HL Deb 09 May 1974 vol 351 cc653-63

4.19 p.m.

Second Reading debate resumed.


My Lords, this somewhat staccato debate makes it rather difficult to follow coherently the Land Tenure Bill for Scotland but luckily my job to-day is a very simple one because I completely and utterly welcome this revised Bill. It is very much better than the Bill originally brought forward to this House in January last on which there had been considerable debate in Committee in another place. That Bill was a bit of a hotch-potch by the time it reached us. Some Amendments were being put forward which would have improved it, but I think the steps the present Government have taken have tidied the matter up considerably and have made the Bill much better than when it set out from the House of Commons.

My Lords, I particularly welcome Clause 5 and the compulsory obligation by the proprietor to review the feuduties on the sale. This was a point that the Church of Scotland had particularly asked for. The other point they asked for was the simple form of procedure, and this also I welcome very much indeed. May I say to those Members of your Lordships' House who were not here for the previous debate that the Church of Scotland derives approximately £125,000 a year from feuduties, and therefore it is very much concerned that this matter should be put on a proper footing. Although these feuduties were originally purchased by the old Church of Scotland at the turn of the century at about 25 years purchase, now they are being redeemed at eight years' purchase on what is very devalued currency. So the Church of Scotland has lost a great deal of money over the feuduties business as a whole.

I welcome the action of the Government in streamlining the nominal feuduty and doing away with it while still finding it possible to leave the conditions to be imposed. It is most curious how, when the last Bill was in this House, we could be assured by the experts, that this was quite utterly and absolutely impossible to do. Now, this afternoon, for the second time we have had something happen which the experts advising the previous Government said it was quite impossible to do and which the experts advising the present Government have discovered is quite possible.

I think one should take note of how a change of Government can also create a change in the quality of the experts' advice. I rather think that the improvement of the Bill that has taken place here is another clear justification for the existence of your Lordships' House in tidying up matters of this kind. I sincerely hope that when the Bill goes to another place it will obtain a speedy passage into law.

4.23 p.m.


My Lords, wish first to thank the noble Lord, Lord Hughes, for the manner in which he has introduced this Second Reading debate and the short and clear way in which he has put his case. I wish to say at once that I have no criticism to offer of the changes which have been made in the Bill since we considered the previous Bill about three months ago. My principal difficulty in relation to the Bill is that I cannot quite understand what is to be gained by restricting to residential property the number of years for which an owner can lease a house. I have tried to discover some justification for it but have failed. I shall be glad if the noble Lord, Lord Hughes, can help me. As a result, I turned to the Green Paper, because there I thought I might find something helpful. However, again I failed.

The Green Paper presents a number of suggestions. First, it says that there are potential advantages to the owner of property in leasing it rather than selling it. The Green Paper does not say why or what are these great advantages, but perhaps the following words are meant to deal with that subject. It states: … may receive a capital payment for the grant of the lease. So far as that is concerned, I understand that the argument is that if a capital payment is demanded it is much the same thing as though you are issuing a feu. The capital payment for the lease, followed by the rent, approximates to the capital payment paid in acquiring the feu, with the feuduty becoming an annual payment. But if that is the principal reason, why not get rid of the capital payment and leave the owner of residential property to lease it for so long as he wishes? I should have thought that it was quite simple for the Parliamentary draftsman to draft a provision in the Bill to make such a course of action possible. The Green Paper then goes on to say: … if the lease is a very long one, he will receive a quasi-perpetual payment. They are wonderful words that they put into these papers! What he will receive of course, is the rent which over the years he stipulates in the lease, and nothing more than that. But I do not honestly see why he should not receive a rent for something that he lets to someone else.

In a most extraordinary passage, the Green Paper points out that, it being common for leases to contain … a provision for breaks at intervals when the rent can be reviewed, he will be able, by increasing the rent, to share in any rise in the value of his property. Why should not he receive something in those terms? I think that the noble Lord, Lord Hughes, would agree with me wholeheartedly that anyone who is letting, renting or leasing a house at present and who does not put a break in the lease every five years or so, is behaving ridiculously in these days of inflation and at the end of the day he may find that his house has been on lease for no value at all in money terms.

The Green Paper, referring to the owner, continues that … when the property eventually reverts to him at the termination of the lease, he may stand to gain from improvements … The noble Lord knows as well as I do that in every lease ever drawn up by any sensible person, all the conditions regarding improvements are inserted in it, and what happens is that if the lessor wishes to make some improvement he is not allowed to do so without informing his landlord. In those circumstances they meet and agree, if it is a good improvement which helps the landlord as well as the tenant, to perhaps split the cost. If they do not do that, they agree that when the lease terminates compensation will be decided in a certain manner. None of these things seem to help me to discover why on earth this prohibition on owners should be in the Bill and what purpose it has.

A letter from official quarters told me that I would see that there were valid social objections, and that I would find them in paragraph 64. I looked up paragraph 64, which says that the social objections arise "especially to leases of undeveloped land for house-building". I am not dealing with that question; my objection has nothing to do with undeveloped land. I am thinking of a case where a house is capable of being leased; the house is there and the question is to obtain a tenant for it. The paragraph goes on: … a tenant may not fully realise"— these are the actual words and this is one of the great social objections— until the terminal date of his lease is approaching that the house which he occupies, which he may have built"— I am not dealing with what he may have built, but with a house that was built— (or at least improved, extended or maintained) from his own resources"— I do not know what other resources would have been involved unless the landlord agreed to carry out the improvements— and which indeed he has perhaps come to think of as his own… and he suddenly comes to the conclusion that at the end of the lease the house will revert to the owner—a most extraordinary conclusion to arrive at, I should have thought.

But, really, this is absolutely farcical. Here is a man who entered into a lease, who knows all the conditions which he accepted and which he agreed with the landlord and who has been paying rent every half-year for any number of years, and yet he comes to the conclusion that the house might have been his own and is very much upset about it. At the end of this it says: A householder who does realise that he is only a tenant will naturally become less ready to maintain the property". Goodness gracious! Again, the terms of the lease deal with the maintenance of the property. He has accepted the lease, and he should stand by it.

I find these arguments thin and absolutely unconvincing, and I really would ask the noble Lord to have another look at this because there are all kinds of cases which can arise, and I can think of one or two. I can think of a case where the landlord has his own house and a dower house, and where he has a younger member of the family (his eldest son being the one who is going to succeed him in his own house) who works about the place, perhaps, and to whom he wishes to give a house with security of tenure for life. Why should he not? Why should it be only for a matter of 20 years? One can think of many other cases.

Another case that strikes me is where a landlord has a daughter-in-law who has become a widow and who very much wishes to remain in the house in which she has lived with her husband, which is on the estate, and where the father-in-law naturally wishes to secure for her complete security for the rest of her life. That is ruled out, too. I am glad the noble Lord nods his head. He is going to be able to help me on this, I am quite sure. What I understand is that in these two cases they can receive a liferent. As a matter of fact, I do not think that gives them complete security, but the noble Lord will tell me that in a minute. The point is that if there is a payment of rent of any form whatsoever, then the lease cannot extend beyond 20 years.

My Lords, there are these cases which can arise. The lady I spoke of, the daughter-in-law, might be a lady of considerable means who might not wish to be sponging on her father-in-law, who might not be so well off as she is, and who wishes to pay a rent so that she feels that she is under no obligation to him. There are all these kinds of cases which arise, and still I am left in doubt and wonder what on earth is the purpose of this provision in the Bill. I hope the noble Lord will help me to the best of his ability, which I know is very great.

4.33 p.m.


My Lords, while looking forward to what the noble Lord has to say in reply to my noble friend Lord Strathclyde—it will be interesting to see how the points he has raised will be dealt with—I should like to reinforce in a few words what was said by the noble Lord, Lord Balerno, in welcoming Clause 5 of this Bill, expressing the hope that when it reaches the Statute Book the conditions which are laid down here will still be there.

When the noble Lord, Lord Balemo, mentioned the £125,000 a year in feuduties paid to the Church of Scotland, my mind went back to a postcard which I found in my desk the other day with a King Edward halfpenny stamp on it. When the Church of Scotland took out these feuduties you could send a notice of duty in an open envelope for half an old penny. To-day, to collect feuduties of £125,000 the postage is a minimum of 3p per notice. This gives some idea of how welcome to the Church of Scotland will be this opportunity to shake off some of this burden.

4.35 p.m.


My Lords, I am very grateful for the way in which your Lordships have received this Bill, and in particular for the unanimously warm welcome which has been given to the new Parts of the Bill. This is not surprising because, after all, it really gives effect to the views which were expressed by your Lordships on the Second Reading of the previous Bill. I think that all I have now to do, therefore, is to reply to the few questions which have been put to me by the noble Lords who have taken part in this debate.

First of all, the noble Lord, Lord Mowbray and Stourton, in giving his welcome to the Bill, as I had referred to a "feudal fiction" in the one penny, in turn said that we were creating another feudal fiction in creating a new feu and then went on to say, in effect, that we were not creating a new feu. That, of course, really is not the case, because what is being allowed is the continued creation under this Bill of feu contracts; and, as I said, the only difference which exists between the present and the new one will be that it will not be necessary to have money passing in order to enforce the land conditions. That is the short answer I have, but perhaps the noble Lord would like me to read the legal answer, which is not so easy to understand.

Referring to the suggestion that we are creating a dangerous legal fiction by dispensing with the one penny feuduty, it says that it is necessary at Common Law to have at least a nominal feuduty in order to have the requisite legal interest of the superior to enable him to enforce feudal conditions. Now—this is not the legal answer; I am adding my own words—I would suspect that this was what the experts said on the previous occasion, having looked at Common Law. But, the experts having looked at the matter further, that then enabled the next part of the note to be written.

But if it is enacted by Parliament that, as regards land conditions, et cetera, a feu shall have effect, or continue to have effect, as if it were subject to a feuduty, that is sufficient to provide the requisite legal interest without the necessity of perpetuating a minimal actual feuduty. As the only purpose in the previous Bill of creating this nominal penny, if asked, was to give the right to enforce the conditions attaching to the land, the advice which we have is that this can be accomplished without having this penny.

It has one effect, and that is to eliminate one condition which still exists but which I do not believe has been exercised for many years, though it potentially could be raised, and that is the right to irritate the feu; in other words, for there to revert to the superior all ownership of the land and the buildings thereon if the feuduty remained unpaid for a period of more than two years. I do not think anyone particularly wants to preserve this condition, because it is rather doubtful whether under existing circumstances any court would be very willing to allow the feu to be irritated without at least giving the owner another chance to pay the feuduty. So it is not worth while keeping it in just for that purpose, and it does remove a potential threat to ownership which, in a property-owning democracy, there is no real need to continue.

I have dealt with the question raised by the noble Earl, Lord Dundee, about the clan. It will still be permissible, as I have said, for a feu of that kind to be created. It could be in favour of a clan society, and the fact that no money is passing will not prevent it. On the question which the noble Earl raised about having another meeting with the Lord Advocate to discuss the contents of the Bill, there has not been opportunity for me to consult my learned friend on this matter but I have no reason to believe that, if the Scottish Peers' Association were to request such a meeting before the Bill concludes its passage through your Lordships' House, he would refuse that. So perhaps it would be a matter for either the chairman or the secretary of the Association to consider whether such a meeting is desirable.

The noble Lord, Lord Balerno, welcomed the Bill in its entirety. I intended to mention in moving the Second Reading of the Bill that there were three points originally raised by the Church of Scotland. The noble Lord will remember that I said that I found it possible to support him on two of these points but could not support him on the third, relating to the abolition of the right of preemption in relation to certain churches, such as, for example, burgh churches. The Church, having achieved its two main points, is satisfied to leave well alone but has asked the Lord Advocate whether this point will be taken into consideration when the next stage in the reform of the system is dealt with, and the Lord Advocate has very readily confirmed that this will be done. The Church is content on that point. I thought perhaps it would be worth while putting this on the record, because the noble Lord, Lord Balerno, speaking in pools language, has gained "two wins and a draw".

The noble Lord, Lord Strathclyde, among others, welcomed the changes in the Bill and returned to the points he had made on the Second Reading of the previous Bill. I shook my head—he said I nodded my head—when he said that this could not be done. I think I had better read the note I have been given, which is as follows: "The grant by a father to an unmarried daughter or to a widowed daughter-in-law of a family house. The Bill does not prevent the grant of a genuine life rent, as distinct from a life tenancy, provided that there is no annual payment other than that which would make the daughter, daughter-in-law, the son or whoever it may be liable, for example, for the continuation costs relating to the maintenance of the property, for the payment of rates and so on." This, in contradiction to the noble Lord's belief, will give complete security of tenure for life.

Then there is the other point raised by the noble Lord; namely, that the daughter or daughter-in-law might be better off than the father-in-law. The obvious recourse is to have a lease not exceeding 20 years. If she wishes to pay, then the lease makes it possible; and if the relationship between father and daughter-in-law is as excellent as this, there is little risk that, if both of them are still alive at the end of the 20-year lease, the lease would not be renewed. Perhaps this point may not have been appreciated. It is not stated that the lease shall be for only 20 years and then that is finality. Another lease, for whatever period of years was deemed suitable, can be entered into. So if there was a very young person who wanted to grant a 20-year lease to another young person and both were still on the scene 60 years later, they could have gone through three 20-year leases in their lifetimes, and it would not conflict with the law as laid down.

I would not necessarily wish to disagree with what the noble Lord, Lord Strathclyde, read from the Green Paper, other than to make the slightly "Party" point that it was not my Government which produced the Green Paper, but his. Having said that, let me also say that had the same experts produced a Green Paper for this Government, probably it would have been little different from the previous one. However, the social point is clear. In Scotland we have not a history of long residential leases, because of the feudal system. We did not need the leasehold system, and I do not think there is any desire to import into Scotland the problems which beset the English and the Welsh on these long residential leases. The point will not arise on a twenty-year lease. No one takes a lease for twenty years and imagines he has bought a house, but if there is a lease for ninety-nine years or 199 years it is very difficult for people to realise that they have not bought the house, even though a substantial capital sum may have changed hands. In fact, they may have bought the house, not realising that there will come a point when the house ceases to be theirs. This is the disadvantage of a lease which in some cases may be for a piece of land on which a house is built, or alternatively, may be a lease of the house itself.

One point is quite certain: putting in a limitation of twenty years will effectively stop any question of a piece of land being disposed of for the erection of a house on it because, to quote the noble Lord, Lord Strathclyde—"anybody who builds a house at his own expense on a piece of land for which he only had a twenty-year lease would be a very stupid person". But sometimes legislation has to be designed to protect stupid persons from their own stupidity. We do not want to see that system brought into Scotland, and this is the reason why we are restricting it to twenty years. In those cases which the noble Lord has quoted concerning the generosity of a father to an unmarried daughter or to a widowed daughter-in-law (where there is no desire that one shall profit at the expense of the other), the life rent adequately protects the situation. In a case where there is a willingness to pay for what is provided, there is the opportunity for renewing the lease on acceptable terms after its expiry at the end of 20 years. This, again, is adequate protection to cover the point raised by the noble Lord.

I hope that with these explanations your Lordships will find it possible to send the Bill very speedily to another place. I regret to inform your Lordships that there will be a number of amendments made to it because in view of the speed with which, last time, we attempted to give effect to the desires of your Lordships, there was not sufficient opportunity to make all the drafting Amendments which were necessary then. There are two sets of these. There are more than a dozen Amendments, but none of them concerns matters of principle and they will be dealt with very speedily. I am most grateful to your Lordships for the way in which the Bill has been received.


My Lords, I wonder whether I may say something to the noble Lord. I want to thank him very much for the trouble he has taken in replying to the points that I raised. There is only one flaw, so far as I can see, in the argument concerning the lady with some money who is a daughter-inlaw—her father-in-law may die and be succeeded by a gentleman who does not like the lady in question at all. In that case she will be out at the end of 20 years. It seems to me rather an unfortunate state of affairs.


Yes, my Lords, that may be so; but I am afraid the complications of feudal tenure are sufficiently difficult already without importing into the Bill special provisions for resolving family quarrels.

On Question, Bill read 2a, and committed to a Committee of the Whole House.