to go back to the period of the last war, when cottages were let sometimes at 2s. and sometimes at 2s. 6d. a week. No matter what they were let at or why the rent was fixed at that figure, that remains to this day the standard rent. If, however, the house was not let, but was in the possession of the owner, as I understand the position we have then to go back to the last letting. Here we have a curious state of affairs. We are not then necessarily concerned with the time of the last war, or with the time of the Boer War; we may conceivably have to go back to the Crimean War to fix the standard rent, because in such a case there is no limit of time at all. Whatever your Lordships' views about that may be, you will, I feel sure, think it wrong that no consideration has been given to the surrounding conditions at the time that the rent was fixed. The landlord may, out of kindness or compassion, have fixed the rent at an exceptionally low figure, yet as a result of his leniency he is penalized ever after.
§ To show by one or two examples how the Statutes operate, I would take the 936 case of a man who owns controlled property which he has let at an inclusive rent. Now he has to pay much more for his coal, and far more for his service, yet he cannot increase his rent in any way whatever. I might perhaps read to your Lordships something from a letter which was sent to me this morning, showing also another way in which these Acts operate. Briefly, the writer states that he owns three ten-roomed leasehold houses, the standard rent of which was £40 per annum. He states that one of these has been taken by the borough council as a warden's post at an assessment of £46, and that the top floor has been re-let for the benefit of the Council —not a very happy position for the landlord.
§ Is it to be wondered at that under these conditions houses are falling into disrepair and decay at the very moment when every habitable house that we have is needed? This process of decay is progressive. As your Lordships are aware, if a gutter, for example, is not repaired, the moisture spreads to other parts of the fabric and so the process of decay goes on. I ought perhaps to have made it rather clearer to your Lordships that repairs are at present quite impossible. I do not know how much costs have risen since 1914, but they have risen very largely since the present war began. Speaking from memory, and omitting quantities, I believe timber has risen from £18 to £55, tiles from somewhere round five guineas to £15, and nails from 17s. to £2; so that for the people who own these properties, even if they can get the materials, the question of repairs is quite impossible. There is this further difficulty, too, that when they do wish to repair their property, they also have to pay for inferior materials at enhanced cost; and again, they may, owing to shortage of materials, be forced to substitute a more expensive article, when it is not needed. For example, they may put in a tiled sink instead of a stone one, but when they do that they are not allowed the 8 per cent. increase for improvements permitted by Section 2 of the Act of 1920.
§ Nor is it unreasonable to suggest that some added rent should be paid. I think your Lordships will agree that the standard of wages throughout the country has risen greatly, and that houses the occupants of which were collectively 937 bringing in £3 or £4 a week before the war now find themselves in a position in which every member of the family is a wage earner, and they may well have £15 to £20 a week coming into that house in wages. In regard to the proper value of property of this type I see that local authorities who build, I believe with a double subsidy, one from the Government and one from the local authority, charge a rent of 8s. 6d. or 10s., to which rates have to be added. In addition to the increased value of the tenant's earnings, there is another matter in which the position of the tenant has improved. The local authorities, owing to war conditions, have been obliged to close their eyes to the overcrowding provisions of the Housing Acts. As a result, the tenant takes in lodgers. Now, lodgers are not subject to the Acts. If the tenant sublets, however, under Section 7 of the Act of 1923 the landlord will be entitled to a 5 per cent. benefit of the sub-letting. But the tenant in many cases knows the law and takes the other course. It is easy to see that these lodgers cause added wear and tear to property, and the landlord may find himself with no reward at all, having to pay for repairs to oblige the lodger—not a very enviable position. It is not altogether surprising, therefore, that when owners of property of this type are fortunate enough to get possession they should be tempted either to leave it empty —in which case they at least know the worst—or to furnish it, and without regard to local demands, without consideration of the people in the country, to let it furnished. It is true that in such cases they are still subject to certain restrictions, but they are then outside the main provisions of the Acts. One can imagine their relief on finding themselves in that position.
§ If in this hasty and imperfect review of the position I have seemed over-critical of these Acts, I hope that your Lordships will not feel that I resent the principle which underlies them. I do not. Few of your Lordships dislike control by Government or interference with private enterprise more than I do, but at the same time I accept without reserve the necessity for rent control during times of national emergency or acute housing shortage. But if I accept that principle, I do say that these Acts as they stand at present are harsh and in some cases unjust in their operation. As for a remedy, that 938 is not so easily put forward, certainly not in the time at my disposal. I can only suggest that the landlord might be allowed, in regard to an unsatisfactory tenant, the same powers of eviction as are now enjoyed by local authorities. In regard to rent I would not myself favour a flat percentage increase. I feel that this might in some cases operate harshly upon the tenant. Rather would I seek the establishment of rent courts charged with the task of determining the economic rent in the locality in which they operate, having due regard to the circumstances prevailing in that district. I hope your Lordships will not feel that these demands are unreasonable, and I hope my noble friend who will reply will certainly not feel that they are lightly to be rejected. I beg to move for Papers.
§ LORD JESSEL
My Lords, you will all agree that we have had a most lucid exposition of the working of these Acts. The noble Viscount who made such an eloquent and clear speech spoke from one point of view—that of the landlord. I am speaking from the point of view of the local authority. Local authorities do not get much sympathy, but they are a useful portion of the administration of this country, and we have been asked by the Minister of Health to inquire into the present difficulties and help as far as possible in their solution. Owing to the fact that so many houses have disappeared, and also because so many houses are suffering from want of repair, there is a great difficulty in housing, especially among the poorer sections of the population. As I say, the Minister of Health has asked the local authorities to help. They are only too ready to do so, and, especially in London, I believe, all the boroughs have complied with the request and have set up committees of inquiry.
It is a very difficult question because the local authorities have hardly any power at all to remedy what may seem to the tenants or to the local authorities to be injustices. In the first place, there is much difficulty in getting information. The local authority have power to institute proceedings in the event of certain offences under these Acts. For instance, service of note of increased rent containing a statement which is false; demanding premium or giving pecuniary consideration in addition to rent; demand- 939 ing rent for a furnished letting which is extortionate; use by the landlord of a rent book which does not comply with the regulations made by the Minister of Health, and so on. In practice very little information comes to the local authority, and one difficulty is that they cannot help very much. As regards unfurnished lettings, if the notice of increase of rent does not follow the prescribed form, the tenant need not pay the increase. The people, however, often agree to pay either because they believe the rent is within the lawful amount, or because they have no information to check the accuracy of the standard rent. That is one big difficulty. Then the landlord cannot be required by the local authority to produce the evidence. Thus, if complaints are received, the Council is unable to help, and the tenant naturally hesitates to go to the County Court. He is frightened because he might not be able to get other accommodation. There is the other difficulty to which the noble Viscount has referred, and that is with regard to "extortionate" rents. What is extortionate rent? The term is a very vague one. Rent must be very excessive before it becomes extortionate; it therefore all depends on the circumstances. Then, as regards furnished lettings, there is no security at all against eviction. There again the tenant prefers to pay increased or extortionate rent rather than suffer the risk of being turned out.
For these reasons I hope something will be done, and done shortly. I put down a question a little time ago drawing attention to this subject, and the noble Lord, Lord Snell, said there would be an inquiry into the matter shortly. I asked him when, and he said he could not say; but since that time the Minister of Health in another place has told us that a Departmental Committee is going to be set up. I believe I am correct in saying that since that statement was made in another place on July 22, the names of the Departmental Committee have not been published, nor the date when the Committee is going to operate. The whole question bristles with difficulties. The law is very uncertain. Local authorities are put in a very awkward position. As the noble Viscount has said, owners are extremely dissatisfied with the situation. In ordinary times these tenants under the Rent 940 Restrictions Acts are very difficult to dispose of when you want to have a big development of property. My mind goes back to when there was a flood near your Lordships' House, and Westminster City Council wanted to clear out all property which had been damaged by the flood. We could not make any development at all because all the tenants were under the Rent Restrictions Acts. Sixteen acres quite close to your Lordships' House could not be developed, and it was only by getting an Act passed through Parliament that we were able to deal with the problem. The ground landlord, the Duke of Westminster, came to the rescue, and agreed with the Council that he would pay any extra cost incurred by the tenants because of the change from the old dwellings to the new. You do not come across people like that every day, and that makes it very difficult.
I will not take up any more of your Lordships' time. The matter has been very ably discussed already, but I do hope the noble Lord (Lord Snell) will be able to assure us that something will be done, and done soon, that this Departmental Committee will get to work very quickly, and that whatever conclusions they reach will be put into force without further delay. The noble Viscount has done a very good service in raising this question again. It has not been lost sight of either by local authorities all over the country or, as the noble Lord knows very well, by members of another place. From the point of view of the tenants, the landlords, and the local authorities I earnestly hope some legislation will soon be passed putting these matters on a proper footing.
My Lords, I wish to add just a word with regard to the agricultural cottage, although I know many members of your Lordships' House are more competent to speak from that point of view than I am. It is a great mistake, as I am sure everyone who lives in the country knows, to say that as a rule the country landlord does not look after his tenants. He does. He takes a great deal of care, and does the best he can to house them properly. I know one member of your Lordships' House who, within the last twenty or thirty years, along with his father, has spent over £100,000 on cottages which bring in no return at all. There are, of course, a few owners of country cottages who possibly "sweat" their tenants, but it is a very 941 rare thing. Putting it on its lowest ground, it does not suit people to do so. The present position is that, with the increased cost of building, a cottage which used to cost £600 now costs £1,000, and under the law it cannot be let for more than 3s. a week. It requires a very little calculation to see what that means. One would expect on an expenditure of £1,000 to get in the ordinary way £30 a year, but you are not allowed more than £8. In addition the landlord pays Schedule A taxation, the rates, and for repairs. In the days when agricultural labourers were only getting 30s. or 35s. a week it was a very close thing, and nobody quarrelled with their having these cottages at such low rents. But now, when their wages have increased by a very considerable sum, and there is talk of more, it is not unreasonable that some alterations should be allowed in the rent which the landlord is permitted to charge—not an economic rent, possibly, but something a little more nearly approaching it.
This matter may be urged not only on the ground of equity but also on the ground of expediency. What is happening, and what will continue to happen unless some alteration is made, is that owners of cottages will sell them, as they easily can do, for a very much higher freehold price, and the agricultural labourer, who is the man who ought to be living in them, will be crowded out. I am sure that that is not wanted and I would like to ask the noble Lord a specific question on that point. Do the Government wish the private landowner to build cottages or do they not? because if the Government wish him to build cottages they must envisage something approaching an economic rent. As an instance of the sort of thing that is happening, the noble Lord behind me has spoken of a local authority taking over a cottage, paying a very low rent for it and then reletting one floor at a sum that would recoup them for the whole of their rent.
Remedies have of course many elements in them which require careful consideration, but if it were possible for some small proportion of the labourer's wage, say 20 per cent., to be set off against the rent of his cottage, something in the way of indemnity to the owner of the cottage might be achieved. I hope your Lordships will not think that I am pressing the claims of landlords against the agricultural worker. That is not the case in 942 the least; but one does want to have the agricultural worker living on what might be called an economic basis of rent, not upon a charity rent, and one wants the agricultural population to be kept in the country and not turned out by people who come down and convert cottages into bungalows without contributing in any way to the benefit of the countryside.
§ LORD SNELL
My Lords, the noble Viscount, Lord Buckmaster, has raised a question of some importance in itself and of very great interest to many people, both landlords and tenants, and no sort of apology was needed from him for having brought the matter to the attention of your Lordships' House. The complaint that the noble Viscount made, as I understood his speech, was that the law as it now stands operates inequitably towards the owners of controlled properties.
§ VISCOUNT BUCKMASTER
May I interrupt the noble Lord for one moment? There are two sorts of property, that which is controlled by the 1939 Act, which I was not discussing, and that which was never decontrolled from the beginning.
§ LORD SNELL
The general statement I think stands that the noble Viscount's complaint is that property owners of one kind or another are subjected to certain inequities owing to the law as it now operates. In regard to that complaint I have at once to say that I do not propose to contest the general accuracy of the noble Viscount's statement, but your Lordships must remember, and I call upon the noble Viscount himself to remember, that it is equally true that if some form of rent restriction did not exist the results would operate inequitably towards countless rentpayers in small houses. Therefore the probability is that no law that is passed by Parliament operates with complete equity towards all people. We legislate on the broad principle of the general good and we cannot legislate, as it were, for individuals. Let me take two illustrations. If we have unhappily to provide for acute famine relief we have to provide a general ration and we cannot consider the claims for a special dietary until the main need has been satisfied. Or take again the question of education. Our aim is presumably to provide a basic minimum instruction for all, but that too 943 leaves a sense of inequity to those of us who are deprived of the advantages of a higher systematic education. That is to say, the law must deal, as I understand it, with the general good and we are so imperfect that no law that we can pass is free from the possibilities of inequitable pressure upon one section of the population or another. We arc frequently compelled to pass amending legislation when the most glaring anomalies can be dealt with.
That is the position, as I understand it, in regard to the matter which the noble Viscount has brought before your Lordships' House. Let us for the moment assume that there had been no Rent Restriction Acts. It requires very little imagination to realize what would have happened. Rent charges would have increased until first the very poorest and then a quickly mounting number of people would be able to retain their homes only by underfeeding and under-clothing and by restrictions in education and in other matters. This does not mean, however, that the Acts have not imposed hardships upon property owners such as the hardships to which the noble Viscount has called attention, but the object of the Acts is to prevent the inflation of house rents during a period of acute housing shortage, when the building of houses has practically ceased and when thousands of homes have been destroyed through enemy action. When the Rent Restrictions Acts were introduced in the last war it was expected that the need for restriction would be only temporary, but as events proved it took much longer to produce houses than was at that time foreseen and lower-rated houses have remained controlled.
On the outbreak of the present war the scope of the Acts was widely extended and now they apply to all houses of a rateable value in London of £100, in Scotland of £90 and elsewhere of £75. The control of rent is effected by fixing as a maximum the rent that was paid on a specified date plus certain permitted increases and by giving the tenant security of tenure. The relative date for houses which have been subject to control throughout is August 3, 1914, and for houses which became controlled or re-controlled on the outbreak of the present war September 1, 1939. The permitted increases 944 are (a) 8 per cent. of the cost of any structural alterations or improvements carried out by the landlord since the house became controlled; (b) the amount of any increase in the rates payable on the house if the landlord pays the rates; (c) 15 per cent. of the net rent; and (d), where the landlord is responsible for the whole of the repairs, 25 per cent. of the net rent. "Net rent" means the standard rent minus the amount of rates payable by the landlord. Items (c) and (d) are not permissible in the case of houses brought into control in 1939, but are together known as the 40 per cent. increase authorized in 1920 following the recommendation of the Departmental Committee which investigated the operation of the Acts. That is how the matter actually stands to-day.
The scheme of control is based on the principle that rents should not exceed those payable on certain dates. Therefore the scheme of control would be jeopardized, to say the least, if increases were allowed from time to time to meet any additional financial obligations imposed on the landlord. It has been represented to the Minister that among the burdens bearing heavily upon landlords of controlled properties are, first, repairs; secondly, War Damage Contributions; and thirdly, national taxation. In regard to repairs it is undoubtedly true that costs have been increased; on the other hand, restrictions of labour and material have prevented a great many repairs from being done. Therefore the actual hardship has not meant payments out of landlord's pockets to a vast extent.
My noble friend Viscount Mersey asked what the Government wanted private landowners to do. I do not accept as a personal outlook on this matter the generous tribute which the noble Viscount, Lord Buckmaster, paid to the landlords when he said that they fixed their rents by compassion. I believe other motives frequently enter into the settlement of what the rent should be. But the point of the noble Viscount, Lord Mersey, as I understand it, is that it is no use building houses now if the rent is to be restricted to 3s. per week, a rent nominally paid by the agricultural community. But very few individual owners can now get the necessary licence to build new houses and if they are fortunate enough to be able to build one the rent is not restricted to 3s. The standard rent is the rent at which the house is first 945 lot and the owner can fix that for himself. In regard to War Damage Contributions and new taxation, I have to say on behalf of the Minister that these matters do not come within his control and he is not responsible for them. When the War Damage Act was passed it was quite clearly intended that the contributions under it should not be passed to tenants on short leases and the Act protects tenants on leases of seven years against increased rents. So the position now is that representations have been received by the Minister of Health from both owners and tenants that the Acts operate inequitably in certain respects.
The report which was recently made to him by a conference of representatives of associations of local authorities and of the London County Council pointed out that the difficulties which arise under the existing schemes are considerable and that these difficulties will increase as the war continues and go on increasing after the war until large numbers of new houses have been built. The report concluded that action was therefore necessary, but recognized—and I am sure your Lordships will agree with this—that rent restriction questions always rouse acute controversy, and recommended that an Inter-Departmental Committee on the lines of the Committees which have previously considered the subject should be set up at once to review the whole question. It was because of this, and because of the fact that they realized that a decision on rent control will have a fundamental effect on house building, and that such decision must be taken before the end of the war so that private enterprise can see just where it stands, that the Government authorized the Minister of Health to announce on July 22 their decision that an Inter-Departmental Committee should be set up by the Minister and by the Secretary of State for Scotland. Consultations as to the constitution of that Committee are now proceeding. It will be set up shortly and will no doubt take evidence from all concerned in this matter. The debate which has arisen on the Motion of the noble Viscount has served a useful purpose, but your Lordships will, I am sure, agree that the wisest course at the present time will be to await the report of the Inter-Department Committee which will be set up without delay.
§ VISCOUNT BUCKMASTER
My Lords, I confess to a considerable feeling of disappointment at the reply of my noble friend. Your Lordships listened to me so generously that it would not be right if I were to detain you now, but my noble friend, if I may say so, appears to have misunderstood what I have said. I was dealing only with houses controlled before the present Act. Their rents are based on the rents charged on August 3, 1914. To fix a rent on the basis of the rent charged on September 1, 1939, is a very different matter. Those who have property controlled by the old Act would be very glad to exchange. I am surprised that my noble friend should have sought to confuse the two. I have the greatest respect for him and his political ability, but I am sorry that he should have suggested that I thought landlords always fixed rents on grounds of kindness or compassion. I never suggested any such thing. What I did suggest was that where a landlord had been kind, had been generous, had been lenient you do not say, "We will treat you with some sympathy, some consideration." You say nothing of that kind, but you say, "Because you have done that, for ever afterwards you shall be punished for it." As for the cold comfort of an Inter-Departmental Committee— which will be set up when I do not know, the recommendations of which no one can know and whether they will ever be accepted no one can guess—I will leave your Lordships to draw your own conclusions. But I confess, if the noble Lord will allow me to say so, to a very great sense of disappointment and dismay concerning the answer he has given. I beg to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.