LONG LEASES (SCOTLAND) BILL (Hansard, 6 July 1954)

THE MINISTER OF STATE, SCOTTISH OFFICE (THE EARL OF HOME)
My Lords, this Bill, which deals with long leases in Scotland, fulfils the unanimous recommendations of a Committee which sat under the Chairmanship of Lord Guthrie and reported in 1952. The provisions of the Bill are complex but the main purpose is simple. It is to confer upon the occupying lessees the right, under certain conditions which are named in the Bill, to convert their leases into feus. The feu is the traditional form of land tenure in Scotland. I think your Lordships are aware that the feuar receives a grant of land in perpetuity for which he pays an annual sum in feu duty. Traditionally, the bulk of the land has been held under this system of land tenure, but between 1770 and 1860, and less frequently between 1860 and 1900, there grew up the practice in certain areas of granting long leases. The practice sprang not from the fact that the landlords in Scotland wanted to adopt this system, but from the fact that a certain number of them were prohibited by titles from granting feus. This prohibition operated during years of considerable industrial expansion and therefore a certain 460 number of Scottish landlords adopted the device of the long lease in order to develop their land. The leases were, in some cases, for 99 years, and in some cases for as much as 999 years.
Under the law of Scotland, buildings erected by the lessee are the property of the landlord, and when the lease expires the land and buildings therefore revert to the landlord without any obligation upon him to pay compensation. I think it is only fair to say at once that most Scottish landlords have not insisted on this strict legal interpretation of their legal rights, and they have generally been willing, if they could, to convert their long leases into feus, for an increased annual payment or a capital sum, or a combination of both. There would not, I think, have been any social problem here had it not been for the fact that the expiration of these 99-year leases coincided after the war with a period of high property values and housing scarcity, and there was a fear (how real it was I do not know) that persons might be dispossessed of their homes—not only that, but that they might be charged by the landlord exorbitant prices on conversion into a feu.
It was in the light of these considerations that the Guthrie Committee was set up, and as a result of their deliberations this Bill comes forward. Its main provision is that lessees who have occupied their homes under leases granted before 1914 and for not less than fifty years should have a right, under certain conditions, which are set out in the Bill, to convert their long leases into feus. In fact, what the Guthrie Committee recommended, and what this Bill does, is to give statutory recognition to what has been the existing practice of most Scottish landlords for a very long time.
The main provisions of the Bill are as follows. In Part I and in Clause 1 the Bill deals with the grant of feu rights by the landlord. The long lease must have been granted before August 10,1914, and for not less than fifty years. Noble Lords may ask why the date August 10, 1914, was chosen. That was the date on which the last major restrictions on feuing were removed, and so any lease which was entered into after that date must have been entered into by the free will of the tenant and not because there was some legal obstacle which would 461 prevent a landlord from giving a feu. The second condition under Clause 1 which must be fulfilled if the tenant is to have the right to convert is that the property must be occupied by the tenant, the lessee, as a private dwelling-house forming his usual residence. This was recommended by the Guthrie Committee because the only evidence of hardship they were able to discover was that it might be difficult for a tenant to find somewhere to live during the period when housing was short and prices were high. The position of the sub-lessee is dealt with; if he has leased his home for a period of at least fifty years, he will have the option to require the principal landlord to grant him a feu right.
Clauses 3, 4 and 5 cover certain modifications of the main provision which are thought to be necessary and fair. Under Clause 3, where the lessee has acquired his interest, otherwise than by inheritance, on or after May 10, 1951, he is not entitled automatically to get a conversion. By Clause 4 certain landlords are given the right to refuse the grant of a feu. The landlords whom the Bill names are Government Departments, local authorities and new town corporations; but your Lordships will note that there is a safeguard and that they can refuse a grant of a feu only if the appropriate Minister gives a certificate to the effect that it is in the public interest. Clause 5 provides that if, between January 1, 1939, and May 9, 1951, a landlord has acquired an interest in property for the purpose of residing there or for developing it, he may apply to the sheriff that the occupying lessee shall not be entitled to a feu right. These are modifications which it is thought should be included and which to that extent modify the main purpose of the Bill.
Clauses 7 and 8 deal with the finance of the scheme. The leases are divided into two classes: those with an unexpired period of 100 years, or less, still to run and those which have 100 years, or more, still to run. In the first category the lessee will pay in two ways: first of all, by a feu duty which will be equal to the present ground rent, and secondly, by the payment of an amount equal to the value of the property at the commencement of the Act deferred at 5 per cent. compound interest for the unexpired portion of the lease or for thirty years, whichever is the less. That is a rather complicated 462 statement, and one rather difficult to understand; but what, in practice, it will mean is that a sum will be asked which will normally not exceed a quarter of the value of the house. Following the unanimous recommendation of the Guthrie Committee, the property will be valued on the basis that the lease had expired at the commencement of the Act and that the property was then being sold with vacant possession.
Clause 9 includes some further provisions to safeguard the position of the sub-lessee. The only other provision under Part I which I need mention is in relation to the five-year period during which the lessee may exercise his option to convert, or the landlord his option to terminate, the long lease. If the lease is due to expire within the five-year period it is clearly necessary that the lessee be given a five-year period in which to exercise his option to convert. It is obviously necessary to extend the period so that each may enjoy the full five years of option, and for this contingency the Bill provides. In Part II of the Bill opportunity has been taken to make some amendments to the Registration of Leases (Scotland) Act, 1857.
I hope it will be agreed that this measure is one which will be useful and will remove a possible abuse. The remedy which is suggested by the Guthrie Committee is one which, as I have explained to your Lordships, is in keeping with our Scottish tradition; it confirms the practice of Scottish landlords over many generations. It so happened that for a good many years in another place I represented a constituency in one village of which this was thought to be rather a burning question. For many years I was urged to take action upon it, so I am glad that it has fallen to my lot to introduce the Second Reading of this Bill to your Lordships, and I hope it will be received with the unanimity with which the Guthrie Report was submitted. I beg to move.

§ LORD MATHERS
My Lords, I have frequently congratulated the noble Earl, Lord Home, on the competent and felicitous way in which he has introduced Bills to this House, and I do that again to-day most heartily. I am having a new experience to-day; not only am I 463 commending the noble Earl for the way in which he has introduced this Bill, and for the information he has given your Lordships' House regarding it, but I will note in my diary that I am welcoming a Bill without qualification. I have been unable to find anyone who can advise me in any competent way as to complaints to make about this Bill; so that truly this is a red letter day. I have not had much experience in your Lordships' House, but it is quite a pleasant experience to have some share in the bringing in of a Bill which I am certain will be widely welcomed in Scotland and universally agreed as a good measure. The noble Earl has made reference to the fact that he represented in another place a constituency which is affected by what is being done in this Bill. It is the fact that in the districts of Stonehouse and Larkhall, in Lanarkshire, what is done by this Bill has been strongly urged upon Governments for a very long time; and the Guthrie Report, a Report by an all-Party Committee, was unanimous in the recommendations it made for putting right this particular grievance and for removing apprehension on the part of dwellers in Stone-house and Larkhall. So it is with real appreciation that I concur in the Second Reading of this Bill. I hope that it will have a speedy passage into law, and that it will be found in operation that it has no flaws in it at all but will be entirely for the benefit of those who are affected by it. And if I may say so to those who have not the privilege of being Scottish Members here in this House, I am certain that if they could manage, from the South of the Border, to go and do likewise, they would be doing themselves a good turn.

THE EARL OF HOME
My Lords, I thank the noble Lord for his reception of the Bill. I thought it might be a red letter day for him, and we put it first on the Order Paper, so that when we returned to normal on the Housing (Repairs and Rents) (Scotland) Bill he would not get such a shock. I have no doubt that the Lord Chancellor wishes that he had at his disposal the tradition which we have behind us in respect of this particular subject.