§ 2.35 p.m.
§ Order of the Day for the Second Reading read.
§ THE LORD CHANCELLOR (VISCOUNT JOWITT)
My Lords, I rise to move that this Bill be now read a second time. This is a complicated and difficult subject, and I am afraid that, in order to explain it adequately, I am bound to make a rather long and dull speech. My function, however, is to explain to your Lordships as plainly as I can what this Bill does and what it does not do. The reform of the leasehold system and other aspects of the law relating to landlord and tenant have been very actively considered from time to time during the last eighty years or so. They raise many difficulties, not only of a technical kind, but also of principle—social and political principle as well as legal principle. A great deal of development of property under the leasehold system took place during the great industrial expansion of the middle decades of the nineteenth century, and since the ninety-nine-year lease was the commonest form of lease granted under that system, the question naturally becomes a very live one during the middle decades of the present century.
For this and other reasons, the Government decided, in 1948, with general agreement, to appoint a strong Committee to advise on all these matters in the light of present-day conditions. It fell to me to appoint the Committee and I was fortunate in obtaining the services of a very distinguished and diligent team. The easiest choice to make was that of Chairman. Our late colleague in this House, Lord Uthwatt, was preeminently suited for the task, and not the least of the misfortunes brought about by his untimely death was the loss of his leadership which the Leasehold Committee suffered when in the middle of their 442 deliberations. Fortunately, I was able to persuade Lord Justice Jenkins to take his place, and, as one would expect, he completed the task with great distinction.
The advice which the Government obtained from the Leasehold Committee was, as your Lordships know, by no means unanimous. They presented a Majority Interim Report with two dissentients, a Majority Final Report with a Minority Report which differed from it fundamentally, together with a Supplementary Report, another Minority Report and a Note by the new Chairman dissenting from the Majority Interim Report. It was not perhaps wholly unexpected to find that so important and complex a subject produced this diversity of counsel. What the Government confidently expected, and what they certainly received, was a thorough and painstaking review of all the problems which arose and a clear statement of the factors which should govern the choice between alternative methods of tackling them. It is, therefore, with really sincere gratitude that I acknowledge, on behalf of the Government, and I am sure on behalf of all your Lordships, the valuable services which this Committee have rendered.
The receipt of the Committee's Final Report last summer presented the Government with a very difficult problem. It was clear that any major reform in this field, whatever general principles it followed, would take a considerable time to put into the shape of a draft Bill. Hasty and ill-thought-out legislation on the topics involved would be worse than useless; nor is the subject one on which the main principles can be enacted by legislation and the details filled in by statutory instruments or by administrative action. There were, therefore, strong theoretical arguments for not attempting to legislate for a period of two years or so during which alt the details of the Government's proposals in the light of the Committee's report could be thoroughly threshed out.
But would this really have been a practicable course? Ground leases would be falling in all the time. The Leasehold Committee had pointed out that occupying ground lessees have no security of tenure upon the expiration of their leases, and one of their few unanimous proposals had been that this class should 443 have some kind of protection. At the same time, the strong sellers' market in business properties posed the problem of insecurity for business tenants, and this had so impressed the Leasehold Committee that by a substantial majority they recommended emergency measures in this field. Obviously, a good many tenants would find their terms falling in during the period when the permanent legislation was being prepared. Were they to be deprived by this accident of whatever protection Parliament might finally see fit to grant? The Government thought not, and therefore they took the decision which is embodied in this Bill—that is, to seek temporary legislation limited to two years, which would hold the situation until there had been time to produce permanent legislation in properly considered form.
I can fairly say this: It is generally agreed that permanent legislation of some sort will be necessary to deal in one way or another with long leases and with business tenancies, as well as with other aspects of the law of landlord and tenant. The Conservative Party, at their Annual Conference last October, passed unanimously a resolution which in terms recognised the need for action in these matters. So it is clear that whatever Government might find themselves in power would feel committed to introducing permanent legislation within the two-year period I have mentioned. If this is true, I think it is equally true to say that no Government could have held their hand and done nothing to meet the immediate situation created by the Report presented in July last by the Leasehold Committee, while long-term measures were being worked out. On reading the speeches made from the Opposition Front Bench during the Second Reading of this Bill in another place (the Second Reading was not opposed), I feel fortified in the view that, if the Conservative Party had found themselves in the position of having to take a decision following the presentation of the Report, they, too, would have felt bound to take early action on these particular points.
My Lords, after that rather lengthy explanation of the background to the Bill, I now turn to its actual provisions. The Bill deals with two different classes of property—dwelling-houses held on a long 444 lease (which is Part I) and shops, whatever the length of their lease (which is Part II). These two classes of property raise quite different problems, and their treatment under the Bill is quite different, too. Perhaps I may deal first with Part II, relating to shops, because that is a good deal simpler than Part I.
As your Lordships know very well, there is at present a considerable scarcity of shop property. One hopes that this situation will be progressively rectified, for example with the progress of reconstruction in our blitzed towns and cities, and in the building of new towns. But at the moment it is certainly possible for landlords to demand very high rents or impose other onerous conditions for the renewal of shop tenancies. I would not say for a moment that the majority of landlords succumb to the temptation, but the Government think it right in the public interest to extend a measure of protection to shop tenants who may be faced with these difficulties. The Interim Report of the Leasehold Committee proposed a scheme of protection for business premises which went a good deal wider than shops. We shall no doubt have to consider, when we come to the permanent legislation, whether new provisions giving greater security of tenure ought to be provided for the wider field, and there will, of course, be differences of view, not only about the width of the field, but also about the form of protection to be given. Meanwhile, however, the Government have considered that to enact new provisions on a purely temporary basis for business, professional and industrial premises generally might create a very considerable disturbance which would not be justified by short-term considerations. Part II of this Bill is therefore confined to shops only, and in this, as in other respects, it follows fairly closely the provisions of the Tenancy of Shops (Scotland) Act, 1949, which I am advised is working perfectly satisfactorily.
Your Lordships will see that Part II of the Bill does not give absolute security of tenure to tenants of shops. It provides that if a shop tenancy comes to an end within two years after this Bill has received the Royal Assent, no matter whether it is a long or a short tenancy, and if the tenant cannot come to satisfactory terms with his landlord, he may apply to the county court for a renewal of his tenancy. The county court is given 445 a fairly wide discretion as to whether to grant a renewal. We do not create by the Bill a presumption either in favour of renewal or against it. The court must decide in the light of the circumstances of the case, though Clause 12 (3) sets out a number of factors which, if the court is satisfied that they exist, operate to pre-vent the grant of a new tenancy.
The court also has discretion as to the rent and the other terms and conditions of the new tenancy. That means that if the rent under the expiring tenancy is now out of date—for instance, if it is too low in relation to the values now current for comparable premises in the neighbourhood—the court can fix a new rent which is neither extortionate nor derisory, but is reasonable as between the two parties in present circumstances, having regard to the other terms and conditions of the lease. The period of the new tenancy is not to exceed one year in the first instance, but if that year expires during the life of the Bill—that is, during the two years after Royal Assent —the tenant may go back to the court for another extension, again not exceeding one year. The intention of Part II of the Bill is therefore to hold the scales even as between landlords and tenants of shop property during the next two years. This will protect the tenant who is unfortunate in his landlord; it will do no harm to a good landlord and it will leave unprejudiced the question of what adjustment, if any, should be made by permanent legislation two years hence in the normal relationships between landlord and tenant.
I turn now to Part I of the Bill. This is more difficult, and also much more restricted in its scope. It deals with residential property held on a long lease, and by that I mean a lease granted for a term of years certain exceeding twenty-one years. What we have in mind, of course, is a ground lease, but it is difficult to the point of impossibility to find a satisfactory definition for a ground lease. An attempt was made in 1939, in the Landlord and Tenant (War Damage) Act, which did not prove to be very happy. We feel pretty sure that, in adopting the comparatively simple course of limiting Part I of the Bill to leases for more than twenty-one years, we are including everything we mean to include, and few, if any, cases which we do not. Leases of residential property for more than twenty-one years certain at a rack 446 rent must be exceedingly rare; if any there be, they are included in the protection given by Part I of the Bill, and I do not think any of us need feel that that will do any great harm.
But, my Lords, the Bill does not deal with all residential property held on a long lease which expires during the two-year period. The case with which the Government felt it really necessary to deal, in advance of permanent legislation, is that of the long lease expiring during the next two years where the house is actually occupied by the owner of the lease or a member of his family. Perhaps I may refer to him sufficiently accurately as an occupying ground lessee. Of course, ground leases which are on the point of expiry were probably granted sixty, seventy or even ninety-nine years ago, so the present ground lessee is pretty certainly not the original lessee, but his successor in title. He may be a descendant of the original lessee, or an assignee, or the latest of a series of assignees. But if he owns the long lease and is occupying, he gets the protection of the Bill. There is, of course, a great deal of residential property which is the subject of ground leases but which is occupied not by the ground lessee, but by a tenant or subtenant who rents the house at a rack rent. This kind of case is not affected by the Bill at all, except for one small special class to which I shall refer a little later.
There are some occupying ground lessees who genuinely believe that the house which they occupy is their own, though they pay a ground rent for the ground it is built on. This is particularly true where the house has been occupied by the same family for several generations and was originally built at his own expense by, say, the grandfather of the present occupant. These people feel it to be a great injustice that, on the expiry of a ninety-nine year ground lease, the house reverts to the ground landlord, who never contributed a penny either to the cost of its erection or to the cost of its repair and maintenance. There is no doubt, of course, that this view is quite wrong in law, and I do not at all mean to suggest that a man's ignorance of the law should be the measure of the protection which new legislation should accord him. Nevertheless, there is a case for considering whether the law, if it were to 447 take its course, would operate altogether in the public interest.
There are also many occupying ground lessees—perhaps the majority—who are in no doubt about their legal rights, but who feel that if they make a reasonable offer for the purchase of the freehold, the ground landlord ought to be under an obligation to accept it, or, at any rate, ought to be prevented from standing out for an entirely disproportionate price at the present time, when the general scarcity of housing accommodation has, quite fortuitously, strengthened the landlord's bargaining position. Others, again, feel that if they are willing to buy the freehold of a leasehold house which they occupy, they ought, as it were, to have the first refusal, and that it is not reasonable for the landlord to sell the reversion over their heads without giving them a chance to bid. On the other hand, some people feel with equal conviction that it would be wrong for the law to interfere more than it does already with the normal relationship between landlord and tenant, and with the free play of the open market, and. in particular, that it would be wrong for the law to impose a variation in an existing contract.
Your Lordships will notice that I carefully refrain from suggesting that any particular one of these points of view is either well-founded or ill-founded on its merits. The vote of your Lordships on the Second Reading of this Bill will not be a vote on the principle of leasehold enfranchisement in any of the numerous forms in which it has been proposed at different times, or yet on the question whether some other form of security should be given to the tenant while leaving the landlord in possession of the freehold. I merely emphasise that these are considerations which are exercising the minds of many people at the present moment and which will have to be settled one way or another by permanent legislation. That legislation may introduce a a system of leasehold enfranchisement or it may not; it may provide for some further security of tenure, either long or short, on the expiry of ground leases; it may do much, or it may do little. The only proposition I am making at the moment is that if the permanent legislation does introduce now safeguards or new security for occupying ground lessees, it would be very hard if those 448 whose leases terminate during the next two years were to be irrevocably excluded from any benefits which that legislation may enact. As I have said, the Government need time, as any Government would, to think out and to put into proper form their permanent proposals, and it would be unjust if the price of that quite inevitable delay were to be paid by those unfortunate people whose leases happened to expire during this particular period. That really is the case for providing temporary protection to occupying ground lessees during the next two years. And, if I may take the argument a little further, I think I can show that it is also the case for the particular method of protection which Part I of the Bill has chosen.
Two main considerations have governed that choice. The first is that whatever we do now must be in a form which will not prejudice the permanent legislation in any way. It must not make any particular solution to the permanent problem either impossible or inevitable; it ought not even to make any particular solution either more likely or less likely. The second is that if we are setting out to ensure that occupiers under ground leases expiring during the next two years shall get their chance of sharing in the benefits—if there are any benefits—of the permanent legislation two years hence, we must not spoil it by altering their status meanwhile. We cannot, therefore, provide in this temporary Bill for the rewriting of the expiring leases in a new form, because that would create a new set of vested interests and a new relationship between the ground landlord and the ground lessee which it would really be quite impossible, two years hence, to translate back again to the ordinary relationship on which the permanent legislation will have to operate. So the only solution which is consistent with the purpose of having a Bill at all is, simply, to "freeze" the expiring ground leases until the end of the two years. Then the permanent legislation, whatever it contains, will be able to operate in 1953, as between these particular landlords and lessees, exactly as it would be operating if it were ready for enactment in 1951, and exactly as it will operate in the case of long leases expiring after 1953.
There are one or two respects in which we think it right to modify the incidence 449 of the leases which we "freeze" in this way, and I shall come to them later. But, in principle, all that Part I does is to keep some ground leases in being without modifying their essential character as ground leases. Let me emphasise again that we are not here dealing with all ground leases which are about to expire, but with those few cases where the actual ground lessee, or a member of his family, is also the occupier. Let me emphasise, too, that even for them we are not imposing a two-year extension generally. That is only the extreme case. Where a lease expires during the two years after the date of the Royal Assent it is extended for the remainder of that two-year period.
I shall not attempt to deny that continuation at the existing ground rent does constitute some hardship to the landlord, who was perfectly entitled in law to expect the house to be delivered up to him on the expiry of the original ground lease, and who may indeed quite recently have bought the reversion with that consideration very much in his mind and very much reflected in the purchase price. But we have to consider here on which side the greater hardship lies. The interest of the landlord is, generally speaking, an investment interest, and the addition of two years or less to a term of ninety-nine years is not a very great matter. A ground landlord might often be perfectly prepared to let the tenant stay on for so short a time without asking for any very great consideration. The ground lessee, on the other hand, if he were not protected as we propose, would, in many cases, be on the street with nowhere to live, unless he were able to buy himself a renewal of tenure on terms which might well be very onerous to him.
Some people have suggested that the rent during the period of extension ought to be fixed by reference to the rateable value or something of that kind. I hope I have succeeded in showing that this would really be quite inconsistent with the purpose of the Bill, which is to enable this class of occupier to greet the permanent legislation—whatever it may contain—with the status of ground lessee and not with the status of rack-rent tenant. Some of your Lordships may be disposed to grant me that much, but to argue that, even so, there is no reason why, during the period of extension, the ground rent should not be increased— 450 remaining a ground rent, but a ground rent related to the conditions of to-day and not to those of ninety-nine years ago. That, I admit, is a more formidable objection, and I will frankly inform your Lordships that we did examine the possibilities of something along these lines. But we rejected the idea and I will tell your Lordships why.
We have got to keep open for the permanent legislation all the possibilities. One possibility is that the permanent legislation will provide for the extension of expiring ground leases without alteration of rent. That would, clearly, be prejudiced if we put up the ground rent in this temporary Bill. Another possibility is that the ground lease will be extended with provision for increase or modernisation of the ground rent. If that were part of the permanent scheme, then, obviously, the extent of the increase to be allowed under the permanent scheme would be very much prejudiced by the extent of the increase allowed in the temporary legislation. And this prejudicing is not on one side only, for the measure of increase allowed now might well have to be regarded not only as the least which could fairly be accorded to the landlord, but also as the most which could fairly be imposed on the leaseholder. So, really, we could not increase the ground rent now without, in effect, taking decisions about the contents of the permanent legislation, which is just what we are trying not to do. The simple "freeze" provided by this Bill is obviously a makeshift and temporary measure, which cannot prejudice anyone or anything. Quite apart from these considerations of policy, we found it impossible to devise a formula for increasing the ground rent which would do anything like justice without being altogether too complicated to be suitable for inclusion in a Bill with such a short life. The extension of the ground lease under this Bill will, after all, in some cases be for no more than a few weeks. Clause 1 of the Bill, therefore, provides that where a long lease expires during the two-year period and the ground lessee or a member of his family is living in the house at that date, the ground lease is continued for the remainder of the two-year period. Clause 2 extends the protection to cases where, at the date of the Royal Assent, the tenant or a member of his family is holding over in occupation of the house after the expiry of the lease.
451 The protection which the Bill gives, however, would be really illusory if we allowed the landlord to enforce repairing covenants during the two-year period. These covenants are, of course, a very important feature of the normal building lease and, particularly towards the end of the term, they really hang just as heavily over the tenant's head as the approaching end of his right of occupancy. Many tenants are in default of their obligation to repair and it is quite common for both parties to contemplate that at the end of the term the house will not. in fact, be delivered up to the ground landlord in good repair but that the matter will be adjusted at that time by a cash payment instead. Or again, the remedying of the dilapidations may be a factor in negotiations for a renewal of the lease: perhaps the landlord will agree to pay the cost himself in return for a higher rent, and so on. But whatever the result may finally be, the plain fact is that the existence of the repairing covenants, in a great many cases, does provide the landlord with a weapon which, if he chooses to use it, will enable him to bring the tenant's occupation to an end before the natural end of the term. It would be quite easy, therefore, for ground landlords to defeat the purpose of the Bill in many cases by forfeiting the tenancies during the two-year period under a repairing covenant. Clause 5, in general, prevents the landlord from en-forcing his right of forfeiture and postpones to the end of the extended lease his right to recover damages for breach of covenant. But we naturally preserve the landlord's right to forfeit on account of non-payment of rent, or failure to ensure or keep insured, or the use of the premises for illegal or immoral purposes.
I should imagine that your Lordships would be most anxious about the land-lord's position as regards repairs. Suppose he discovers signs of a serious subsidence of the fabric of the building or other symptoms which need to be dealt with at once if the value of the property at the end of the term is not to be seriously depreciated. Must he stand by and watch his property going to rack and ruin through the tenant's neglect? We have dealt with this in Clause 6, which gives him power to go in and carry out essential repairs himself, recovering the cost, in so far as is 452 just, from the tenant at the end of the extended term. We have also provided, in Clause 3, that the extended tenancy may be determined by the landlord if the tenant assigns or sublets the whole of the house. This again, I think your Lordships will agree, is a fair concession to make to the landlord, having regard to the intention of the Bill. What we want to do is to protect the occupying ground lessee's right of occupation. If he chooses to turn that uncovenanted benefit into cash and no longer to live in the house himself, then we do not think he ought to get protection.
The provisions I have described so far carry out the main purpose of Part I of the Bill—namely, to protect the occupying ground lessee. I hope that in describing them I have satisfied your Lordships that this Bill, as is proper in a temporary measure of this kind, is drawn very narrowly indeed and that the utmost care has been taken to restrict it to the very small class for whom immediate protection is needed. It will apply only in the case of ground leases which happen to expire during the next two years and where the present occupier of the premises himself holds a lease granted for a term of more than twenty-one years. It is, as I think your Lordships will concede, a very small group indeed, though not the less deserving for all that.
Now I come to Clause 7, which deals with the exceptional case to which I referred a moment ago. This is the case where the Bill affects occupiers other than occupying ground lessees. The problem to be dealt with arises out of a recent decision of the Court of Appeal in the case of the Knightsbridge Estates Trust Ltd. v. Deeley on the interpretation of the Rent Acts. As your Lordships know, the Rent Acts do not apply to a letting at a rent which is less than two-thirds of the rateable value of the dwelling house. That is to be found in Section 12 of the 1920 Act. I hope your Lordships will forgive me if, in this rather difficult matter, I call in aid those useful alphabetical abstractions, Messrs. A, B and C. Suppose a case where A, the freeholder, lets to B at a rent less than two-thirds of the rateable value and B sublets to C at a rack rent. Suppose, too, that the house is within the rateable value limits of the Rent Acts and that accordingly C is enjoying the protection of those Acts as 453 a statutory tenant of B. It had hitherto been generally thought that when B's tenancy came to an end, C would continue to enjoy protection as a statutory tenant directly under A. The decision in the Knightsbridge case was that he does not. I should like, if I may, to read an extract from the judgment of Lord Justice Asquith, as he then was. This is what he said:I agree that the result which I have indicated was almost certainly unintended. I agree that it is unjust, and that it does nothing to promote the objects of this body of legislation, which are too well known to need restatement here, but it seems to me an ineluctable conclusion when one considers the actual wording of these two provisions.Lord Justice Cohen agreed with that judgment and Mr. Justice Roxburgh reserved his opinion as to the intention of the Legislature, although he agreed with the result. That is the Knightsbridge case.
The Leasehold Committee thought that legislation should be passed to reverse this effect. That was one of the very few points on which they were unanimous. This is not a Bill to amend the Rent Acts, but it is a Bill to deal with any untoward effects which may result from the expiry of long leases during the next two years. We felt, therefore, that it was appropriate in this Bill to deal with the Knightsbridge type of case, in so far as it arises from the expiry during the next two years of long leases at rents less than two-thirds of the rateable value. That is what Clause 7 does. It is by no means an easy clause to read, but it works in this way: and again I use the symbols, A, B and C. It says that when B's long lease comes to an end, C will continue to enjoy against A any rights which he would have continued to enjoy against B. if B's tenancy had continued for the rest of the two-year period and had been vested in A. If B's tenancy had continued, C would have continued, of course, as a statutory tenant. Therefore, under the clause, he will continue as a statutory tenant of A. We do not actually extend B's tenancy—B disappears; we merely preserve for C the statutory tenancy which he enjoyed before B went. As for A, he will not, of course, get possession of the house, but he will get the rack rent from C in place of the ground rent he has been getting from B. Incidentally, I have spoken only of an occupier holding direct from the long lessee, but the clause is framed to work 454 however long the chain of lettings between the freeholder and occupier.
I am afraid that this will have seemed to your Lordships a very lengthy and involved exposition; but nevertheless I propose to lengthen it by emphasising a point which has, I think, led to some misapprehension. Some people have supposed that the clause goes a great deal wider than it actually does, and gives automatic security of tenure to any occupying subtenant at a rack-rent It does not do this: it only clears the lines, as it were, for the Rent Acts to operate, and it gives continued security of tenure only to an occupier who is already enjoying the protection of the Rent Acts before the expiry of the intermediate long lease. If the Rent Acts do not apply to the house—for instance, if its rateable value is above the Rent Act limits—C, the occupier at a rack-rent, will find that the clause does nothing for him. This is because his rights against B are purely contractual rights, carved out of B's own interest and expiring when, or immediately before, B's own interest expires. Contractual rights such as these the clause does nothing to revive.
I hope I have made it clear that Clause 7, though some people have thought that it has a very wide application, does in fact add only a very limited class of case to the beneficiaries under the Bill. Moreover, it is a class which hitherto has been generally thought to be already protected. There are a number of other provisions in the Bill, but they are of a minor or technical character, and I do not think I need trouble your Lordships with them now.
I should like to say two things in conclusion. First, I wish to re-emphasise that this Bill in no way predetermines the provisions of the permanent legislation, either in great matters or in small. The field is left completely clear, and anyone who seeks to find in this Bill any pointer to the contents of the permanent legislation, or who tries to found himself on any expectations which he thinks this Bill creates, is indulging in a quite unprofitable exercise. We have gone out of our way to frame this Bill in a form which does not create any new vested interests and should not create any particular expectations. Secondly, I want to assure your Lordships that when this Bill limits itself 455 to two years, it means what it says. In introducing the Bill in another place the Attorney-General promised—and I gladly repeat the promise to your Lordships— that the Government would introduce permanent legislation in time to take the place of this temporary Bill on its expiry two years after the Royal Assent. There is a lot to be done. Not only are there important and controversial issues of principle to be thought about, but also a great mass of technical detail arising for instance, from experience of the operation of the Landlord and Tenant Act, 1927. On these points we are, of course, particularly indebted for the valuable spade work done by the Leasehold Committee. The Government have, however, made special arrangements to ensure that all this work is thoroughly and speedily tackled under the direction of the Cabinet, and that is already going ahead. Unless, therefore, some altogether unforeseen circumstances intervene—by which I mean some such calamity as a world war, or even a change of Government—the Government are confident that they will be ready with their permanent proposals in good time.
I hope, therefore, that this Bill may be regarded rather as presaging controversies to come than as the occasion for any great controversy in itself. Behind its rather complex and technical provisions it is really trying to make three very simple propositions: first, that there is in this field a serious problem which requires treatment; second, that the problem is a difficult and complex one, and that its treatment, whatever its form, must take some time to prepare if it is to be satisfactory; and third, that while the appropriate permanent treatment is being worked out it is just to ensure by a sort of moratorium that potential beneficiaries are not prejudiced by the delay. I hope that, whatever differing views your Lordships may hold about what the permanent legislation should contain, we may all find it quite easy, without prejudice to those views, to unite in agreeing to those three propositions. I do not expect to carry your Lordships with me further than that at the present time. Nor am I attempting to do so, because that is really as far as I need go in inviting your Lordships to give a Second Reading to this temporary Bill. I 456 should merely add that there is a some-what similar Scottish Bill, which does not, however, contain Part II, since that is already part of the law of Scotland, and does not contain Clause 7, which deals with what I call the Knightsbridge case. For some reason which is not plain to me, the Scottish laws are so sensible that they do not have problems of that sort in Scotland. I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.— (The Lord Chancellor.)
§ 3.16 p.m.
§ VISCOUNT SIMON
My Lords, the speech of the Lord Chancellor will, I feel sure, have convinced most of your Lord-ships that this is both a very technical and a rather repulsive subject. We have had many occasions to admire the Lord Chancellor's skill in expounding a Bill, and although on the present occasion, in order to save time, he has spoken much more rapidly than he usually does, I think-that when his speech is examined in Hansard it will be found to be one more example of his remarkable powers of explanation. There is a second quality— if I may presume in the most friendly way to say so—which is sometimes shown in my noble and learned friend's speeches when he is introducing a Government measure. He creates a general feeling that everything he is saying is so reasonable, moderate and unobjectionable that one really is rather shy about getting up and making any criticism at all.
I will endeavour not to occupy too much time, and, therefore, will select only a limited number of points which I feel it is important we should weigh before we give this Bill a Second Reading—as I have no doubt we shall. The first point I would make is this. As your Lord-ships see, the Bill is divided into two important parts: the first is headed "Dwellings," and the second is headed "Shops." I am going to follow the order of the Lord Chancellor and take the second part first. But I would invite your Lordships to observe how different is the treatment which it is thought fit to give as a temporary measure to shops from the treatment which is thought to be appropriate in the first part of the Bill headed "Dwellings." To take first Part II, the shop part, that enables the tenant of a shop whose tenancy would expire within two years from the commencement of this 457 Act to apply to the county court for the grain of a new tenancy not exceeding one yearon such terms and conditions as the court in all the circumstances thinks reasonable…One of the most obvious of those terms would be fixing what is the appropriate rent for this additional extension, I ask your Lordships to bear that in mind, because when we turn to Part I we shall see whether or not the same method is applied.
As my noble and learned friend has pointed out, the provision in Part II has only a temporary effect. In that respect it resembles what is said in Part I, for if the new tenancy of not more than one year expires before the end of the second year period, then a further application can be made on behalf of the occupants of the shop, and the court will have the power to extend the tenancy for a further term not exceeding one more year. The all-important thing to bear in mind is that, under Clause 12, the decision reached by the county court, in the case of an application by the occupier of a shop, is one by which the rent is not necessarily the rent previously payable under the lease which is expiring, but is the rent which is felt by the court to be reasonable at the time. If I may say so, I think the Lord Chancellor was justified in saying, with regard to Part II of the Bill (he did not make the same boast about Part I) that its intention is to" hold the scales even as between landlord and tenant." So it is, and I think that in a few minutes we shall see why the same claim cannot be made for Part I.
There are, perhaps, one or two things which we shall have to consider in Part II. I conceive that this Part is framed on the view, which I should have thought right, that the shop tenant's primary need is for better security of tenure, rather than for compensation for loss of premises; and. further, that as the existing legislation does not give sufficient protection to the shopkeeper, who may have created a good will and who will suffer greatly if he has to go elsewhere, we should provide a further security of tenure for the time being, and then seek a final solution. One point which may arise is that, as this Bill is drawn, the decision of the county court judge as to what is the reasonable rent to be paid by the occupier of the shop for this additional period is not subject to any sort of appeal, and 458 yet the principles on which it is to be arrived at are not by any means fully defined. In a proper case I should sympathise if it were said: "We had better not go in for too many appeals." because there are many cases where that may be right. But when we are dealing with this subject, what is important is that there should not be a great diversity of decisions given by different county courts; otherwise every case will be litigated on the chance that the parties will get a decision on the lines most favourable to them. I should have thought that there was a great deal to be said for providing that there should be an appeal on this matter, so that a formula is established and authorised.
Another question which is likely to arise, and which was mentioned by the Lord Chancellor, is this: To what business premises should Part II apply? As things are at present, the Bill applies to shop premises occupied wholly or mainly for carrying on a retail trade— and that may be right; I am not at the moment indicating a view to the contrary. The question will arise, however, to what other premises it might apply. As the Bill is now drawn, Part II is not available, for example, to secure an extension of the tenancy of unlicensed premises, or of licensed cafes and restaurants, which may claim that they too will suffer if they have not some mitigation of the present law, because they may suffer from the need to change their situation. It is clear that factories, and premises not occupied for making profits, should not be covered; and they are not covered. Anyhow, those are details, and the only other observation I make about Part II (I do not think the Lord Chancellor mentioned this fact, though he knows it well) is that it differs from Part I in this way. In the case of Part II, the expiring tenancy may be of any length, even the shortest, whereas when we turn to Part I—as I am sure all who followed the Lord Chancellor or looked at the Bill know—whatever else may be said about this Part, it applies only to leases which in their original term were for more than twenty-one years.
If Part II were all that was contained in this Bill I do not suppose there would be a great controversy pending, although one may, perhaps, ask how it comes about that the Government have not 459 legislated about it earlier. The Lease-hold Committee were moved to make an Interim Report, an urgent Report— interim because of the urgency—on this very subject, and it was pressed by the late Lord Uthwatt as a most urgent matter twenty-two months ago. It is a pity that, as the matter was so urgent, and was not subject to much controversy, this time should have elapsed, with the result that a number of people who might well have hoped for this advantage find that they have passed out of the range of this proposal, and it is only now that we are passing it through Parliament. Subject to that, I think your Lordships will all be prepared to look benevolently and gratefully on the Government's proposals in Part II.
The Lord Chancellor then turned to Part I. With that charming command of conciliatory phrase which we expect from him, he was pleased to observe that Part I was "not so simple. "Nor is it. It contains far more controversial matter, although I fully recognise that here again we are dealing only with a temporary proposal, and it may well be that the threshing out of all these matters will occur later. On Part I, I myself should be disposed to begin by an observation which is certainly not hostile to the general purpose of Part I-We must not forget that when a long lease is just expiring the situation in which the lessee under that long lease now finds himself may be very different from the situation in which he found himself when he first accepted the lease. When he first accepted the lease there may have been a plentiful supply of accommodation and, therefore, when the lessee entered upon the long lease he may reasonably have reckoned that when his lease came to an end he would be able to find what he wanted else-where. I think that that is a much more telling way of putting the case for Part I, than to say that a great many people, when they took on a lease, never understood that it would come to an end. That is a state of mind which I cannot think is very common, especially in the case of people who actually bought the lease during their tenancy. I should have thought that the very first thing anybody buying that lease would want to know was: "If I do pay this price for it, how long will it last? "
460 Therefore, I prefer to say that there is now a great scarcity of accommodation; couples who want to get married have the greatest difficulty in finding a house or even a room. Supply and demand are quite out of line. I will resist the temptation, in this discussion, to inquire how far this disastrous situation has been created or aggravated by the Government's building policy, and by their refusal to encourage the private builder. Let us have a little pity on the author of this policy, who is not at the moment in the good books of the Cabinet. But that, I should have thought, was the justification for some well-thought-out provisions to meet the situation which no doubt, in view of this scarcity, faces a number of people whose long leases are expiring. There is this, however, to re-member—and I do not think that in discussing the supply of houses and protecting the existing occupier it always is remembered—that even if the present occupier, when he is coming to the end of a lease, is given a right to stay on, it means that somebody else who is looking for a house, who is in want of accommodation and who has been counting upon being able to get in, and who might like to take a lease on the property, cannot do so until a later date.
What, therefore, was the real difficulty facing those who have been considering this problem of longer leases—by which my noble and learned friend said, in substance, were meant building leases—which are now just running out? At first sight, it might have been natural to suppose— at any rate in the case of smaller houses —that the actual occupier was not in any real difficulty, because the Rent Restrictions Acts protect the occupiers of houses under the prescribed rateable value, both from eviction and from having their rents raised. But, of course, the explanation— as the Lord Chancellor incidentally men-tioned—is that the Rent Restrictions Acts do not protect a tenant if the rent that he is paying under his lease is less than two-thirds of the rateable value. In the case of a building lease, where the lease began with the letting of a piece of ground, maybe at a rent of a few pounds a year, and a house or a block of flats has subsequently been built on it, then, of course, the rent originally reserved by the building lease is probably a great deal less than two-thirds of the present rate-able value of the whole property. There- 461 fore, I concede that there is a problem here; and after the speech of the noble and learned Viscount I do not think that anybody will doubt that it is a difficult problem, and one which is well worth a. little attention in your Lordships' House, where we all wish to do what is fair and right, and not to allow ourselves to take one side as against the other.
Now, my Lords, what is the fair thing to do? I was interested to see whether, in the Leasehold Committee's Report any support was given for the proposition in Part I of this Bill, that if an extension, such as two years from the passing of the Bill, was given, the reasonable and right thing to do would be to continue the extension at the original rate of rent. I invite your Lord-ships to turn to, or make a note of, paragraph No. 107 on page 41 of the Report, in which dwelling-houses occupied by tenants holding under building leases at ground rents amounting to less than two-thirds of their rateable value, are discussed. The Report goes on:These tenants cannot in our view reason-ably claim renewal of their leases at the existing rents. …Clause 1 of this Bill flagrantly departs from that view. My noble and learned friend observed, and quite justly, that there are a great many varieties of view expressed in these Reports, but so far as this matter is concerned the view is that the fair thing would be, not to continue for two more years at the rent which was fixed perhaps ninety-nine years ago, but that a figure should be taken which is fair at the present time. That is not merely the opinion of the majority of the people on the Leasehold Committee; I challenge my noble friend to cite any Minority or Majority Report, any Memorandum or anything at all, by members of the Leasehold Committee which would give support to the proposition that the fair way to achieve the object would be to continue these extra two years at the old rate.
I turn, for example, to the Supplementary Report which was made by Miss Alford, Mr. Bowen, Mr. Hale, Mr. Reddaway, and Mr. Ungoed-Thomas— good Socialists, a fact which may inspire a little confidence in the view which they take. But they do not suggest that if there is to be this extension it should be at the old antiquated rent. If your Lordships will turn to page 119 of the 462 Report you will see that they observe that if the business tenant should have the right, on certain conditions, to the renewal of his tenancy "at a fair market rental," then there should be a "corresponding security of tenure" for residential tenants. "Corresponding security of tenure" means tenure at a fair market rental. For, further down on page 119 your Lordships will find that the writers of the Supplementary Report say that… unless the new Landlord and Tenant Act gives security to residential tenants this would make the number of unprotected residential tenants far greater than that of protected business ones, whereas if the proposal for renewal at a fair market rental were applied to residential tenants from the outset the initial problems could be overcome. …These people who have been investigating this most difficult problem one and all assume that if the additional protection to the lessee—what my noble friend calls the occupying ground lessee—were to be given by Statute, it should not be done as this Bill proposes to do it, but by a method which would secure a reasonable rent.
§ LORD SILKIN
If I may interrupt the noble and learned Viscount, may I ask whether what he is now asking really applies to the property referred to in Part I of the Bill? Is it not a totally different type of property?
§ VISCOUNT SIMON
I may be wrong: my noble friend knows this subject very well. I thought that it referred to this, and that something corresponding to what was done for the shopkeeper ought to be done for residential tenants.
§ VISCOUNT SIMON
I concede that, especially in a temporary Bill, you could not very well substitute formulas which involve a tremendous lot of investigation and so on. If you were to say "Do it exactly like Part II, "then the county courts would have a great deal of extra work thrown upon them. It would take a long time to decide it, and the two years would be half-way through before the work was finished. I would ask that, before the Committee stage, we should consider a possible alternative which at least has the merit. I venture to think, of being fair. If the occupying ground lessee is to be given an additional period of occupation, should not the provision be 463 that he should pay either the rateable value or the reserved rent, whichever is the higher? That at least would be entirely fair. Certainly, Part I is in striking contrast with what is commented on in Part II, and is described as "holding the scales even between the landlord and the tenant."
I venture now to add a few comments and ask one or two questions of the Lord Chancellor on matters which will not be decided on Second Reading but which it is convenient to mention now. The first question I should like to ask him —and he may perhaps be able to deal with it in his reply—is this: What, in his view, is the scope of Part I? Throughout he spoke as though Part I dealt solely with residential property in the ordinary sense of "dwelling-house" and the like. But, so far as the clauses are concerned, I cannot see any limitation of that sort. As the noble and learned Viscount knows well, if the language of the clause is unambiguous and clear, the fact that the Government have chosen to put at the top of Part I some such term as "Dwellings," or have chosen to put in the Title of the Bill that it is "for the protection of occupiers of residential property," will not necessarily cut down the application. It seems to me that all that is necessary for a tenancy to qualify for protection under Clause 1 or Clause 2 is that it should have been granted for a term of years certain, exceeding two years, and expires within the two years beginning with the commencement of the Act.
There is the second condition about living there which I leave out for the moment. That does not seem to me to be limited to residential property or dwelling-houses at all. I should have thought that the language would apply to a factory; I should have thought that it would apply to a warehouse or to a gas-works, always assuming that the other condition is fulfilled. What I wish to ask is this: What is the intention of the Government in this matter? If we find out what their intention is, the draftsman, and possibly some of the rest of us, will see that that intention is clearly expressed. The noble and learned Viscount spoke as though nothing but an ordinary dwelling-house is covered by these operative Clauses 1 and 2. I must point out to him that, though that was the language of the 464 Attorney-General when he presented the Bill in another place, and though indeed it was the language of the gracious Speech which referred to the legislation which is forthcoming, in another place, if I under-stand it rightly, the Solicitor-General entirely denied that the clauses were limited to dwelling-houses, and in terms asserted that the Government intended to include these other properties, though they were neither residential property nor dwelling-houses. It may be convenient if, at the end of this discussion, the Lord Chancellor will indicate provisionally his view. I am sure he will agree with me that, if there is any doubt about the matter, it will be much better to have the Bill put in a form, in Committee, which leaves no doubt at all.
The next point, again a point of detail but not unimportant, has to do with this other condition which several times during his speech the noble and learned Viscount described in this way: that, of course, the benefit would not apply un-less the lessee was living in the premises. With great respect, that is not an accurate statement. That is not the condition. The condition is that immediately before the date of expiry the tenant, or a member of the family, was living in the property. Let us imagine the case of a ground lessee who has built upon the land which he has acquired a block of flats: in every flat there would be a tenant of the ground lessee who would be paying a rack-rent. All that that ground lessee has to do, if he wants to extend his ground lease by two years, is to occupy an empty flat, so that he can say that immediately before the date of expiry he was living in a part of the property. Or one of his relatives might do so—whatever "family" means I am not sure; we shall have to investigate that a little further. If there is not an empty flat, all the ground lessee has to do is to make a bargain with one of the people living in one of the flats to surrender the flat to him—and for that privilege he would pay a pretty handsome price—so that he may at the critical moment be said to be living there. I am not saying that the law would consider that twenty-four hours' living in a place necessarily satisfies the provision, but the language offers a loophole wider than the Lord Chancellor indicated. It is a loophole for people to get the advantage of these two years by 465 an arrangement by which, though they have not lived in the place before in their lives, they can say: "The Government have made an admirable arrangement by which, if I occupy not the whole of it but any part of it, or if any member of my family does so, at the time when the lease expires, I have another two years." I cannot believe that that is the best that the draftsman can do. Nothing of that sort was recommended by the Leasehold Committee.
There is a second matter in which the Government's Bill entirely departs from the recommendation of the Leasehold Committee: I refer again to the Final Report, where paragraph 107 says:But we think it may be fair to say that they are victims of an anomaly in the sense that they, at the expiration of their ground leases, find themselves without any protection at all."—By "anomaly" is meant, as contrasted with the people protected by Rent Restrictions Acts—whereas their neighbours perhaps holding similar premises as tenants at rack rents are protected by the Acts.Then paragraph 108 says:We therefore recommend legislation bringing these tenants within the protection of the Acts on the expiry of their long leases. The amendment should, we think, be limited to cases where the ground lease expires after the commencement of the amending legislation"—that does not apply to this Bill; this Bill includes Clause 2—and where the tenant occupying the premises under the ground lease at the date of expiration (or some other person through whom he claims other than by purchase) has been in occupation for at least three years.Of course, if the Bill were to lay down the condition which the Leasehold Committee recommended, that the lessee, if he is to get this extension, must have been occupying those premises for three years before the lease expired, then it really would be a Bill for protecting people who were at the inconvenience of having to leave premises where they had been accustomed to live. But as this Bill stands it does nothing of the kind, It disregards the three years, and simply says that all that is necessary is that a person should be living in the property or some part of it at the moment when the lease expires. Incidentally. I may say that perhaps on Committee stage we might consider whether or not "residing" is a better word than "living." 466 But that is one of the rather technical points with which we need not deal now.
There is one other consideration which I agree is a detail, but a very important detail, which seems to arise when one examines this Bill. I hope that I have made it plain that I am not at all adverse to trying to do what is right and reasonable to this class of person who is hard pressed owing to the scarcity of accommodation. But we must have some regard to what may have happened in the recent past before this Bill was ever heard of. Consider this case: My lease, originally granted for more than twenty-one years, is coming to an end. I wanted to see whether I could make arrangements with my landlord by which I should be able to stay on, so I negotiated with him in order to buy his reversion. What did I buy? I bought the landlord's right to go in, let us say, in six months' time. We have negotiated and agreed it. I have paid the money, and he has given me the receipt and the conveyance. Now, having done all that, here come the Government, who say, "We are very sorry but you were under a misapprehension. You thought that you had only six months of your lease left, but you did not know what a benevolent Government were going to do for you. You have paid too much, and the landlord has got more than he ought to get. You did not need to acquire the reversion after six months because, under this Bill, thanks to the addition which you can secure under the Bill, the landlord's reversion would not enable him to take possession for possibly another two years." What is going to happen in that case?
Take the reverse case. I desire very much to buy a house, but find the greatest difficulty in doing so. A man is willing to sell the end of his lease to me. It now turns out that I have bought the wrong thing, and that the value of what I have bought is not the right value. Take a still more obvious case. As I think my noble and learned friend remarked, few people can be expected to see from beginning to end a ninety-nine years' lease. Let us suppose then, that the previous owner of the reversion died three or four years ago. His estate will have had to pay death duties. The reversion of a lease is just as much a piece of property as anything else, and the valuers will see that it is given a proper value when dealing with it; but a great deal depends 467 upon how soon you can resume possession of the house, and how long you have got to put up with two or three pounds a year where a property is worth, perhaps, hundreds of pounds a year. The valuer could not possibly be a prophet, and I am sure the Inland Revenue authorities knew nothing about the intentions of Clause 1. The result is that more than was justified has been paid in death duties. I ask these questions merely because these difficulties must be faced. What is going to happen? It seems to me that at present there is nothing in this Bill which provides at all for those cases, and I honestly wonder how the Lord Chancellor, who commends this Bill to us in so pleasant a way, imagines they ought to be dealt with.
There is one other point. My noble and learned friend has pointed out that one curious result of the benefits of Clause 1 is that not only has the landlord to be content with the same rent as before, which may have been fixed ninety years ago, but he is not to be allowed to enforce against his tenant during the last two years—I think, strictly speaking, since the passing of the Bill into law—any covenant to repair: only a covenant to pay the rent and to insure, and about not using the premises for improper purposes. Is that not very odd? If the slightest effort is being made to hold the balance fairly, what is the point of regarding it as fair to say: "The Government are going to give the hard-pressed tenant at the end of the lease not only the advantage of an additional period at the old rent, but during that additional period we also enact that the landlord is not to be entitled to enforce the covenant to repair." All I can say is that it seems to me curious that that should be thought to be holding the balance fairly. Of course, the effort which was made in another place to meet that point by inserting Clause 6 really adds insult to injury. Clause 6 says that, while the landlord is not entitled to enforce the covenant to repair, he may go in and spend his own money on repairs. It is said that while it is true that the tenant really ought to spend his money, the Government want to do everything that is fair, so the landlord himself can do the repairs. It is fair to say that there is an additional provision that, at the end of the time—and not all tenants at the end of the time are very good for money 468 —the landlord may sue the tenant who has this advantage. I do not know, but I should not have thought that would meet the difficulty which some people feel. These comments which I have been making are on the details of the Bill. They seem to a large extent to be capable of adjustment, and I hope they will be adjusted. I mention them now only because I think we ought to consider them.
I have one last observation to make. The present intention is that this Bill should come into force at the date of the Royal Assent—that is the commencement of the Act—unless, of course, some other provision is made. I suggest to the Lord Chancellor that it would be well to consider whether it might not be better to insert in the Bill a date at which the Bill should come into force—it may be Midsummer, Michaelmas, or some other date. The reason I do so is that if it is laid down that the Act will operate as from the date of the Royal Assent, nobody knows when the Royal Assent will be. Indeed, within limits, the Government can control the date. The last day of the Session in November would be quite all right from the constitutional point of view. But see what will happen. The moment this Bill is on the Statute Book—and, indeed, even before—a great many people whose leases are nearly running out will be anxiously asking whether their case comes within the Bill. If it so happens that a man's lease runs out at Midsummer, he will be very anxious that the Royal Assent should not be too long delayed. If, on the other hand, his lease does not run out until the end of the year, the later the Royal Assent the better, because the two years are measured from the date of the Royal Assent. I suggest for consideration that it really would be very much better to fix a date in the Bill— preferably a quarter day, because, as a matter of business, it usually is the case that leases end at quarter day.
Those are the only observations I wish to make on the Bill. I am sorry to have kept the House for such a length of time, but it is really one of the most difficult and perplexing Bills which have ever been put before Parliament. I am sincerely grateful for what the Lord Chancellor said in introducing the measure, but he spoke rapidly and rather differently from the way in which he sometimes does, and I feel that we ought to know and to consider these difficulties. I think they may, 469 to some extent, be met and dealt with fairly in Committee. So far as I am concerned, I should not dream of opposing the Second Reading. I think the second Part of the Bill is, in principle, admirable, though a few Amendments may be needed. As regards Part I, it is indeed much more controversial. Though I still accept the view that something ought to be done, my reason for intervening at this length is merely that, having studied the Bill as well as I could, without any very-special knowledge of this branch of the law, I feel, on a fair examination of Clauses 1 and 2, that the Bill ought in some respects to be amended.
§ 4.3 p.m.
§ VISCOUNT BUCKMASTER
My Lords I will endeavour to be brief, and my task is lightened by the admirable exposition —If I may with respect so describe it— of the Bill, which has just been given by my noble and learned friend, Viscount Simon. It is. in this matter, my duty at once to declare any interest which I possess, though I believe it to be but slight. I am privileged to be President of the Association of London Property Owners, and I am a director of a number of public companies engaged in different activities. I have made inquiries of these companies, and I cannot trace that any of them is materially affected by this Bill in one way or another. So far as I, personally, am concerned, I do not own any ground rents, nor, indeed, am I a ground lessee. Having said that, I may, perhaps, show a measure of agreement with my noble friends opposite by saying that I am not second to anyone in wishing to see hardship relieved where that can be done without imposing added or extra hardship on some other person. But I think that before we introduce a measure such as this, which does, in fact, utterly violate the sanctity of existing contracts, we should be satisfied that hardship exists to such a degree and of such an extent as to justify what we are doing. The most diligent inquiry on my part has been quite unsuccessful in eliciting anything of the kind.
I would direct your Lordships' attention to Page 23 of the Report of the Leasehold Committee under Lord Justice Jenkins. Your Lordships will see that it says there, specifically:We have, moreover, heard of practically no cases in which occupying ground lessees 470 have, in fact, been compelled to quit their holdings.It then goes on to give an example, and the example is this: a tenant under a long lease at a ground rent of six guineas per annum for the site, is offered, upon expiration, a new tenancy of site and house at a rack-rent of £60. It points out that he is not by any means necessarily exposed to hardship in such a case. I will not quote any further from the Report, but your Lordships will find— and will correct me if I am at fault— that special inquiry was made in Wales, the very area in which it was suggested in another place that the maximum degree of hardship existed.
But let that be; let us say that we accept that there is such dire hardship that something must be done. We have then to ask the question. What is the solution? According to the learned Attorney-General in another place, it is to be found in this Bill. If I may say so without disrespect, he introduced this in soft and soothing tones and with a purring note which to me was quite unfamiliar. It was not until the Committee stage was reached that he exhibited the steely claw to which one is more normally accustomed. He said that the Bill was as non-controversial as possible, that it was "a standstill" and that it was a form of first aid. I have no very violent feelings on this subject, but unfortunately 1 cannot agree with the learned Attorney-General in any one of those descriptions. Speaking of the first Part of the Bill—for I do not propose to address myself to the second Part—I cannot agree that it is non-controversial. In its first Part the Bill virtually does not adopt any one of the recommendations of the Majority Report of the Leasehold Committee and it adopts very few of those of the Minority Report.
I do not see either how a Bill of this kind can in any way be called a "standstill." A "standstill," as I understand it, would be something in the nature of a financial moratorium. An example would be where one man has bought goods from another. He owes money to the man from whom the goods are bought. A moratorium says, in effect: "All right, instead of paying on June 1 you shall pay on the first of the following December." The underlying conditions of the contract of sale are not altered. 471 But here conditions are entirely altered. With the three exceptions mentioned by the noble and learned Viscount the Lord Chancellor, the tenant is relieved of every single covenant contained in his lease. I cannot see how that can be called a "standstill." If, indeed, a "standstill" were the real purpose of the Bill, why not freeze covenants as well as the period and the amount of the rent? I wonder whether noble Lords have fully realised the implications which flow from the provisions of this Bill. As the noble and learned Viscount, Lord Simon, has pointed out, estates have been valued for duty on a basis quite other than that on which duty should be paid. I should like to join with my noble friend in asking whether any relief is proposed in this regard. I regret that it was not one of the questions of which I gave notice.
Now I turn once more to the covenants. We find that the tenant is relieved entirely of the covenant to repair. It is true, as my noble and learned friend has pointed out, that the landlord has the remedy of entering on the premises and there executing repairs, but I do not think my learned friend pointed out that these repairs can be executed only if they are such—I will try to give the exact words—as are necessary for preventing or arresting any serious depreciation in the condition of the property.That is a long way short of the full repairing covenants contained in the normal lease. Yet it is very much in the public interest that property should be kept in full repair. The test in these matters—as those of your Lordships who are familiar with the subject are well aware—is whether there is, or is not, damage to the reversion. But with right of entry for a limited purpose to prevent serious depreciation, there is not, so far as I can see, anything to prevent damage to the reversion, and this, as I said, falls far short of what I would call the normal maintenance of the property.
I have no doubt that the motive underlying this provision was the prevention of penal claims for dilapidations in the concluding period of a lease. I should like to put this question to the noble and learned Viscount, and again I hope he will forgive me if I have not given him notice, because it sprang to my mind only while spending some time on this matter over 472 the week-end. It is surely plain that the tenant is abundantly safeguarded by a number of existing Acts. I will not weary your Lordships by naming them all, but in particular there are the Landlord and Tenant Act, 1927, and the Leasehold Property (Repairs) Act, 1938, both of which seem to me to do all that is necessary in this regard. The Attorney-General in another place described the Bill as a first-aid measure. I think it is nothing of the kind. It is not a first-aid dressing designed to stanch bleeding; rather is it a tourniquet designed to stem the flow of blood prior to a crippling and disabling operation. What that operation may be, those who study the comments of certain Members in another place can form a fairly just impression. If anything approximating to their intention is put into effect, there is certainly no question of first-aid in the treatment that will be meted out.
Speaking without any kind of animosity towards the purposes of the Bill. I nevertheless feel it is restrictive and repressive in its effects. It must tend to stifle development, if there are found any courageous enough to attempt this under present conditions. It is easy to see why it must be so. Part of the advantage of the leasehold system is that when leases fall in, the landlord is able to prepare a comprehensive scheme for rebuilding. I may add, if It is any encouragement to noble Lords opposite, though I am not suggesting they need it, that I am not a strong enthusiast for the principle of building leases. But the argument in their favour is that they give landlords power to redevelop a whole site. A landlord may prepare a scheme which will be of immense advantage to the public, and if he is fortunate he may even obtain approval for the plans; but under the Bill such a scheme is immediately shelved and nothing can be done. I say that nothing can be done because if a land-lord goes to the tenants of a row of houses, and is able to make an agreement with each one, he can bribe them to do that which they are already by contract liable to do. Suppose he bribes forty-nine out of fifty tenants, and the fiftieth refuses, that tenant can pre-vent the whole scheme and obstruct the execution of the landlord's plans which may be to the great advantage of the 473 public and provide much additional accommodation.
I feel, further, that the Bill goes beyond anything that the Rent Restrictions Acts intended, and they go far enough. It gives protection to premises above the rateable value provided in those Acts. I am not quarrelling with the principle of giving protection to property below that rateable value. In addition, there is practically no limit to the retrospective date to which rent is related. As your Lordships know, under the Rent Restrictions Acts some houses are tied to the rent established in August, 1914, subject to a permitted increase of 40 per cent. But if there was no letting then, the controlled rent is that which was charged when the house was last let, which might have been at the time of the Boer War. Here we do not go back only to the Boer War; we may go back to the Indian Mutiny! That is one more reason why I feel the Bill goes farther than is reasonable or necessary, although I do not quarrel with its principle.
Furthermore, it is proposed that the Bill's provisions shall extend to all members of a tenant's family. If I may strike a lighter note, as I understand the Bill it provides a protected tenancy to a burglar who occupies an empty flat provided he is careful enough to burgle a flat belonging to someone of whose family he may be held to be a member. I hope your Lordships will allow me in due course to move an Amendment defining "family." There is no definition under the Rent Restrictions Acts, and as a result a mass of case law has grown up. I am not criticising the decisions, but each successive decision has tended to widen the meaning of the word. It has extended now until a niece by marriage is a member of a family, and in appropriate circumstances it includes someone whom I can most felicitously describe as an unmarried wife. If we are to legislate in these matters, we must, as the noble and learned Viscount said, hold the scales evenly. That being so. I trust this is a proposition from which no fair-minded member of your Lordships' House will dissent: that we should weigh up the difficulties and if we are prepared to legislate to help the one side, we should not be afraid to meet the just demands of the other.
This Bill is to some extent an extension of rent restriction. We on this side, 474 who, without complaint, have passed successive measures benefiting the tenant, are entitled to ask His Majesty's Government what their plans are in regard to rent restriction. It is patent to everyone that with the constant, indeed, the daily, rise in the cost of repairs and services, where these are provided, the burden to those who own controlled property is fast becoming more than they themselves can bear. I hope the Bill will not live beyond its allotted span. If life insurance companies prepared actuarial tables of expectation of life for measures such as these, I am afraid they would show surprising vitality. None the less, I hope this Bill will expire at the end of the time allotted to it, and that from its ashes there will spring not merely a wise and constructive measure of leasehold reform, but that wide and sweeping revision of the Rent Restrictions Acts which I feel all your Lordships will agree is so sadly overdue.
§ 4.20 p.m.
§ LORD SILKIN
My Lords, I find myself in a considerable measure of agreement with the speech of the noble and learned Viscount, Lord Simon. Like him, I feel that if a measure of this kind is urgent and has to be introduced now, then, subject to some of the points which he raised—and I agree that, though they are Committee points, they are points of substance and principle—this House can do no other than give that measure a Second Reading. But I must confess to a feeling of apprehension. I doubt very much whether this Government, or any possible successor, will be in a position to legislate in time to substitute a permanent measure for this one which expires at the end of two years; and unless they are in a position to do so, any Government at that time in office will be in a difficulty. They will probably have to legislate for an extension of this measure possibly for another two years or some such period, because it is inconceivable that at the end of two years matters should be restored to the position in which they are to-day. It is, therefore, imperative that the Government should make up their mind at once what they are going to do, and introduce legislation in the next Session of Parliament in readiness for the expiry of this measure in two years' time.
My apprehension is that the Government will not be in any better position 475 next year than they have been hitherto to make up their mind what they are going to do. After all, they have had the advantage of a Committee of great weight, and, as the noble and learned Viscount on the Woolsack told us, a very well-informed Committee, who have given a great deal of consideration to this problem and who have published two Reports. It is true that those Reports are by no means unanimous—indeed, in taking the Interim Report and the Final Report, I find eight different opinions expressed. Nevertheless, the Reports do, I think for the first time, set out the problems that arise in connection with leaseholds, what are the possible solutions and what are the arguments each way. I fail to see what more the Government can expect. Indeed, I think it is of some advantage that the matter has been so threshed out by this Committee that the Government should be able to see clearly the pros and cons and decide on any action that may have to be taken. It seems to me that they have now all the data they can possibly expect in connection with the leasehold problem, and no further investigations will throw any additional light on the matter.
Nevertheless, instead of studying the Report and coming to a conclusion on it, which I submit they might well have been expected to do within, say, three months of its publication—no doubt they had it in their possession at some date earlier than the actual publication—the Government, according to the Attorney-General in another place, have set up another Committee, under the chairmanship of a Minister of Cabinet rank, consisting of officials of the different Departments concerned, who are asked (I use the language of the Attorney-General):to study the matter and to prepare legislative proposals for consideration first and introduction in due course.What is it that they are to study? I thought the Leasehold Committee had already carried out all the necessary study. I have read this Report with great care, and I find it inconceivable that any further study can throw additional light on the problem. Are the new Committee to settle policy for the Government? Obviously not: that is not expected of officials, who, at the best, can only elucidate further facts. But, as I say, I fail to see what further facts they can possibly 476 provide: all the data is there on which to come to a decision.
I feel that the Government might well have introduced permanent legislation at this time, rather than this temporary legislation, which gives rise to many difficulties, not the least of which is that on the present method of working one can feel no confidence that the temporary legislation will not become something of a permanency, as in the case of rent restriction. I would therefore sincerely urge the Government to make up their minds straight away, with a view to the introduction of permanent legislation in the next Session of Parliament; because unless they do so the same difficulty will arise. This matter is not something which can wait until the next Session but one. In order to introduce such legislation the Government ought to be making up their mind at this very moment. I gathered from the noble and learned Viscount the Lord Chancellor that, far from the Government having made up their mind on this matter, they still stand on Olympian heights, not wishing to come down on one side or the other; and all these difficult problems which the Committee on Lease-holds considered are evenly balanced in their minds. If that is the case, it is going to take a very long time. At some time they must come down and make a decision. I respectfully suggest to the noble and learned Viscount that it will be no easier to make a decision after six months, a year, or even two years, than it is to-day. The facts are known, the arguments are known and it is a simple matter of making up one's mind on the different points.
What are the points? I think they can be put under some five or six different heads. The Government have to make up their mind on the question of legal enfranchisement. I know it is difficult, but again I ask, will the Government be in a better position to decide on this matter in a year's time than they are to-day? For my part, having read the Reports, I have made up my mind; but, in view of the attitude of the Lord Chancellor who wishes the thing to be evenly balanced, I will not say which way, unless he invites me to do so. The other questions are questions of security of tenure, repairs, dilapidations, covenants to be signed and changes of user, all of which are clearly set out under the different headings in the 477 Report, with the arguments given both ways—in fact, there is a clear invitation to the Government to make up their mind one way or the other. I hope they will do so quickly.
I do not wish to detain the House, but there are two or three points on the Bill to which I should like to allude, although what I say could be equally well said in Committee. Nor do I want to follow the noble Viscount or be understood to agree with him on all the points he has made. I do think that they are all important. I understand the noble Viscount's point that the shopkeeper is treated differently from the person who is a resident; that is, that Part I and Part II are quite different. I must confess that I had the same reaction on that matter as the noble Viscount. It seems to me that there should be no insuperable difficulty in asking a person who is holding over, getting the benefit of an extra two years, or less, on his tenancy, to pay something on the basis of the rateable value or some other easily ascertainable basis. I agree that, if it meant having to go to the county court to fix the rent in each case, it would create administrative difficulties which we should not wish to face for this relatively short period. But on the basis of the rateable value, which is automatic, I can see no administrative difficulty.
While we are discussing this point, I should say that part of the justification which the noble Viscount on the Woolsack gave for this measure—that numbers of people do not realise that they hold something which will come to an end in due course at the end of its term; that they really believe that leasehold premises are their own—is something which surprises me completely. As one who has carried on a practice in these matters for many years, I must confess that I have never come across anybody who had any illusions as to the meaning of a lease. Every lessee I have met has realised that at some time his lease will come to an end. Again, I must agree with Lord Simon that if that were to any substantial degree the justification for this measure, I should not be able to accept it. I believe that the House will have to look again at the provision in Part I for an automatic continuation of the tenure at the existing ground rent. I believe—and the noble and learned Viscount who sits on the Woolsack agreed 478 —that it is unfair, although I think his answer was that it was for a short time and it was administratively the most convenient thing to do.
There are two classes of tenants who ought to have been brought into this measure, and for whom I am sure the House will have as much sympathy as it has for the shopkeeper. The first is the resident of premises who holds a lease of less than twenty-one years, whose tenancy comes to an end and who is then, by reason of the great shortage of premises of the kind which he is occupying, sometimes, but not often, held up to ransom. The noble and learned Viscount did not make the case that all landlords are holding up shopkeepers to ransom. The case for this measure is that it is being done in a limited number of cases. I say that, equally, in a limited number of cases persons occupying residential premises are held up to ransom at the end of their term. I know of cases where people living in flats have been granted very short tenures and, at the end of each term, their rent has been substantially increased. They have not had anywhere else to go, and they have been compelled to pay. I know of one case where that has happened three times. I feel people living in those conditions might well receive the same sort of protection as a shopkeeper—namely, where there is no question of the landlord wanting occupation for himself, the right to go to a court and get a reasonable rent fixed. Once this is granted to shopkeepers, I can seen no logical reason why the same right should not be granted to people using offices or other business premises.
I know the argument is that the shopkeeper establishes some kind of goodwill, and that he cannot readily go from one district to another; he is tied to the district and he is tied to the particular goodwill which he has built up. But, of course, that is not the provision made in Part II. Part II, as I understand it now, applies to any shopkeeper, however short a time he has been in occupation and whether he has built up a goodwill or not. The Report provided for a period of three years' occupation, but the Bill does not. Therefore, the point about establishing and safeguarding the goodwill does not really arise. It is not my function to accept a brief for the Bar, but a barrister who happened to be 479 evicted from his chambers would find considerable difficulty in going elsewhere. He should have the right to go to the court, if he so desires, and get a fair rent fixed and a security of tenure. The same applies to all kinds of office and business premises. Once the principle has been established for the shopkeeper, I cannot for the life of me see why it should not be equally established for anybody who has to earn his living by occupying premises. Again, these are no doubt points which can be argued in Committee, when the opportunity will arise of extending the principle of the Bill on those two grounds.
The point which I wanted to make and to emphasise was that there is a real danger of the Government coming to this House in two years' time and saying that they have not had time to work out all the implications of a permanent measure, and asking for a further extension, and of this process going on indefinitely, because I imagine that in the troublous times which lie ahead of us there will always be more difficult and more urgent problems to settle than the problem of leasehold reform. I sincerely hope, therefore, that the noble and learned Viscount the Lord Chancellor will take it to heart and give us a definite under-taking, not only that a measure will be introduced in the next Session, but that it is under active consideration to-day.
§ 4.39 p.m.
§ LORD LLEWELLIN
My Lords, I do not wish to take up much of the time of the House to-day, because it is quite clear that nobody intends to divide against the Second Reading of this measure, although I do not suppose that anybody in the House is much enamoured of its contents. It is a moratorium Act—or it will be—and, I venture to say, brought in by what I call a very moratorium Government. The noble and learned Viscount on the Woolsack said that the Government need time to make up their minds. Here I find my-self in sympathy with the noble Lord, Lord Silkin, when he says that after the Interim and Final Reports of the Leasehold Committee there is quite certainly available all the material needed for anyone to make up his mind. It may be easier for the Government to make up their minds now, with a different 480 Minister of Health from the one who reigned when this measure was adumbrated in the King's Speech at the beginning of the Session. But the noble Lord has pointed out that the Attorney-General has said that there is a Committee sitting, under the chairmanship of a Cabinet Minister, to investigate and follow up the whole of this problem. I have a pretty shrewd idea what that Committee are doing. They are trying to see whether they cannot get Departments into line.
Now, my Lords, one Department who are very keen on long ground leases are the Commissioners of Crown Lands. In the past they have made a very good thing out of the system; and no doubt they have a certain amount of backing from the Treasury. I suspect that part of the Ministry of Local Government and Planning over which Lord Silkin presided not so long ago is also in favour of these ground leases—otherwise, in the Town and Country Planning Act and in the New Towns Act there would not have been the provision that land acquired by planning authorities and development corporations should not be disposed of except by way of leases not exceeding ninety-nine years. That was the way in which this Department was obviously working. There is, on the other side, the political pressure to do something for what is said to be a problem, particularly in South Wales and areas such as that. This Bill limits the period to two years—and the noble and learned Viscount says it means what it says. But I have considerable doubts whether another Bill will appear in this Parliament within that period. Lord Silkin said that the Government have at some time to make a decision on this matter; but I have a feeling that it will not be this Government who will have to make that decision.
I think the general view of most people would be that, although Parliament, in its wisdom, can do anything, it ought to be slow and reluctant to intervene in con-tracts between individuals unless the interests of the country as a whole demand such intervention. Well, the interests of the country have demanded similar action before. Governments with not a Socialist but a Conservative majority have acted in this way. They have brought in Rent Acts. The Law of Property Act of 1925, the Landlord and Tenant Act of 1927, and the Housing Act of 1936, all of 481 which had some provisions in them which altered existing contracts between parties, were other examples. I am sure that something must be done to-day, when we have the situation of a man protected by the Rent Acts living side by side with a man who is not protected because he is living in a house affected by one of these long leases.
It can also be said that when these leases were made, all over twenty-one years ago, and many ninety-nine years ago, nobody could have contemplated the conditions now existing in this country. In the days when these leases were made there was, so far as I know, an abundance of houses to spare—not an acute shortage of houses such as we have at the present time. The present Government, and, indeed, other Governments in the past, have taken away a great part of the heritage which a man may leave. Those who inherit these ground leases, however, are being given an advantage of two years. That is an odd commentary on the present situation. Opinions may differ as to the advantage or disadvantage of these ground leases. In a number of instances they certainly secured the uniform and proper growth of parts of our great towns, as may be seen in a number of our principal Squares in London itself, And the Leasehold Committee arrived at the conclusion that the leasehold system is a convenient and even essential feature of our real property law.
Let me turn for a few moments to the measure before us. I do not think any great exception can be taken to Part II. The noble and learned Viscount the Lord Chancellor, in introducing this measure, said it could not be delayed while the Government were making up their mind, because ground leases would be falling in all the time. I think, too, that the noble and learned Viscount, Lord Simon, drew attention to the fact that, twenty-two months ago, the late Lord Uthwatt wrote to the Government suggesting that they should introduce Part II immediately. Yet here we are, twenty-two months later, and the Government are proposing that the arrangements should last for only another twenty-four months; so that for practically half the time leases have been falling in. What is proposed will be a way of seeing that the few bad land-lords are brought up to the standard of the majority of landlords—men who are always ready to do what 482 is reasonable towards their tenants. I am told that the equivalent provision has been working well in Scotland, and I am never one of those so "South-of-the-Border-minded" that I mind taking hints from those who have similar problems North of the Border.
Part I, as the noble and learned Viscount on the Woolsack said, is more complicated. I think it is far more complicated than it need be. First, I should like to underline the fact referred to by my noble and learned friend Lord Simon that, although it is said to relate only to residential property, it in fact relates to other property also. The Lord Chancellor, when he was talking about Part I, referred all the time to residential property, but, if one looks at the way it may work, although it may not be in-tended to work that way, one sees that it certainly goes beyond that limit and beyond what was outlined in the King's Speech, when we were told that:… measures will be introduced to provide for the continuation for a short period of ground leases relating to residential premises.So that is a matter at which I think we should look.
The second matter which I personally think is all wrong is that a man obtains the benefits of this measure if he or a member of his family, although not living in the premises normally, just goes in for what I would call the "tag end" of the lease. I know that the Committee suggested that there should be a period of stay of three years, but I should not go so far as that. I think the man ought to have been in occupation at the time of the introduction of this measure in another place. The Bill would then benefit the genuine owner of a ground lease, and not one who had merely taken over after the introduction of this measure in order to obtain the benefit of the Bill—a man for whom I hesitate to think the Bill was ever meant to provide. Therefore I think that we ought to insert that date, which is an easily ascertainable one; and in order to benefit under the Bill a person would have to prove that he was a genuine tenant before the Bill itself was introduced.
§ LORD LLEWELLIN
A genuine resident tenant. The only other matter to which I want to refer in regard to Part I 483 is the bad provision releasing a tenant holding over from his covenant to repair. It is all very well to give the landlord the right to come in and do major structural repairs if he wishes, but he does not know what is going to be the status of his house when the permanent legislation is introduced and enacted by Parliament. He may find that he has gone in and repaired a house that is no longer his. That is another matter to be considered. While a tenant is to be allowed to continue in occupation at the same around rent that he previously paid and not at a rack-rent for the purpose, he is at the same time being relieved of his covenant to repair. For these two years very few repairs will be done to any of the premises. The tenant will say: "I am not bound to do them," and the landlord will say: "I am not going in to do them." What we are doing by this perhaps well-intentioned clause is to ensure that for two years—and perhaps this measure will continue, as I predict it will, under the Expiring Laws Continuance Act, for a year or two more—either no repairs or very few repairs will be done to any of these houses, and we shall be creating a slum.
There must be a different way of dealing with the position of a recalcitrant ground owner who tries, by threatening to enforce a covenant to repair, to put pressure on the tenant to leave. Surely we can find a way in which these exceptional cases could be brought before the county court, and if it were merely an instance of improper pressure it could be dealt with there. That could be done without freezing (this Bill has been called a "freezing" Bill) all repairs to such property, maybe for two, three or four years, and thereby creating more slums. I hope that we shall find some way, not to encourage persons to take advantage of what is called a loophole to put pressure on their tenants, but to see that landlords can still insist on proper repairs being done to their property. We must take care that we do not, as a result of this Bill, build up in our midst another slum problem which otherwise would not arise. That is a point on which I hope we shall be able to get together during the Committee stage, because I believe the provision I refer to is one of the biggest defects of 484 this Bill. As the noble and learned Viscount knows, we on this side do not intend to divide against the Second Reading of the Bill. Therefore, I do not propose to detain your Lordships any longer.
§ 4.58 p.m.
§ THE LORD CHANCELLOR
My Lords, I am grateful to your Lordships who have taken part for the tone and temper of the speeches that have been made and for the constructive suggestions that have been put forward. Let me say at once that I am sorry if, in making my opening remarks on this Bill, I spoke too fast or gabbled through what I had to say. I have one record of which I am very proud. I have never, since I have been Lord Chancellor, addressed your Lordships for as long as one hour at a time. I had some difficulty with regard to such Bills as the Coal Industry Nationalisation Bill and the National Insurance Bill and some others, but I have never yet spoken for that length of time. When I started to prepare my speech on this Bill, I thought to myself: "If I do not watch my step, I am going to break my record." Consequently, I went very carefully into the matter, and I thought that the most useful thing I could do was to set out the case for the Bill at some length in order that my words might be read in the OFFICIAL REPORT to-morrow by those of your Lord-ships who wanted to read them, so that you could see what the Bill sought to do. If it be that, as a result of my dread of going on too long, I spoke too quickly, I can say only that I apologise, because I fully realise that a speech gains a great deal by being delivered at a reasonable and not too fast speed. So much for that matter.
Now, my Lords, I come to the remarks made by my noble friend Lord Silkin. I want to stress that I regard this Bill as only a temporary Bill. As a technical matter of drafting it has been deliberately framed so that it cannot be continued by the Expiring Laws Continuance Act. Of course, there is nothing to prevent a Parliament of the future passing a Bill to provide that such-and-such an Act shall continue to have effect; but in this case it cannot be done by means of the Expiring Laws Continuance Act. I liked Lord Silkin's reference to the Olympian heights. Apparently what happens when you are on the Olympian 485 heights is that you have to make up your mind about nothing. I think the charwoman's idea of Heaven was that it was a place where she did nothing for ever and ever. I confess that, having been, as we all have, rather hard pressed recently, I should like at any rate a spell on the Olympian heights, if it meant that I had to take no decisions about anything for a very long time.
In reality, I think it is the fact that on this topic there is no further factual information to be acquired. The difficulty is to "read, mark, learn and inwardly digest," all the available information that we possess at the present time—which docs not suffer from being too little, but rather from being too much. And a number of Ministers, who really do have other things to think about, have to try to select some plan on which they can all agree what they think to be right, and they have to listen to their experts. The trouble about experts on this topic, as on most topics, is that they nearly all differ in the remedy that should be applied. Therefore, in practice, it is quite unreal to suggest that Ministers in present circumstances, or, indeed, in any circum-stances, can say: "In July of last year, we had eight Reports from this Committee, all differing. That being so, let us get down to this before we take our nourishment tonight and decide what we are going to do." That is impossible, and no one knows it better than the noble Lord, Lord Silkin. He knows that these things have to be hammered out and that all considerations have to be duly examined.
Therefore, I can certainly say that I regard this as a purely temporary Bill. I think it would be utterly wrong if this Bill were to be extended indefinitely. I can tell the noble Lord that active consideration is now going on as to what the new Bill should contain, and how the pro-visions should be put down on paper. The noble Lord knows that those are two quite different things. As I have said before, and as the noble Lord knows quite well, it is not for me to say what may or may not find its way into the programme for the next Session. Obviously, I could not give any such undertaking as that, though I do say, repeating what your Lordships will remember was said once before, that this certainly "brooks no delay." So much for that.
486 I therefore start with the assumption that this is a temporary measure. If I am right in introducing this as a temporary measure, I should like to know, privately, what the noble Lord, Lord Silkin, advocates as the permanent solution. I should also be most interested to hear from the Opposition Benches what their permanent solution to this problem would be. But there we are. If I am right in introducing this as a temporary measure, I need make no apology for the fact that I depart from the Uthwatt or the Jenkins Committees, which were concerned to consider permanent legislation. That is a very different problem. Their solutions may or may not have been right: I am not quarrelling with them for a moment. They concerned themselves with the permanent solution to the problem. I am addressing myself to a very different problem; I am considering the purely temporary problem. The result I want to arrive at is to continue the present position so that nobody is prejudiced; as far as possible to see that the status quo is preserved. For instance, I do not want to bring about a position whereby a man who is to-day a ground lessee becomes a lessee at a rack rent, because that obviously would prejudice the permanent solution. It is for that reason that we have endeavoured to introduce not a precise moratorium but a kind of moratorium to meet the difficulty.
My Lords, many points of interest have been raised, most of which I think may be regarded as Committee points. Some of them I shall not refer to. I cannot refer to the point that was made about what effect, if any, this Bill will have on death duties, or, rather, what concessions should be made. Oddly enough, so far as I know, this point was never canvassed in another place, and I did not come prepared with any answer to that problem. However, there are one or two points to which I should like to make reference. I was asked why throughout I have referred to this Bill as though Part I refers only to residential premises. The reason is that it does refer to residential premises only, provided always that we bear in mind that premises of a mixed nature—for instance, a shop with a flat over it—are included, and that there may, therefore, be an element in those premises which is not residential. Subject to that, my understanding of the 487 Bill is (and if we have not got it right, we can certainly put it right) that it is intended, with that qualification, to refer only to residential premises. It is not intended to refer, for instance, to a gas-works. If the Bill is not right, by all means let us put it right. I confess that I thought it was right, because one of the conditions laid down is that the lease must be of more than twenty-one years, and (I quote) that:immediately before the date of expiry the tenant or a member of his family is living in the property or a part thereof in right of the tenancy….Those words may, or may not, be apt, but they were intended to be sufficiently precise to make it plain that, with the exception that I have referred to, Part I refers only to residential premises. But we will certainly consider in Committee whether we should make that fact more specific.
My Lords, the point whether the word "residing" is better than the word "living," and the question whether the words "immediately before the date of expiry" should be altered or extended in some way, are points which I will most readily consider on the Committee stage of the Bill. I fully realise the substance of those points. Then Lord Buckmaster and other noble Lords raised points particularly with regard to the repairing covenant, and pointed out how hard it was that the landlord should be prejudiced by being prevented from exercising his rights. I do not pretend to be an expert in this matter, but I express the view that when a ninety-nine year lease falls in, it is nearly always the fact that the tenant is in breach of his repairing covenant. He has to return the premises in good order and condition, and I think those of your Lordships who know much more about this matter than I do will agree that, in practice, in nearly every case the tenant is in breach of that covenant.
My Lords, I go further, and say that I have never made any attack on land-lords, as such. I believe that, had it not been for the fact that the great majority of landlords have behaved in a reason-able and considerate way, this problem would have thrust itself upon our attention a long time ago. It is because the landlord, in most cases, did not take advantage of the letter of the law that 488 this problem has not become so prominent as it might have done. But if you are going to give the tenant protection by extending his lease, and you do not give him any protection against breach of repairing covenants, the protection you are giving him by Statute will be, in fact, illusory. The landlord, in my belief, might turn round and say to the tenant: "Look here, you have not carried out your repairing covenant. That being so, I shall eject you, not because your lease is coming to an end—indeed it is extended —but because you have not carried out your repairing covenant." This is a very real fact which we have to consider. It is true that there is some protection, some mitigation of the position, under the Statutes to which the noble Viscount, Lord Buckmaster, has referred. I am not going to quote them all, but I will just refer to them because it might be useful to your Lordships to have them before you when we come to the Committee stage.
There is first, of course, the Leasehold Property Repairs Act of 1938. That Act protects the tenant from the enforcement of covenants, except in so far as that enforcement is held by the court to be necessary to prevent serious dilapidation. But the Act has no application to the leases with which this Bill is dealing, since, apart from the fact that it applies only to dwellings with a rateable value of less than £100, the protection that it gives comes to an end with the beginning of the last five years of the term. Therefore the Act cannot apply to any of the cases which we are considering.
§ LORD LLEWELLIN
May I interrupt to say that it was the kind of principle embodied in that Act to which I was referring when I suggested that we might deal with the matter in some such way?
§ THE LORD CHANCELLOR
I am not saying that it is impossible to evolve some machinery; all I am saying at the moment—and I think the noble Viscount, Lord Buckmaster, rather referred to this point—is that it is impossible to use the precise machinery of that particular Act. That Act has no application to the last five years of the tenancy.
§ VISCOUNT BUCKMASTER
May I thank the noble and learned Viscount, and take the opportunity of pointing out that there are other Acts to which I did not draw his attention, as I was 489 anxious not to detain the House? There is, for example the Courts (Emergency Powers) Act of 1943, and various other Acts which, if the Lord Chancellor agrees, we need not discuss now but which no doubt will be considered between now and the Committee stage with a view to determining to what extent they help.
§ THE LORD CHANCELLOR
I should be very grateful to the noble Viscount, who I am sure is much better informed on some of these points than I am, if he would impart some of his knowledge to me. If he will do so I shall be most grateful, and I shall be happy to consider what should be done. The other Act which I had in mind, and which I think the noble Viscount mentioned, was the Law of Property Act, 1925.
§ THE LORD CHANCELLOR
I am afraid that I have not a note on that before me. I have Section 146 of the Law of Property Act, 1925, which requires a tenant to be given notice of the landlord's claim for dilapidations, and enables him to apply to the court for relief. The relief he gets is against for-feiture—not against a claim for damages. The court has power to impose conditions which normally include the condition that the breach must be remedied. But the tenant who has not the means to comply with the landlord's notice of dilapidations will not normally secure his protection under Section 146.
I do not want to indulge in "sob-stuff" about this matter, but I do want your Lordships to consider the human problems which are involved. There is a very large number of people in this country who are living in homes sometimes built, perhaps, by their remote ancestors; in many cases they are people who have lived—and their fathers before them— in the same dwelling for years. When that ground lease comes to an end they have no protection whatever to-day. They have not the protection of the Rent Acts: they can be turned out on to the street. That is a fact. And it is that fact with which we want your Lordships to help us to deal. If we can do justice and prevent that state of affairs arising without injustice to any investment interest, then 490 so much the better. If we have to balance the human interest as against the investment interest, then I believe that all your Lordships will be on the side of the human interest—at least I hope so. But I want your Lordships to look at this Bill—as I surely shall—on the assumption that it is merely a temporary Bill. that it does not attempt to prejudge what we are going to do as a permanent solution. That fact, I think, makes it irrelevant to consider how far the Bill differs from the Jenkins Report. I want your Lordships to help us to find some solution that does not prejudge the future position and which preserves fairly the status quo. When we get to the Committee stage I shall be pleased to consider any suggestions which your Lordships may make. In the meantime, I thank your Lordships most sincerely for the attention and care which you have given to the consideration of this Bill at this stage.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.