§ 7.52 p.m.
§ Order of the Day for the Second Reading read.
My Lords, this is a Private Member's Bill from another place where it had the blessing of Her Majesty's Government. I commend it to your Lordships as a short Bill which seeks to tighten up existing provisions against a malpractice which is giving rise to increasing concern. The racket of charging wholly unreasonable prices for furniture and fittings to incoming tenants as a condition of sale will be well known to your Lordships. Although houses and flats are now generally easier to find, there are still people who, fot business or other reasons, must live in one particular area, which naturally limits their choice. This Bill is designed to protect those people from unscrupulous landlords.
It is widely known that this practice has been on the increase, particularly in the London area, and existing legislation has not been able to put a stop to it. The existing law on the subject goes back to Acts passed in 1920 and 1923, but as the result of repeal and re-enactment the provisions which are of real consequence at present are contained in Sections 2 and 3 of the Landlord and Tenant (Rent Control) Act, 1949, as extended by Section 13 of the Rent Act, 1957. Section 2 of the 1949 Act makes it an offence to require a premium in connection with the grant, renewal, continuance or assignment of a tenancy to which the Rent Acts apply. There are certain exceptions to this rule where assignments are concerned—notably where a lease for a term of years certainly of more than twenty-one years is involved —but they are not important in the present context. The penalty for requiring a premium in contravention of Section 2 is a fine not exceeding £100, 1073 and the court may order that the payment, so far as it is unlawful, shall be refunded. Quite apart from any criminal proceedings, an unlawful premium can he recovered by the person who paid it by means of a civil action.
Section 3 of the 1949 Act provides that where the purchase of furniture, fittings or other articles is required as a condition of the grant or assignment of a controlled tenancy, anything charged over and above the reasonable price is to be treated as a premium, and demands for such prices are punishable accordingly. The courts have construed the words " reasonable price " in a number of cases, and it is clear that in this context one must take into account not only the market value of the articles but also that they are in situ and may be particularly desirable to the incoming tenant. Fitted carpets are an obvious example of this. They will be worth far more in the room in which they are laid than in a sale room, so long as they are to the liking of the incoming tenant.
These two sections of the 1949 Act apply only to controlled lettings, but Section 13 of the Rent Act, 1957, provides that they should apply to tenancies decontrolled by that Act: that is to say, tenancies of dwellings with rateable values of £40 in London or Scotland, or over £30 elsewhere, and new tenancies of dwellings within those limits commencing on or after July 6, 1957.
While it is true that the ban on straight premiums seems to be effective, disguised premiums in the form of excessive charges for furniture and fittings are freely asked. The ineffectiveness of the law is in some part due to doubts whether the offence has been committed until a contract has been entered into. When this has been done, many people are reluctant to take the initiative in reopening the whole transaction in the courts. This Bill tackles the position by creating two new offences which are set out in Clause 1 (1) of the Bill. They are, first of all, to offer —and I repeat "offer"—fixtures and fittings as a condition of the grant or assignment of a tenancy at a price which the vendor knows, or ought to know, is unreasonably high. As I have explained, it is already an offence to require a 1074 premium in connection with the grant of a tenancy, but it is doubtful whether the offence is committed until the contract is concluded, and this provision has little deterrent effect. The new offence relates to the much earlier stage of negotiations when the premises are being put on the market. The second offence is to fail to furnish an inventory of the fixtures and fittings specifying the price asked for each item to people who are supplied with particulars of the tenancy.
Clause 1 (2) provides that a local authority who have reasonable grounds for suspecting that fixtures and fittings are being offered at an excessive price may, after giving not less than twenty-four hours' notice, inspect the premises. There was some concern in another place regarding Clause 1 (2), as it appeared to give additional powers of entry into private property by local councils without a search warrant, and in the light of discussion of the Bill in another place—and if this Bill is given a Second Reading in your Lordships' House—an Amendment will be moved in Committee which will provide that if the person in charge of the premises refuses to agree to the local authority inspecting the articles in question, the authority will have to apply to a magistrate for a search warrant. The reason for giving the local authorities powers in this matter is that they already have extensive responsibilities in this field. They already have power to prosecute for offences against the provisions of the 1949 Act relating to furniture and fittings, and it is to them that the tenant is most likely to turn for help and advice. Local authorities are also given power in the Bill to prosecute and to publish information about the effect of the measure.
I should like to emphasise here that there is no intention whatever in the Bill of prohibiting or interfering with sales of fixtures and fittings to an incoming tenant at a reasonable price, or with sales which are not made conditions of the grant or assignment of a tenancy. It is where, for example, a tenancy will be granted only if the incoming tenant pays an outrageous price for a few fittings and pieces of furniture that the law needs to be strengthened. Moreover, the provisions of the Bill 1075 apply only to those tenancies which are already within the field of the ban on premiums laid down in the 1949 Act. It does not make it an offence to charge a premium for those special types of tenancies where it is now legitimate to do so. The Bill will have real value to those searching for accommodation in the big cities, and will, I am sure, prove a real deterrent to those who seek to exploit a local shortage of accommodation by demanding disguised premiums in the form of fantastic prices for fixtures and fittings. I beg to move.
§ Moved, That the Bill be now read 2a.— (Lord Grenfell.)
§ THE EARL OF LUCAN
My Lords, I think the House is indebted to the noble Lord for the admirably clear way he has explained the provisions and the object of the Bill. I will not bind my noble friends to refrain from putting down Amendments, if they think fit, on the Committee stage, but in general I can say that we are entirely in agreement with the objects of the Bill.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE)
My Lords, I intervene only to say that this Bill is clearly designed to stop a racket which has grown up quite contrary to Parliament's expressed intention: the intention that no premium should be charged as a condition of the grant or renewal of leases. As this Bill is designed to stop that racket it has the blessing of the Government. I commend this measure to your Lordships as one which is thoroughly worth while, and I hope that the House will give it a Second Reading.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.