§ 4.9 p.m.
§ Order of the Day for the Second Reading read.
§ THE PARLIAMENTARY SECRETARY, MINISTRY OF WORKS (LORD MORRISON)
My Lords, this is a short and straightforward Bill—short in the sense that it consists of only five clauses, and straightforward in that it is free from many of the complications raised by the corresponding English measure which was so recently before your Lordships' House. This is because the leasehold system is much less widespread and much less complex in Scotland than it is in England and Wales. It is therefore possible to deal with the limited, but none the less important, Scottish problem in a short Bill of this kind.
The traditional form of land tenure in Scotland is the feu—that is, a lease in perpetuity, under which the feuar, or lessee, undertakes, in return for a grant of land on which he proposes to erect a building, to pay an annual feu duty and to carry out such other obligations as may be specified in the contract. The great bulk of the land in Scotland is held in this way, but about the middle of the last century a practice of granting long building leases grew up in certain parts of Scotland for one reason or another, possibly because the titles of the land prohibited sub-feuing. Under these leases, which were generally granted for a period of ninety-nine years, the tenants paid a small ground rent and undertook to erect and maintain dwelling-houses or other property—in the main, I think, dwellinghouses—on the land let to them. These 540 long leases occur mainly in Lanarkshire, Inverness-shire, Wigtownshire, and in one or two other parts of Scotland. Many of these leases have fallen in during the past ten or fifteen years, and more will come to an end within the next few years. Strictly speaking, the landlords are entitled, on the expiry of the leases, to take possession of the land and of the buildings thereon without any liability to compensate the tenants. But in Scotland landlords have seldom proceeded in this way, and they have usually been prepared to convert the leases into feus in return for an increased annual payment and, generally, also a capital sum.
The tenants under these long leases have always regarded themselves as owners of their properties. This is natural enough, as the properties were erected on the land by their predecessors and have been subsequently maintained at the tenants' expense. Moreover, the tenants are entered in the valuation roll as owners of the properties. As my right honourable friend the Secretary of State for Scotland said in another place, repeated requests have been made from time to time by organisations representing lease-holders, by Scottish local authorities and by individual tenants, for an amendment of the law to protect tenants against excessive demands that might be made upon them by their landlords as a condition of the grant of a feu. With the rise in property value during recent years the payments asked by landlords at the expiry of the leases have been correspondingly increased; and requests for the payment of capital sums ranging from £500 upwards have been made to tenants as a condition of the grant of feus of modest little houses. In one case the tenant was faced with a demand for the payment of £1,300, although this was, perhaps, exceptional.
Whatever the rights and wrongs of the leasehold system, it is clear that it raises many difficult legal and social problems which are in urgent need of solution. As your Lordships may be aware, my right honourable friend the Secretary of State has recently set up a Committee, under the Chairmanship of Lord Guthrie, to inquire into certain aspects of the Scottish law of leasehold, including the position of tenants under long building leases, and when the Report of the Committee is received long-term proposals for dealing with the problem will be formulated. 541 The present Bill is therefore designed to hold the position as regards long leases which fall in during the next two years. It is purely a stop-gap measure which will maintain the status quo until the Scottish Committee of Inquiry have reported and legislation to deal with the long-term problem can be framed. The Bill has undergone some alterations in another place but has not been changed materially since it was introduced.
With your Lordships' permission I will now proceed to explain briefly the provisions of the Bill, and in the course of so doing I hope to enlighten those of your Lordships who are not familiar with Scottish legal terminology about the meaning of expressions in the Bill such as "ish" and "tacit relocation." By Clause 1, the Bill extends until the end of the period of two years from the date on which it becomes law all long leases whose "ish" (that is to say the date of expiry) falls within that period. The qualifications required to secure extensions are, first, that the lease must have been granted for not less than thirty-one years, and second, that at the date when the lease is due to expire, the tenant or a member of his family must be living in the property or some part of it in pursuance of the lease. The period of thirty-one years was chosen because it is the minimum duration of leases which can be registered under the Registration of Leases (Scotland) Act, 1857. Under Clause 2, the extension of the lease is automatic unless the tenant gives notice that he wishes the lease to terminate.
During the two years' period, so long as the tenant or a member of his family is living in the property, the landlord, subject to some exceptions which I shall mention, will not be able to terminate the lease or to bring an action of damages for failure to comply with any of its conditions. The reason for this provision, which comes in Clause 3, is simple. The object of the Bill is to preserve the tenant's right to remain in possession of his home during the two years' period while the whole leasehold position in Scotland is being examined. It is there-fore necessary to ensure that a landlord should not be able to frustrate the purpose of the Bill by using a "back-door" method to get rid of his tenant. It would be of little use to give the tenant an extension of his lease for two years if, during that period, the landlord were free 542 to secure its termination for some, per-haps technical, breach of its conditions. I should like to stress, however, that these rights of the landlord are not destroyed under the Bill. They are merely suspended, and at the end of the two years' period, subject, of course, to future legislation, the rights will revive. And although the Bill places some restrictions on the enforcement of the conditions of the lease, the landlord is toy no means left defenceless during the two years' period. His existing remedies remain unimpaired where the tenant is in breach of any obligation relating to payment of rent, or to insurance of the buildings, and his power to apply for interdict against the use of the property for some purpose contrary to the provisions of the lease is also unaffected by the Bill. These remedies should be adequate in relation to leases which can be continued for a maximum period of only two years.
We have thought it right, and have so provided by Clause 4, that the Bill should apply where any interest in the property is held by the Crown, or by a Government Department, in the same way as it applies where all interests are held by private persons. There may be some cases in which the date of expiry stipulated in the lease is past, but by the operation of "tacit relocation"—that is, by the implied consent of the parties—the lease is still continuing at the date when the Bill becomes law. Clause 5 will apply to any cases of this kind. The Bill also covers two other special types of cases— namely, where the property is a manse occupied by a minister, and where a beneficiary is living in trust property. In both of these cases the tenancy is generally vested in trustees who, in law, are the tenants of the property. To overcome this difficulty, the Bill provides that the minister or beneficiary shall be treated as a tenant living in the property in pursuance of the lease.
In conclusion, I should like to say again that this is a purely temporary Bill. Its life is limited to two years and it cannot be continued under the Expiring Laws Continuance Act. I hope that your Lordships will agree with the principle of the Bill, and that it will command your Lordships' support. I beg to move that this Bill be now read a second time.
§ Moved, That the Bill be now read 2a. —(Lord Morrison.)543
§ 4.27 p.m.
§ THE EARL OF SELKIRK
My Lords, I should declare a contingent interest in this Bill, in that I am a director of a company which has long leases, although none of them is affected by the terms of this Bill. The noble Lord, Lord Morrison, has presented this Bill in his usual charming way. He said, truthfully, that it is a short Bill, but I am not sure that it is as straightforward as he would have your Lordships believe. Last Tuesday your Lordships' House discussed a Bill which might be considered very similar to this, but in fact there are certain marked differences which I should like to mention. The first is that in England the facts are known—that was agreed, I think, in all quarters of this House. In Scotland they are not known. No inquiry has been held; no one is prepared to say that this Bill affects more than 250 cases certain. In England the problem is vast and complex; in Scotland it is limited, both in extent and in time. I think it is fair to say that in twenty-five years from now there will be no long leases in Scotland at all; or if there are any left the number will be an infinitesimal one.
I understand that the solution in England is difficult. In Scotland, I think, in a majority of cases, the solution is simple; but it is not in this Bill. The reason is largely that which the noble Lord has indicated: that in the great majority of cases we are able to convert directly into a feu. If I may say so, that may be the answer to the question which the noble and learned Viscount on the Woolsack asked on Tuesday—namely, why is it that in Scotland we have not got into the very complicated condition which prevails in many parts of England. I think it is proper, because there has been criticism of it, to recognise the real value of the feuing system of tenure. I am glad that this opportunity has arisen, so that the value of the system can be fairly seen. There are other reasons why we have overcome this difficulty in Scotland. It may surprise some people to know that it is very common for a person in Scotland to own a flat at the top of a tenement in fee simple. I do not know whether that is possible in England; I believe that, in any case, it is very rare. Moreover, as the noble Lord has said, there is practically no specula-tion in rented property. The reason for that is largely due to the rating system 544 in Scotland, which makes almost every class of leased property an undesirable investment. It may be that Scotsmen are more hard-headed than Englishmen, but the fact remains that at this date no one would accept a 100-years building lease, whereas I believe they are continuing in England as they always have done.
I find it difficult to understand the genesis of this Bill. The noble Lord, Lord Morrison, said that it was due to rising prices—"rising values" were the words which the noble Lord actually used, but that really means, in these modern times, depreciation in the value of currency. If that is the problem, I suggest that the noble Lord or the Government might try to get as Chancellor of the Exchequer, instead of one from Eton or Winchester, somebody from a more sober institution, such as Harrow. Be that as it may, it is the depreciation of currency that is the major cause of rising prices at the present time. One spokesman in another place, who generally speaks with authority, spoke of the relevance of this matter to a General Election. I do not know whether that has much to do with the subject, but I feel that the reason we are considering this Bill now is simply that a similar Bill is being brought forward for England: we are merely bobbing along at the coat-tails of an English Bill. There is no particular reason why this Scottish Bill should be advanced at the present time. It is true that about a hundred years ago on entailed estates the only way to develop was not feuing but by long leases. But that situation ceased to be necessary in 1874. I think it is fair to say that, since that time, virtually no long leases have been made.
With the best will in the world, I find it difficult to say that this is a very good Bill. In the first place it solves nothing, it only postpones a solution. It is a case of legislating first and inquiring afterwards, which is not, I think, a very wise process. The Bill creates certain advantages but also certain disadvantages, on the nature of which we are very im-perfectly informed. It leaves a period of uncertainty. Anyone who may be a tenant on one of these properties is unable to settle his affairs because he does not know how he will be effected. In most cases he will be quite unable to dispose of his lease at all. Moreover—and I think this is most serious—the Bill does give, 545 albeit for a limited time, a statutory protection to tenants who do not wish to maintain their property properly. If there is one growing social evil in this country to-day it is that housing properties are being allowed to deteriorate. This Bill in some measure assists in that deterioration by giving statutory protection which will allow that deterioration to go on further. In that sense, I am afraid that I must condemn the Bill as it stands at the moment.
I agree that, at the present time, according to our views in Scotland, it is a hardship in many cases that at the end of the lease a tenant must grant to the landlord the whole reversion of his property. I think that is particularly true where the tenant has added largely to the value of the property by modernisation. The property may have been held in one tenure for a hundred years. I agree that it is absurd to pretend that the tenant does not know the conditions of the lease, but the hardship lies mostly in the fact that the better tenant a man is, the more he hands over. If he has kept his house well he hands over a very good property. If he has been a very bad tenant, who has not taken care of his house, it may well be that when he hands over the house it is a liability; and the tenant himself may be a man of straw who cannot put the property right. I think the situation can be unfair, and that it is one which requires adjustment. As the noble Lord, Lord Morrison, said, it is rarely in those leases that have been held for a long time that full legal rights are exacted. We are passing a Bill for the express purpose of stopping hard land-lords from exacting their pound of flesh. I suggest that we should also see to it that bad tenants are not allowed to take full advantage of the situation. That is one point to which I should particularly like to direct the noble Lord's attention.
I know that this is not the noble Lord's Bill, and some of these are Committee points. But it will be easier for the noble Lord to answer these questions if I put them now, rather than bring them up at the last minute. I ask him, first, what is the position at the end of those two years where the tenant is a public authority? In such a case will the tenant be able to claim freedom from legal action by virtue of the Public Authorities Protection Act? I think it is worth while considering that point. One case of this 546 nature has been raised in a letter which I have received. Whether the situation which I have visualised arises frequently I do not know, but I feel that something should be incorporated in the Bill if it is the intention not to give a public authority that advantage.
My next point is one which the noble and learned Viscount, Lord Simon, raised when the English Bill was under discussion. It is whether this Bill is really confined to building leases. I do not know whether that matters very much—in Scotland we should not get factory leases of thirty-one years, though we might get agricultural leases, and I am not certain as to the consequences. May I take a further point? Suppose a "smart Aleck" went into the Stationery Office and saw this Bill some time ago when it was first published. Having informed himself of its nature, he went to a tenant of a long lease who had no idea that the Bill was being put forward and whose lease was due to expire at Whitsun, and bought his house or the reversion of it at perhaps three months' value. The "smart Aleck" then waited until he obtained the benefit of the extension, and sold the house again. How is that to be prevented by this Bill as now drafted? I suggest that it is not the purpose of the Bill to allow things of that sort to happen, but I think it possible that some action of that sort might well be carried out. The noble Lord mentioned the family. I think that here, again, we are entitled to some sort of explanation of what a family is. The Lord Advocate in another place gave certain examples. It is easy to give examples, but unless they are exhaustive it does not help very much. In my view, in a Bill of this kind it is proper that the word "family" should be fairly and fully defined. The examples given included an adopted child or an illegitimate child. Apparently a mother or a father is not included, nor is a wife living apart from her husband or, maybe, a mother-in-law. I think it is not improper to ask for much more adequate definition in this connection.
The main point upon which I should like to ask for the noble Lord's support is in regard to what seems to me to be two issues of considerable importance. The first relates to the position of the neighbourhood. The people in the neighbourhood are, by the leases, entitled to certain protection. The noble Lord has 547 said that that could be done by interdict, proceeding on the contract but not giving rise to damages. Would it not be better to put that provision into the Bill? I suggest that it ought to be made perfectly clear that this protection which is for the neighbourhood does much to make sure that the character of the property as it has been for maybe ninety or a hundred years is maintained.
A further point is this. How are we to have reasonable assurance that bad tenants do not make full use of the opportunity provided? I do not think it is possible to interdict anyone to maintain his property. An interdict is essentially a negative instrument; it cannot be used for positive action. There is an action ad factam prœstandam, but I do not know whether it is competent, or likely to be competent, in such a case. I suggest that there is no reason why some provision of that character should not be put into the Bill to make it clear that in a number of cases where property has been grossly abused—which is, clearly, against the public interest—there is a remedy.
Finally I suggest that we fix a date in the Bill. I suggest Whitsun, 1951. At the present time no one, not even those who have read the Bill, knows when the measure is to come into force. We in this House do not even know when the Royal Assent is to be given. Surely people who have property, whether they are owners or tenants, are entitled to have some indication of when this Bill is to be-come law. If the Bill is given the Royal Assent before Whitsun, it may be only two or three days before the end of many leases on May 15. I suggest that we should put in two dates in the Bill— namely, the date on which the Act is to take effect, and secondly, as was suggested in the debate on the English Bill, the date from which the tenant's occupation will count, which I think should be the date when this Bill was introduced into Parliament—that is,November21 last. Anybody who in the meantime tried to take advantage of the Bill would not be acting in the spirit and purpose of the Bill itself. I do not think the Bill is going to solve our problems, but with these two exceptions—the maintenance of property and the interests of the neigh-bourhood—I feel that the Bill will not do any serious damage.
§ 4.41 p.m.
§ LORD MORRISON
My Lords, as he usually does, the noble Earl has made an interesting speech, and I will endeavour to answer some of his points. If I may, I will start with the last, while it is fresh in my mind. The noble Earl asked when the Bill would become law. Obviously it is impossible to put any date into the Bill. It is hoped that the Bill will become law very soon—if possible, before May 15. Now that the Bill has gone through another place, that will depend largely upon the noble Earl and his friends in this House. If they are helpful, as they usually are on Scottish legislation, and desire that the Bill should be placed on the Statute Book at an early date, then the Bill will become an Act of Parliament probably before the House rises at Whitsun, and that will mean that it will be in force by May 15.
If I may go back to the beginning, the noble Earl said that he thought the only reason for the Bill was that England had a similar Bill. I would not put it so low as that. The noble Lord must know better than I do, because he lives a longer part of his life in Scotland than I do, that a number of nasty cases in connection with this matter have arisen in Scotland. He says he knows that there are a few bad landlords, as there are a few bad tenants. Unfortunately, that seems to characterise a great deal of our legislation. If only there were not bad people in one respect or another, if only everybody would play the game and treat each other decently, we could dispense with 90 per cent. of the legislation that we pass through Parliament. But because there are always exceptional people, because some 5 per cent. or 10 per cent. try to "do their neighbours down," Parliament has to legislate on every possible subject. The noble Earl went on to say that this was legislation first and inquiry after. No: inquiry is going on now. Lord Guthrie's Committee have commenced their work, and what this Bill does is to create a standstill for two years. I must emphasise that there is no provision here for renewing the Bill, and so continuing it year after year. It must come to an end in two years, by which time, in ordinary circumstances, the Guthrie Committee should have reported, and whatever Government are in power at the time should be able to carry out the recommendations of the Committee.
§ THE EARL OF SELKIRK
Does the noble Lord agree that the Guthrie Committee were appointed after this Bill was introduced?
§ LORD MORRISON
Probably the noble Earl is right: at any rate, the Committee are sitting now and taking evidence. The point I was making was that this is a standstill Bill. The noble Earl mentioned the "smart Aleck," who buys a house from somebody who may not know of this Bill. He would be a very foolish man who sold a house without acquainting himself completely with the legal position. I do not think any Scotsman would buy or sell a house without first taking legal advice, which would include knowing that this Bill was before Parliament.
The noble Earl wanted to know what a family is. The expression "member of a family" is left for the court to decide: it is not defined in the Bill. I am advised that there is a considerable body of case law on this point under the Rent Restrictions Acts which would be equally applicable to the interpretation of this Bill. For instance, it has been held under these Acts that a member of a family may include a husband, a brother or sister, a niece by birth or by marriage, an adopted child, or an illegitimate child. Therefore, it would be for the court to decide in every case whether a niece or an illegitimate child, or anyone not covered by the ordinary understanding of the word "family," was to be included in the family. With regard to the two suggestions made by the noble Earl, I can only say that I will talk these over with those who are responsible for the Bill, and will Jet him know the answers. If he cares to frame Amendments for the Committee stage, I will do my best, as I always do, to meet his points, if they are reasonable. I am not able to express an opinion on them at the moment. In view of the fact that this is a temporary or standstill measure, which is to last for two years and which cannot be renewed, and be-cause, although the noble Earl does not appear to think there is much need for this Bill in Scotland, I am advised that there are a considerable number of cases in which leases will fall through on May 15 and cause considerable hardship, I hope the noble Earl will do his best as he usually does, to help us to get the Bill on 550 the Statute Book, so that it will be in force by May 15 and prevent further damage being done.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.