§ 7 p.m.
§ Baroness YOUNG rose to ask Her Majesty's Government whether they intend to legislate to amend the Rent Act 1974. The noble Baroness said: My Lords, not so long ago I was asked to speak at a 449 meeting. One of the questions that arose was whether I could name any one thing that, had I the power to do so, I should like to carry out in the field of the environment. I answered without a moment's hesitation: to do something about he housing situation. It is very much in that spirit that I offer today a debate on this Unstarred Question.
§ In the last two years I have already asked two Unstarred Questions on housing. In each case my intention was to see whether there was any way out of the difficulties created by legislation and the shortage of accommodation in the private rented sector. My first Unstarred Question concerned the working of the Rent Acts. The second one concerned the development of the North Wiltshire district council housing scheme which, of course, is an attempt to build a bridge between those private individuals who have houses to let and the local authority. I have been prompted to put down this third Unstarred Question on the private rented sector because of the publication of the Government's Consultation Document A Review of the Rent Acts. May I say at once that I was delighted to receive it and that I am most grateful to the noble Baroness, Lady Birk, for immediately sending a copy to me.
§ It is my intention this evening to see whether all-Party agreement can be reached on one relatively narrow part of the housing problem, that of private rented accommodation, and in particular the private furnished sector. I do this quite deliberately, not because I think that the problems of council housing, home ownership, subsidies, rebates, allowances or mortgages are unimportant; nor, indeed, because privately rented un-furnished accommodation does not present us with innumerable problems; nor because I have forgotten about the acute difficulties and tragedies of homelessness and squatting. These are all matters to which I shall return on another occasion. However, in the time available for an Unstarred Question I think that it is most useful to explore how best we can improve the housing situation in one area only; namely, furnished rented accommodation.
§ It is, I think, one of the great uses of your Lordships' House that we can raise matters which are themselves the subject 450 of great Party political controversy in another place—and, indeed, sometimes in this place, but in a much calmer atmosphere. It is my personal belief that unless there is all-Party agreement the present tragedies in housing will continue for a very long time, and that so far as the private rented sector is concerned it will certainly get worse.
I said that I welcome the Consultation Document. I welcome it first because I think it means that the Government now recognise that there is a need for the private rented sector. I refer to paragraph 13 on page 5, particularly the part which reads:
There are also various groups who need ready access to accommodation at short notice and who at present may find it difficult to rent from a council or to buy. They include mobile workers and their families, the young, the newly married and those suffering from family break-up".
very seldom do I go back to re-read what I have said—I suppose with befitting modesty, in that I might be obliged to eat my words! However, when I introduced my first Unstarred Question on 23rd January 1975 I did in fact mention the people who would be affected by the 1974 Act, and I now quote:
But many people, particularly the young, whether married or single, need rented accommodation. The young married couple need it because they cannot afford to buy. Often young people, whether married or single, need rented accommodation only temporarily because of the nature of their work, for, after all, young people are the most mobile. Students want ' digs' for a time in their university town".—[Official Report, 23/1/75; col. 249.]
I think that there is a noticeable similarity in the wording of these two statements. I quote them only to show that I hope there is unanimity of agreement on the need for private rented accommodation, at any rate for certain groups of people who will inevitably find it very difficult to get council housing and who simply will not be able to afford to buy.
§ I suspect, indeed, that the difficulty in finding accommodation is adding to the difficulties of getting a job, and so contributing to unemployment. Further, since the last debate we now know that the fastest growing groups of households are those of one and two persons, for whom, of course, so much private accommodation is ideally suitable. I hope that we are agreed on this point. Although some people may believe that council housing 451 is the answer to everybody's accommodation, I find it extremely difficult to believe that any local authority would give priority to a single person over a family and would, in any event, be able to house at very short notice, perhaps at a week's or a fortnight's notice, either a person or an individual. When the noble Baroness replies, it would be very helpful if she could give us information about the numbers of people affected.
§ I have no doubt at all that most home-less families want permanent accommodation in a council house. Nearly always they are going to get a vastly better bargain in a council house than in private accommodation. A council house, if it is new, will carry a subsidy of about £1,300 per annum in the first year, whereas if the family goes into private accommodation it is likely to be much less good and, in many instances, much less suitable. We know from Government statistics that there are approximately 6,600 families living in local authority homeless accommodation, and that a further 26,000 families applied for accommodation but were not found it by local authorities.
§ It is a little difficult to gather from the figures whether the numbers are increasing or decreasing. The collection of information has now been switched from the Department of Health and Social Security to the Department of the Environment and a different basis is being used. I quote the figures simply to show that we have a problem. What, however, the figures do not show are the numbers of the hidden homeless—that is, those people who are looking for accommodation but who have not applied to a local authority and about whom we know nothing. We shall know something about this problem when, in a fortnight's time, we debate the Motion initiated by the right reverend Prelate the Bishop of London who, I think, will be speaking about homeless young people coming to London and looking for accommodation. However, they are just the kind of people who will look for furnished accommodation and for whom we ought to make some kind of provision.
§ On the other side of the equation we know very little about supply because, so far as I can see, we have had no up-to-date figures since the 1971 Census. I hope very much that in the Consultation 452 Document the questions on basic security are designed to find out, among other things, what is happening to the supply in the private rented sector. The fact is that almost everyone who is concerned with accommodation believes that accommodation is being kept empty and also that accommodation is being let to foreigners, not simply because people do not understand the Rent Acts—many people do not understand the Rent Acts—but because, if you let your accommodation to foreigners, you can be almost certain that they will go home and that you will then regain possession of your property.
§ I will quote two true stories from my personal experience. During the last local election campaign when I was canvassing in a block of flats I met a woman who said to me, "Yes, I was very fortunate to get this flat; you see, I carry a French pass-port". The second story concerns a friend of mine who lets a flat in her house. She lives in the top part of the house and she lets the ground floor. She said, "Of course I always get a good let and I never take anyone but foreigners and they stay for two or three years". Those are just two instances, without searching at all, which have come my way; two lots of accommodation which could be avail-able to the English but are let to foreigners. One has only to look at the advertisements in the newspapers to see that this has become quite an extensive practice.
§ Then we know that there are all kinds of "dodges" to try to get round the Rent Acts, whether by giving a very simple meal, by letting the flat on licence or whatever it may be. I have seen different estimates of the amount of accommodation that has been lost, but there are two figures given in an article which appeared in the magazine Chartered Surveyor for February 1977. It said that on the coming into force of the 1974 Rent Act the number of advertisements for furnished accommodation to let appearing in the Evening Standard dropped by 75 per cent, and it can be estimated that up to as many as 600,000 dwellings of one sort or another have been lost. I cannot say how accurate those figures are, but if there is any accuracy in them at all it amounts to a very depressing fact. For the fact remains that before the 1974 Rent Act, although the private rented sector as a whole was declining, the 453 furnished private sector was increasing and one suspects now, because of these figures, that it too is declining. It is difficult to see how such a situation can possibly be of long-term benefit to the nation. I can see at once that it is of immediate benefit to those tenants who have security, but for those who are looking for accommodation the future is indeed bleak.
The Consultation Document is concerned with two major questions of letting—one of security and one of rent. I should like to say something about each, but I will preface my remarks on security by saying that I do not propose that those who have security now should have it taken away from them. That would be cruel and wrong, so I am looking for constructive, middle ground, based on the Consultation Document, that will not in fact take away from those who now enjoy security. I hope the Government also believe there is a middle way because in paragraph 4 of the Consultation Document the statement appears:
The Government are prepared to consider new ideas or reconsider previously rejected proposals on all aspects of the Acts with the exception that the general principle of security of tenure for the tenant in his home is to be maintained.
In fact, if we turn to page 6, we see that objective (c) says:
…to promote the efficient use of housing, particularly to meet needs not otherwise adequately catered for (for instance lettings to the young, single and mobile) and to encourage the use of property which might be available for letting for limited periods only.
It is difficult to see that the two statements are exactly the same and therefore I quote them because I believe there may be some middle ground between us and the Government on this matter. Surely objective (c) must be to encourage people to let under-used property. I believe the Government have already given encouragement to local authorities, to encourage local authority tenants to take in lodgers where that is suitable and I believe objective (c) on page 6 is designed to encourage the private individual to let under-used property or rooms in his own house.
§ Following upon that, I should like to make three suggestions. I should like to return to the question of the resident landlord. I think there is a distinction between the large and the small landlord 454 and in the case of the small landlord, whom I call the "resident landlord", it might be possible to take his lettings out of the Rent Acts altogether. It is of course perfectly true that under the 1974 Act you can let a room in your own house and regain possession; but after the end of the first letting the tenant has security of tenure on a second fixed term letting. Even in the first case the problem arises that, where-as the Act says that the landlord can regain possession of part of his own house, there can be cases of considerable difficulty in regaining possession.
Indeed, we need only look at paragraph 13 on page 6 of the second part of the Consultation Document to see that:
The Department have received many complaints about the delays and costs incurred in recovering possession. These complaints come particularly from resident landlords
et cetera. The fact is that in most cases the system works well, but if a room is let to a tenant and for one reason or another it is not a success and the tenant decides that he or she will not leave, the landlord is within his rights to regain possession; but it can take a very long time and can also be expensive. It can present the whole of the household with most frightful trouble because you have someone in your own home who is thoroughly dissatisfied—a dissatisfied tenant with whom you do not get on. I believe that a lot more people would be encouraged to let if they felt there were no complexities; if they felt that they could retain possession. If a lot more people were encouraged to let it would of course be much easier for those who wanted to go into property because there would be much more property available.
§ Not so long ago I introduced in this House a debate on the retired, and among the many points I made was the point that there are thousands of elderly people in this country—after all nearly one in four is a pensioner—who have houses which are far too large for them and who would let if they were not frightened. At the same time there are a lot of people looking for accommodation. I can foresee the noble Lord, Lord Janner, telling me that it is all laid down in the Rent Acts and that the landlords have nothing to fear and it is all very easy. Of course he is a lawyer, so perhaps it is easier for him; but it is not very easy for a lot of people and in the meantime it creates great difficulties.455
§ I would say to the noble Baroness, Lady Birk, that I am not asking for a new principle but rather to build on the principle that is already in the 1974 Act and to consider whether it would not be in the interests of the groups of people that the Consultation Document wants to help, for this group of people to be taken right out of the Rent Acts altogether.
§ Then, once again, I should like to suggest the idea of short-hold lettings for new tenancies. This is where a tenancy is being created for the very first time, so therefore there is no question of evicting anybody from anything. It is somebody who decides that they would like to let. I should like to base it on the Bill that was introduced in another place in June 1975 by my honourable friend Sir Brandon Rhys Williams. He proposed that for un-furnished lettings (but it could equally well apply to furnished lettings) there should be a system of short-hold tenure for up to one or five years which would be an agreed contract between the landlord and the tenant, with the understanding that the landlord could regain possession at the end of the contract. This would bring in new accommodation, not touching any-thing which is already let.
§ Next, I should like to make one suggestion in regard to paragraph 7 on the proposals about introducing other cases under Part II, Schedule 3, to the Rent Act 1968—the full security—on page 3 of the second part of the document. I notice that the Department has already been asked whether there are other cases that could be brought in and I wondered whether they had considered the case of Servicemen. There are a number of Servicemen who are buying houses, who are sent abroad, who have to move to another part of the country and who find it is very difficult to let, often because the fair rent does not cover the mortgage; therefore, they have to sell. They find that when they have moved to another part of the country they have to start buying again; it makes the whole thing very difficult. I do not necessarily expect an answer this evening, but it might be something the noble Baroness will consider worth looking at, because there are a number of people who fall into this category.
§ Now, I should like to turn to the question of rent, which I shall leave 456 largely to others to comment upon. I read with great interest the table at the end of the Consultation Document. If I have understood it correctly, the percentage increase in fair rents over the period since 1966, when registered rents were first introduced, is in fact less than the percentage increase in rents for council housing, and considerably less than the increased costs of repairs and decorations and so on. It seems to me that under these circumstances fair rents are in fact, as a proportion, falling behind council rents, and are falling very seriously behind the cost of upkeep and repair.
§ Not unnaturally, the second thing which prevents anyone from letting is that the return, the amount of rent, is now out of alignment. I should like to suggest that, at any rate in a period of great inflation, there ought to be an annual review of rents. Very few people, I think, except owner-occupiers, know how very expensive it is to have repairs done. It is impossible for a great many landlords to have repairs done. As a consequence of all this, first, the tenant suffers, and, secondly, the country suffers because a lot of property is going to deteriorate, and this is surely not something we want to see. I suggest an annual review of rents which really takes account of inflation, because unless we have that we shall have as much deteriorating property on the one side as we have improved property on the other. We should always bear in mind that rent allowances are available for private tenants so that those who cannot afford to pay can be helped. So we are not asking for something which would be grossly unfair.
§ My Lords, in conclusion, I hope we may look at this short debate as the start of a dialogue. I know of too many hard cases myself, particularly of the young looking for housing, to feel in any way complacent. I would be happy to discuss further with the noble Baroness, Lady Birk, any of the matters that I have raised, or others that I could raise; the time is too short this evening. I hope that she and her colleagues will find this debate of value, just as I hope that we shall be able to see some progress in this matter.
§ 7.24 p.m.
The Earl of SELKIRK
My Lords, I, too, welcome this Yellow Paper. I should declare an interest in that I rent a house 457 and I have two maisonettes in that house let off, one of which may or may not be subject in some form to the 1974 Act. I am also President of the Building Societies' Association, and although I do not speak at all for them today I may express the view that I hope the time will soon come when political differences on the manner in which houses are made available will cease to be valid or accepted and that we shall return much more to finding what people want as housing. It is true that young people, I believe to the extent of some 90 per cent., would like to own their own houses. I am afraid they certainly will not reach that percentage for a very long time indeed.
If I may depart from the sweet reasonableness of Lady Young and talk in more general terms, I think that this paper has the germs of a great change of mind which could be of very vital importance indeed. If I may take it in quite general terms, our problem is that we have something like 20 million houses, but they are old, they are in the wrong places, and in many cases they are empty. This is the problem, particularly when we were told in the last year that there were something like 50,000 homeless people. We will not get over that problem entirely by building. We are running in the order of perhaps 300,000 houses a year, perhaps a little more, but this will not of itself ever be enough. Our greater resource lies in making houses available and ensuring that they are maintained. There is a field which is very large, and which could play an enormous part in raising the standard of housing, which is still far too low in this country. I have never quite understood why it is as low as it is, why in many respects we compare unfavourably with other countries in a somewhat similar stage of industrial development.
May I say that, quite apart from money, the problem of maintenance today is a very considerable one indeed. I know it is difficult to give figures of the extent to which houses are maintained; it is always easier to give the figures in regard to the houses which are new, or built, but maintenance is of far greater importance today than the building of new houses. One of the problems with housing over many years has been that Ministers, in their periods of office, two or three years, are not there long enough to see a long-term plan succeed. It is a long-term 458 situation. It is 10 or 20 years before a new policy really begins to show fruit. We have been trying to do this, one way and another, for a very long time.
I would put it to the noble Baroness like this. I think we have got something like 31 per cent, plus of council houses, probably 53 per cent, plus of owner occupation, giving 85 per cent, security of tenure; all those houses provide security of tenure. If we add to that the tied houses, such as those of universities, perhaps the Armed Forces and other institutions, we are left with 10 per cent, private rented houses. That is about 2 million. I think the Yellow Paper has a misprint in it; it says 2,000, which is not quite true. I would suggest that this is the minimum required for the ordinary mobility and availability which a community such as this requires. To take the remaining 10 per cent, into complete security of occupation is, I believe, wrong.
I would go further than that. I suggest, too, that long-term rents them-selves are not a good thing. Renting of a house should essentially be for rather a short period. At the present time, as the noble Baroness, Lady Young, said, private houses are used to a very considerable extent for young people. They are there to take movements, to get people near their work. To a large extent they are single persons, some of them young, some of them old, and, of course, some who are very much less well off. But they are in conflict with the homeless, and it is significant that the figure of homelessness has increased since the summer of 1974; there has been quite a marked increase, and the figures, I believe, have not been challenged. This is a field which has not received the attention it should have done. Until we have the maintenance of perhaps 2 or 3 million houses, which are less than satisfactory, we shall still be facing an inadequate supply of housing.
My Lords, I am going to add only this. I hope the noble Baroness will be able to tell us, for instance, how many houses today are empty, and what steps the Government are trying to take to see that they are properly used for the purpose for which they were built. I hope she will be as good as her word in trying to see that the main principles upon which this 459 Yellow Paper is devised will be carried out, because then, I believe, she can really provide a blessing not only to this generation but to many in the future.
§ 7.30 p.m.
§ Baroness HORNSBY-SMITH
My Lords, I welcome the opportunity given to us by my noble friend Lady Young to debate this subject. I want to discuss the same aspect as she has. Anyone who has ever held a Member of Parliament's "surgery" over the weekend can have no illusions whatever about the shortage of housing, about the sad cases that come to one and so often one's feelings concerning inability to find those people accommodation. In an urban constituency such as the one I had one pleads time and again with worthy elderly people to let their accommodation. More often, one pleads with a widow who would have made the most delightfully cosy and kindly landlady. She is probably living alone in a large family house because her family has now married and gone away. Whatever may be the reasons those people are terrified to let their accommodation. They could do with the additional income in order to keep their house in better repair and, for example, to install better heating arrangements. However, there is a genuine and sad terror among a great many old people, many of them widows, who have spare accommodation which they could let—whether it is a bed-sitter, the whole floor of a house or three bedrooms on the second or third floor.
Whatever our distinguished lawyer friends may say about the Act protecting such people, many of those with houses of this nature just will not let. What prevents them from letting—and this applies particularly in the London area—is not only the fear of having to go to court to obtain repossession if they have an unsocial tenant. It is also the fear of rising violence, which latest statistics show is increasing among younger people. That fear is particularly prevalent in a widow who is alone in the house. I wish that there was some means whereby the Citizens Advice Bureaux or the local authority had an ancillary register. That register need not impinge on its housing list because very few local authorities ever find accommodation for the young, the 460 spinster or the bachelor. If there were such a register these often elderly people living in their family houses could be registered, and could at least feel that as they were on the authority's list they would be likely to get reasonably worthy tenants.
I appreciate that the law provides that landlords can go straight to the county court for possession in cases where the tenant does not pay his rent, misuses the premises, illtreats the furniture or behaves in an anti-social manner. For multiple or experienced owners that is merely routine—they have gone through the drill so often. However, to thousands of one-property landlords, who are often elderly couples, who have never had any conceivable reason to go to a court of law, the majesty of the law is morally something to be kept away from and if they can possibly help it they do not want to invoke the law.
These people regard that as a barrier to letting in case they get bad tenants. One can say to them time and again that bad tenants are in the minority and that it is an outside chance that they will get someone who will behave badly. However, as one can see from the many half-empty houses, they remain unconvinced. I carried out a survey along one not-very-long street in my old constituency. There were 11 three-storey Victorian houses in which a total of 18 people were living. In seven of those 11 houses only the ground floor was occupied—the top floors were not used, except occasionally for the bathroom on the first floor. In five of them the residents had not left the ground floor for years because of in-capacity, arthritis, or whatever the case may be. They could have had worthwhile accommodation upstairs if they could have been safeguarded against the possibility of getting bad or anti-social tenants.
One of the results of this grave short-age is that those who do let sometimes find themselves the victims of deceit. Perhaps one or two perfectly charming young people come along and say that they would share the accommodation. Before they have been there a week, because of compassion for their friends, they will have doubled up and provided accommodation for those friends. There may be six people in accommodation that is adequate for only two. That gives rise to overcrowding and all the consequential demands of heating and lighting, battles 461 over the limited bathroom and kitchen accommodation which, although adequate for two, is not adequate for six. This is an extraordinarily difficult problem. Old people are told that they are callous, inhuman and unkind if, having been prepared to take two people, they find that suddenly they have six people, some sleeping in sleeping-bags and they try to turn them out.
Equally, in blocks of flats more and more landlords are refusing to relet, and are selling. Perhaps the Minister in her reply can say whether there are any figures for London. A year or so ago I made inquiries of the then Minister for Housing who was then taking action against owners of multiple flats who were quite deliberately not reletting but instead were putting them up for sale. Many of these properties are being sold to foreigners. Those who can afford only to rent and who do not have the sums to lay down in order to buy property are being deprived of accommodation which some desperately need because of their jobs. In some cases the local authority has stepped in to buy some of the flats which are for sale within what are otherwise privately-owned blocks. It is a little hard for long-standing tenants to swallow the fact that they are paying the economic rent—they may have had their rents fixed by registration through the local authority—when others are receiving rent subsidies from the council.
I should like to make some remarks on behalf of some landlords who equally are being "done down" and appear to have no redress. The clause in one's lease says that one must not sublet. In block after block of flats in London landlords know perfectly well that their one or two legal tenants, who are paying £20 a week, are subletting to three or four other people and charging them £15 a week, thus themselves living rent free. It is practically impossible to prove that those people are not simply friends staying for a short while. In some cases we over-condemn those landlords who are not making sufficient sums to enable them to keep their flats in good repair, particularly with the high costs of today, when they can see before their very eyes smart young men or women taking in four tenants and subletting—literally having a tenant in every room—so creating a standard of overcrowding which a council would not permit. In many cases it is useless them 462 trying to go to court to try to get them out.
In this immediate crisis period, before we can get the housing drive going further and do something to increase the supply, we should use what we have got in unoccupied premises, an enormous number of which are with elderly people who could do with the money. Somehow we must get their confidence to let, and not lead them to believe that, if they are unfortunate, they will not be able to get rid of a bad, unruly, bullying, or a non-paying tenant.
§ 7.41 p.m.
My Lords, it appears to me that we are straying a little from the matter which has been raised this evening by the noble Baroness, Lady Young. I gathered that we were dealing with the 1974 Act, and not with all the rest of the problems that arise in respect of rented houses and properties that are let. I have a high regard for the noble Baroness, and I think that she presents her case in a very reasonable and alluring way. But I think "alluring" is the proper word that one has to use, because I am sorry to say I could not agree with her, or with the speakers who have followed her, in respect of this particular matter.
What we are losing sight of in this debate so far is that tenants—and I am not saying that all tenants are good, but they are not all ogres as some people might imagine, any more than all landlords are—have to be protected in so far as the occupancy of accommodation is concerned, and in so far as they should not be charged exorbitant rents, both of which points are covered to some extent by the Rent Acts and to a considerable extent by the 1974 Act. It is no good bringing forward exceptional cases. I wish that those who feel so badly about the Rent Acts would use their utmost endeavours to bring home to the people who have accommodation to let that the Rent Acts are not so bad that they should have the fears that have been expressed this evening. They are in most cases unfounded fears. Of course there are exceptional cases, but in most cases they are unfounded fears.
The trouble is that some people—and I am putting blame where it really rests—keep on denouncing the Rent Acts. These Acts have, in my view, been a most 463 valuable asset to the people occupying rented houses in this country, from their commencement until the present time. People come forward with arguments which frighten the very people they want to protect. I do not know whether they realise that. The Government do their best by issuing circulars which explain them in fairly easy language which does not need a lawyer. Well, all right, it might need a Citizens' Advice Bureau to explain it, or, better still, a Member of Parliament who is doing his duty in his "surgery"; and he usually has the confidence of his constituents so that he can explain what the real position is.
The Acts are not bad. They have saved homes for millions of people who otherwise would have been turned out. They have provided, and are now providing, for a proper rent, a fair rent. The noble Lord is shaking his head. Blame the person who fixes the rent, blame the tribunal, but do not blame the law.
§ Lord REDESDALE
My Lords, would the noble Lord be kind enough to give way? I shook my head only because I feel that the charming way in which the noble Lord puts over his case shows that he is rather living in Cloud Cuckoo-land. He does not appreciate the fact that comes out of the figures of rented accommodation. It is not available, and it is because of the simple reasons that have been given by the noble Baroness. The noble Lord must wake up to reality.
My Lords, I am very much awake to the realities, I can assure the noble Lord. I have already stated why I think there is so much unrented accommodation. Let us take this Act we are talking about. I wish that the noble Lord would read again the provisions in the Act about the residential occupier. We are told about people being frightened to let. Of course if they do not know that whatever they fear can be removed very rapidly by the tenant being pushed out of possession under the very Act itself, they are naturally not prepared to let. What I am driving at is that the average person who has been referred to tonight is not aware of that fact. All right, they are afraid to go to the courts. There are plenty of voluntary bodies today who would help them in 464 that regard. It may be that there are longer delays, but that is a different matter entirely; that is a general matter so far as court procedures are concerned. This knowledge would help in shortening waiting times, which are not so long as people are putting forward today. The county court is not such a difficult place, nor is the tribunal itself so difficult. They are not as difficult as those who have spoken this evening would lead us to believe.
The Act as it stands is a very useful Act. I believe that the Government were right in producing the Yellow Paper. If arguments are to be used, an opportunity should be given to everybody who wants to put a case forward. But to take away the Act now and try to disturb a position which has been in existence very usefully since it was introduced, is entirely wrong.
§ Baroness YOUNG
My Lords, would the noble Lord allow me to say that it is not my intention to suggest the repeal of the 1974 Act? I was merely talking about a rather narrow part of it.
My Lords, I appreciate that. But you are not talking about a narrow part of it. With the greatest respect, the noble Baroness should be talking about a narrow part of the Act but may I humbly say that she did not keep it as narrow as the subject she introduced. The subject is the 1974 Act. While it is true that one can to some extent elaborate the argument, the fact remains that the Act about which I am talking has protected people and I submit that they must continue to be protected.
At one time noble Lords spoke about widows; they brought tears to one's eyes talking of difficult cases—and certainly there were exceptional cases of widows with great difficulties. But the main purpose of the Act I am talking about—I say this with the greatest respect to everybody concerned—is to protect people from being thrown out of their homes. The 1974 Act covers a very limited period and in the other Acts the period is much more extensive. We must abide by the principle of affording protection to tenants so they can obtain accommodation at a fair rental. We may complain that the people administering the Act are not fair, but I assure noble Lords that in many cases where fair 465 rents have been asked for the assessment has been for a much higher figure. Go to any district and inquire, and I assure noble Lords they will find this is a fact, even when in many instances the landlord has applied. I see the noble Lord, Lord Redesdale, shaking his head in dissent; if he will have a word with me later I will give him some examples.
We must afford people protection at fair rentals so that they may have their homes. Those who are holding up lettings are doing so either through ignorance of the actual position—in many instances they are frightened and do not know what protection there is for them—or because they are avaricious landlords who are not content with a fair rent; and that is something we should not encourage.
§ 7.53 p.m.
§ The Earl of KINNOULL
My Lords, I always feel that the House has a warm regard for the noble Lord, Lord Janner, and it is always fun to listen to him. Despite his strict legal experience outside the House—when he is, no doubt, warning his clients against the dangers and problems of being a private landlord—he is always tempted to lace his remarks with a stimulating political flavour, although I suspect that on this occasion there would not have been many of us entirely convinced by his arguments.
I support and congratulate my noble friend Lady Young on the way in which, with her usual skill, she stripped this complicated subject to its bare simplicity; and to strip the subject of the Rent Acts, in whatever sphere of the Rent Acts, is quite an achievement. I also congratulate the Government—unhappily, a rare event—on producing the yellow Consultation Document which we are discussing, the main and genuine objectives of which, as I understand them, are to try to reach a consensus of all the Parties to establish the future role of the private sector in housing.
I particularly commend the two latter objectives of the document, to which Lord Janner did not refer: first, to endeavour to simplify the unnecessarily complex and obscure laws we have under the Rent Acts and, secondly, to try to provide a framework within which we can achieve a fair balance between the interests of the private landlord and those of the tenant. Those 466 are commendable objectives and I congratulate the Government for putting them firmly in writing.
As Lord Janner reminded us, my noble friend's Question relates to a very limited aspect of the Rent Act in that fundamentally it covers furnished accommodation. This form of accommodation is provided only by the private sector; it is not provided by councils, housing associations, housing societies or housing co-operatives, and I do not think anybody in this House denies that its value is highly recognised as being quite essential to a complete housing policy. It offers immediate accommodation to varying people who require this sort of accommodation, particularly in large cities such as London. One need only think of those moving jobs, students and a whole host of people, including people who have just got married and are desperately looking for a home.
I do not think anybody underestimates the value of furnished accommodation. Yet, as my noble friend said—I think this is widely accepted outside the House—this valuable sector is in danger of drying up. I hope that when the noble Baroness, Lady Birk, replies to the debate, she will give some figures, because it is vital to our discussion to know the extent to which it is drying up. The figure I have seen is that when the 1974 Act was going through there were about 750,000 units of accommodation available in London, while today that number has dwindled, I am told, to about 150,000. I see Lord Janner shaking his head in disagreement; perhaps he has a figure. I have passed on the figure given to me, and perhaps Lady Birk will confirm or deny it.
The real trouble in this valuable sector of furnished accommodation is that there are no incentives for private landlords to retain this form of investment; indeed, there is a positive incentive to opt out. There is certainly no inducement to encourage fresh investments in this field.
My Lords, is the noble Earl saying that to have an incentive one must ask for more than a fair rent?
§ The Earl of KINNOULL
I am not suggesting that at all, my Lords, and I am surprised that the noble Lord should even think me simple enough to answer that 467 tempting argument. I assure Lord Janner that I was not suggesting anything of the sort.
§ The Earl of KINNOULL
I am saying nothing of the sort, my Lords. One aspect of the current legislation within the sector of furnished accommodation is that the very strings which tie round the landlord's flexibility have been so knotted, as my noble friend indicated, that there are now widespread abuses of the 1974 Act; this is suggested in Lady Birk's Consultative Document. Indeed, sadly, every effort today is concerned to thwart the legislation, as one so often sees with our tax laws.
Perhaps the worst feature and result of the 1974 Act in this sphere is that we are now reduced to this trickle of accommodation available, and the trickle in many cases is available only for selected tenants. As my noble friend indicated, it is available in the main to foreigners, embassy staff, students and anybody who has a limited time in that accommodation by the very nature of their jobs or occupations. I find that very distressing and, whatever steps the Government decide to take following the consultation period, I hope that my noble friend's suggestion to introduce an exemption for the private resident landlord within the framework of the 1974 Act will be very seriously considered. It is not a contentious suggestion. It does not allow any form of Rachmanism nor does it open the way to the making of vast profits at the expense of the tenants. It would not in any way allow wide-scale abuse. I believe that the consensus among the Parties today is that none of them wants any of these factors in its housing policy.
I see that the noble Lord, Lord Robbins, is here tonight. I do not know whether he intends to speak on behalf of the educational boards and their problems under the Rent Acts. The noble Baroness is always abreast of what is happening in this field and she will know of the fears which the noble Lord expressed at the time when the 1974 Act was going through. He said that he feared that there would be a lack of accommodation for new students at the opening of the academic year.
468 A number of responsible studies on housing policy have been published recently. I commend to the attention of the noble Baroness a pamphlet entitled, Housing published by the chartered surveyors. This report concentrates on rented accommodation and in particular on furnished rented accommodation. One of the points discussed—and the noble Lord, Lord Janner, touched on this in his speech—is our present system of fair rents. Is the fair rents system fair and is it being operated in the correct way to give a reasonable inducement and return to the landlord as well as being fair to the tenant? The report suggests a solution to improving the fair rents system. As noble Lords will remember, once a rent has been set by the rent officer, it is settled for a period of three years. We now often discover that that by no means keeps up with inflation. The report suggests that the Minister should have the power to bring in an order covering the entire fair rent system to raise rentals in any one year to a level that would try to meet the heavy burden of repair costs and so on in the inflationary period involved.
I hope that the noble Baroness will consider that suggestion because I believe that it is a perfectly genuine proposal and something that might be of help. I should like to end on a plea which is not strictly connected with my noble friend's Question but which is on a point that I know goes to the heart of the noble Baroness. It concerns controlled tenancies. This relates to some half million units within the 18 million units which exist throughout the country. All these units are now declining to a sorry state, to the detriment of the tenant and often to the sadness of the landlord who cannot afford to repair his property. Frankly, I believe that this is the time for the Government, now that they are reviewing their housing policy, to examine this and to initiate a survey into this important sector, and not to hide away, as other Governments have done, from this problem.
§ 8.5 p.m.
§ Lord MIDDLETON
My Lords, the present inefficient use that we make of our national housing is nothing short of deplorable. I fully recognise the social benefits which have flowed from the Rent Acts to which the noble Lord, Lord 469 Janner, referred, but the fact of the matter is that, in 1977, unless you are rich and, preferably, a foreigner, it is virtually impossible to find accommodation to rent. My noble friend Lady Young has given us the 1976 figures for homeless households. Yet the number of empty houses in London alone—I admit that I have not been able to verify this figure—is generally thought to be about 100,000. Although in the rented sector the proportion of houses rented from private landlords has declined rapidly, there are nevertheless still approximately 2.8 million left. Of these, 1½ million are unfurnished lettings, half a million are furnished lettings and the remaining 0½8 million are houses that are tied in some way to a business or a particular employer. So there are still about one-sixth of all households living in privately rented housing. This is a substantial part of our national stock of housing.
It is therefore not surprising that, at a time when it is clear that there will not be enough money either for building or for ambitious schemes of municipalisation, the Government are turning their attention to the privately rented sector. We have had the recent Ministerial statements and the Consultative Document to which every person who has spoken tonight has referred. Clearly, the Government are considering what effect the Rent Act legislation over the past 30 years may have had not only on the supply of rented housing but also on the state of the privately owned housing stock, particularly in the inner urban areas.
I believe that there are ways of increasing the supply, and here I find myself in full agreement with my noble friend Lady Young. But I wonder whether the process of physical deterioration may not already be out of control in some areas. We have figures in the Consultative Document to show that in the 1971 House Condition Survey 40 per cent, of privately rented and tied dwellings lacked one or more basic amenities, 30 per cent, were in substantial disrepair and 25 per cent, were statutorily unfit for human habitation. So my noble friend's Question is very timely. It asks specifically whether the 1974 Rent Act is to be amended. I am in complete agreement with her that, if we are to amend any of the Rent Acts and associated legislation, the 1974 Act is the one to tackle at the outset. I also agree 470 with her reasons for saying so. However, the Consultation Document refers to review "of the Rent Acts".
I am sure that the Government are aware that many of the problems affecting private renting arise from the proliferation and complexity of the Rent Act legislation. My noble friend Lord Kinnoull has referred to that complexity. Annex No. 1 to the Consultation Document sets out the legislation which it is proposed should be reviewed. It would be tedious to quote the list in detail but it refers to the 1968 Act, which was in itself a consolidating Act, and to no less than 14 other Acts, most of them passed after 1968, and to one Bill which has recently been introduced. I am sure that this complexity alone acts as a deterrent to letting; and that there is a very strong case for consolidation is admitted in the Consultation Paper. But a much more searching review of the whole range of legislation is called for, and the fact that views are being sought by the Department from interested bodies by 30th April next is a welcome sign of realistic thinking on the part of the Government.
But to come back to the 1974 Act, I take it that there is no dispute that the supply of furnished accommodation is rapidly drying up, and I echo the hope of my noble friend Lady Young that there may be scope for amending the 1974 Act in a way that would avoid the political see-saw effect that has bedevilled Rent Act legislation in the past. I hope that the noble Lord, Lord Janner, will not accuse me of straying too far if I say that I, too, with my noble friends Lady Young and Lord Kinnoull, would like to start with amending the legislation affecting the resident landlord. It must be a deterrent for an owner to relet part of his house to the same tenant for a second fixed term when that letting would become a protected tenancy under Part VI of the Rent Act 1968.
So far as new furnished lettings are concerned, I, too, am sure that a real impetus would be given to many more of these coming on to the market if owners and tenants were allowed to enter into agreements for fixed term tenancies, at the end of which the tenant could not stay on indefinitely under the protection of the Rent Acts. There is no encouragement whatever for anyone to let furnished 471 accommodation to a tenant who cannot be removed if he wants to stay fast at the end of his term and whose tenancy may pass not just to one successor, but to two: first, perhaps to his wife, and then to a child of the family, extending the occupation into the next generation.
I believe that enforceable new fixed term tenancies would be acceptable to a public which sees little opportunity of obtaining furnished accommodation, except for holiday lettings and lettings to people who are not British residents. I am very much in favour of hospitality to our visitors from overseas, but not when it means denying short-term accommodation to our own young families. My noble friend Lady Young has quoted a passage from the Consultation Document, which says that there is a need for ready access to accommodation by mobile workers, and she quoted the other categories. I would stress the need for accommodation for mobile workers, and I would add that there is a similar need among students.
If we are to encourage furnished lettings, then the owner will require to know not only that he can regain possession, but that he can charge a reasonable rent. There must be sufficient incentive to let after the costs of repair and management are covered. But the tenants must not be exploited, and here the rent officers must continue to play a key role. A point which I do not think has been raised before is that the owner must be reasonably sure that he will recover his property in fair condition. Ordinary contractual obligations are usually not sufficient to ensure this, and some kind of deposit system should be permissible. There is reference in the Consultation Document to this question. I think that by now there have been enough cases to determine what does and what does not constitute furnishing, and that the complicated formulae relating to the ratio of the value of the furniture to the value of the premises will not be necessary.
I am quite aware that the Government are saying, both by Ministerial Statement and in the Consultation Document, that they are prepared to consider all aspects of the Acts, with the exception that the general principle of security of tenure for the tenant in his house is to be maintained. 472 I agree with my noble friend Lady Young in accepting the general principle that one should not legislate to interfere with security of tenure in respect of existing tenancies, but I am convinced that one will not get anyone to re-let furnished accommodation to, or to create new furnished lettings for, British residents if there is a continued insistence upon the degree of security provided in the 1974 Act.
I do not wish this evening to stray into the more difficult territory of unfurnished private lettings, since my noble friend's Question does not really embrace this category. Nevertheless, I feel that the Government should not shy away from examining the question of security of tenure of unfurnished lettings, nor should they refuse to contemplate amending legislation. My noble friend Lady Young referred to short-term, and I think that she meant making possible and enforceable fixed term new lettings of private housing.
This Government have frequently com-mended the system of letting by private owners to local authorities on short-term tenancies, as exemplified in the North Wilts scheme. Indeed the Consultation Document invites comments and advice on just this type of leasing. Surely the main incentive for owners thus to release for letting surplus housing to increase the local housing pool, is that they know that they will recover their houses when they themselves require them for direct letting.
It should be borne in mind that security of tenure is now not to be found in the majority of rented lettings. At present local authority and housing association tenancies and tied house occupations, other than in agriculture, none of which are protected, outnumber private tenancies, which are covered by the Rent Acts. If it is the supply and quality of the latter which is causing concern, then it is at least worth considering how far this decline may be caused by the balance under the Rent Acts being too far towards the tenant in the matter of security. It does not seem to me to be very sensible to refuse point-blank to look into this question.
I shall listen with much interest to the Government's reply to my noble friend Lady Young. I believe that she was right at this stage to narrow the scope of her Question to the 1974 Rent Act. I 473 am sure that in the reply the Government will wish to refer to their review of the other Rent Acts as well, and therefore I look forward at an appropriate time to a wider debate embracing all privately rented housing and accommodation, when the Department has had time to digest the replies to the questionnaire set out in the yellow document.
In a uncertain world one can be sure that privately rented housing, however unpalatable this may be to the Party opposite, must, from sheer economic necessity, continue to house a substantial proportion of our families. One can be sure also that unless something is done to loosen the dead-handed grip of the present Rent Acts, to provide financial incentive for an owner to let without exploitation of the needy, and to concentrate scarce resources into the improvement of rented houses in certain areas—unless we can achieve a substantial advance on all three of these fronts, then the present deterrent to the mobility of industrial skilled labour and the present frustrations and unhappiness of so many families will continue to constitute a national disgrace, and will militate against our economic recovery.
§ 8.18 p.m.
§ Lord MOLSON
My Lords, it is traditional in this House to allow debates to range a little wide of the particular point that has been raised, and several noble Lords who have spoken have emphasised how difficult it is to deal with the 1974 Act without taking into consideration the broader issues that are raised by the review. It was for that reason that I notified the noble Baroness, Lady Birk, that there were matters that I wanted to raise tonight, to which I hoped she would be able to give a reply, which go a little outside the Question put by my noble friend Lady Young.
I welcome this Consultation Paper because it holds out the prospect of two Bills: a Rent Bill to consolidate the present law, and a substantive Bill, probably next Session. First, let me show the urgent need now of a consolidation Bill. Annex 1 of this Consultation Paper lists seven Acts of Parliament, throughout which the present law on rent is scattered. Other relevant 474 provisions regarding security of tenure are scattered through another five Acts. A consolidation Act is uncontroversial, and takes up no Parliamentary time in either House. Delay, of course, is solely due to the immensely difficult task of Treasury counsel who have to harmonise the existing provisions.
There is another reason why a consolidation Bill is urgently needed. It would be an immensely difficult task to understand the promised substantive Rent Bill if we did not know the existing law. It would be difficult and would waste innumerable hours of Parliamentary time if, in considering a new Bill, we had to refer to seven Statutes which are at present in force. For these two reasons, I hope that the noble Baroness will be able to say tonight that a consolidation Bill will be introduced at an early date. Her Majesty's Government have made a very good beginning with the Bill introduced on 21st December last, consolidating the protection against eviction, and I hope they will follow the good example that they have set.
The outstanding fact about housing is that there are just about as many habitable housing units in the United Kingdom as there are households. I obtained these figures from the noble Baroness. There are 19.3 million fit dwellings and 19.4 million potential households. What, then, is the explanation of the amount of homelessness and the difficulty that people have in finding accommodation? The Department of the Environment has indicated that by 1991 it is quite likely that there will be half a million more houses in London than there are households; and all these matters do have to be taken into account. Why, then, do so many people find it difficult to find accommodation? There are many reasons. Probably the 1974 Act is the chief cause; but there are, of course, houses in areas with dead or dying industries; and many people, including the working classes, occupy two homes. But the main reason is an arbitrary and rigid system of rent fixing which discourages people, and even prevents them, from moving into more suitable accommodation. When the main body of council tenants are paying only 43 per cent, of the cost, it is no wonder that the strain upon the private sector, and especially upon furnished accommodation, is as great as it is.
475 I am not going to waste your Lordships' time by attempting to answer the questionnaire, penetrating and wise as many of the questions are. They should, of course, be answered on paper. I hope, however, that the substantive legislation will be based on the principle of the determination of fair rents by independent tribunals. As a junior member of the Government, I vainly urged upon Mr. Harold Macmillan in 1952 that that should be his main approach to this problem, and I have repeatedly paid tribute to the late Richard Crossman for having introduced that principle. I hope that in her speech, even if it goes a little outside Lady Young's Question, Lady Birk will be able to give us some slight indication of what the present position is with regard to the fixing of fair rents. The original legislation, passed by Mr. Crossman, has, I think, for reasons of combating inflation, been modified by the Department of the Environment, and I am sure that many people, including myself, are not fully aware of the present position.
But, my Lords, I welcome this questionnaire. It practically promises a consolidation of the existing law upon the subject; it practically promises in a future Session a new substantive law dealing with rent restriction. And, although this Question deals only with the Act of 1974, it is quite impossible to amend or alter the Act of 1974 without taking into account the other seven Acts which are specified in Annex 1 of this White Paper, all of which are dealing with that or relevant subjects.
§ 8.27 p.m.
§ Lord PITT of HAMPSTEAD
My Lords, I am sure we are all grateful to the noble Baroness for initiating this debate. As is my wont, I will deal with it as it affects London. It is well known that the private rented sector has been in a state of decline for almost 50 years. London's private sector has declined as much as that of the rest of the country; but although London's private sector has declined—it has in fact declined by 140,000 dwellings since 1971—there are still 570,000 dwellings in the private sector in London, which is in fact 22 per cent, of the stock. Again, London is probably the only part of the country, the only conurbation, where private 476 tenants and council tenants are roughly equal; that is, 27 per cent, in each sector. I have not a later figure, but in 1971 London had 37 per cent, of all furnished lettings. So from what I am saying your Lordships can see that if something could be done about private rented dwellings in London much would be achieved.
Unfortunately, I must be fair to your Lordships and say that it is my view that merely tinkering with Rent Acts, or any other Acts of that sort, will make no difference; the deterioration, the drying up in terms of private rented dwellings, will continue. Therefore, if we are to have the bipartisan policy which the noble Baroness asked for, it must begin with the acceptance of the fact that the day of the private landlord is over, that our policies must be based on that fact, and that the people who are now looked after by the private landlord must have other arrangements made for them.
§ Lord ROBBINS
My Lords, I wonder whether the noble Lord could expand his proposition a little and explain to us the reason why the private sector has declined. Is this some mysterious natural law, the nature of which is veiled from us, or may it be simply economic considerations which leap to the mind when one asks oneself whether one would be prepared to advise anybody to put money into that sector, having regard to the complexity of the Rent Acts?
§ Lord PITT of HAMPSTEAD
Yes, my Lords, I can. I was trying to be brief. The Deputy Chief Whip asked me to be brief. I can give the reasons. As I see it, there are two main reasons why I, for one, am quite convinced that the privately rented sector will dry up. The first is credibility. The private rented sector has been in a state of continual decline for 50 years. It has now reached a situation where none of the important landlords or relevant associations will any longer believe that there is a future in private renting whatever any Government may say. This is the first point; and I believe that. The second point concerns economics. Once a person has vacant possession, he will get a very much better return by selling a house and investing the capital elsewhere than by renting it. Therefore, the impetus is for him to sell and to invest elsewhere.
477 If you take a typical London house and sell it for £12,000—that would be about the price that you would get—you can get about £2,000 a year by investing that money in fixed interest securities; and you will have none of the headaches of being a landlord. What is more, if I can spell it out, that £2,000 a year, if it is in rent, must be at least £40 a week rent; and not even the noble Baroness will suggest that a Government formed by her Party would make it possible for landlords to get rent of £40 a week.
§ Lord MOLSON
My Lords, is not this very largely the result of the unsatisfactory position under which council tenants at the present time are paying rents that amount to only 43 per cent, of the cost of providing them with housing?
§ Lord PITT of HAMPSTEAD
My Lords, that may be true; but the fact is that when you balance the position if a person has a sum of money today buying a house and renting it out is not the best way of investing that money. Therefore he will not do it. Because that is so—that is how I see it—our policies must be geared to enable the people who are now serviced by the private-rented sector to be served by other authorities. It is my view that a right step was made when council tenants were encouraged to take in lodgers rather than prevented as they used to be. That was a step in the right direction.
I believe that local authorities should be encouraged to go into the furnished rented sector because you must have a furnished rented sector. I believe that they should be encouraged to provide more hostels and more accommodation for people; the old waiting list system must be abolished and people must be given a house on the basis of need and not on the basis of the period they have been on the waiting list.
All those things are necessary if you start from my premise. It is obvious that the Government does not start from my premise. The Yellow Paper suggests that the Government think that something can be done about the privately-rented sector; whereas I am saying that you should begin with the acceptance that it is going to dry up, and that all that one should be concerned about is what I would call the orderly transfer of responsibilities. In 478 other words, instead of having the disorder that I think we are having at the moment we should have an orderly transfer of responsibility. Therefore, the people now being catered for by the private-rented sector should be catered for in the public sector and other agencies should be encouraged to come in and play a part.
I believe that we will need a kind of rounded policy, a comprehensive approach, and obviously one would need not only a change in the attitude of the local authorities and their responsibilities but a change of attitude on the part of central Government in what they allow the local authorities to do. The local authorities have had the money which was allowed for municipalisation considerably reduced. The municipalisation programme, if you accept my premise, is one of the ways in which the local authorities can start replacing the private landlords in the field in which they now serve and where, I am insisting, they will no longer be. I am talking long-term; but, as I see it, the 50-year drift will go on and we will end up with practically no private sector except—and I will give the one exception—at the luxury end.
It is only at the luxury end that the private landlord can feel able to get a proper return and, therefore, only there will he continue. My view, and I am expressing obviously a different view from that of other speakers this evening, is that Government policy should be aimed at dealing with that and getting what I call an orderly transfer of the responsibilities which are now on the private landlord on to the shoulders of the public sector.
I believe, however, having said that, that in the process of the orderly transfer, one must what I would call maximise the uses that can be made of the houses that are still in the private-rented sector. I think a multiplicity of approach is what is required. I will throw out a few suggestions; for my time is up. I think of selected acquisition of dwellings by the local authority in areas of housing stress—and I have mentioned that recently—and a further examination of the potential for short-lease schemes to encourage the landlords to let vacant dwellings. The noble Baroness made some mention of that earlier. There should be some selective relaxation of security of tenure provisions 479 —and I will go along with her on that—even though this may be more cosmetic than real in its impact on lettings.
I have not, because of the time, gone into the argument of whether the 1974 Act has had the effect that was claimed for it; I do not believe that it has. I think that the RICS survey was not a good one and not very accurate; but there is no time to go into that. We can do some cosmetics along those lines; but I think it will be only cosmetics. Then we should also press the building societies to change their policies and to encourage lending on older proper-ties of private-rented sector origin. They are not doing it now. The local authorities were doing it, and are doing it, but the Government consistently cut the local authority allocations for this purpose; and somebody must do it. We must try to pressurise the building societies into doing it.
The Earl of SELKIRK
My Lords, I think the noble Lord, Lord Pitt of Hampstead, may well be aware that over £100 million has been spent by building societies on those precise properties.
§ Lord PITT of HAMPSTEAD
Yes, I know that; but they can spend a lot more because they have a lot more. My Lords, I know what I am talking about because I have been involved in trying to get building societies to do a lot more than they are so far prepared to do in this particular sphere, with the support of the local authorities, which they could get.
Another suggestion is that powers can be given to local authorities to acquire dwellings and pass them from non-improvers to improvers. A lot of the dwellings in the privately rented sector are steadily deteriorating. Again, local authorities could be encouraged to play a part there, not necessarily buying the properties and keeping them themselves, but passing them on to somebody else who will improve them. Obviously, the Government should look again at the whole question of repair grants, with a view to helping in this particular sphere.
Then we should be examining much more thoroughly the potential for co-ownership schemes between the private landlord and tenant or local authority and tenant, or between the local authority 480 and private landlord. We should be looking more and more at agreements made in this field. Remember I am talking about a gradual transfer of responsibility. Another point we ought to examine is the potential for trade union or employer-financed housing associations as a means of increasing resources for preserving rented accommodation. I can see no reason why the trade unions should not go into this particular field, instead of others.
My Lords, I have spoken for longer than I ought. I have been urged to be brief. My speech has not been as coherent as it would otherwise have been; I have had to discard a lot of what I had written. I know that I have sounded pessimistic, but this is how I see the matter. I personally think that if we are going to do anything about housing we need to be realistic. I am awaiting with great interest the reply from the Minister.
§ The Earl of KINNOULL
My Lords, before the noble Lord sits down, knowing his genuine interest in the welfare of private tenants, why does he think that private tenants would welcome the move to becoming council house tenants, when they would lose the security of tenure?
§ Lord PITT of HAMPSTEAD
My Lords, I am not suggesting that they would welcome it one way or the other. Although in theory they do not have security of tenure in local authority dwellings, in practice they have very good security of tenure, the truth being that local authorities do not evict. They do not evict, for the pure and simple reason that the publicity of an eviction is not very good for them.
§ 8.47 p.m.
§ Baroness BIRK
My Lords, it is clear that if I gave a simple answer to the noble Baroness's Question, it would be very short, it would be, "No" and I would then sit down. But I think from what has been said, both by the noble Baroness—who went rather wider than her original Question—and from other noble Lords, that what we really are talking about are the Rent Acts themselves. The Government are not carrying out a review of the 1974 Act, and we do not expect to bring in any legislation to amend it. What we are doing is reviewing 481 the legislation on privately rented housing as a whole. I was pleased to hear what the noble Baroness said about her view, and also the flexibility with which she approached it. From the debate in January 1975, from which she quoted her remarks, we have probably in thought moved rather closer together. I said at that time that I thought that, although the arguments had been, as usual, put very reasonably, there was a political and social chasm and it went further and deeper than this particular Act. If that chasm has been made smaller, then we are getting some way towards some partial form of agreement on what should be done in the future.
With one exception, we have not come to any decisions. But it would be surprising if we concluded that this corpus of legislation—to which reference has been made by almost every speaker—could not be improved. The purpose of the Consultation Paper was to invite evidence and representations to help us come to conclusions. The one firm point was that the Paper reaffirmed our commitment to the general principle of security of tenure for the tenant in his home. That is a firm and fixed point. Otherwise, it sought to ask questions, not to answer them. Since 1915 there have been some 25 Acts of Parliament (the noble Lords, Lord Middleton and Lord Molson were quite right about this) wholly or mainly to do with rent restriction and security of tenure for tenants of private landlords. Some 20 further Acts have contained amending or extending provisions. Some of this mass of legislation has been repealed or superseded. But a lot of it still remains. At a very rough estimate, when it has all been consolidated, it will amount to some 170 sections and 25 Schedules. That is about 220 pages of the Statute Book. The only thing I have not worked out is the number of words, and that would be most formidable.
In the review we shall be trying to simplify and shorten the law. I hope that those who suggest amendments to the Acts will bear this objective in mind. I could not agree more with all the noble Lords who pointed out difficulties that arise from the complexity of legislation which it is extremely difficult for the ordinary person and even, indeed, often for Members of Parliament and lawyers 482 to understand without great care and trouble.
So far as I know, nobody has gone through every word and comma in the Acts to see how much comes originally from Conservative—or Conservative-Liberal coalition—Acts and how much from Labour Acts. But at a very rough calculation, I would suggest that the score is about fifty-fifty, and that all Parties have been parents of Rent Acts. The Counter-Inflation Act 1973, for instance, brought practically all the more expensive unfurnished tenancies into rent regulation and security of tenure. At that time it was whispered that that Act dried up the supply of luxury accommodation and encouraged landlords to sell out or to let only to foreigners. But I will not dwell on that.
Nevertheless, it is the 1974 Rent Act that has entered popular demonology and become the symbol of everything alleged to be wrong with privately rented housing. It has become the whipping person for problems, many of which were apparent well before the 1974 change of Government. I should point out to the noble Baroness, Lady Hornsby-Smith—who made a very impassioned and humane plea for both landlords and would-be tenants who wanted accommodation—that there are people even in large houses who do not want to let rooms. It is nothing to do with the 1974 Act. They did not want to let them before that Act and they do not want to let them now. She also brought in the point about violence. The Rent Acts are not concerned with that. She may well be right; maybe it is a factor in this whole problem which is taken into account when one is looking at it in its whole social context. I do not think that one can refer to the 1974 Act on that basis.
§ Baroness HORNSBY-SMITH
My Lords, would the noble Baroness allow me to intervene? I brought in the question of violence, and if the noble Baroness reads Hansard, she will find that I deliberately said that that was something which could not be blamed on the Rent Act, and that there was this other consideration. I was blaming that on the Rent Act.
§ Baroness BIRK
My Lords, I thank the noble Baroness. We are in agreement over that. Nevertheless, the Act has been 483 blamed for the emptiness of many privately owned houses. Yet the figures on empty houses which are always quoted are those of the 1971 Census, which was three years earlier.
I found the contribution of my noble friend Lord Pitt extremely invigorating, and I do not think that he is quite so far away from the Government's view as he may feel, because the effect of trying to pin everything on to the 1974 Act is that all the other factors, some of which he mentioned, and about which he is quite right, are then forgotten about; that happens if one concentrates on one Act and does not look at all the other parameters which are responsible. There are a number of them, and, as I say, I think his approach to this aspect was refreshing. Unfortunately, to follow up some of those would take us rather too far a field.
One way or another, Rent Acts have been with us for over 60 years now. Yet the 1911 Census, which was before anyone but a few Utopians on the Left ever suggested rent control, recorded that 5.6 per cent, of all houses were vacant; and lower rents were advocated in Keir Hardie's 1893 Manifesto. So this is not a new manifestation. The percentage of 5.6 is higher than in many of the five Censuses taken since the introduction of rent control. I do not wish to make too much of such an elderly statistic but it is clear that, even in the days of laissez-faire and a Liberal Government, many landlords were reluctant to let. No doubt there were many complex factors behind these statistics then, just as there are now, although the factors themselves may have changed.
It has also been said that the Rent Act 1974 has hastened the decline of the privately-rented sector. But there again the number, as has been pointed out and accepted during our discussion today, has been diminishing since 1914, and particularly since 1945. The only previous Rent Act which appears to have increased the rate of decline was the Rent Act of 1957, which lifted all controls on new lettings. So we do have to look rather beyond the 1974 Act. That Act was introduced, your Lordships will recall, because landlords of furnished accommodation were making use of their freedom from controls to evict their tenants and sell with vacant possession. It was necessary to take action to 484 ensure that the decline did not take place in a precipitate and uncivilised way. However, I accept that some landlords may well have been deterred from letting: it would be foolish of me not to. There are so many ponderables and imponderables in this subject. But against that we must set figures which after the Act show a drop of nearly 50 per cent, in possession orders granted to non-resident landlords of furnished accommodation. On that point, I shall not add more to what my noble friend Lord Janner said.
The noble Baroness, Lady Young, referred to 600,000 dwellings having been lost since the 1974 Act. With all respect—and I think the same point was picked up, though with a slightly different figure by the noble Earl, Lord Kinnoull—I would point out that in 1974 there were not all that many furnished dwellings let by non-resident landlords in the whole country. So this is really one of the rather wild stories which have gone around as a result of that Act.
§ Baroness YOUNG
My Lords, I must apologise for interrupting the noble Baroness. I did in fact very carefully indicate that it was very difficult to get the figures and that this was one that I had been quoted. I quoted my source—from this magazine which has just been published from a reputable source. Of course, I entirely agree with what the noble Baroness has said: what we are looking for are accurate figures.
§ Baroness BIRK
My Lords, with great respect, I must point out to the noble Baroness that this is really an old ploy—one quotes something and then says, "Yes, I was quoting something else." But meanwhile the idea has been recorded and probably picked up by people. The noble Baroness also referred to a drop of 75 per cent, in the number of lettings advertised in the Evening Standard after the Act. The fall, as actually recorded in a survey commissioned by the Department, was 33 per cent. That occurred immediately after the introduction of the Act and was then followed by a recovery. I now understand that advertisements are running at about three-quarters of the pre-Act level.
That, of course, is a problem of these rather nebulous statistics. But I would 485 not even have been drawn into that question, although I did have it in my speech, because I do not like using that kind of information myself. But I felt that here I must try to counterbalance some of the arguments and show how very "aery-faery" they are apt to become if one gets into this particular area of statistics. So misunderstanding about the Act has been widespread and, if the House will bear with me for a couple of minutes, perhaps I might remind your Lordships of what the Act in fact did, not what it is thought or supposed to have done.
First of all, it provided that furnished tenancies granted by non-resident land-lords should be subject to full Rent Act protection. Secondly, it provided that new unfurnished lettings by resident land-lords would no longer be fully protected but subject only to restricted protection of the rent tribunal. That was a sort of opening up of the Act. Thirdly, it maintained the existing absolute right of a home-owner—for instance, a Serviceman who is posted abroad comes into this category—who may have let his home and given his tenant due notice at the beginning of the tenancy, to recover possession when he or a member of his family want to live in it again. It also gave the courts a new discretionary power to grant possession where a returning home-occupier had failed to comply with the procedural formalities but it was only equitable to waive them.
Fourthly, the Act created certain new exemptions from Rent Act protection and new grounds for recovering possession from protected tenants, such as retirement homes, holiday accommodation, off-season and university and college accommodation. Fifthly, the Act increased a resident land-lord's right to take court action against an unsatisfactory tenant. Sixthly, the Act made some technical modifications to rent fixing procedures, to make them more flexible. Seventhly, the Act removed the remaining restrictions on the granting of rent allowances to furnished tenants; and it is quite true, as one speaker has pointed out—I believe it was the noble Earl, Lord Selkirk—that there was a need to draw to people's attention their right to rent rebate.
I should now like to turn to the Consultation Paper. I was particularly glad to hear the congratulations on it from the 486 noble Earl, Lord Kinnoull. As he said, he does not very often congratulate the Government, and I rather feared that particular god when he came bringing gifts, but he was really very reasonable about it. Now that the Rent (Agriculture) Act is on the Statute Book, the Department are in a position to press forward with the review which, as your Lordships and the noble Baroness will know, has been talked about for some time. As a first step, we thought it right to give the many people in organisations affected by the Acts, or who were concerned about their effect, an opportunity to contribute—and I see this debate tonight as an important contribution to that important discussion.
The Consultation Paper is essentially a question-asking exercise. Indeed, it is built round a questionnaire. To judge by some of the comments that have been made on it, I think that noble Lords at some points were divided between whether it should have been a questionnaire or whether at this point the Government should have come forward with firm proposals. They were surprised at its open-ended form, but I hope they agree that it is much better that it should be in this form so that we are ready to consider new ideas or to reconsider previously rejected proposals.
We considered that we ought to see how the Act was working, and we realise that in places it needs a new look, as indeed the other Acts do. In particular, we shall be looking afresh at both the principles and practical procedures for rent fixing. If the noble Lord, Lord Molson, will forgive me, I think I would rather write to him on the point that he made. I can answer him now, but it would take some little time and I think it would be better to write to him regarding fixed rents, the effect of the Housing (Rents and Subsidies) Act and so on.
We were also looking at ways of taking account of the effects of inflation, raised by the noble Earl, Lord Selkirk. The objectives of the review are set out in the Consultation Paper and, briefly, I think they may cover largely these objectives. We shall be seeking to safeguard the interests of existing private tenants, and this seems to have general agreement. So that is a step on which both sides are agreed.
487 Secondly, we want to ensure that fit privately rented houses are properly maintained and kept in repair, and do not deteriorate so that there is no alternative to clearance. My noble friend Lord Pitt and the noble Earl, Lord Selkirk, made particular points on this subject, which they were absolutely right to do, because the Consultation Paper asks for suggestions on how the rent fixing system could take account of landlords' actual costs, and on how the house improvement grant system might be amended to cater for the special problems of rented property.
Thirdly, we want to promote the efficient use of housing, and to encourage the use of property which might be available for letting for limited periods only. This is a point on which the noble Baroness, Lady Young, laid considerable stress. She was absolutely right in saying that there are certain groups—and I agree that she had said so before—notably single young people and mobile workers, for whom private renting is a convenient though temporary form of housing. This is clearly an area which must be considered and on which we are seeking views. I very much hope that if the noble Baroness has any further thoughts on this matter she will let me have them.
We, also, do not say that a landlord ought never to be able to recover possession, even from a good tenant. We recognise that there must be exceptions. For instance, the Acts already provide exemptions to cover resident landlords, home owners who let their homes while they are away, purchasers of homes for retiring into, and certain other proprietors of housing kept for defined purposes but not currently used for those purposes. The Consultation Paper invites suggestions for other categories of dwellings which, although temporarily vacant, will be needed again by their owners and which could be the subject of new exceptions. Here I am thinking particularly of categories such as flats over shops, houses held by executors pending the winding-up of estates and houses due for redevelopment. I must say that in the last category there is often far too long a period while a house is boarded up, left empty, whether for local authority or private development, when it could be used as fairly reasonable temporary housing. The Paper also asks for evidence 488 of the number of houses which might be the subject of local authority leasing schemes, such as that pioneered by the North Wiltshire District Council.
We fully accept that resident landlords are a special case, and the 1974 Act recognised that their tenants ought not to have full security of tenure. Tonight, the noble Baroness, Lady Young, drew our attention to the provision designed to prevent resident landlords from avoiding the jurisdiction of the rent tribunal by granting a succession of fixed-term lettings. The Consultation Paper canvasses views on the general question of the jurisdiction of rent tribunals over resident landlords, but I must make it clear that we cannot see a way of taking the whole of the resident landlord area entirely out of the Act, as she wants to do.
The noble Baroness put forward the idea of short hold tenancies. At least in the form in which it has been put forward hitherto, it would represent an unacceptably wide breach in the principle of security of tenure and we doubt whether the limited safeguards that it incorporates would be effective, any more than the pre-1974 safeguards for furnished tenants were effective. But, again, I say that we are ready to look at new cases for possession to cover further special categories; and also at whether something of the kind she has mentioned could be worked, which incorporates the degree of security of tenure which we consider absolutely essential.
Paragraph 6 of the questionnaire in the Consultation Paper acknowledges the delay and expense which resident land-lords can face in recovering possession from bad tenants, and the fact that this may deter some property owners from letting; and questions 6 and 7 make it clear that we are prepared to look very carefully at these problems faced by resident landlords. But I must also make it clear that we attach great importance to maintaining a civilised procedure for recovery of possession, if a tenant refuses to go voluntarily. So that it would therefore be a case of finding the right balance between landlord and tenant, because, like other speakers. I certainly do not accept any dogmatic view that all tenants are good and all landlords are bad, or vice versa; one has to see this as a partnership, with the security point more on one side.
489 Our fourth objective is to ensure that the methods and criteria for the determination of rents are tailored to meet the difficulties faced by both landlords and tenants. There is certainly a great deal of evidence that landlords who regard their property as an investment are far more concerned about rent levels than about recovery of possession. This was certainly the view of the Royal Institution of Chartered Surveyors in their recent report on housing. I will not go into the different features of the report. The noble Earl, Lord Kinnoull, thought, that it was a very good report, while my noble friend Lord Pitt thought that it was bad. Nevertheless, it put forward some ideas which we shall obviously be looking at and considering with all the other ideas.
Fifthly—and this is one of the most important points—we want to simplify the law. To judge by the many letters we receive in the Department, many people, particularly resident landlords and home owners who wish to let their houses while they are away, and other small landlords, find it very difficult to discover how the Acts affect them. Often, they genuinely think that they are prevented from recovering possession or from raising rents, when in fact they are not. I accept that this is a legitimate criticism, and it is quite wrong that a situation like this should be perpetuated a moment longer than is necessary. Therefore, we would very much welcome suggestions on how procedures and definitions could be simplified. The first step is consolidation, to which both the noble Lord, Lord Middleton, and the noble Lord, Lord Molson, referred. I cannot at present give the noble Lord, Lord Molson, a firm promise as to introduction, but I can assure him that work on the drafting of the Bill is well advanced and I hope that it will have its First Reading in this House before we rise for Easter.
Finally, we want to provide a legislative framework which maintains a fair balance between the interests of tenants and land-lords. In the 1960s, many people came to the view that the fair rent system in Richard Grossman's 1965 Act had come near to achieving this. In the event, it was strained by inflation and the proliferation of unprotected furnished lettings, often in properties which had previously been let unfurnished.
490 Therefore we come back to the points which were made by my noble friend Lord Pitt of Hampstead: to the problems which beset us like a minefield. The noble Lord may well be right in the long term about many of the points that he made. However, when we are faced with a housing problem of this magnitude—here I join those people whose approach I do not necessarily agree with—we must use to the utmost even a diminishing area of our housing stock while we are trying to find a new way to deal with the problem or of interrelating the two.
Obviously, resident landlords are very concerned about security of tenure. So are home owners and purchasers of retirement homes. I hope that I have made it clear that we are aware of their problems and that we are seeing what we can do to help them. Certainly I and my Department will be taking very careful note of what noble Lords have said this evening. We shall look carefully at all their suggestions when we consider the evidence submitted in response to the Consultation Paper, to see in what way we can use the present rented housing stock to maximise its capacity for letting and help to overcome the problem of the homeless.
The noble Earl, Lord Selkirk, and the noble Lord, Lord Molson, mentioned that the number of dwellings in the country exceeds the number of households. The problem with the statistics which both the noble Earl and I have used is that, while he was using United Kingdom statistics, the official housing and construction statistics in the Consultation Paper are for England and Wales. The statistics show that there were nearly 17.9 million dwellings in England and Wales and only about 17.4 million households. This is an encouraging figure; it shows that a great deal of progress has been made over the last 30 years. Gross totals are, however, somewhat misleading.
I must point out that at any given time a certain number of houses must be empty to allow for mobility and also for modernisation and rehabilitation. If one allows a 4 per cent, vacancy reserve—and that is a figure commonly quoted—the surplus disappears. Nevertheless, the reserve varies very much from place to place. I am not saying that we should be complacent about the number of empty 491 houses that there are at any one time, although we have to bear in mind the geographical distribution of dwellings, which does not always match that of households, and the sizes of the existing stock of dwellings, which do not match necessarily the demands of existing families. Certainly one of the great social changes of the last 30 years has been the increase in the number of small households. More than half of all house-holds now consist of one or two people, yet the housing stock still consists mainly of family-sized dwellings. It may be that there is no overall shortage, but in many places shortages are still all too real for many households.
If I may interpolate one figure, the noble Earl, Lord Selkirk, is not correct in thinking that there was an error and that the figure of 2,000 should have been 2 million. The figure of 2,000 is quite correct. It is a rough estimate of the small number of privately rented flats and houses above the rateable value limits of £1,500 in London and £750 elsewhere. It is in this general context of trying to see where there is injustice and hardship that we shall be developing our policy for the private rented sector. We do not intend to take decisions until we have studied carefully all the representations and evidence. Nevertheless, as I think I said in answer to a Question the other day, we hope to announce our conclusions in the course of this year.
I should welcome very much the dialogue which has been suggested by the noble Baroness. I hope that this debate, together with the Consultation Paper, has been a good start and will form part of the general discussion and consultation. Although we still have a fairly strong difference of opinion on security of tenure, certainly in the field of the residential landlord, I think that there is a great deal which can be done to make the best use of the existing stock of rented housing, even taking into account the change in living behaviour patterns over the last decade and the way it is panning out for the future. A great many surveys are being undertaken and much research is being done. However, as with all surveys they are always in the middle of it when the conclusions are needed. We are extremely conscious of these needs. If 492 we can reach agreement on any area, certainly it can only be for the good of all people who are searching for homes. On that point the noble Baroness and I are in total agreement.