HL Deb 02 July 1980 vol 411 cc373-464

House again in Committee, on Clause 51.

3.58 p.m.

Lord STRABOLGI moved Amendment No. 116A: Page 36, line 4, at end insert— ("(3) A tenancy of a dwelling-house is not a protected shorthold tenancy if it relates to a dwelling-house which—

  1. (a) was subject to a regulated tenancy at the commencement of this part of this Act; or
  2. (b) has, since the commencement of this Part of this Act, become vacant.").

The noble Lord said: I beg to move Amendment No. 116A standing in my name. I think it is conceded that the principle of shorthold will make considerable inroads into security of tenure. This is not a party matter. The noble Lord. Lord Bellwin, on one of the previous amendments spoke about "the views of noble Lords opposite". Well, I think the views that we hold will be held also by many of his noble friends. Security of tenure we owe, I think, principally to Mr. Christopher Tugendhat, the previous Member for Westminster, who was my Member, and other central London Conservative Members of Parliament. Mr. Tugendhat was a very good MP, and I personally was sorry when he left Westminster to take up an important post in Europe.

The reason why he strove so hard, and eventually got the Government of Mr Heath to agree, to put security of tenure on most flats below a certain rateable value, which indeed was to include most flats except the expensive penthouses, was because at that time we were in the middle of the break-up era which began in the late 'sixties and then came to its height in the early 'seventies, and the Rachmanism that went with it. Indeed over the last 10 or 15 years we have seen a complete revolution in the methods of tenure of apartments, in the centre of London mainly, and the other big cities.

In the era of cheap money, when they were able to borrow money cheaply from the banks, property developers then acquired these blocks of flats from old-fashioned companies, many of them family trusts. They then persuaded, or threatened in various degrees, the tenants with having to buy the long lease or to get out. It was called "winkling out". Of course many tenants then bought their long leases and lost the security of tenure, if those leases were for over 21 years, and those tenants are now in trouble with their service charges, as we shall find when we come to Schedule 18. Therefore, security of tenure was put on most flats in London and the big cities.

One of the snags of shorthold is that it removes the security that goes with the flat or the dwelling. At present if a tenant leaves his dwelling and a new tenant moves in the new tenant enjoys the same protection. But after shorthold comes in, if anybody has to move the tenancy will then go into shorthold. The Government say that nobody has to do this and that all existing tenants will have the same security that their party put on tenancies some 10 years ago. People often have to move. The family may grow or they may want to have their mother-in-law to live with them. They may have been abroad and have returned. Not all people have large companies who buy houses and apartments for them. Many of them have to find their own accommodation. They will go on to shorthold where they will he given a choice of a tenancy of one year, perhaps; if they are lucky, five years, with no opportunity to renew it. They will therefore have an increasing sense of insecurity. It will not even be worth having the curtains made.

I concede that there may be a case for shorthold on empty property. If there are as many properties empty as the Government claim, there may be a case for that. But there is no case for changing all properties into shorthold because, within a decade or two, there will be no security of tenure left at all—this, of course, in an area of acute housing shortage. This all started, of course, with a Private Member's Bill by Sir Brandon Rhys-Williams, but the aim of his Bill did not extend at all to future property becoming vacant. It was made quite clear that this was only for empty property. Indeed, the sponsor of the Bill and all the other Conservative MPs in Central London—this is not at all a party matter—are very concerned about this development and about the genie that has been let out of the bottle. They probably did not know what had been started.

The Government's switch of policy will lead to greater insecurity in the private sector, and it must also be seen in conjunction with increasing rents, the services charge loophole, and the acute pressure on housing in Central London. It is also not in line with the Government's very clear undertaking during the election campaign. One of their spokesmen (and I heard this myself) was asked by a listener who phoned in just a few days before polling day: I have always voted Conservative all my life. One thing I am worried about though are the proposals that you have for shorthold". The spokesman said: There is no need to worry, only properties that are empty on a given date can fall within the scheme that we propose as regards shorthold". If it is empty now, not if it becomes empty subsequently—I think I have made that point quite clear. Later on he said: What we have said is that where there are empty properties on a given date then those could be rented on fixed terms which would give security during the period of that term". That was reinforced by the Conservative election manifesto which said: There are now hundreds of thousands of empty properties in Britain which are not let because the owners are deterred by legislation. We intend to introduce a new system of shorthold tenure which will allow short, fixed-term lettings of these properties"— I repeat that, "of these properties"— free of the most discouraging conditions of the present law. This provision will not, of course, affect the position of existing tenants".

As the noble Lord, Lord Evans, said, there are many good landlords. I have always been fortunate in that respect myself. But there are also a number of landlords who will take advantage of this new provision. If, as the Government claim, there are all these huge numbers of empty properties, why do they not concentrate on the properties that are empty now and leave the other ones alone? That is why I submit this amendment to the Committee, because the tenants of Central London are considerably worried about it, and so are their Conservative representatives. There is considerable worry about this, and I hope the Government will have second thoughts.

4.5 p.m.


Again, I shall resist the temptation to make some of the observations on the generality of the intentions behind the shorthold proposals, although I was very interested in some of the historical points made by the noble Lord, Lord Strabolgi. These amendments would have the effect of restricting short-hold to tenancies that were not being let on regulated tenancies at the time the Act came into operation. It would also prevent from being let on shorthold any dwelling that became vacant after the Act comes into operation. Any dwelling that becomes vacant after the Act comes into operation would, if this amendment were passed, be prevented from being let.

I presume from what the noble Lord said that the intention of this amendment is to ensure that there is a continuing supply of accommodation available for lettings on ordinary regulated tenancies. I do not believe it would achieve this. In my view, the effect would be precisely the opposite. It would encourage landlords to sell as soon as they obtained vacant possession. The Government certainly hope that shorthold will encourage landlords who have been holding property vacant because they are deterred from letting by existing legislation, and that they will make that accommodation available for renting. We firmly believe that properties that are currently vacant should be a source of shorthold lettings, but the Government do not believe that this should be the only source. One of the reasons for the decline of the private rented sector is that landlords are selling when they get possession. I hope that shorthold will encourage them to consider re-letting rather than selling. The effect of this amendment would be to prevent them from letting on shorthold, and it would therefore severely restrict the opportunities for so doing. That may well be its aim.

I just cannot see how it can be logical to suggest that because a dwelling was at one time let on a regulated tenancy basis it should thereafter remain empty. What is magic about the date of commencement of the Act? It just does not make sense to me. The noble Lord, Lord Strabolgi, said this is not a party matter. I am glad to hear him say so. Would that his party had not already committed itself not only to doing away with shortholds but to going much further, as I shall mention when we come to discuss the matter further. I would have thought it was very much a party matter. It is true that there are members on, if I may put it that way, my side who are concerned, but I am satisfied that as we go through these amendments and as we discuss the matter a little further during today we shall be able to give explanations that will satisfy them.

The noble Lord said, why not concentrate on empty properties? Certainly that is one of the very hopes of what shorthold will be, that it will induce those who own those empty properties now to let them, whereas hitherto they have been unwilling to do so. Now they will be able to see a time when that letting will come to an end should they so desire it to do. But at least for a time there will be properties brought on to the market, if this succeeds, which at present are not there. They are not available to anyone at the present time. They are either empty or they are premises which are under-occupied for whatever reason. That is a fact.

I keep saying, to make all the points I have to make on the general philosophies behind shorthold, that as far as this particular point is concerned it will not, as the noble Lord, Lord Strabolgi, says, create additional pressure on housing in the centre of London. It will have exactly the opposite effect. If it has any effect at all, as we believe it will, it will be precisely the opposite. It is for that reason that we must resist the amendment.


I am sorry that the Government cannot accept the amendment. As I said before, it would have been much better if they had started this new experiment with empty properties and allowed security of tenure on existing inhabited dwellings. I do not think that they have any idea of the sense of insecurity that they are bringing to people who do not own houses but who live in these dwellings. When they go into a dwelling of this kind they do not know how long they will be there—it may be one year, three years, four years or five years. They will be there entirely at the whim of the landlord who, of course, will bring all kinds of pressures to bear upon them in other ways in respect of not going to the rent officer and so on. However, once again these are points which we can discuss on subsequent amendments. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.11 p.m.

Lord EVANS of CLAUGHTON moved Amendment No. 117: Page 36, line 8, leave out subsection (4).

The noble Lord said: As the clause stands at present it appears to allow the Secretary of State a dispensing power to be exercised very freely to release the only shred of protection that a shorthold tenant has, which is that the rent he pays must be a registered rent. I think that I understand the philosophy behind the proposal in the Bill in that the Government hope that there will be so much vacant property available in various areas of the country that this regulation will not be needed. But I should have thought that in a matter of this importance the deliberate protection of the shorthold tenant is minimal, and that this shred of protection of enjoying a registered rent is not one that we should be willing to dispose of in this fairly easy and cavalier way. In my view the Secretary of State should have to come back to your Lordships' House and Parliament generally if he wished to dispense with this power.

It seems to me that because of the very sensitive nature of this legislation, and the very sensitive balance that many of us feel as to whether we can or cannot support it, it is ill-advised that this clause should be inserted in the Bill and that is why I beg to move this amendment.


I should like to speak in support of my noble friend on a rather different ground from the one on which he has put the matter to the Committee. It seems to me—and I do not know whether I am the only person in the Committee who has this reaction—that subsection (4), which the amendment seeks to delete, is almost unprecedented in the legislative history of this country. If one looks at the clause, one finds that subsection (1), paragraphs (a), (b) and (c), sets out the conditions which must be complied with in order that a tenancy can be a protected shorthold tenancy. That, of course, if it is enacted and carried, will be enacted—as every part of this legislation is enacted—under the authority of the preamble to the Bill. I shall quote the preamble which says: Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same". Then, to my astonishment, when we come to subsection (4), which we are discussing at present, we see that it provides that: The Secretary of State may by order direct that subsection (1) above"— that is the subsection to which I have been referring— shall have effect, either generally or in relation to any registration area specified in the order, as if paragraph (c) were omitted". Am I wrong in thinking that what that is saying, in effect, is that it will be within the power of the Secretary of State, and within his unlimited power, to abrogate what Parliament has decided upon? He will not only be able to abrogate it geographically, because the subsection provides that he may nullify the condition (c) generally or in relation to any registration area. Therefore, he may not only nullify the whole decision of Parliament with his decision, but furthermore the power which he is given under subsection (4) appears to me to be entirely unfettered. At his whim, and subject to no control whatever, he may abrogate and nullify the condition (c).

There is no mention in the subsection of any considerations to which the Secretary of State must apply his mind. On that account I suggest—and perhaps the Law Officers will be able to deal with this point in due course—that the decision of the Secretary of State, if he does decide to annul this condition either in whole or in part, will be wholly unchallengeable in the courts because it is quite impossible to say that his decision is ultra vires if no conditions are attached to the way in which he exercises that discretion.

I suggest that the third consequence of this subsection is that, because the Secretary of State will be entitled to apply the subsection or say that the subsection shall not apply to one particular region but shall apply to another, it will be within the power of the Secretary of State, of the Executive, to distinguish between the rights of the subjects in this Realm depending upon the accident of whether they happen to live in one place or another.

To my mind it is astonishing that at this stage, after the Civil War that we fought in this country to contest the divine right of kings, we should be asked to enact today that it shall be within the power of the Secretary of State to decide whether something which has been enacted by this Parliament and this Queen in her Realm shall be altered, and shall be, if necessary, abrogated and nullified. This is a much bigger point than the point involved as regards the Housing Act. It is a constitutional point and I suggest, with respect, that the inclusion of a clause of this type in any Act of Parliament is wholly unconstitutional and wholly improper.


It is important that the constitutional point has been raised. I feel that the onus is on the Government to show that subsection (4) is absolutely necessary, otherwise we are faced, it seems to me, with a very uncertain state of the law if we pass the Bill in its present form.


I have listened with great interest to what the noble Lord, Lord Foot, has said. Like him, I have been trying to think whether there is any parallel for this sort of thing. I doubt that there is, but I do recall an item in the Rent Act 1957 that made it possible for the Secretary of State, by order, to decontrol certain areas. Of course, it is not a very happy precedent. The experience of what was called "creeping decontrol" was so unattractive that, after a time, the Secretary of State had to give an undertaking that there would not be any more for a while—at least not until the next general election was over. However, it was not as drastic a defiance of what is in an Act of Parliament as is now proposed.

There are two further points. The Secretary of State can create a situation in which paragraph (c) can be set aside. What happens? I think that it is clear enough that certainly one thing happens; namely, any future shorthold tenancy created, can be created, if the Secretary of State has used these powers, without there being any registration of rent.

But what about shorthold tenancies already in existence with a registered rent? The offending subsection says: The Secretary of State may by order direct that subsection (1) above shall have effect, either generally or in relation to any registration area specified in the order, as if paragraph (c) were omitted". I do not know whether, if he made such an order, that would be interpreted to mean that shorthold tenancies already in existence with a registered rent under subsection 1(c) no longer had such a registered rent; that the tenant had no certainty as to what the rent might become. I may be wrong in my interpretation of it, but I think that he would be a very resolute person who would flatly and confidently contradict me immediately. The tenants really ought to know where they stand on this matter. Does it apply only to future shorthold tenancies, or does it undermine the situation of people who have already entered into shorthold tenancies with a registered rent?

Then the noble Lord, Lord Foot, very wisely mentioned the unfettered nature of the power of the Secretary of State. Even the regulations under the 1957 Act allowing for creeping decontrol had to be made by means of an order which required the approval of Parliament. Surely if the Secretary of State is to make an order of this kind, it ought to be one that runs the gamut of parliamentary approval. Perhaps one might be able to dig out somewhere in this voluminous Bill a clause saying that an order made under Clause 51 must have the approval of Parliament. However, I am bound to say that I have not yet found it, though he would be a rash man who would say for certain that anything was not in the Bill.


Perhaps I may interrupt the noble Lord in order, I hope, to help him. I should like to draw his attention to Clause 140, which provides that: Any power of the Secretary of State to make an order or regulations under this Act shall be exercisable by statutory instrument subject, except in the case of regulations under"— and then it quotes certain sections— or an order under section 59 or 142, to annulment in pursuance of a resolution of either House of Parliament". In other words, certain regulations can become effective only if they are endorsed by Parliament; but that provision does not include Clause 51(4), which is the one we are talking about at present.


It is that which worries me. I think that the Government ought to look at this again. They should be able to say to us with confidence what the position is of a tenant who has already entered into a shorthold agreement, if this power is used, and be able to tell us on what authority they make that pronouncement. Secondly, they ought to put some greater limit on the powers of the Secretary of State than there apparently is in the Bill as it at present stands.


In moving the amendment, noble Lords have argued that wherever and whenever a shorthold letting takes place the rent must be one which the rent officer has registered. They have suggested that without a registered rent tenants will be subject to excessive pressure. In so arguing they have illustrated a tendency in landlord and tenant legislation which your Lordships may agree has caused much unnecessary difficulty. The tendency of which I am thinking is to legislate for the whole country on a uniform basis in response to a problem which has arisen in pressure areas. For example, can anyone seriously question that it was something of a disaster to apply full Rent Act protection to furnished lettings everywhere, as was done in 1974 when the problem, such as it was, and is, was alleged to be serious only in London and other city areas—areas of housing stress. The same is true of rents. In many places landlord and tenant would probably be happy to agree rents between themselves without the need for statutory intervention.

Where these rights have been established we are not, of course, taking them away. I am simply illustrating the fact that much previous legislation in this area has been far more sweeping than necessary. Perhaps I may digress for a moment and say that when I was on the committee studying the workings of the Rent Acts 1965 and 1968, to which task I was appointed by the noble Lord, Lord Greenwood of Rossendale, one of the facts that impressed me so much, when reading through and when taking oral submissions of evidence from hundreds and hundreds of organisa- tions and individuals, was the great problems that have been created by legislating for everywhere on a uniform basis in this way. There were also many other problems, some of which will come up during the course of discussions on other aspects of the Bill. This certainly was one of them. There were also the great fears to which it had led in landlords who had wanted to be landlords and who were only waiting for the day when they could no longer be landlords—landlords who wanted to get out of renting for reasons about which we all know.

Referring to the amendment specifically, where the rights, to which I have referred, have been established we are not, of course, taking them away. I am simply illustrating the fact—and I repeat it—that much previous legislation in this area has been far more sweeping than necessary. It is clear that this thought had occurred to the authors of the Labour Rent Act 1977. Section 143 says that where in relation to an area the Secretary of State is satisfied that the demand for rented accommodation of a certain category is not substantially greater than the supply, he can, by order, provide that no such accommodation in the area shall be the subject of a regulated tenancy. In other words, both security of tenure and rent regulation could disappear completely.

Turning back to shortholds, as it so happens we have been more stringent than the Rent Acts by providing in Clause 51(1)(c) that a fair rent must be registered for shorthold. In an ordinary letting the Rent Acts provide that a fair rent may be registered; in other words, registration is optional. In the subsection which this amendment seeks to remove we have simply allowed for a reversion to the normal Rent Act position of optional registration. If your Lordships agree that conditions in private renting can differ radically from one area to another—and I should hope that that is not disputable—it seems only sensible that we should have a power to revert to the normal Rent Act position by area if that seems reasonable in the circumstances. I certainly do not rule out a use of this power. There would otherwise be no point in having it in the Bill. Whether it is used, and where, would be a matter for my right honourable friend to decide in the light of national and local circumstances.

I should like to touch upon the point referred to by the noble Lord, Lord Stewart, about the position on rents already registered. I should like to stress that reverting to the normal Rent Act position would in no way take away the force of any registered rent in operation for a shorthold; nor would it take away the right of landlord or tenant to apply for a fair rent at any time. When one considers that the Labour Rent Act contains a power to remove the whole fair rent system and security by area, Clause 51(4) seems a very mild proposal indeed. I am quite sure that it should be retained.

I should like to refer to one or two other observations that were made, certainly by the noble Lord, Lord Foot. With respect, I should have to point out that Clause 51(1)(c) can, in fact, only be brought in by order by a Negative Resolution and, therefore, if prayed against it could, of course, be debated—it could not happen on its own. Whether or not there are, indeed, any aspects of this whole matter which are unconstitutional, in that the point has now been made, I am sure that my colleagues will look very carefully at that. I hope that that will satisfy my noble friend Lord Hylton who expressed concern on that matter. Of course we shall look at it. From my own knowledge of this, I certainly doubt it, but if it is so, quite clearly we must and shall look at it.

As for other points made by the noble Lord, Lord Stewart, who cited the precedent of the 1957 Act for decontrol, we shall be discussing certain aspects of that a little later. I am not sure that I quite follow how this makes a point in favour of the amendment; nevertheless, it is a matter about which I am looking forward to talking later. I do not think that I can helpfully add much more. I believe that it is another part of the objections to shorthold which I fully understand are held by noble Lords sitting opposite. I hope that in turn they would accept from me that we believe, with equal sincerity and conviction, that these proposals are a tremendous advance and step forward in this problem. I fear that so far as the amendment is concerned, I cannot accept it.

4.30 p.m.


May I follow the noble Lord before the noble Lord, Lord Boyd-Carpenter, because there is something I want to withdraw? When I interrupted the noble Lord, Lord Stewart, and drew his attention to Clause 140 of the Bill, I was in error. It is correct that the particular subsection we are talking about does come under the Negative Resolution procedure. I accept that, and I apologise to the Committee for having, temporarily at any rate, misled them.

However, that does not go to the gravamen of the argument that I was addressing to the Committee. The noble Lord, Lord Bellwin, sought to draw an analogy between this subsection in this Bill and a section in some earlier Rent Act. The section that he quoted—and I can only remember it from what he had to say—went something like this: "The Secretary of State shall, having regard to this, that, and the other, if he sees fit and thinks reasonable, make an order". That is very different from the subsection we are trying to delete from this Bill. The discretion of the Secretary of State here is unfettered in any way whatever. He has not got to be satisfied about anything. He has not got to apply his mind to anything. There is no way in which, if he laid an order, it could be challenged in the courts as being ultra vires.

I address my remarks now not on any party basis whatever but because I believe that we should be making at any rate a minor blunder if we allowed this subsection in this Bill to establish a precedent for the future. I dearly hope that if this matter is carried to a Division the Government Whips will not call upon their cohorts to come here and vote upon a matter of constitutional principle, when most of them—I do not complain about this, of course—have heard nothing of the discussion that has gone on. I hope that if we see fit to carry this amendment to a Division the Whips will not be put in control of their supporters in order to vote the amendment down.


From the practical point of view, my noble friend the Minister has satisfied some of the doubts on this amendment that I held at an earlier stage of the debate. I hope he will not think it offensive if I say that he left me a little less happy on the constitutional point which was so well deployed—it is indeed a family habit well to deploy these constitutional points—by the noble Lord, Lord Foot.

It is now clear—and here the noble Lord, Lord Foot, has generously admitted that he was in error on the original point—that if the Secretary of State sees fit to make an order under subsection (4), that order will be subject to the Negative Resolution procedure. That is certainly how I also read it. But those of us who have had some experience of the Negative Resolution procedure know what an inadequate safeguard this is for a matter of substantial importance. In another place, as I understand it, the time for discussion on Prayers to annul these Negative Resolution instruments is restricted. It takes place late at night. In this House it is a very long time indeed since such a Prayer was carried to a Division. I wonder whether the Negative Resolution procedure is sufficient to cover a situation in which the Secretary of State will be giving himself power to suspend the operation of quite an important part of this Bill—soon, I hope, to be an Act—in respect of particular areas.

I formed the impression that my noble friend was his usual confident self on the practicalities of housing administration—and he has reason to have every confidence in himself on that subject because his experience is almost unique in this House—but seemed to me less than happy when he indicated that he would have another look at the constitutional aspect. For my part, I should he greatly relieved if my noble friend, without making any commitment, would say that between this stage and the next of this Bill he would, with his right honourable friend the Minister, have a look at the idea of substituting the Affirmative for the Negative Resolution procedure in respect of these orders.

As the Committee knows, if you have the Affirmative procedure the Government have to bring the instrument before the House, and they normally have to do it at an hour of the day when debate is effective. I hope that my noble friend, who seems to me very reasonable on this aspect, will indicate that he would be prepared, in view of the doubts raised—some of which seem to me to go beyond the normal party or controversial issues of this Bill—to see whether the Affirmative procedure could be substituted.

I know it iF never popular in Government circles to provide an additional order that comes in the Affirmative procedure. From the point of view of the Whips it is a nuisance, because they have to find time for it at some stage. But there is some force in what the noble Lord, Lord Foot, said about the fact that the subsection which would be suspended is to be the outcome of a considered legislative decision of both Houses of Parliament. Its suspension, perhaps over wide areas—I express no view; it might be sensible to suspend it over wide areas; I do not know—is quite an important constitutional act for any Minister of the Crown to take. Although I have the utmost confidence in the present Secretary of State there is always the possibility that there may one day be another in whom one might have much less confidence. I should like to see the Affirmative procedure adopted.


In support of my noble friend Lord Boyd-Carpenter, may I just point out that Clause 59 of the Bill is already proposed to be under the Affirmative procedure.


Of course I readily agree that we should do precisely what my noble friend says. I am grateful to him for the way he put it. As I think I indicated before, how could I be on certain ground when a constitutional point is raised by noble Lords of experience and knowledge? Clearly one would have to look at it. The suggestion that my noble friend makes, that possibly the Affirmative order procedure might be better, could indeed be an answer. I cannot say, and I know he does not expect me to say at this moment, that that is so. I cannot make a commitment, but I think the point is valid that we should look at it. I think also that the power to the Secretary of State would be a far-reaching one and involve an important matter. Therefore I have no hesitation in saying yes, of course, we will do precisely that.


While the Minister is in this receptive mood, may I suggest to him that if he wants to rely upon that section of the earlier Act which he quoted, which began, The Secretary of State, if satisfied that certain circumstances exist, may make an order", he should take this subsection away and write into it what the Secretary of State has to be satisfied about; because Parliament really would like to know what has to go through the Secretary of State's mind before he makes an order under this subsection.


I do not want to drag out this matter—we have so much ahead of us—but on that latter point I should have to say that of course we will look at it, but I am very doubtful whether the Secretary of State would want to lay down such rigid lines. It would take away from him any flexibility whatsoever. Indeed, the point I made earlier was that one of the matters that have so bedevilled housing above all other things in this country has been some of the attempts to legislate nationally for situations which differ so much locally. Having said that, I would add that of course if we are looking at this matter we shall look at everything, that is said on it.


I had not realised the extent of the problems that would arise when I moved the amendment. From the housing administration point of view, the point of view on which I am perhaps more expert than I am on the constitutional point, I am not happy with the proposal to allow the Secretary of State to make these orders. However, in the light of what the Minister said and the helpful remarks made by noble Lords in all parts of the Committee about this, and the undertaking the Minister has given to have another look at it—bearing in mind that I can always return with an amendment on Report if I am not satisfied—I will withdraw the amendment. I had not realised that I said the Secretary of State was taking cavalier powers to himself, but on listening to my noble friend Lord Foot, I realise how apposite those words were, particularly bearing in mind the distinguished father he had who was a great expert on keeping cavaliers in their place. On those terms, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 118 not moved.]

4.41 p.m.

Lord STRABOLGI moved Amendment No. 118A: Page 36, line 20, at end insert— ("(6) A tenancy of a dwelling-house is not a protected shorthold tenancy if prior to the grant of that tenancy a previous protected shorthold tenancy of that dwelling-house had been granted by the landlord and had been the subject of proceedings for possession under Case 19 in Part II of Schedule 15 to the Rent Act 1977.").

The noble Lord said: With permission, I will speak at the same time to certain consequential amendments, namely, Nos. 122A, 122B and 282A. This amendment, I submit, is an improvement on No. 118, which was not moved. This series of amendments seeks to give the shorthold tenant first option on any subsequent letting of the dwelling-house. It will be recalled that the idea that the shorthold arrangement should provide for such an option originally came from Sir Brandon Rhys Williams' Private Member's Bill, which I referred to earlier but which, like so much else, has been changed by the present Bill.

All that the amendment requires is that the notice served on the tenant should contain a declaration by the landlord that he does not intend to grant a further tenancy of the dwelling-house. Should the matter go to court, that declaration would then be part of the landlord's case for possession. This proposal thus entirely avoids the difficulties foreseen by the Minister in another place in establishing a separate procedural mechanism to deal with the offer and acceptance of an option. Nor is the amendment linked to the proposal that the rent officer should keep a separate register of all short-hold tenancies. That is a propsal that has its merits, but the Minister made clear on Report in another place that in his view a register for shortholds would be cumbersome, and there is probably much in what he said.

If the landlord cannot give some good reason why the existing tenant is unsatisfactory, and the landlord wants to continue letting the accommodation, then he is constrained to offer the existing tenant the option to remain. That is the nub of the option. The landlord can only get possession against the bad tenant when he intends to take the dwelling out of the market for renting. Thus good, shorthold tenants—I am sure there are many good shorthold tenants, just as the noble Lord continually reminds us that there are many good landlords—know they will be secure not only for the initial term of the tenancy but until the landlord no longer wishes to rent the dwelling. I beg to move.


This series of amendments would severely restrict, in a way we could not accept, the circumstances in which shorthold could be used. Their effect would be that a landlord could be sure of letting any particular dwelling on shorthold once only and that he could not let on shorthold at all any dwelling he might want to let again, whether on shorthold or, for that matter, on any other type of tenancy at some time in the future. That would be quite unacceptably restrictive. The Government's view is that shortholds should be widely available to encourage landlords to go on letting and to make more accommodation available. That is the whole object of the exercise.

The only restriction we are placing on the the use of shorthold is that an existing statutory or protected tenant cannot have his tenancy converted to a shorthold. We have done that because of our manifesto commitment that short-hold would not affect the security of existing tenants. As I have indicated, these amendments would completely undermine the whole concept of shorthold, and we therefore cannot accept them.


The purpose of this series of amendments was effectively to give the shorthold tenant the option to remain where the landlord intends to continue renting and where there is no reason why, if he is a good tenant, the landlord should not continue renting to him. However, clearly they are not acceptable to the Government and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.46 p.m.

On Question, Whether Clause 51, as amended, shall stand part of the Bill?

Baroness BIRK

We are dealing with the whole basis of this part of the Bill and it seems that to have a general debate on the matter on Clause 51 is as good a place to have it as on, say, Clauses 50, 52 or 53. We are dealing with the whole principle of shorthold. I find—and I do not think this view is restricted to myself or members of my party—very little enthusiasm for this concept, except probably among members of the Conservative Party. It is clear from a Westminster Council press release which I read that they have very grave doubts about it, and they too discuss the problems of shorthold as set out in the Bill. Tenants do not like it because it leaves them with the threat of homelessness. I also find it strange that, while it is called "protective shorthold", the protection is very limited; the shortholds as laid down in the Bill are from one to five years and, as we know, in such a situation the minimum will become the maximum, so the likelihood is that shortholds will not be longer than one year.

Landlords do not like it. Certainly I have not seen a great deal of correspondence from landlords saying, "Support this". They are concerned about it because there is very little financial return in it for them. The taxation position makes it far more advantageous for a landlord to sell than to rent. Despite what I am sure the Minister will say, we have seen that from as far back as 1900, the private rented sector in this country has been shrinking all the time. Even after decontrol in 1957 the rented sector continued to decline. This seems, therefore, to be an ideological creature of the Conservative Party, who are committed to reviving the private rented market despite all the evidence to the contrary.

Indeed, there is very little evidence that this will generate new lettings. The surveys do not show that it will bring more accommodation onto the market and it will mean that lettings which are at the moment secure will, when they come to an end, become shortholds, so the whole area of secure tenancies will gradually be eroded—and it will not be such a gradual process because I fear it will happen quite quickly, and then we shall have a generation of homelessness. This is a delayed time bomb because once one gets beyond the first phase of shorthold lettings, when the tenant of the so-called protected shorthold will have no protection, it will become a very insecure shorthold letting and may necessarily go on for a period of only one to three months.

Today the private sector can exist economically only on high rents; this is what we are seeing. What about the average family who are looking for somewhere to live, but are unable to buy? Where can they go? Their only resort is to local authority housing—the public sector—or to housing associations; and these are the bodies which should be, and are, taking over the stock of rented accommodation. Here I refer to Part I of the Bill dealing with the compulsory sale of houses, or as the Bill describes it, the right to buy. These provisions make it extremely difficult for local authorities to increase their housing stocks, or even to keep them up. Because of the cut in the housing investment programme there will be a fall in rented accommodation, which is so very important for many families in this country.

What I regard as particularly unfortunate about the Bill is that the safeguards which were included in the Private Member's Bill moved by Sir Brandon Rhys Williams in another place have largely been dropped. Those which were in fact, accepted had to be pressed on the Government. I have in mind, for example, the provision about rent registration in relation to the application for shorthold. There has been no willingness to include in this Bill basic safeguards which in another place were incorporated in a series of Bills with considerable Conservative as well as Labour support.

In the original Private Member's Bill, for example, there was a provision that to start with only empty property should be available for shortholds, which makes sense. The aim was to bring empty properties into the market, and there is something to be said for that. We moved some amendments the other evening on those lines. The present Bill contains nothing regarding the minimum standards, and now the Government have just rejected a proposal regarding a tenant having first refusal at the end of a short-hold. My noble friend who moved the amendment providing for that was absolutely right. If the tenant becomes a nuisance and gets into arrears, he can be evicted; but he should have the first option. Yet under this Bill that will not happen.

I can see some of the effects of short-holds. There will he, for instance, the breaking up of many mansion blocks of flats. The landlord will be able to hold on to the shortholds as they become vacant, until the market rises, or alternatively sell the lot as an entire portfolio. Another of the effects will involve flats above shops in instances where the shop owners do not want to live there but do not want to create secure tenancies. In such cases, there should be shorthold lettings. However, in other respects short-hold lettings represent a frightening danger to security of tenure for tenants in this country.

The Government have often spoken about the single homeless, and when they were in opposition they were very concerned about them. It is claimed that the new form of tenure will benefit single people, particularly young single people. But in fact it will not. It will worsen their already desperate housing situation. Surveys carried out among young people by CHAR and After Six show quite conclusively that in 1979, for instance, most inquirers were wanting not temporary or short-term accommodation, but secure accommodation. About 5,000 people were already homeless. Half of them were on the streets and half of them were in temporary accommodation.

I cannot see how shortholds will help the single homeless, the average family, or indeed the majority of people looking for rented accommodation in this country, who in fact want permanent accommodation. At this stage I am restricting my remarks because we have a large Bill to get through. Many of us feel very strongly about this matter, and I urge that Clause 51 should not stand part of the Bill.


T have given considerable thought to the question of shorthold tenancies, and believe that many of us, in all parties, will probably want to praise Sir Brandon Rhys Williams most warmly for the initiative that he took in the other place in introducing in season and out of season proposed legislation for the introduction of shortholds. Perhaps he was unduly idealistic in his belief that the proposal would produce in the private sector houses available for letting to young people. Nevertheless, it was a very fine initiative, and one which many of us supported at the time. Ever since the introduction of the rent and mortgage interest restriction Acts people have been looking for ways to revive the private housing sector, and the initiative of Sir Brandon Rhys Williams was perhaps one of the best. But, unfortunately, the protections which Sir Brandon and his friends included in his Bill have not been incorporated by the Government in the legislation that they have now presented.

I considered that the Government were most insensitive in that they did not include Sir Brandon Rhys Williams in the deliberations on the Committee stage of the Bill in another place. He is well known as an expert in this field, but because of the guillotine on Report he was not able at any length, to put forward the views that he and people like him hold on shorthold tenancies. Therefore, there was a tendency for the provisions on shortholds to go through in another place without being properly and fully debated, without the protagonists of a liberal short-hold policy having the opportunity to speak. Therefore we must try to fill that gap as best we can in this Chamber.

I think that the concept of Sir Brandon Rhys Williams was idealistic, but it was none the worse for that; and perhaps one is not a member of my party if one is not a bit of an idealist. In my view the gap in private lettings, which we all know about, is being filled best by housing associations. They are doing very well. I believe that it is widely accepted that despite Government cutbacks, the housing association movement is probably providing rented accommodation in the semi-private sector, as the noble Viscount, Lord Gage, is the first to tell us. Therefore I should have thought that in the future that kind of accommodation, outside the public sector, will most likely be found through the housing associations.

Not all landlords are bad; only very few are. Probably the average landlord owns only two or three houses. The advantages of selling in the present economy, rather than letting again, even on shorthold, are so great that most landlords would not in any event seek to take advantage of the shorthold pro- visions, as the noble Baroness pointed out. There is another point here. In the other place the honourable friends of the noble Baroness, particularly Mr. Kaufman, stated pellucidly that if there was not greater protection, a future Labour Government would abolish the concept of shorthold. That will be another obvious disincentive to landlords to take advantage of the system.

As I have said—and I am trying to keep my remarks to the minimum because of the time—I think it is basically a good idea which ought to be developed. I believe very strongly that it is not too late for noble Lords on the Government Front Bench or for the Minister and the Secretary of State and their colleagues to get together with those people who put forward the shorthold concept and other people who are interested in this subject. It is not too late for them to get together with those people to see whether a short-hold system might be introduced which would have adequate protection and could get the support not only of the Government themselves but of many members of the Government party who now oppose the inadequate nature of the protection, as well as the support, perhaps, of the Labour Party and, certainly, of my party.

I think the statesmanlike thing for the Government to do at this stage would be to have a conference with all the people interested to see whether some form which is widely acceptable could be worked out. But since the Government are quite clearly not willing to accept the amendments which are moved in reasonable terms from the Labour Benches and these Benches, as things stand at present we shall feel compelled to support the noble Baroness in her objections to this clause.


I hope the noble Lord, Lord Evans of Claughton, realises that the housing association programme for the current year for England has been cut by very nearly 50 per cent. I do not know what are the prospects for it in the year after this one, but they are not all that bright, I am afraid. As a landlord, I disagree with the Opposition on this clause, and I will give just one instance of why I do so. At the moment I have one house which is let for less than two-thirds of its current rateable value. This was done intentionally, in order to preserve the possibility of regaining possession. When shorthold becomes law, my financial position in respect of that particular house will be very considerably improved. It may not be all I would hope, but at least it will be a lot better than it is now.

While I am on my feet, may I ask a question which will probably expose my ignorance about this particular part of the Bill? It is clear that unfurnished properties are covered by the shorthold concept, but I should like to know whether furnished ones could also come under the shorthold provisions.

5.2 p.m.


I am very disturbed about this particular proposal. Those of us who passed through the stages of the Rent Acts, the Leasehold Reform Act and the provisions which were being made by reasonable Governments after long discussions dating from 1915 onwards, were desirous of protecting those who occupied their homes—and let us use the word "homes" instead of "houses". We were desirous of protecting their tenure of places which they regard as home and which they have so regarded, in many cases, for very many years. We found ourselves at the end of the First World War in a situation in which unscrupulous landlords (I do not say all landlords) took advantage of the position, with the result that a large number of people were either evicted or were about to be evicted, and tremendous efforts were made in order to protect them. That is why the Rent Act is as it is.

But I quite understand why this proposal is introduced by the present Government. I do not blame the noble Lord who is carrying, I was about to say, the burden of having to try to convince us all that the Government are doing the right thing, but I hope that he will come to some other problems in addition to those which have been raised. I am not going to repeat what my noble friend Lady Birk has already put forward very well indeed; I want to deal with the general principles. The Government are determined to finish protected tenancies. There is not the slightest doubt in my mind that that is what they are after; and if you look at the effect of this particular clause you will see how simply it leads to that. Noble Lords may agree with it or they may not agree, but the fact of the matter is that the Government are intending to stop protecting people in relation to their homes.

Pensioners and old people, people who have lived in their home for years and years, are eventually going to be deprived of their tenancy. Take, for instance, the protected tenant. There are 200,000 protected tenants, I believe, in the country at present. They are people who have relied on remaining in their homes at a rental. It is perfectly true that there are difficulties, of course. There are always difficulties on both sides of the fence, if I may put it in that way. Many landlords suffered; but one has to look at the effect on human beings, 200,000 of whom are going to be deprived altogether of their protected tenancies.

Then we come to the question of the regulated tenancies. Later on we shall be discussing the kind of rents that are being demanded of regulated tenancies. If noble Lords will look at it they will see that pensioners who are living on non-linked incomes, and many thousands of other people, will be involved if the kind of pressure which there is at present to remove the Rent Acts altogether—because that is what it is intended to do—succeeds. Millions of people have depended on the provisions of those Acts—not thousands, but millions of people throughout the country. Millions of people have retained their homes because there have been these provisions protecting them.

I am thinking, of course, of unscrupulous landlords. There are some landlords who will not take advantage to the extent that they will be entitled to if the legislation contemplated in this particular Bill is put into force. There are some people with human hearts; some people who know their tenants, and who are not going to deprive them of their home. I want to emphasise that point, my Lords—that it is homes we are dealing with; it is not a question of houses, it is a question of the people being allowed to remain in their home to the end of their days. We must also remember that their children have lived in the home, too, and know the home and want to remain in it.

Of course, I realise that there is no hope. They say that hope springs eternal, but I do not suppose for one moment that the Government will change their mind with regard to this. I want them to realise, however, that what they are in fact doing is to cut away 50 or 60 years of protection which people have had—protection for people who cannot afford to be put into the hands of landlords who are unscrupulous and who will take the biggest advantage they possibly can by removing the tenants and giving them this so-called short-term security, so that when the short term finishes the whole tenancy becomes free of any protection at all. I say it is an inhuman and unbalanced view to take in respect of protection for people who are tenants and who want to remain in peace.


I was glad to hear the noble Lord, Lord Evans, say that he approves and supports the concept of shortholds. I would have been moved, and I am sure all noble Lords would have been moved, by the noble Lord, Lord Janner, if this particular clause, which has to do with shortholds, affected at all the security of the existing tenants; but it does not. This proposal has nothing to do with existing tenants. The noble Baroness, Lady Birk, put forward the argument that this must be a had clause because the tenants are not cheering for it. Of course they are not; it has nothing to do with them. This clause concerns people who are not tenants at the moment but who want to obtain property for a short let of something between five years and one year. For them it is of enormous benefit.

However, I do not believe that this is the chief benefit of shorthold. The chief benefit is that it brings back on to the market hundreds of thousands of dwellings which previous legislation has taken off the market. This piece of the Bill makes its chief contribution in easing the heavy burdens placed on the housing authorities who would otherwise have to provide accommodation for people who will get it under the shorthold and it eases the burden of the housing associations, the point to which my noble friend, Lord Hylton, referred, who, if left to tackle this sector on their own, would never be able to cope with it in the present circumstances. This is the chief reason why we strongly support the provisions in Clause 51.


If I may briefly intervene, I am totally in agreement with what was said by the noble Lord who has just spoken. This clause relates only to new tenancies and therefore I think that the very warm-hearted deprecations of the noble Lord, Lord Janner, are not relevant. I am not in agreement with the noble Lord, Lord Janner, in smelling sulphur in every clause of this Bill which I think is a well-intentioned one and, in parts, even intelligible. That is a matter for complimenting the draftsmen. But think that this consideration ought to be taken into account: the purpose of this clause is to make available a greater amount of accommodation for letting; and it may do that.

But against that one must weigh the consideration that this would be appropriate for a more expansive period in the supply of housing and accommodation. At the moment there is a desperate shortage and, we are still in a situation where people are desperately in quest of accommodation, so that I feel that it is a premature provision. One must remember that a great many people will take short-hold tenancies because they cannot get anything else. They will feel a total sense of insecurity throughout the period of the tenancy. One of the great evils in the relationship between landlord and tenant—and I base this belief, if I may say so, on my too many years of experience of it—is the sense of insecurity that you may lose your home. I cannot help feeling that the benefits secured by having available a greater supply of letting accommodation will be more than counteracted by the sense of greater insecurity on the part of people who have to seize this accommodation because they can get nothing better.

I might suggest to the Government, if it is not too late, that the provisions of the old Rent Act which enabled a landlord to secure accommodation on the grounds of greater hardship should be reintroduced into this situation, so that in the case of genuine hardship the landlord could get his accommodation back without the same burden of proof that applies at the moment. It might be a more relaxed burden of proof. It would remove the deep social evil of a great number of people in terrible dread and apprehension that they may lose their homes.

5.15 p.m.


I am deeply grateful to everyone who has spoken on this. As the noble Baroness, Lady Birk, has said, this clause really is the fundamental part of this whole matter and I am glad that we can talk right across the whole spectrum of it. There are a few facts that I should state and I shall try to do so as quickly as I can, but I do feel obliged to try to cover the points that have been made.

Between 1961 and 1977 the number of houses and flats let by private landlords fell from 4.3 million to 2.2 million, and there is every sign that the decline continues unabated. This is fact and we can all agree about it. We may differ about the reasons for it. Possibly the growth of owner-occupation and the tax relief and subsidy available in the main housing sectors have played some part. But anyone who tries to pretend that the effect of the Rent Acts has not been a major, indeed, overriding cause of the massive withdrawal of private rentable accommodation is burying his head in the sand. The combination of rent restriction and security of tenure unto the second generation has proved to be devastating. Once vacant possession has been achieved, landlords have voted with their feet in their tens of thousands and got out. And who can blame them?

Relatively speaking, it was perhaps not so bad up to 1974. Before then, even though long-term renting in the unfurnished sector was certainly declining, the furnished sector was playing a vital role in housing the mobile worker, the newly-married and the young and single. But, despite the clearly expressed warning of the Francis Committee, the Labour Party blundered in yet again and, with the clamp-down on furnished letting in the Rent Act of 1974, the situation became even more desperate at a time when the need for short-term accommodation was growing.

I find it hard to believe that all the members of the party opposite both here and in another place did not realise in their heart of hearts that in the 1974 Act they had gone too far. Surely, they knew that many furnished tenants had been given a life-long security they did not want and that the price was paid by the homeless and frustrated movers who could not find a place to rent. For every tenancy this made secure, how many thousands more were denied the housing they so urgently needed?

I suppose that the nearest the Labour Party came to admitting that all was not well was the announcement in 1975 of yet another of their reviews of the Rent Act. Of course, they did say of the private rented sector in their 1977 Green Paper entitled Housing Policy (Command 6851). If the decline continued unabated and no action were taken to compensate for the loss of accommodation from the sector, many people particularly new and mobile households—might not be able to find the housing they need. To guard against this we need to consider what action can be taken to stimulate the supply of lettings within the private sector and what can he done to provide accommodation in the public sector". "What action can be taken?", they said. And what action did they take? There are no prizes for guessing that it was none whatsoever. Far from legislating on the matter, they did not even publish the findings of their review which had been on the go for four years—presumably because it was not propitious so to do. Four years during which another half million or so private lettings went out of existence. What about that as an example of masterly inactivity! We can all understand why as prisoners of their own own history, the Labour Party made no constructive proposals of their own. Yet here they are, hack in Opposition—and with what vigour they criticise our proposals! We have shown that we are prepared to modify our shorthold proposals in the light of parliamentary and public discussion. What the Committee and the country cannot understand is why the Labour Party have adopted not merely a totally negative but a destructive attitude to shorthold. They have not merely said they would dicsontinue shorthold if and when at some future date they might come hack to power. They have said that life-long security will be given to everyone in a shorthold letting at that time.

The noble Lord, Lord Evans, was absolutely right—a very substantial contribution to try to ensure that shorthold does not succeed. Without even being prepared to see how it works and what it achieves, they rush to announce that if returned to power they will repeal it. I can only say that it may well turn out to be poetic justice for that undertaking will surely prove to he one of many which might have an influence on the likelihood or otherwise of their being returned to power.

Everyone—of whatever party—professes to be anxious that accommodation should be available in the private rented sector for those who seek it. Shorthold is a carefully considered proposal to encourage landlords to make accommodation available to meet that need. It recognises the fact that most people who are currently looking for accommodation in the private rented sector do not want or need long-term security. They are looking for relatively short-term lettings while they attend college, take up their first job away from home or save up to put a deposit on a home of their own. Surely it is better that they should be guaranteed security for one or two or up to five years under shorthold than that they should be unable to find any accommodation at all?

There has been a considerable amount of alarmist talk, both inside Parliament and outside, about the threat to tenants' security posed by shorthold. I should therefore like to take this opportunity, as my honourable friends have done in another place, to repudiate these claims, and to go over again the important safeguards for tenants that are incorporated in our shorthold proposals. First, we have ensured that there is no threat to the security of tenure of existing tenants from shorthold. The Bill makes it impossible for an existing statutory or protected tenant to have his tenancy converted to a shorthold.


My Lords, I am sorry to interrupt the noble Lord; he is always so courteous. What happens if somebody wants to move who is at present a regulated tenant? The only choice that he will have will he buying a house, probably at a price he cannot afford, or becoming a shorthold tenant. What protection is that for regulated tenants? The Government assume that people will remain in their dwellings for the rest of their byes. People have to move.


My Lords, if someone wants to move who is currently a regulated tenant, first of all he will surely take into account the security that he has if he stays where he is. If he wishes to go into the open market for something else I would presume that, with the security he already has, he would make quite certain that he did not do so until he had found something that was an alternative. If the suggestion is that the shorthold provision that we are proposing will make it more difficult for him so to do, I respectfully suggest that the noble Lord does not follow the arguments that I am trying to make. I believe very deeply that there will be so much more such accommodation available. It will be up to the tenant who has the security at the present time to decide if that is or is not in his best interests.

But, if I may continue, I say that the second point is that a fair rent must be registered for a letting to be a shorthold. Compulsory rent registration has never been a feature of any previous Rent Act legislation, and thus the proposal provides an entirely new safeguard for tenants. Following the Committee's acceptance of the Government amendment we have just discussed, No. 112, the Bill now ensures that the tenant will pay no more than the fair rent right from the start of the short-hold. Third, we have ensured that tenants who stay beyond the end of the fixed term will be guaranteed a further year's security under shorthold, provided that the landlord has not exercised his right to recover possession during the last three months of the shorthold term.

Fourth, as shortholds will be protected tenancies under the Rent Acts, shorthold tenants will have the full protection enjoyed by other protected and statutory tenants with regard to such matters as the over-payment of rent and the charging of deposits. Fifth, the landlord must under Clause 51(1)(b) serve a prescribed notice on the tenant before the grant of the tenancy setting out the terms of the shorthold. This means there will be no question of tenants being unaware of their rights under shorthold, or of the fact that shorthold does not offer the same security as a fully protected tenancy. It will also spell out the conditions with which the landlord must comply in order to create a shorthold. If he does not comply, the letting will not be a shorthold.

And finally, we have given tenants the right to leave before the expiry of the fixed term, without penalty, provided that they give the landlord appropriate notice. What more safeguards can one practically give without destroying the scheme before it starts? It is constantly said—both the noble Lord, Lord Evans, and the noble Baroness said it today—that we have not incorporated safeguards proposed in the Private Members' Bills promoted by the honourable member for Kensington and Chelsea in another place. We have of course examined those Bills with great care but we have decided that there are simpler and more effective ways of safeguarding tenants who take shorthold than he had been able to devise. There was nothing in Sir Brandon Rhys William's Bill to say that shortholds should apply only to dwellings vacant on a particular date.

But I am bound to say that a number of proposals which have emanated from the Opposition—some in the guise of sweet reasonableness, some I am sure in an attempt to be helpful—are not really safeguards at all but limitations of one kind or another intended to ensure that the number of properties eligible for shorthold should be kept as minute as possible. For example, the proposal to confine shorthold to self-contained dwellings with all standard amenities would have applied a condition which is currently nonexistent in owner-occupied and public and private rented sectors alike. An even more extreme demand which emerged at a late stage during proceedings in another place and was Amendment 116A was that shorthold should not be possible in any dwelling with a private tenant in it on commencement date, even if he leaves and the property stands empty for a year. Incredible indeed! But surely also revealing in its stark highlighting of the Opposition's great wish—I put it no stronger than that—to undermine our attempt to bring more private accommodation back on to the market.

It has been claimed that shorthold means the demise of security of tenure in the private rented sector. The noble Lord, Lord Janner, said that with great feeling and belief. Let us look at this very emotive statement carefully. First of all, it assumes that in future every landlord will let on shorthold and not on any other basis. The Law Society have been quoted to this effect—no less an authority than that. But while I have great respect for that very distinguished body—indeed should I not?—I do not think they are in a position to speak for all landlords. What they said has in fact been contradicted by a number of landlords, including, if I may quote him, Mr. HoHamby of Chestertons, whose views were quoted in another place.

After all, shorthold will involve the procedural formalities of going to the rent officer and the serving of a notice spelling out the tenant's rights, and there may well be landlords who will choose to let at an agreed rent to a tenant without going through these formalities. There is no reason to think that every landlord will be concerned about the length of his letting and will automatically opt for short-hold. But let us just suppose that landlords find shortholds so attractive, that very large numbers of shorthold lettings are made. That, in itself, will mean that even for those looking for long-term security it will be of much less importance than it has been in the past because the shortage of accommodation to rent will be substantially eased.

The most important point of all, which is fundamental to our thinking in bringing forward shorthold, is that the overwhelming majority of people seeking private rented accommodation these days are the young, the mobile, newly-married couples who want somewhere quickly but not necessarily for long. Just to give one figure, 20 per cent. of all lettings in the private sector turned over to a new tenant in 1977. We are doing nothing to disturb the established arrangements of long-term tenants but we do feel strongly that the Rent Acts need reshaping to meet the needs of the 'eighties rather than the 'forties and 'fifties. Raising the spectre of the end of security of tenure is rather like bemoaning the end of the silent movies and the coming of the "talkies". Nostalgia for the concept of life-long security is no help to a young worker who wants a flat for a year or two for his first job away from home.

I have to try to comment on one or two of the other points made by noble Lords a little earlier. So far as the noble Lord, Lord Janner, is concerned, I have always respected deeply his great wanting to see a betterment of the conditions and availability of accommodation. No one questions that for a moment, least of all I. I was grateful to the noble Lord, Lord Goodman, for pointing out that he really has this one wrong. It will not have the effect on existing tenancies to which he referred. I am sorry that he used some other language which was so emotive. It makes pensioners and the others to whom he referred worry, when they really have no cause to worry. It is essential that I make that absolutely clear.

I was grateful to my noble friend Lord Sandford who pointed this out again and said that the clause is not about existing tenants. He said—and this is our dearest wish in this whole matter—that it would bring back thousands of dwellings which other legislation has taken away. We do not know whether it will bring them back and no one would be so arrogant—least of all I—as to say that is what it will do; but it might do, and if it does the prize is very great indeed and certainly worth the attempt. As long as we put in the safeguard to which I have referred and others which we may put in, if people bring them forward and they are meaningful, not meant to destroy the basis underlying the intentions, and if they are constructive—providing we do this, at least we are trying to do something about a problem which really is becoming worse. It would be wrong simply to go on letting it drift.

I said that the last Government talked for four years and did nothing. Well, we are doing something, and if it is not to the liking of everyone at least let us give it a try to see what it achieves. If it fails, then of course it will he done away with, but if it succeeds can anyone really envisage that the Labour Party, or anyone else, would take something which had succeeded and then do away with it? I suggest that they would not dare; nor would they want to, if it came to that. I beg to move that this clause stand part of the Bill.

Baroness BIRK

There are just a few points I should like to make on what the Minister has said. I am sure I heard him refer to "nostalgia for long- term security". This is hardly "nostalgia". What most people are looking for is security and, if I may use this analogy, I thought that his shop window was very attractive but that the goods behind it were not quite in such prime condition.

I took down what he said about the numbers of people looking for relatively short-term lettings. Most people are not looking for relatively short-term lettings and, with regard to this picture of a young couple who want something for a year or so, the noble Lord, Lord Goodman, answered that when he referred to the anxiety on behalf of people and the need for people to know that they had security. As regards this young couple whom the noble Lord says want a tenancy for only a year or so, under the Bill they can be evicted after one year. The landlord does not have to keep them there for five years: then he gives them notice to quit—


Will the noble Baroness allow me to intervene? With great respect, that is not correct. The tenant will not he able to he evicted within one year. He will not be able to be evicted during a period of less than the term for which he has signed the agreement for the shorthold, which can be up to five years. There is no way in which he can be evicted within one year.

Baroness BIRK

With respect, I did not say "within one year"; I said, "after one year". After all, it is more than likely, when a landlord can let for a maximum of five years to a minimum of One year, that he will opt for the shorter period. He would be less than human if he did not, and he could then see how things worked out. Of course, he may want to sell the property.

When my noble friend Lord Strabolgi asked about people moving, the Minister said that if they leave a protected tenancy they should find out whether they are moving to another protected tenancy. If they could not do that, the impression he gave to us was that they should stay put. So what price all this need for mobility of labour? In industry we want to encourage people to be able to move around the country, and every amendment moved on the first part of the Bill to encourage that in the public section was turned down. The same thing is happening and no doubt will go on happening throughout the passage of this Bill. If the Government really see the process by which people are having to leapfrog from one shorthold to another shorthold, there is no security in this at all: that is the anxiety and the worry.

The noble Lord refers to looking for relatively short-term lettings, but that is not going to help the basic housing situation in the country. I entirely agree with the noble Lord, Lord Evans, and others who see that, unless you get to very high rents, the rented sector in this country must be supplied by local authorities and housing associations. This, through other provisions of the Bill, with compulsory sale and also the cutting of the housing programme, means there will be less and less rented accommodation. This is the nub of the argument: not the question of whether there are a few more short-term lettings. The noble Lord, Lord Goodman, was absolutely right when he queried whether this was the time, given the economic situation as it is, to embark on this.

Finally, I would say that the noble Lord made a great deal of the safeguards that have been introduced. Those which have been brought into the Bill were brought in with the Government screaming against them. He is taking credit for amendments which, frankly, were absolutely pressed on the Government. As to the other safeguards which were in the Bill of Sir Brandon Rhys Williams, the noble Lord says they were examined very carefully before the Government decided against them, but that does not make them any less valid safeguards. As regards whether the next Labour Government would repeal this whole section, that depends, as my colleagues in the other place put it, on how far the Government are prepared to accept more safeguards and to accept improvements which would improve the Bill in the way we feel is necessary, so that people will have as little anxiety and insecurity as possible. For these reasons, I am afraid my friends and I will be pressing this Question to a Division.


May I ask the Minister a question before we divide? The noble Baroness has indicated her intention to divide and I must say it will leave some of us very troubled indeed as to how to make our decisions on this matter, The noble Lord said he was prepared to consider amendments to these provisions at a later stage. Could he give us a little amplification of that?—because I did indicate one possible amendment that has occurred to me and I think there are other safeguards that could be introduced. If the Government retain an open mind, I personally should abstain from the Division.


I am sorry if I did not earlier touch on all the points that have been raised, and I apologise to noble Lords for that. One point was that made by the noble Lord, Lord Goodman. In his suggestion about hardship, I thought he was referring in the main to the position as it is in the existing Rent Acts. It is a very interesting one to me. I gladly assure him—and I am sure that even noble Lords opposite will confirm to him that whenever I say that we will take something away and have a look to see whether

something can be done, we always do. I give him that undertaking.

As to the amendments, we have not felt able to accept any of the amendments that have been brought forward so far, but I meant it very genuinely when I said that if we can make this a better Bill we shall do so. The noble Baroness said that some of the amendments were inspired by others than our own people and put into the Bill, and I would reply: so what? What we are seeking is to get the best Bill we can. If we can make it better, of course, that is exactly what we want to do and yes, of course, we will consider anything that is suggested. I hope that will not be taken to mean that, if I resist some of the amendments that have been tabled today, I am going back on what I have said.

5.37 p.m.

On Question, Whether Clause 51, as amended, shall stand part of the Bill?

Their Lordships divided: Contents, 99: Not-Contents, 91.

Ailesbury, M. Falkland, V. Merrivale, L.
Airey of Abingdon, B. Ferrers, E. Monson, L.
Alexander of Tunis, E. Ferrier, L. Morris L.
Allen of Abbeydale, L. Forbes, L. Mottistone, L.
Amory, V. Fortescue, E. Mowbray and Stourton, L.
Ampthill, L. Fraser of Kilmorack, L. Moyne, L.
Auckland, L. Gage, V. Murton of Lindisfarne, L.
Bellwin, L. Glenkinglas, L. Norfolk, D.
Belstead, L. Godber of Willington, L. Northchurch, B.
Berkeley, B. Gormanston, V. Northesk, E.
Bessborough, E. Gowrie, E. Nugent of Guildford, L.
Blake, L. Greenway, L. Orkney, E.
Bourne, L. Gridley, L. Orr-Ewing, L.
Broadbridge, L. Grimston of Westbury, L. Redmayne, L.
Cathcart, E. Hailsham of Saint Marylebone, L. (L. Chancellor.) Robbins, L.
Chelwood, L. Rochdale, V.
Clifford of Chudleigh, L. Hanworth, V. St. Aldwyn, E.
Clitheroe, L. Henley, L. Saint Oswald, L.
Cockfield, L. Holderness, L. Sandford, L.
Colville of Culross, V. Hylton, L. Sandys, L. [Teller.]
Craigavon, V. Hylton-Foster, B. Selkirk, E.
Cranbrook, E. Killearn, L. Sempill, Ly.
Croft, L. Kimberley, E. Shannon, E.
Cullen of Ashbourne, L. Lindsey and Abingdon, E. Skelmersdale, L.
Davidson, V. London, Bp. Soames, L. (L President.)
De Freyne, L. Long, V. Spens, L.
De La Warr, E. Lonsdale, E. Strathcona and Mount Royal, L.
Denham, L. [Teller.] Luke, L. Trefgarne, L.
Digby, L. Lyell, L. Vaux of Harrowden, L.
Drumalbyn, L. Macleod of Borve, B. Vivian, L.
Elliot of Harwood, B. Malmesbury, E. Westbury, L.
Exeter, M. Mansfield, E. Young, B.
Fairfax of Cameron, L. Marley, L.
Faithfull, B.
Ardwick, L. Gifford, L. Pargiter, L.
Avebury, L. Gladwyn, L. Peart, L.
Aylestone, L. Glenamara, L. Plant, L.
Balogh, L. Gordon-Walker, L. Raglan, L.
Banks, L. Goronwy-Roberts, L. Rhodes, L.
Beswick, L. Gosford, E. Ritchie-Calder, L.
Birk, B. Greenwood of Rossendale, L. Rochester, L.
Blease, L. [Teller.] Gregson, L. Ross of Marnock, L.
Blyton, L. Grey, E. Sainsbury, L.
Boston of Fuversham, L. Hale, L. Seear, B.
Bowden, L. Hampton, L. Shinwell, L.
Brockway, L. Harris of Greenwich, L. Simon, V.
Bruce of Donington, L. Hatch of Lusby, L. Southwark, Bp.
Burton of Coventry, B. Henderson, L. Stedman, B.
Caradon, L. Houghton of Sowerby, L. Stewart of Alvechurch, B.
Chitnis, L. Jacobson, L. Stewart of Fulham, L.
Cledwyn of Penrhos, L. Jacques, L. Stone, L.
Collison, L. Janner, L. Strabolgi, L.
Crowther-Hunt, L. Jeger, B. Taylor of Mansfield, L.
Cudlipp, L. Kaldor, L. Underhill, L.
Darling of Hillsborough, L. Kilmarnock, L. Wall, L.
David, B. Lee of Newton, L. Wallace of Coslany, L. [Teller.]
Davies of Leek, L. Leonard, L.
Davies of Penrhys, L. Llewelyn-Davies of Hastoe, B. Wells-Pestell, L.
Denington, B. Lovell-Davis, L. White, B.
Diamond, L. McCarthy, L. Wigoder, L.
Donaldson of Kingsbridge, L. McNair, L. Willis, L.
Evans of Claughton, L. Maelor, L. Wilson of Radcliffe, L.
Fisher of Rednal, B. Meston, L. Wootton of Abinger, B.
Foot, L. Ogmore, L. Wynne-Jones, L.
Gaitskell, B. Oram, L.

On Question, amendment agreed to.

Resolved in the affirmative, and clause agreed to accordingly.

Clause 52 [Right of tenant to terminate protected shorthold tenancy]:

5.45 p.m.

Lord MONSON moved Amendment No. 119: Page 36, line 26, leave out ("one month") and insert ("two months").

The noble Lord said: I beg to move Amendment No. 119 and, with the leave of the Committee, I will speak at the same time to Amendment No. 120. Although not consequential, it is closely related to the previous one. On Second Reading, many Opposition speakers claimed that this whole new concept of shorthold tenancies was not only largely wrong in principle, but would in practice be a non-starter—a damp squib, in other words—and this assertion has been repeated this afternoon by some noble Lords on both the Labour and the Liberal Benches. I am bound to say that if the dice remains so loaded against a landlord, as I hope to be able to demonstrate, the Opposition's forecast will prove all too accurate.

The Conservative election manifesto promised, a new system of shorthold tenure … free of the most discouraging conditions of the present law". I do not think that the proposed new system is free of all the shortcomings of the present law; for one thing rents are to be held below the market value. But to the extent that they are, new disadvantages are introduced which do not exist in the present law. Clause 52 gives the tenant a unilateral right to terminate after only one month, in the case of a shorthold tenancy of two years or less, and after three months in the case of a longer shorthold tenancy; in other words, a tenancy of between two and a half and five years. No corresponding right is granted to the landlord, should his circumstances unexpectedly change for the worse.

I ask your Lordships to consider the case of a small landlord, owning perhaps only one property, who happens also to be an engineer, who is offered and accepts a posting in Nigeria, say, or Western Australia for two years. He goes to the trouble and expense of finding a tenant and going through all the necessary legal formalities. He packs up and stores most of his possessions, he purchases a one-way ticket for Lagos or Perth and sets out on his journey. A fortnight after he arrives, he receives a communication to the effect that his tenant has given him one month's notice. It will not work like that, in practice, because if he is out in the hush or the outback letters will take fully a fortnight to reach him, so he will effectively have only two weeks' notice. It may be in the middle of winter in the United Kingdom. He is almost certainly likely to be worried about frozen water tanks or frozen pipes. What on earth is he to do? Is he to ask for a fortnight's unpaid leave only a month after arriving in the country, and to expend a large sum of money on returning to England? I submit that one month's notice is far too short in the circumstances.

I appreciate that there has to be some provision for early termination since shorthold tenancies cannot, under the Bill as it stands, be assigned. But if the intention was to equate the period of notice provided under Clause 52 with the time it will take, in the case of a traditional tenancy, to find an alternative tenant—an assignee, in other words—to secure references, to get the references approved, to get the legal formalities completed and so on, then I suggest that the Government have got their calculations quite wrong, because all this would certainly take more than one month.

It may well be that my Amendment No. 120 is superfluous—that the period of three months proposed in the subsection as it stands is not entirely unreasonable, given the difficulty of balancing the interests of the landlord and the tenant. Subject to what the noble Lord, Lord Bellwin, has to say, I do not intend to press my Amendment No. 120; but I think it is essential that the period of one month should be lengthened. I should have preferred a common period of notice, irrespective of the length of tenure, whether it be one year or five years. Failing that, I submit that it is vital to raise the minimum period of notice from one month to at least two months.

5.51 p.m.


As he has explained, the amendments which the noble Lord, Lord Monson, has just moved, are concerned with provisions to enable a shorthold tenant to terminate his tenancy without penalty, provided that he gives appropriate notice to the landlord. What is provided for in the Bill is that a tenant must give at least one month's notice where the short-hold is for two years or less. For short-holds of between two years and five years, we have provided that three months' notice should be given.

I accept that our figures are not infallible. They are matters of judgment. When selecting the period of notice which would be required we had particularly in mind students who may not want to stay for a full year's shorthold. Normally they would pay their rent either weekly or monthly and it seems reasonable that they should give to the landlord at least one month's notice of their intention to leave. This should give the landlord adequate time to find a new tenant. However, for longer shortholds where the landlord has committed his property to the tenant for between two years and five years, with no opportunity of changing his mind, it seemed reasonable to us that the tenant should be required to give three months' notice of his intention to leave.

As I have said, there is no scientific basis for these periods of notice. Our main consideration was that rent is often payable either monthly or quarterly. These are easily memorable periods of notice which a landlord might expect to receive or which a tenant might expect to give. The amendment would extend these periods to two months and four months.

I must confess that I am not convinced that there is any justification for this. The noble Lord, Lord Monson, gave the example of a man who was suddenly called abroad to do engineering in the Gulf, or somewhere similar, and who would be out of touch. I suggest that it would be a very foolish man who went far away without giving the power of attorney to somebody at home. He could give it to a relative or to his legal adviser. A man who went abroad to do a full time job would be rash to try to deal with, for example, burst pipes. People who go abroad to be soldiers, sailors or diplomats normally grant a power of attorney to somebody at home. On balance, I think that we have got it about right and I would ask the noble Lord to take back his amendment.


I cannot agree that the Government have got it about right. I concede that they may have got it about right so far as longer tenancies are concerned; I also concede that there may be something in the argument put forward by the noble Lord. Lord Mowbray and Stourton, about students. But he is talking about a one-year not a two-year tenancy. If the one-month period of notice were confined to one-year short-holds it might be acceptable, but I do not think it is fair when one is thinking of a shorthold tenancy of 18 months or two years.

I ask the Government to think again about this point and to give serious consideration to what I have said. I reserve the right at the next stage to come back to Amendment No. 119. although I would not wish to go any further with Amendment No. 120. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 120 not moved.]

Clause 52 agreed to.

Clause 53 agreed to.

Clause 54 [Orders for possession]:

5.56 p.m.

Baroness DAVID moved Amendment No. 121: Page 37, line 15, leave out (" (or is treated under section 54(2) of the Housing Act 1980 as having been so let)").

The noble Baroness said: In moving this amendment. I should like also to speak to Amendment No. 123 which leaves out subsection (2) of Clause 54. Rent registration is compulsory for shorthold, and the Government amendment means that registration will take place before the beginning of the tenancy. Therefore it is quite unnecessary for an element of discretion to be devolved to the courts when considering a claim for possession. This amendment seeks to remove that discretion from the Bill.

Clause 54(2) sets a precedent. It introduces an entirely new concept into the relationship between protected tenancies and rent registration. It seeks to extend the principe of court discretion, at present only applicable in cases applying to grounds for possession, to the giving of notice that tenancies will fall, under those cases, to the question of rent registration. At present, wording similar to that proposed in Clause 54(2) is included in Mandatory Cases 11 and 12 of Part II of Schedule 15 to the Rent Act 1977. Case 11 refers to owner-occupiers who let while temporarily absent, while Case 12 refers to owners who let the property which they intend to occupy later when they retire.

In both cases, the exercise of court discretion in relation to preconditions to the grant of tenancy concerns the giving of notice that possession might be recovered under these cases. Matters of rent registration have nothing to do with it. There is therefore no precedent for the concept contained in Clause 54(2). What possible circumstances can there be in which it is just and equitable for a registered rent not to apply to a shorthold tenancy? If the answer is that the Government take the view that failure by the landlords or the tenant to apply for registration should not be allowed to stand in the way of repossession, then what is the point of the requirement that rent registration is compulsory? Since the original publication of the Bill various changes have been made, or promised. The Minister has recently told us that he is willing to consider making more. Compulsory registration of rent by the beginning of the shorthold tenancy is one of the things upon which he has given way.

We felt that the need for Clause 54(2) was unproven when the Bill was in its original form. In the light of the Government's action on rent registration, we feel that Clause 54(2) has become completely redundant. Were it to remain in the Bill following these changes, it would amount to an unnecessary complication of what, without it, would be the clear role of county courts in such cases. I hope that the Minister will feel able to accept this amendment. I beg to move.


I support this amendment and I do so as a result of many years' experience of the vagaries of county court judges. The clause in the Bill which Amendment No. 123 seeks to delete gives a completely open discretion to a county court judge to determine whether it is just and equitable to order possession, even though the rent had not been registered or even though the proper notice has not been given. In the old days it used to be said that what was equitable was as long as the Lord Chancellor's foot. Even that was predictable when one knew who one's Lord Chancellor was. But now we have a provision for "just and equitable" which is going to be as long as 300 county court judges' feet. It means, quite seriously, that if one is advising a tenant who has a year's tenancy, but there is no fair rent, one cannot say whether or not it is going to be a protected shorthold tenancy until one knows what judge one is going to come before.

I know that what is likely to be said is that this clause is intended to cover only some bona fide mistake which may have been made in the drafting of the notice, or maybe a few days' delay in the application to register the rent, or some innocuous circumstance of that kind. If that is the case, as I anticipate it is, I would ask the Government to consider spelling that out in the Bill, because, whatever the noble Lord says, Hansard cannot be quoted in the courts, and this question of "just and equitable" will be completely at large in the county court.


I think I detected in the observations of the noble Lord, Lord Gifford, something of a cri de æcceur. His concern for past vagaries, as he put it, strikes a sympathetic note. I do not know whether or not I can help him, but certainly it does that. I think it is important that I should try to remove a misconception about Clause 54(2). It is not intended that this should allow a court to grant possession under Case 19 where there has been a major infringement of the shorthold requirements; for example, where the landlord has failed to serve any notice on the tenant or where no rent had been registered during the whole of the tenancy. In view of the express statutory requirement for these provisions in the Bill I do not think it would be possible for a court to be satisfied that it would be just and equitable to regard a tenancy as a shorthold if either of these requirements had been completely ignored.

However, there are mistakes the landlord might make which in my view should not inevitably prevent him from being able to reclaim possession under Case 19. For example, there might be a defect in the formal notice that he has served on the tenant. The application for a registered rent might be made, say, 30 days after the start of the tenancy rather than 28, as required. These are the sort of circumstances in which, if no real harm had been done to the tenant, I think it is right that a court should have the power, subject always to the point made by the noble Lord, Lord Gifford, to grant a landlord possession under Case 19, provided they are satisfied that it would be just and equitable to do so. It is allowance for this for which Clause 54(2) is designed.

I would remind your Lordships that this provision mirrors an equivalent provision in Cases 11 and 12 of Schedule 15 to the Rent Act 1977, concerned with a temporarily absent owner-occupier and retirement homes. I understand that that provision was introduced in the Rent Act 1974, which was a Labour measure, and I am not aware of its having caused any difficulties in practice. It must surely be only right that there should be an equivalent provision in the shorthold, and therefore, while having carefully noted what has been said—we will note it carefully again later—I would ask the noble Baroness whether she feels able to withdraw the amendment.

Baroness DAVID

I thank the Minister for that explanation, which of course we shall study with care, but for the moment I shall withdraw the amendment.

Amendment, by leave, withdrawn.

6.5 p.m.

Lord GIFFORD moved Amendment No. 122: Page 37, line 26, at end insert ("; and (c) the landlord has not knowingly received from the tenant any amount on account of rent in excess of the registered rent, or any premium.").

The noble Lord said: I beg to move this amendment, which stands in my name and the names of my noble friends. This is an important amendment because it seeks to deal with what I feel is a real, almost inevitable, danger in the shorthold pro- visions as they are drafted at present; that is to say, there will be illegal overcharging and the demand of illegal premiums, either at the beginning of a tenancy or possibly as a condition of a renewal. There is the requirement, which has now been made a requirement at the beginning of the tenancy, that the rent should be registered. But let us consider what there is to stop a landlord charging a rent which is in excess, perhaps well in excess, of that which is registered. The only sanction at the moment is that the tenant has the right under the Rent Act to bring an action in a county court to recover the rent which has been overpaid.

A tenant who finds that he is being overcharged and who wishes to stay in his shorthold tenancy for more than the minimum term will be in this dilemma. Either he brings his action for the recovery of the rent overcharged, which almost certainly is going to be met with a notice at the end of the first year, or he sits tight and pays the excess rent. We have some experience that that is likely to be the case from the experience of rent control in the furnished sector. I appreciate that the provisions were different, in that there was not a compulsory registration, but the rights given to furnished tenants to apply to the rent tribunal to get a rent fixed were really a dead letter. No furnished tenant would exercise his rights because lie knew that that would be likely to be met with a notice to quit. And it is rather the same here.

This amendment seeks to give teeth to the fair rent system, to provide an effective penalty for the deliberate over-charging of rent, by inserting an extra proviso into the grounds which have to be established before possession of a shorthold can be obtained; that is to say, the landlord must show that he has not knowingly or deliberately overcharged rent or accepted an illegal premium. A landlord in that position would have to be advised that if he wants the shorthold provisions then he must not charge in excess of the registered rent. There may be different ways of dealing with this, and I shall be interested to hear how the noble Lord, Lord Bellwin, answers, but I suggest that there should be something much more effective to prevent a black market in excess rents.


So far I have endeavoured to refrain from excessive intervention in the debates, although there have been occasions when I was sorely tempted, but this particular amendment has a profound interest for me. In fact, I am an interested party, not as a landlord but as a tenant. I have observed in the course of the debate that we have gone all round the perimeter but have ignored the central feature, which in my judgment has not been so much the principle which is embodied in the Bill, the new device the Government propose to employ, hoping for success. A number of other items have been raised by my colleagues and by noble Lords on the other side of the Committee.

Reference has been made more than once to fair rent, hut no one has endeavoured to define it, not even the Minister himself. The assumption is that this is a matter primarily for the landlord to determine in the first instance. Subsequently, if there is disagreement about the amount demanded, a submission can be made to the rent officer. He comes to a decision which may be disagreeable to either party and the matter is referred to the rent tribunal. Who is to determine what is a fair rent and what is the criteria? Is it scarcity? Obviously that is a factor which can be excluded because indeed the whole purpose of the Bill is to deal with scarcity and to provide some remedy. Scarcity will not do. What worries me are the implications that derive from the language used in this amendment. I do not object to it—far from it. I seek to understand it and how it will operate.

It will operate in this fashion: there are in the United Kingdom at the present time and there have been for some considerable time—and to this I raise no objection whatever—many people who have come from other countries, some even from Iran. Some of them are neighbours of mine. I have not arranged it; it has been quite fortuitous, although one offers no opposition—why should one? A landlord has very little difficulty with people of that kind because they do not dip their hands into their own pockets in order to pay their rent or even the cost of the house or flat which they seek to obtain.

The sums required are usually paid either by the Governments they represent or by the business firms they represent. All the landlord has to do is to say, "I want a certain amount as rent", or a certain sum as the price of the house. No objection will be raised—or hardly ever. They can obtain flats and houses as easily as falling off a log and I understand (if your Lordships will excuse the cliché) that that can be done without much difficulty. But when it comes to a citizen of the United Kingdom who seeks to obtain a tenancy at a fair rent and he comes before the rent officer, can he be assured of impartial treatment? Is there any guarantee of that? Again I ask the question: What are the criteria upon which he comes to a judgment? I think we ought to know.

Without delving too far into this matter, I could say a great deal about it out of my own experience, but I do not want to make accusations against anybody in their absence. I prefer to make any accusations facing them, eyeball to eyeball. Nevertheless, I am bound to say that I have been somewhat disturbed and I want some protection, not only for myself. Indeed, I can look after myself. I can even go so far as to say (but do not tell the Inland Revenue) that I can look after myself financially and in other directions I am quite capable of looking after myself. However, I want some protection not only for myself but for others: neighbours, tenants nearby, where they are forming tenants' associations. Why are they forming tenants' associations? Most of them voted for Mrs. Thatcher in the last election, which of course amuses me. The people who are squealing most are those who asked for it at the last election. They were perfectly entitled to do so; this is a free country, as we know—so far—but now they are complaining. So strident are their complaints that they are forming tenants' associations. I have been asked to join one myself. All I have done is to refuse to commit myself more than to pay a subscription (that I can afford) in the hope of gaining something in consequence.

I am speaking for other people. I want the Minister to tell me, as clearly as he can—and there is one thing he can do, as was demonstrated in the course of our debates; he can speak clearly. He knows what he is talking about, even if we do not agree with it. I want him to answer this question: Are we going to place any kind of restriction?—and I ask noble Lords to excuse the use of the term "restriction" because the Minister himself has complained about its frequent use and has rejected it when it has been suggested by implication, and even directly in the course of the debates. What kind of restriction are we going to place on the landlord and, subsequent to the landlord's decision, on the rent officer?

Let me deal with the landlord first. I make no accusation against landlords at all. I am not acquainted with many; I know nothing of them and I agree with the noble Lord who said that the majority of landlords are decent, respectable, responsible people. I do not object to that at all. I can understand it and if the landlord seeks to make a profit there is nothing wrong in that. But what are the landlords going to do? They are going to try to obtain the highest possible price for letting either a flat or a house. I do not blame them, but we have to protect ourselves. I want the Minister to say what kind of protection he can afford for tenants who are probably unable to pay the price demanded either for letting or for buying and what kind of restriction we are going to impose on landlords who take advantage of the situation to obtain a price which is neither fair nor reasonable. That is a simple question and I should like a simple answer.


I will try to answer the noble Lord. Strictly speaking, it is not the subject of the amendment at all and indeed many of the points raised by the noble Lord are more apposite for discussion under the Rent Acts of 1977. Nevertheless, I will gladly try because he put it so well to me. Your Lordships will excuse me if I try to do it quickly in order to cover the points which the noble Lord made.

First, I am glad that he referred to the point about protection and tenants' associations and the fact that people are getting together in that way. I do not think that is ever a had thing. Why should there be fewer tenants' associations in the private sector than in the public sector? However, there is a great deal of misunderstanding about the proposals in regard to shorthold. The points referred to by the noble Lord were almost all to do with the Rent Acts of 1977. First, he asked what is the definition of a fair rent? I will tell him: a fair rent is defined as a market rent with the scarcity element removed. I do not have that from a brief; I remember it from the days of the Francis Committee, many years ago. I hope it is right. The noble Lord then asked how do we know if it is fair? That is a tremendously broad subject which I am sure no one will want me to go into now.

Basically, it is the rent officer who decides that and if the tenant or landlord is not satisfied with the rent officer's decision he then has the right of appeal to a rent assessment committee. Before the 1974 Act in the case of furnished lettings it was to a rent tribunal, but now it is to the committee. He may well consider at the end of the day that it is still not fair in the sense of "fairness", but the rent officer is trying to be fair as between the landlord and the tenant.

Inevitably this is a no-win situation, because if one is satisfied the chances are the other is not, once the matter has had to go to adjudication in this way. A perfect system no one would claim it is, but one that has worked reasonably well, and despite the reservations of the noble Lord, Lord Gifford, I am sure that he would agree with that. I think it has achieved a great deal in an area which is so complicated and complex. I am only saying, so far as the shorthold proposals go, that the benefit of this protection (a word which the noble Lord used) continues absolutely; in no way is that in the slightest affected. This proposal does not affect existing tenants at all, and if the noble Lord's question has enabled me to emphasise that yet again I am grateful to him.

If I can come to the amendment, the Government do not accept that there is a need for special provisions of this kind for shortholds. Because shorthold tenancies will be protected under the Rent Acts the same provisions relating to overpayment of rent and premiums will apply to shortholds as apply to other tenancies. Perhaps it would help noble Lords if I explain what these provisions are. First, with regard to over-payment of rent, the Rent Act of 1977 provides that once a rent has been registered any rent above the level of the registered rent is irrecoverable; that is to say, the tenant is not obliged to pay it and can get back any excess he has paid in the previous two years. Once the rent has been registered it remains the rent limit until either a new rent is registered or the registration is cancelled.

So under shorthold the registered rent would be the rent limit not only during the fixed term but also during any period that the tenant stays on beyond the fixed term. The tenant will have the same right to recover any excess rent he has paid as any other Rent Act tenant. Secondly, there is the question of premiums. Sections 119 and 120 of the Rent Act 1977 make it an offence to charge a premium for granting or assigning a protected tenancy. This applies to shortholds just as it does to other protected tenancies. So does the clarification of what constitutes a premium which we are introducing in Clause 76 of the Bill.

These provisions seem to me already to provide adequate protection for tenants against being charged too much rent or being asked for a premium. I see no reason for extra provisions for shortholds. I cannot accept the implication that landlords who let on shortholds would be likely to try to trick the tenant in the way that might be suggested or implied. Nor would it seem to me to be right, as the amendment proposes, that the court should be required to consider whether the landlord has asked for excess rent or a premium before granting possession of the Case 19 tenancy. These are quite separate matters for which there are already separate provisions in the Rent Acts.

I fear that I may not have covered one or two of the points the noble Lord, Lord Gifford, made, for which I apologise. On the other hand, he may feel that what I have said is adequate in the circumstances, albeit not as satisfactory as he would have liked. If I have missed anything which he considers most important, I would be glad if he would take it up with me privately and discuss it with me.


I agree with the noble Lord, Lord Bellwin, in this at least, that the rent officer system has worked well since it was introduced by a Labour Government in 1965. But the rest of what the noble Lord said did, I suggest show an astonishing ignorance of what actually happens. What we are talking about—and I gladly reiterate my noble friend Lord Shinwell—what the amendment is about is people cheating. It happens now. Again and again the tenant is in complete ignorance that a rent for the property has been registered and is being charged double or more. But at least in the normal working of the Rent Acts so far there has been this protection, that when he finds out he can sue for the back rent or withhold his rent so as to compensate for what he has overpaid, without any fear that anybody, particularly the landlord, can impose any sanction or penalty or revenge upon him. This situation is changed with the shorthold provisions, because with the shorthold provisions there is always a threat that if you are not co-operative about the extra over-payment then the shorthold can be brought to an end.

Having said that, I am wanting to try, with the Government, to find a constructive solution to what I hope they will feel in a greater or lesser degree is a problem that ought to be looked at during the course of the passage of this Bill. As I said earlier, there may be other ways of dealing with this problem. For instance, the court, before it orders possession, could be required to make sure, to order, that any sums overpaid are repaid before the actual order is made; because at the moment the court would have to order possession on a mandatory ground leaving any question of over-payment to be put off to the future, and maybe to dilatory payment over months or more. Will the Minister look at this problem which I have sought to outline and, before Report stage, see whether some protection—perhaps not the one I have proposed in this amendment—might not be inserted to discourage and to sanction this kind of cheating?


May I say that I do not at all accept the point that if the tenant under a shorthold starts to take proceedings, or makes attempts to do anything at all about the rent, the shorthold tenancy will be brought to an end. I entirely fail to see that. The position is no different from that under the Rent Acts. On the contrary, the safeguard is even greater under the shorthold proposals, for two reasons.

In the first place, the shorthold tenant has his fixed term in any case. Secondly, why should he need to go to court on the subject of rent, because the rent is fixed once, it is registered and it cannot be increased at all, not only during the term of the tenancy but even beyond if the tenancy should continue. So I do not take that point. But what I do accept is that if there is a better way to cover some of the points the noble Lord mentioned which concern him—I said it earlier and I meant what I said, and we will read very carefully what the noble Lord has said—I will of course consult with those who are more expert than I am on these matters. If the noble Lord thinks of another way that he has not mentioned, he should not hesitate to come forward with it. We want the best Bill we can get. If we can make it better, why not?


I say no more at this stage. We shall come back to this. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 122A, 122B and 123 not moved.]

6.39 p.m.

Lord EVANS of CLAUGHTON moved Amendment No. 124: Page 38, line 6, at end insert— ("(3) For the purposes of the Housing (Homeless Persons) Act 1977 no person shall he treated as having become homeless intentionally or become threatened with homelessness intentionally by reason of his having accepted a protected shorthold tenancy of any premises and thereafter having been required to give up possession thereof.").

The noble Lord said: I hope I do not need to detain your Lordships long on this amendment, because it is an amendment which is really seeking information. It seems to me, as the legislation is at present drawn, that if a person becomes a shorthold tenant he or she knows, or can be assumed to know, that that tenancy is going to come to an end after one, two, three, four or five years. At the end of that time the person will have to remove himself or herself from the shorthold tenancy. It seems to me—and I believe I mentioned this to other members of my profession, and to members of Lord Gifford's branch of the profession—that it could be argued in the courts that any person who takes on a shorthold tenancy knowing that it is going to come to an end is, in fact, in danger of rendering himself or herself intentionally homeless under the Housing (Homeless Persons) Act 1977, in which case if you render yourself intentionally homeless the local authority does not have to rehouse you. Consequently, by accepting a shorthold tenancy, technically that person would be rendering himself or herself intentionally homeless, and therefore could not benefit from the provisions of the Housing (Homeless Persons) Act.

If the Minister could reassure me that that interpretation is wrong, I should be very happy, but I feel on a technical ground—and learned counsel do tend to use technical grounds; so do members of my part of the profession—it may be found that local authorities do not have to rehouse people. That would be a very serious outcome of the proposal which I am sure that neither the Government nor anyone else wishes. I should be glad to have an explanation.


I wonder whether I could respond to that request for information from the noble Lord, Lord Evans, before my noble friend replies to it. It is a matter to which the housing authorities, or at least those represented by the Association of District Councils, 300 or so of them, have given a good deal of thought. It is on their shoulders that the housing of the homeless under the Housing (Homeless Persons) Act 1977 chiefly falls. Their view is that when the shorthold provisions are enacted their burden under that Act will he considerably reduced, certainly reduced to some extent, the extent depending on the extent to which the shorthold tenancies are or are not sabotaged by the Labour opposition. But they will be reduced to some extent.

That leaves open the further fact that the operation of shorthold will produce in some cases a situation of hardship for tenants whose shorthold is ending, but it will also introduce to a small extent the possibility of deliberate abuse by tenants. It is, therefore, the view of the association as a whole that it would he better to leave the Act of 1977 and this Bill as it is drafted under which they can exercise their discretion as to what actually has occurred, whether it is a case of abuse or a case of hardship.


Before the noble Lord replies, I must say that I think the noble Lord, Lord Evans, has a point here. I do not want to repeat the excellent arguments that he has put forward, but I may say that should fears on this question seem exaggerated it is worth noting that a survey by Shelter in 1978 and 1979 of local authorities' policies regarding applicants coming out of out-of-season lettings, showed that four authorities, as policy, judged all such applicants as intentionally homeless. Also in a regional newspaper the local health and housing officer was reported as saying that: Fixed term agreements already exist, but a landlord can have great trouble in getting a tenant out if he has to go to the courts. We regard anyone forced out of such a tenancy by the courts as voluntarily homeless, whereas we would do our best to house anyone who informed us their shorthold was running out".


I listened closely to what has been said and would say that the Government are in full agreement with the principle that a tenant should not be disadvantaged under the homelessness legislation merely because he has taken a shorthold and the shorthold has come to an end. We do not, however, think that there is a real problem here. Under existing legislation there are various types of letting where the tenant does not have permanent security of tenure. For example, tenants in houses let by absent owner-occupiers or by people pending their retirement can be made to leave under the mandatory grounds for possession in the Rent Acts. Tenants of resident landlords only enjoy limited security of tenure, and the occupants of tied cottages and lodgers have even less security.

The Homeless Persons Act does not provide that anyone who takes one of these lettings and then has to leave cannot thereby be intentionally homeless. Although there has been a recent case in the court of appeal—in fact reported in The Times yesterday—where someone was declared intentionally homeless at the end of an out-of-season holiday let, this depended very much on the circumstances of the case where a secure council tenancy had been given up in favour of the winter "holiday" letting. The mere fact of taking such a letting does not mean that someone will be making himself intentionally homeless. There is no reason to suppose that a court would take such a view of the ex-shorthold tenant. Therefore, there is no need for this amendment.

Moreover, and this is crucial, if we were to provide that taking a shorthold does not put a person into the intentional homelessness category, we should immediately be casting doubt on the status of all other tenants or occupiers without permanent Rent Act security. That would be highly damaging to the operation of the Homeless Persons Act and, I have no doubt, is far from the intentions of the noble Lord, Lord Evans, in whose name the amendment stands.


I shall have to think more about this matter and take more advice. The noble Lord, Lord Strabolgi, has shot my fox a little, in that he brought up the precise points I was going to mention, and it is absolutely right that there are large areas here where there is uncertainty. I thought that this additional paragraph would make an area which is admittedly in the mind of barristers and solicitors an uncertain area, into a certain area. I should have thought that for the protection of themselves and their shorthold legislation, the Government might have welcomed this. I take the point made by the noble Lord, Lord Sandford. With no disrespect to him, the kind of problems which I envisage as a vice-president of the AMA, are probably more likely to crop up in metropolitan areas than in the areas of the ADC. What I will do, with some reluctance and a considerable amount of reservation, is to withdraw the amendment at this point, but I am going to consider it again and I may well come back to your Lordships' House with it again.

Amendment, by leave, withdrawn.

Clause 54 agreed to.

Clause 55 [Assured tenancies]:

Lord MOWBRAY and STOURTON moved Amendment No. 124A: Page 38, line 36, at end insert—

  1. ("(6) The preceding provisions of this section do not apply to a tenancy if, before the 430 grant of the tenancy, the landlord has given the tenant a valid notice stating that the tenancy is to be a protected tenancy or, as the case may be, a housing association tenancy and not an assured tenancy.
  2. (7) A notice is not valid for the purposes of subsection (6) above unless it complies with the requirements of regulations made by the Secretary of State.").

The noble Lord said: This amendment to Clause 55 removes from the assured tenancy scheme one unintended restriction on the ability of the landlord to let on a protected or housing association tenancy should he prefer to do so. Under Clause 55 as presently drafted a tenancy is automatically an assured tenancy if three conditions are met. These are: that the landlord has been approved by the Secretary of State; that the property was built after the Housing Act received Royal Assent; and that it was not previously let other than as an assured tenancy.

An approved landlord who has built new homes will, therefore, have no option but to let on assured tenancies. This restriction was never intended. It would, for instance, prevent an approved landlord from entering into an arrangement with a local authority whereby part of a building was let at fair rents. It would also prevent a housing association, which specialised in new-build, from becoming an approved landlord unless it was prepared to abandon building for letting at fair rents. A mixed programme of fair rent and assured tenancies would not be allowed.

The amendment puts this right by providing that an approved landlord can let on ordinary protected or housing association tenancies if he serves a notice to that effect on the tenants concerned. The notice must comply with the regulations made by the Secretary of State. It is a useful modification to the assured tenancy scheme which I hope will commend itself to your Lordships.

On Question, Whether Clause 55, as amended, shall stand part of the Bill?


I should like to ask the Government three questions on Clause 55. I am bound to ask these questions because, as we said at the beginning of this Committee stage, they have not made the background notes available to the Opposition. First, with regard to approved bodies, what happens to the tenant if an approved body loses that status? Would the tenant be fully protected? Secondly, what sort of bodies do the Government have in mind for "approved body" status? Thirdly—and this is important with so many overseas interests buying in to our property—will approved bodies have the right to sell their interests to other non-approved bodies? If so, what parameters will be used to judge the eligibility of potential approved bodies? If the noble Lord cannot answer all of those questions, perhaps he will write to me about the matter.


Clearly, I could attempt to give an answer to the points that have been raised, as I understand them, but I would far rather ensure that the answers were authoritative and absolutely accurate. So, I thank the noble Lord for his suggestion and I certainly take it up.

Clause 55, as amended, agreed to.

Clause 56 [Effect of Interest of landlord ceasing to belong to approved body]:

6.42 p.m.

Baroness DAVID moved Amendment No. 125: Page 38, line 37, leave out subsection (1).

The noble Baroness said: I beg to move Amendment No. 125 and I should like to speak also to Amendment No. 126. The Government's attention must now be devoted to what happens to the tenant if an approved body loses that status. These amendments relate to the status of tenants following loss of approved body status by the landlord. We see no reason why the tenant in this position should not enjoy full Rent Act protection. We want to look after individual tenants who may come up against bad landlords taking over from the approved bodies.

Clause 55(4) states that: 'approved body' means a body, or one of a description of bodies, for the time being specified for the purposes of this Part of this Act in an order made by the Secretary of State".

Has the Secretary of State decided yet which will be the approved bodies? I feel that before we can really take in these three clauses dealing with assured tenancies we need to know a bit more about the whole matter. I beg to move.


These amendments relate to the Government's proposals under Clauses 55 to 57 to allow landlords approved by the Secretary of State to build for rent outside the Rent Acts. This assured tenancy scheme is a strictly controlled experiment designed to test the possibility of attracting new investment into private renting. The main sorts of body we have in mind for approval under the scheme are building societies, pension funds and insurance companies or housing associations backed by such bodies. But that, of course, is not to exclude other bodies if they are considered suitable. As we are speaking of an experiment, we shall monitor it carefully. I should stress that Clauses 55–57 are concerned only with new build, and hence will have no implications for existing tenancies.

These amendments would delete subsection 56(1), which contains a transitional arrangement whereby tenancies existing at the time of a variation in the order taking a landlord off the "approved list" would continue to be assured tenancies. Landlords subject to such an order would then have all their assured tenancies converted automatically into protected tenancies on expiry of the three-month period provided by subsection 56(2).

These amendments would make the assured tenancy scheme less attractive to potential approved landlords. If they are to commit finance towards the building of new homes, it does not seem reasonable that the potential rental income can be reduced at a stroke—to use a phrase—perhaps simply because Government policy has changed rather than because the body concerned has not proved a good landlord.

Tenants in occupation at the time when a variation order is made will have taken on their tenancies in the knowledge that they will pay market rents, and it seems reasonable that they should continue to do so. They will of course have the protection of their leases and of Part II of the Landlord and Tenant Act 1954 as modified by the Bill. If a landlord is taken off the approved list the sanction will be that he cannot build any new dwellings under the scheme or create new tenancies. If the body was in financial difficulty it would be a double blow to have the value of its existing holding cut as proposed by the amendment. I I wonder whether, with that explanation, the noble Baroness will feel able to withdraw the amendment.

Baroness DAVID

Once again I should like to study what the Minister has said and find out whether the answer is entirely satisfactory. But, for the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 126 not moved.]

Clause 56 agreed to.

Clause 57 agreed to.

Schedule 5 agreed to.

Clause 58 [Rent officers and applications for registration of rent]:

Lord BELLWIN moved Amendment No. 127: Page 39, line 33, at end insert— ("(1A) In section 67 of the 1977 Act (application for registration of rent) for subsection (2) there is substituted the following subsection— (2) Any such application must be in the prescribed form and must—

  1. (a) specify the rent which it is sought to register;
  2. (b) where the rent includes any sum payable by the tenant to the landlord for services and the application is made by the landlord, specify that sum and be accompanied by details of the expenditure incurred by the landlord in providing those services; and
  3. (c) contain such other particulars as may be prescribed."").

The noble Lord said: I beg to move Amendment No. 127 and for the convenience of the Committee I shall speak also to Amendments Nos. 128, 129 and 130. Under the present legislation, which is not changed by our proposals in Schedule 18 to the Bill, tenants with fixed fair rents are not statutorily entitled to information from their landlord on the cost of providing services. This is because they have the rent officer to protect them against unreasonable claims by the landlord. The rent officer also fixes service charges for the full registration period—which will be two years under the Bill—even though costs may rise substantially. The benefit this confers at a time when wages and the cost of fuel and repairs are rising rapidly should not be underestimated.

However, we have received representations that the right to information about costs could help tenants in their arguments before the rent officer and rent assessment committee on re-registration. Many fixed fair rent tenants have expressed concern that landlords influence rent officers to fix higher rents than they would otherwise have done by producing spurious data on services at the last minute without the tenant having the opportunity to contest it. I am by no means sure that rent officers are so easily misled, but these amendments to Clause 58 and Schedule 6 provide additional protection to fixed fair rent tenants by giving them the opportunity to challenge landlords' evidence to the rent officer on service costs. In introducing these amendments we are fulfilling an undertaking given in another place.

The amendment requires the landlord, when applying for a rent registration, to state on his application how much of the rent sought is attributable to services. He will also have to attach supporting evidence. The rent officer is then required to serve this information on the tenant. The tenant will then be asked whether he wants a consultation, as in all applications. If a consultation is to be held the amendments require that it should not take place until at least 14 days have elapsed since the serving of the notice.

This amendment will ensure that tenants on fixed fair rents always have the opportunity to see in advance and challenge the evidence on which their landlord is seeking an increase in rent attributable to services. I hope noble Lords will accept this—as I consider it to be—important new safeguard.


I think that the Government's amendment goes some way, although it does not go far enough. We shall probably deal in more detail with the service charges when we come to Schedule 18. But I may say that, as a result of one case—I think that it was Campden Hill Towers v. Gardner in 1977—it was found in the courts that tenants can be charged for large-scale major repair works even though they are protected by Section 32 of the Housing Act 1961. The cost of works on flats other than their own can be put on the service charges. That is surely doubly unjust because tenants will have to pay towards maintaining the capital value of properties in which they have no capital stake, and as regards which there should really be a capital expenditure on the part of the landlord. And tenants have to pay twice—once through the service charges and again in rents, increased as a result of the repairs. This is a major scandal which is going on in particularly many of the flats in London, and I hope that it is something to which the Government will give their attention.

I am also very glad that the Ministers and the department concerned will be called before a Select Committee of another place which is to look into the question of London accommodation—particularly in flats—in some depth. Therefore, I hope that the Government will take some action to repair what is a very great injustice to many flat-dwellers in London and in the other large cities. However, as I say, the amendments go some distance, and we are grateful for that.

Clause 58, as amended, agreed to.

Schedule 6 [Applications for registration of rent]:

Lord BELLWIN moved Amendment No. 128: Page 108, line 18, after ("application") insert— ("(b) stating any sum specified in the application in accordance with section 67(2)(b) of this Act;")

The noble Lord said: I have already spoken to this amendment when I spoke to the last amendment. I beg to move.

Lord BELLWIN moved Amendment No. 129: Page 108, line 24, at end insert— ("(2) Where, in pursuance of section 67(2)(b), the application was accompanied by details of the landlord's expenditure in connection with the provision of services, a notice under this paragraph shall be accompanied by a copy of those details.")

The noble Lord said: I also spoke to this amendment with Amendment No. 127. I beg to move.

Lord BELLWIN moved Amendment No. 130: Page 108, line 42, at end insert— (".In sub-paragraph (2) of paragraph 4, for the word "notice" there are inserted the words "notice, or 14 days in a case falling within paragraph 3(b) above".")

The noble Lord said: I spoke to this amendment when I spoke to the last amendment, Amendment No. 127. I beg to move.

Schedule 6, as amended, agreed to.

Clause 59 [Applications for new registered rents and phasing of increases]:

6.53 p.m.

Baroness BIRK moved Amendment No. 131: Page 39, line 38, leave out subsections (1) to (4).

The noble Baroness said: I shall be very brief on this amendment. It has had a very wide airing in the other place and has been discussed widely in newspapers, and so on. This clause reduces the normal period before fair rents can be re-registered from three years to two years, and alters the phasing of rent increases accordingly. It seems to me that if the Government had set out to find the worst possible time to introduce something that will fuel inflation in this way, this is it. To change the reviews at a time when inflation is over 21 per cent., with rates of interest as they are, and without any solid reason for so doing, is bad timing.

As rents increase, the money needed to gain access to new tenancies increases proportionately. As rents have increased, as I shall show, and are increasing, not only will tenants be paying more—and this is quite apart from the question of the change in reviewing and phasing—but Clause 76 of the Bill lays down that a £200 deposit can be charged, in addition to supposing that a tenant is paying £25 a week, a month's rent in advance and possibly, on top of that, a hefty agency fee. Therefore, the whole effect of this is, again, to increase the cost of living, to increase wage demands and to increase the vicious spiral that the Government say all the time they are trying to break.

The average registered rent for Greater London in the fourth quarter of 1979 was £18.70 a week. This represented a 33 per cent. increase on the previous year. For the rest of England and Wales the average for the last quarter of 1979 was f13.96 per week, which represented an increase of 36 per cent. on the previous year. Therefore, without changing the review system and phasing, I should have thought that rents are showing quite a considerable increase.

If this remains part of the Bill, it means that rents will increase 50 per cent. more rapidly over the next two years; and as a result of the change in reviewing from three years to two years and the phasing from two years to be spread over one year, it will require more rent officers, and more time and effort will be spent on going through the procedures every two years. As there is at present a bottleneck over rent reviews, I beg the Government—not, I am afraid, with very much hope—to look at this again. It will increase the need for manpower. It is increasing everyone's anxieties. Almost before one review has been completed, the next one will be on the way. It is bad from a human point of view; it is bad financially and it is bad economically.

Finally, if one looks at the takeup of rent allowances, one sees that only between 50 per cent. and 55 per cent. of people take them up at all. The whole system is so complicated. Unfortunately, it is one of the least effective of the grants or allowances available to people because they do not understand it, and because they have to present evidence of the rent charged, people are often uneasy and worried about doing so.

If rents are not registered—and, of course, this applies to more than half the rents—there can be no rent allowances. Therefore, the rent allowances in no way balance the effect of very considerable increases in rent. I am quite sure that the Minister will explain how landlords have fallen behind; and I submit that the increases which I have given have been quite considerable. Compared with some years ago—and I shall not bother your Lordships with the figures—when inflation was very much lower, it is true that rents were much lower. To do this at this particular time seems to add to a bureaucratic jungle and to be unviable, either financially or socially.


Without wishing to repeat what the noble Baroness has said, I should like to urge the Government to consider this on the purely administrative considerations that she advanced. I should declare a special interest here for I am the president of the Rent Officers' Association and, as such, I have a good knowledge of rent officers. I understand that at their last conference, at which I made a short address, there was a move to reduce their number. I wonder whether the Government will consider what the expenses involved in this earlier and more frequent rent review will be, as opposed to any increase in rents that might benefit the landlords. I have a feeling that if it were to be worked out, it would be found that a very considerable amount of administrative expenditure is involved. It is disheartening to the rent officers. Already they have to deal with a considerable backlog. I think that the Government ought to give it further thought and consideration on that ground alone.


I should like to support this amendment for perhaps a different reason. Today tenants' associations are very disturbed indeed—and I am not talking about the amounts to which my noble friend Lady Birk has referred—at increases as high as 500 per cent. being charged to tenants of flats by rent tribunals. Increases of between 200 and 300 per cent. are being charged in a vast number of cases. I do not think that three years is enough. If we are to reduce the period, the feelings of security that a tenant of a flat has will also be reduced by two-thirds. In my view and in the view of the tenants it is a very important consideration that that period should not be reduced.


I should like to oppose what the Opposition say about these amendments. So long as you have any phasing whatsoever, the whole concept of a fair rent is completely bogus and fraudulent. You are always one or two steps behind. After all, what is adjudged to be a fair rent in 1980 cannot possibly be a fair rent in 1981, still less in 1982 at the present rate of inflation or at any rate of inflation we have had in recent years. When the Labour Government were in power we had a Price Commission. The Price Commission did not come along to a manufacturer and say, "We adjudge the right price for a certain brand of children's shoes to be £10. This is a price which gives you a reasonable return. However, this year we will allow you to charge only £8 and next year £9." They allowed the manufacturer to charge £10 straight way. That is how it should be with fair rents.

I notice incidentally that in the Scottish Bill there is no phasing whatsoever. This is something that has only just been brought to my attention. I am not aware of the attitude taken by the Opposition to this fact, but if there is no phasing in Scotland there does not seem to me to be any case for phasing in England, and certainly not for retaining the three-year phasing which the Opposition wish to have.

7.2 p.m.


This amendment would delete the new provisions in Clause 59 relating to the period before a new fair rent can be registered and to the phasing of increases in fair rents. These are important measures which bring the present rent registration system into line with current circumstances. I should have thought that those were the operative words. I shall deal first with the provisions relating to the minimum period before a new fair rent can be registered. At present once a rent has been registered it remains the rent limit for three years. This period was introduced in 1965 when the fair rent system came into being and when the annual rate of inflation was only about 4 per cent. By reducing this period to two years Clause 59 seeks to ensure that the real value of the registered rent does not fall due to the present higher inflation rates as rapidly as it does now under the three year registration period.

Clause 59 makes a parallel change in the system of phasing increases up to a fair rent. It provides that increases will be phased in two annual instalments following a new registration rather than three as at present. The full fair rent will therefore become payable a year after the registration of the new rent instead of two years as at present. It is important that the tenant has some measure of protecton against steep increases in rent. However, under the present system, which the noble Baroness wishes to retain, a fair rent does not become payable in full until it has long since ceased to be fair. On that I entirely accept the observations made by the noble Lord, Lord Monson, and I am grateful to him for his comments.

I think I can best illustrate this by taking the example of a fair rent of, say, £7 which is increased on re-registration to £10. Let us first look at what would have happened in 1965 in these circumstances. Noble Lords will appreciate that at that time there were three years between the rent registrations but there was no phasing at all. In the first year the tenant would therefore pay the full registered rent of £10. With inflation running at 4 per cent. the rent would be 4 per cent. below (and this is the point Lord Monson made) the real value of the fair rent in the second year and 8 per cent. below it in the third year. At the beginning of the fourth year it would be re-registered and, assuming that the rent goes up broadly with inflation, the fair rent would go up from £10 to £11.25 and, once again, because it would be paid in full immediately, it would be at its full real value.

I will now take the same example with a rate of inflation of 14 per cent., and with phasing in three annual instalments as was introduced in 1975. In year one the tenant would not be paying the full fair rent of £10; because of phasing he would be paying £8 rent. That is 20 per cent. below the real value of the fair rent. In year two, as a result of the second instalment of phasing, the rent would increase from £8 to £9, which would still be 21 per cent. below the fair rent in real terms. In year three the rent would increase to £10 and would still be 22 per cent. below the real fair rent. In year four the rent would be re-registered, and again because of the effect of phasing the rent payable would be £11.57, which is still 21 per cent. below the full real value.

The essential difference is that when fair rents were first introduced the rent remained at its real value for two out of every four years, and for the two intervening years it was only slightly below it. The effect of a high rate of inflation plus three annual instalments of phasing means that throughout the whole of the four year period in the latter example shown the fair rent remains about 20 per cent. below its real value.

It is this situation that Clause 59 seeks to alleviate and that the amendment strives to preserve. All that the changes in Clause 59 will mean is that tenants will pay the full fair rent more quickly, following its registration, than at present. The rent allowance system is available to those who have difficulty in meeting their rent. I entirely take the point the noble Baroness made about the degree of take-up at the present time. It is a matter of considerable concern. Frankly, it has always been a matter of concern ever since the introduction of the Rent Acts. But the Government are trying to do something positive about that, in that we are launching a publicity campaign to ensure that people are aware of the benefits which are available to them as of right.

From 1st July we are increasing the maximum rent allowance payable to £25 a week in London and £23 elsewhere. I can illustrate the very limited effect of the Bill on tenants' rents by again taking a typical case. At present if a tenant is paying a fair rent of £9 per week, he might expect an increase of £1 per week in the first year following re-registration of this rent. Under the Bill the equivalent increase would be £1.50. If it is assumed that the tenant was married with two children and had an income of say £5,000 a year, at least 90p of the £1.5O increase would be met by rent allowance. In some areas of London such as Westminster, El or more would be met by rent allowance. The net increase to the tenant would still be beneath the general rate of inflation.

The provisions of Clause 59 are designed to ensure that a fair rent means what it says, both to landlord and tenant. We had some discussion with the noble Lord, Lord Shinwell, as to what a fair rent would he. The amendment proposed by the noble Baroness and the noble Lord would perpetuate the present inequities in the pri- vate rented sector—I see that the noble Lord looks puzzled. Perhaps I may be able to do something about that later. May I just finish what I am speaking about now, and come back to the point later. The amendment would perpetuate the present inequities in the private rented sector which are forcing landlords to find other uses for the rented accommodation which is so badly needed, especially by the young and the mobile. I hope that noble Lords will reject this amendment.

Viscount SIMON

May I ask the noble Lord one question? In the interesting figures he gave us he appeared to be assuming that it would be fair and reasonable that rent should increase along with inflation. But is that right`? Surely only a part of the rent is required by the landlord for current expenditure. A large part of it is amortisation of his original capital, and that does not have to go up with inflation.


The point is that what the rent will become in due course, the new rent that it will lead to, will be a matter for determination by the rent officer. What we are talking about is the impact of inflation upon the rent which has been fixed for the time until the next registration. It is that that I was trying to give examples about when I was referring to it before. I think that that is what he wanted to be sure about.


May I just say to the noble Viscount, Lord Simon, that a great part of rents is consumed by the expenses of repairs, and building costs over recent years have tended to rise more rapidly than general inflation.


I follow what the noble Lord on the Front Bench was saying. One can follow that argument through. But then I come to the conclusion that the Government must expect for ever and ever to be facing inflation. One listens to the points put through the media that it is hoped to bring inflation down within the next three years. If the Government are so successful, will the tenant he able to appeal to the rent officer, when inflation is down, for a decrease in his rent?


I have every confidence that the Government's intentions regarding inflation will be entirely successful, and I am sure the noble Baroness would expect me to say no less. Should that happy event take place (I might say "when" it does; sooner rather than later is perhaps the best phrase I can use) we shall then have to see the extent of it. I was talking about giving illustrations of rents set when the rate of inflation was 4 per cent. We hope one day to return to that happy state, and when we do that will be the time for us to reconsider the kind of situation the noble Baroness happily presents to us as a possibility. Let us look forward to the moment when it becomes a probability and a fact.


Is the Minister aware that he is basing the whole of his argument on the question of inflation? Does he realise that today the increases that are being demanded are very much higher than the rate of inflation? Is he prepared in the circumstances to do something to prevent increases higher than the rate of inflation?


With respect, the noble Lord is talking of a separate category altogether. We are talking about rents which are applied under the Rent Acts where the determination of the new rent is fixed by the rent officer, and the basis the rent officer uses to do that is the formula we discussed earlier, which I am sure noble Lords would not wish me to go over again. The point which the noble Lord, Lord Janner, is so troubled about and which, understandably, he raises regularly in your Lordships' House, is rather different and, with respect, does not come within the context of the amendment now before the Committee. I am sure that will not prevent the noble Lord from raising it

again on many occasions in the future, and I will do the best I can either to assuage his fears or satisfy him as best I can.

Baroness BIRK

I thank the Minister for all he has said. I listened carefully to his remarks and to the comments of other noble Lords. I have not heard from the Minister a convincing reason why this change in review and phasing should take place at this time, and certainly there has been no answer to the points raised by myself and by the noble Lord, Lord Goodman.


May I ask the noble Baroness to permit me to intervene to correct a point she raised earlier? I am sure she would like me to put the record right because her figures were wrong. She probably gave figures for furnished lettings. The average rent registered for unfurnished lettings in London in 1979 was £668 or £12.84 per week. In England and Wales the figure was £483 or £9.20 per week. The noble Baroness gave percentage increases on the previous year, but those were misconceived because when rents are re-registered they are increased on a rent registered at least three years before, and the average increase on re-registration after three to four years in 1979 was, in fact, 47 per cent.


I have to point out to the Committee that if Amendment No. 131 is agreed to, I cannot call No. 132.

7.14 p.m.

On Question, Whether the said amendment (No. 131) shall be agreed to?

Their Lordships divided: Contents, 62; Not-Contents, 88.

Ardwick, L. Davies of Leek, L. Jacques, L.
Balogh, L. Davies of Penrhys, L. Janner, L.
Birk, B. Denington, B. Jeger, B.
Blease, L. Donaldson of Kingsbridge, L. Kaldor, L.
Boston of Faversham, L. Evans of Claughton, L. Lee of Newton, L.
Bowden, L. Fisher of Rednal, B. Leonard, L.
Brimelow, L. Gaitskell, B. Llewelyn-Davies of Hastoe, B. [Teller.]
Brockway, L. Gifford, L.
Bruce of Donington, L. Glenamara, L. Lloyd of Kilgerran, L.
Chitnis, L. Greenwood of Rossendale, L. Longford, E.
Cledwyn of Penrhos, L. Hale, L. Lovell-Davis, L.
Collison, L. Hampton, L. McNair, L.
Cudlipp, L. Hatch of Lusby, L. Maelor, L.
David, B. [Teller.] Jacobson, L. Oram, L.
Peart, L. Ross of Marnock, L. Taylor of Mansfield, L.
Pitt of Hampstead, L. Seear, B. Underhill, L.
Ponsonby of Shulbrede, L. Segal, L. Wall, L.
Raglan, L. Simon, V. Wallace of Coslany, L.
Rhodes, L. Stewart of Alvechurch, B. Wells-Pestell, L.
Ritchie-Calder, L. Stewart of Fulham, L. White, B.
Rochester, L. Strabolgi, L. Wynne-Jones, L.
Airey of Abingdon, B. Fortescue, E. Morris, L.
Amory, V. Fraser of Kilmorack, L. Mottistone, L.
Armstrong, L. Gage, V. Mowbray and Stourton, L.
Auckland, L. Glendevon, L. Moyne, L.
Bellwin, L. Glenkinglas, L. Murton of Lindisfarne, L.
Belstead, L. Godber of Willington, L. Northchurch, B.
Bessborough, E. Gowrie, E. Northesk, E.
Blake, L. Greenway, L. Nugent of Guildford, L.
Buxton of Alsa, L. Gridley, L. O'Hagan, L.
Campbell of Croy, L. Grimston of Westbury, L. Orr-Ewing, L.
Chelwood, L. Hailsham of Saint Marylebone, L. (L. Chancellor.) Redesdale, L.
Clitheroe, L. Redmayne, L.
Colville of Culross, V. Harmar-Nicholls, L. Reigate, L.
Colwyn, L. Holderness, L. Rochdale, V.
Cork and Orrery, E. Hornsby-Smith, B. St. Aldwyn, E.
Craigavon, V. Hunt of Fawley, L. Saint Oswald, L.
Craigmyle, L. Hylton, L. Salisbury, M.
Croft, L. Hylton-Foster, B. Sandford, L.
Cullen of Ashbourne, L. Kimberley, E. Sandys, L. [Teller.]
Davidson, V. Kinnoull, E. Selkirk, E.
De La Warr, E. Lindsey and Abingdon, E. Selsdon, L.
Denham, L. [Teller.] Long, V. Skelmersdale, L.
Digby, L. Lonsdale, E. Soames, L. (L. President.)
Drumalbyn, L. Lyell, L. Strathcona and Mount Royal, L.
Elton, L. Macleod of Borve, B. Trefgarne, L.
Fairfax of Cameron, L. Mansfield, E. Vaux of Harroden, L.
Faithfull, B. Margadale, L. Vivian, L.
Falkland, V. Marley, L. Ward of Witley, V.
Ferrers, E. Monson, L. Westbury, L.
Ferrier, L. Montagu of Beaulieu, L.

Moved accordingly, and, on Question, Motion agreed to.

7.22 p.m.

Lord MONSON moved Amendment No. 132: Page 40, line 1, leave out subsection (2).

The noble Lord said: I beg to move this amendment, and with the leave of the Committee I shall speak also to Amendment No. 151, which is more or less consequential. As the Committee will have gathered from my intervention on the last amendment, I consider the whole idea of rent phasing to be totally immoral. It ensures that allegedly fair rents always in practice remain unfair rents. Phasing does not occur in any other sphere of economic activity in this country or, so far as I know, in any other country. When I speak of economic activity I am referring to essentials as well as non-essentials and luxuries.

If private individuals are hard up as a result of rising rents and in consequence deserve a subsidy, the subsidy should surely be provided by the state, not by other private individuals. But in fact I do not think that such subsidies are to any great extent justified, because, despite what the noble Baroness, Lady Birk, and the noble Lord, Lord Janner, said, I believe that if they examine any 5-year period since fair rents were first introduced, they will find that the fair rents have always lagged behind the retail price index and, even more, behind earnings. In other words, the fair rents represent a smaller and smaller proportion of earnings. I know that the Labour Party is anxious that rents should not take up a higher proportion of the average person's earnings than they do, but if noble Lords look at the record they will find that what I say is the case. Fair rents—and excluding other rents—represent a decreasing, rather than a rising, proportion of these earnings. The reason that I move the amendment is that anything that reduces the period of delay in bringing into effect the full rent ought to be encouraged, and I hope that the noble Lord, Lord Bellwin, can give me some assurance on this.


The amendment would delete subsection (2) of Clause 59, which ensures that the new 2-year period before fair rents may be reviewed applies only to rents registered after commencement of the Bill. The 2-year period would therefore apply also to existing registrations. I do not think it reasonable that we should change the rules in mid-stream in the manner proposed by the noble Lord, Lord Monson. Tenants with existing rent registrations will not be expecting another change in the registered rent, except through phasing, until three years are up. They will probably have received notices of increase covering the whole period. If at the very moment that they were about to start paying the full fair rent under the existing registration a further increase were to be imposed from a new registration, this would cause confusion, not to say concern.

The amendment would moreover place a major burden on the rent registration system, which was referred to earlier by the noble Lord, Lord Goodman. All rents registered between two and three years previously would become due for review on the date of commencement, and the result would inevitably be delays, some of which could be very serious. I hope that on reflection the noble Lord will decide not to press his amendment. My sympathy for the philosophy behind his motivation in raising the matter is not inconsiderable, but I hope that in practical terms he will feel able to withdraw the amendment.


The noble Lord has very successfully convinced me of the difficulties that would ensue if the amendment were passed, and therefore I beg leave to withdraw it.

Amendment, by leave, withdrawn.


Amendment No. 133. I have to point out to the Committee that if this amendment is agreed to, I cannot call Amendments Nos. 134 to 136.

[Amendments Nos. 133 and 134 not moved.]

Lord MONSON moved Amendment No. 135: Page 40, line 34, leave out ("or increasing")

The noble Lord said, I beg to move this amendment. I find it very strange that a Conservative Government propose giving the Secretary of State the option to increase the period of delay. I suppose that in order to be consistent I should have introduced an amendment to delete the words "or increasing" in line 32 as well as in line 34, but because of the complexity of the wording I omitted to do so.

What is proposed in this clause seems to be a rather dangerous thing to do. I cannot visualise this Government seeing any occasion when they might wish to increase the period of delay before higher rents came into operation. It would give hostages to fortune if, "heaven forbid"!, a Government of highly Tribunite complexion were to come to power, since they would immediately seize upon the opportunity afforded them by the clause as it stands to increase the period. They might well do that by means of legislation later, but it seems rather silly for a Conservative Government to give them a toe-hold whereby they could do it that much sooner. I think it is quite unnecessary to provide for any possibility of the period being increased. I beg to move.


I say to the noble Lord, Lord Monson, I hear what you say. The Bill provides for the period of delay to be one year, which means that fair rents will be phased in two instalments, with the second instalment being due one year after registration. We believe that this is right for present circumstances, but would not necessarily be so in future. In particular it might be necessary to amend the period if the minimum period between registration was amended, as is also possible by order under Clause 59.

The amendment would provide that the Secretary of State could only reduce the period of delay, not increase it. That would detract from the flexibility that we are seeking to introduce and would make the power a one-sided affair. I can see no purpose in that. The amend- ment would also have the anomalous effect that once the order-making power had been used to reduce the period of delay—say, to six months—it could then be used subsequently only to achieve a further reduction from six months. It would not be possible to revert to a period of one year without primary legislation. I dare say that this would provide a deterrent to the power being used at all, which is not, I think, what the noble Lord would wish to see. I hope the noble Lord will see the merit of the flexibility which Clause 59 as currently drafted provides, and perhaps will not press his amendment.


I do not intend to press the amendment now, of course, but I really would ask the noble Lord, Lord Bellwin, and his colleagues to look at this very carefully, because it really does give hostages to fortune. Can he really visualise a situation in which a Conservative Government might wish to increase the period before a new rent comes into operation? I cannot think so. I see one of the difficulties mentioned, which could be got round, perhaps, by a little redrafting; but I would ask the noble Lord whether he would look at this point seriously before the next stage, and on the assumption that he will do so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7.32 p.m.

Lord HYLTON moved Amendment No. 136: Page 40, line 38, at end insert— ("(d) setting a limit on rent increases for any category of landlord for such a period as he may determine".).

The noble Lord said: This amendment, No. 136, may not be, strictly speaking, necessary, but I put it down to prevent unnecessary hardship to a small minority of housing association tenants. I have brought with me some examples of the kind of financial hardship which these tenants may face, and precise details of rent levels. However, in the interests of brevity I will not quote them now, but if my noble friend on the Front Bench would like to see them I will willingly let him have them. Suffice it to say that the new, much larger level of rent allowances is extremely welcome. However, it will not help all the housing association tenants, because only if they are in extreme poverty can they benefit from the allowances unless the total rent per week exceeds £10. The result is that some housing association tenants will find themselves more harshly treated than similar tenants of local authorities or private landlords. In addition, there is also the point that rent allowances cannot relieve service charges which are sometimes made in respect of flats.

My noble friend and others who have studied these arcane matters will know that housing associations generally are not obliged to charge the full fair rent, or even the full permitted increase, and can therefore limit the extra burden on tenants to some reasonable sum, such as £3 a week or a little more. However, associations now receiving revenue deficit grant are expected by the Department of the Environment and the Housing Corporation to maximise their income. Concern therefore arises about a minority of tenants and a minority of associations. I hope that my noble friend will be able to make a statement that will set our fears at rest. I beg to move.


I merely wish to say that the reason why I did not move Amendment No. 134 was that I thought, first, that the amendment to be moved by the noble Lord, Lord Hylton, was worded slightly better than mine and, secondly, that he would explain it very much better than I could. I want to say that I agree with everything he has said, working from the same basis as that from which he works—from a housing association basis—because housing associations do, as the noble Lord said, feel concerned about this and are looking for reassurances.


May I give my support to the amendment moved by the noble Lord, Lord Hylton, and hope that the Minister will be able to help us. No doubt we have all had information from various housing associations, but some of it is absolutely alarming. There can be rent increases up to £12 a week, which is quite phenomenal. I have another example here that I received only today, I think, from an association of which I was for many years a member. They say that the rent increases will range from £2 to £4.50 a week. I think it would be correct to say that probably for council tenants rent increases will be in the region of £2, and we are pleading for housing association tenants, who are going to be required to pay way beyond that particular figure. Some are going up (in this association they have done their homework) by £4 to £7. In addition to that, there have got to be service charge increases. The whole situation is really very serious.

I happen also to be a member of the Sutton Housing Trust, where we are not in receipt of revenue deficiency grant, and we have already taken a decision that £3 is as much as we can possibly put on our tenants. I would be so delighted if the Minister could indicate that that was the kind of figure that he would have in his mind.


I understand it has been suggested that I am taking a long time in dealing with some of the points raised. I fail to see how I can move more quickly when so many noble Lords feel—and I see no reason why they should not—that they wish to raise points; and I really can do no better than to speak at a rather rapid rate of knots, greater than is my normal wont, as I am sure your Lordships will agree. But I am doing my best from my side, and I will try to do the same on this amendment, also.

Let me deal with what I believe to be the principle behind these amendments. I believe they are saying that the fair rent system is all very well, but that it should be overridden if it results in increases in rent above a certain specified cash level. I would suggest that this is misconceived. Increases in registered fair rents over the last three years have been much the same as the average increases in earnings; that is, about 45 per cent. in both cases. However, because of phasing, tenants have not paid these increases in full—a point we were talking about earlier—for two years; that is, five years after the previous fair rent was fixed. This follows a period when fair rent increases were generally less than the level of inflation. Since 1970, for example, earnings have gone up by 258 per cent., and fair rents by 111 per cent. Of course, there are individual cases where recently registered fair rents have risen more sharply than the average of 45 per cent. or so.

Some may ask: Why is this? The first reason is that the previous rent will often have been fixed several years ago, and this really is an answer that I ought to give to the noble Lord, Lord Janner, when he so frequently raises the same point. It really is, What is the starting base? For example, an 80 per cent. rent increase may sound very startling at first, but if the previous rent was registered, say, six years ago, the increase is rather less than in other indications of inflation. If a ceiling was placed on rent increases, it would be extremely difficult to take account of such factors. The landlord would be penalised for not having increased his rents sooner, which is hardly fair.

The second reason is that the fair rent system is not meant to be some means of index-linking. Where a rent has already been registered and is then reviewed without a change of circumstances, it is perhaps likely to be increased certainly in line with inflation. There are many cases where circumstances have changed since the previous legislation; where, for example, the property has been improved, or where rents are being registered for the first time. Two hundred thousand such cases will result from the conversion of controlled tenancies into rent regulation under Clause 63, and I am sure we shall be talking about that soon—at any rate, I hope soon.

The purpose of the fair rent system is to create an equitable and consistent system for rent fixing based on the statutory criteria in Section 70 of the Rent Act and on the building up of experience of comparable properties and circumstances. I need hardly remind your Lordships that this was a Labour measure. However, if a ceiling is placed on increases, the system becomes distorted. Comparable properties will not have comparable fair rents. In fact, rents will cease to be fair rents and become something quite different. In some cases—and a good example here is those properties coming out of control under Clause 63, where rents are at present pegged at 1956 levels—the result would be patently absurd. Where increases in fair rents do cause difficulties for individual tenants, the correct way of preventing hardship is not by distorting the fair rent system but by a phasing of increases and by rent allowances. It is often not appreciated how substantial rent allowances are, especially in meeting increases.

As I said earlier, from 1st July we are raising the maxima payable very considerably. I will not repeat the figures again in the interests of time, but may I say on this that if my noble friend Lord Hylton cares to send me his figures, as he said he would, I would be very interested to see what they are and what significance they may have in the context of this whole matter.

I hope that on reflection these amendments will not be pressed. I could talk to them at greater length but, at the end of the day, we really have a basic principle here. I think the great need is to ensure that people know what are their rights. We must do what we are suggesting. We will launch a new campaign—and some noble Lords may say, "Yet again"—I know it will not be the first. We will try to make it a better one. We want people to know what are their rights. The whole purpose is that they should be able to have this protection. They are the ones who need it and we will do our best to help them.


I have no intention of pressing this amendment. My noble friend the Minister has given me a splendid answer but has given it on a very high plane of generality. I wish he had been able to take on board my particular point about the housing associations now receiving revenue deficit grant. This kind of thing applies very much where there has been a planning agreement between the housing association and the local authority when a particular property came to be modernised with the result that sometimes a tenant has been enabled to go on paying the old, unmodernised rent even after he has moved back into the new, fully-modernised property. This is the kind of case where we will have huge jumps in rent levels in the next re-registration.

I am not quite sure whether my noble friend took my point about rent allowances. Of course the increases are splendid and we are grateful. I hope that more will be taken up in future than in the past. But they do not bite immediately in a case where you had a very low old rent and a medium, moderate £8-to-£10-a-week new rent. They work higher up the scale but not at that point. Could my noble friend say a little more?


I cannot remember the figures, but in an answer to a question recently I gave some examples; or, if I did not give them, they were in the brief that I had. They were very impressive as to the level at which allowances start to bite. The best thing that I can do is to write to my noble friend with that information. If noble Lords opposite would like to have the same, then I think I should do that, too. I felt that they were very impressive and I should like everyone to know clearly what they are. If anything is to be raised following that, then it will be done.


We should be grateful to accept the noble Lord's offer.

Viscount GAGE

I hope that the noble Lord will look at the figures produced by my noble friend. I have noticed in other directions that where there are basic principles which I am in favour of, they sometimes produce ridiculous results. There ought to be some ministerial power to make some sort of allowances. It is a difficult question, but I do not think that all these things should be grouped under the heading of a principle which, in no circumstances, can be changed.


With a little goodwill, which I am sure is available, these can be arranged by administrative means without amendment to the Bill. I am grateful for what my noble friend said when he spoke again. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord BELLWIN moved Amendment No. 137: Page 40, line 38, at end insert— ("(6A) An order under subsection (6)(a) above may make a corresponding reduction or increase in any of the periods for the time being mentioned in section 13 of the 1976 Act (application for registration of rent) and sections 73(1)(a) and (1A)(a) (cancellation of registration of rent under Part IV), 80(2) (reconsideration of rent under restricted contract) and 81A (cancellation of registration of rent under Part V) of the 1977 Act.")

The noble Lord said: Clause 59 enables fair rents under the 1977 Act to be reregistered after two years. This two-year period may be reduced or increased by an order made by the Secretary of State under subsection (6) of Clause 59. There are, however, other two-year periods in the Bill affecting the rent registration system for which there is at present no corresponding order-making power. These are subsection (2) of Clause 61 which enables fair rents to be cancelled after two years; Clause 68, which provides that reasonable rents for restricted contract lettings may be reconsidered after two years; and Clause 69 which provides that reasonable rents may be cancelled after two years. If the order-making power under subsection (6) of Clause 59 were exercised to alter the period between fair rent registrations this period would become out of line with the other periods I have just mentioned. This would create anomalies since the reason for a change in the period between fair rent registrations would apply equally to the period under the other clauses.

This amendment therefore allows the Secretary of State to vary the two-year period for the reconsideration of reasonable rents in Clause 68, the cancellation of fair rents in Clause 61 and the cancellation of reasonable rents in Clause 69. This is achieved by an extension of the order-making powers which subsection (6) of Clause 59 already grants the Secretary of State. No new order-making powers are created. I beg to move.

Clause 59, as amended, agreed to.

Clause 60 [Effect of registration of rent etc.]:

7.46 p.m.

Lord EVANS of CLAUGHTON moved Amendment No. 138: Page 41, line 1, leave out subsection (1).

The noble Lord said: This is an amendment which is very important in the consideration of the Bill. I would admit that the present drafting of the existing Section 72(1) of the 1977 Act is not perfect; but there is general concern expressed by a large number of people involved in rent and by rent officers about the re-wording of it. As the law stands at present, unless the rent officer fixes a different date, a registered rent takes effect from the date on which the application is made to the rent officer—that is, the date on which the party, whether landlord or tenant, making the application lodges the documents with the rent officer. This rule applies to both landlord and tenant. If the tenant is being overcharged and the rent officer fixes a lower rent, the tenant is entitled to a refund. If the landlord makes the application because the rent is too low, any increase awarded is backdated to the date of the application unless there are special reasons why this should not be so.

The most important advantage of the existing system is that neither landlord nor tenant can profit by deliberate delay or by the current backlog of work—of which noble Lords are aware—for rent officers, particularly in the Greater London area. The Bill's proposals as they stand would reverse this rule by making the registration effective from the date the application is heard, without any discretion to fix another date. If this stands as drawn, it will give a powerful incentive, on the one hand, to the landlord who knows that the rent is likely to be reduced and, on the other hand, to the tenant who knows that an increase is probable to delay proceedings for as long as they can. The existing text of the Bill needs simplifying in other respects, but the basic point that I make is that the date of the application should be the governing date and not the date of the decision.

I cannot understand the reason why the Government have made the change. I can understand that the drafting of the clause needs improvement, but why the philosophy of the date on which the new rent comes into force should be changed defeats me; particularly because of the present position with regard to rent officers. I wonder whether the noble Lord when replying could give some idea whether, with his Government's legislative attitude to public expenditure, he envisages appointing a sufficient number of rent officers to do the additional work which will be required; for otherwise the present position will, because of the changes, become considerably worse.

I move this amendment on two grounds. First, I feel that it is a matter of some importance. I believe, for the reasons I have given, that it is fairer that the rent should be effective from the date of the application. Secondly, do the Government have in mind appointing more assistant rent officers in parts of the country where they are at present grossly overburdened and where this Bill is likely further to overburden them? I beg to move.


I wonder whether I may, with temerity and diffidence, venture a suggestion. The rent officer is vested with total discretion on much more important matters than the question of when the new rent is to start. Would it not be a complete solution to leave it to the rent officer to determine from what date the new register is to start, on the basis it does not start earlier than the application?


The noble Lord, Lord Evans of Claughton, has taken the same point as I and my noble friends are proposing to take on Clause 60 as a whole. We should therefore speak to it now. I do not know whether his amendment or mine better meets the point being made. Even as a lawyer I find the drafting of these amendments to the Rent Act and amendments to those amendments very difficult. Behind all the legal jargon there is one enormously important point on which I hope the Government are going to move: that is that when a tenant who is paying an excessive rent in an area of scarcity takes his rights to apply to a rent officer, he can at the moment do so in the security that if he is right and he is being overcharged, then when the rent is registered it will be effective from the time that he makes the application. This Bill changes that position completely. It is, as the noble Lord, Lord Evans, pointed out, an invitation to procrastinate on behalf of the landlord, who may be getting £20 or £30 a week for every week he could put off a determination. That cannot be desirable.

There is an even more problematic area which has to be considered. Very often when a tenant goes to a rent officer, and the rent officer asks for the landlord's representations, the landlord says: "He is not a protected tenant because I am a resident landlord", or because it is a holiday let or something of the kind. What happens very frequently is that the rent officer feels that he cannot properly determine that issue and that it ought to be determined in a county court. He adjourns the application and invites the parties to go to a county court and get a declaration from the judge as to exactly what the position is. That extends the period over which the application is pending by months and possibly more than a year. All this time the tenant has to pay what may turn out to be an exorbitant rent, with no possibility of getting it back. I hope that, whatever the right form of the amendment needed to take account of that situation, the noble Lord will indicate that this is going to be considered.

7.54 p.m.


Clause 60 seeks to remove the confusion that has been caused by the present provisions relating to the date from which a fair rent takes effect and the date from which the minimum period before re-registration is calculated. This amendment would, by omitting subsection (1) of Clause 60 of the Bill, restore this confusion and the inequity that goes with it. The present provisions relating to the date on which the new rent takes effect are unfairly biased against the landlord. If the registration results in a rent reduction, the reduced rent is effective from the date of the application to the rent officer, and hence the reduction is back-dated. If, however, the new fair rent represents an increase, the increased rent, although theoretically effective from the date of application, can be recovered only from the date of registration—and then only if the landlord serves the correct notice on the tenant. This amendment will perpetuate that system.

When the Rent Acts were first introduced a significant number of rent registrations resulted in a reduction in rent because they were first registrations. They were therefore payable from the date of application for the registration of a fair rent and thus were in line with the date from which the minimum period before a rent can be re-registered runs. Now, however, the vast majority of registrations are re-registrations and will therefore inevitably result in rent increases. This is reflected by the fact that in England and Wales in 1978 only 4.8 per cent. of all applications for rent registrations were made by tenants. Although these rent increases take effect in the real world from the date of registration, their theoretical "effective date" is the date of application. It is this theoretical date, which has no other significance, from which the three-year period before re-registration is calculated. This causes considerable confusion to landlords and tenants alike.

Subsection (1) of Clause 60 removes this source of confusion by providing that all fair rents will take effect from the date that they are registered by the rent officer, except in the tiny minority of cases where the rent is changed on appeal to the rent assessment committee—currently about 2 per cent. All registered rents whether reductions or increases, will be payable from this effective date, which will also be the "relevant date" for calculating the period before re-registration can be obtained. Landlords will still, however, be required to serve notices of increase which cannot be back-dated for more than four weeks. This is simpler for landlord and tenant, and I believe much preferable to the present position which the amendment would restore.

The noble Lord, Lord Evans, and the noble Lord, Lord Goodman, earlier, made a point about administration, the number of rent officers, and so on. On that, I should like to say this: we accept this point that Clause 59 particularly—which we have gone past but the same point is still here now—will result in more registrations. In order to meet this, we have been reviewing rent officer output together with rent officers. A report was prepared and its recommendations were discussed with the Institute of Rent Officers (of which the noble Lord, Lord Goodman, is president) as a result of the amendments to the Bill which were introduced in another place to speed up rent officer procedures. This flowed from that. These have the full support of the Institute. We and they are confident that the increased number of registrations can now be dealt with with little or no delay and at only modest extra cost. If noble Lords have reservations as to that, I shall be pleased to hear them and of course to look at them. Indeed, if necessary, I will try to give more chapter and verse on them, if it is called for either by correspondence or in Committee.

I understand the points that have been made and that trouble the noble Lord, Lord Gifford. The answer that I have given covers them. I see the noble Lord shakes his head to intimate that it does not cover them. In that case I repeat what I have said: we will study what he has said very carefully. If we feel it is as he says, then of course he need not bring it back; we will bring it back in another way. Beyond that I cannot go at the moment.


The noble Lord may have a point with re-registrations. There is not the same problem of a rent which is probably excessive being charged. But when it is a first registration, the point that the noble Lord, Lord Evans, and I have made must be met. This is a matter which could be considered between now and the Report stage.


I wonder whether I could add my plea to the noble Lord, Lord Bellwin, to think about this matter again. The British Property Federation does not usually find itself in close harmony with the Labour or Liberal Parties, but it takes exactly the same view as they do about this clause. They would far prefer things to be left as they are. They anticipate an enormous log jam with the burden upon rent officers being uplifted by 50 per cent. as a result of the shortening of the re-registration period. Like noble Lords on the Labour Benches they would prefer matters to be left as they are.


I take the point that the noble Lord, Lord Gifford, has made; it is a very good point. The noble Lord, Lord Bellwin, made the same point: it may well be that in the case of re-registrations the position is in order. So far as first registrations are concerned, the position from my point of view and that of a great number of people who have spoken to me about it is most unsatisfactory. The remedy that the noble Lord, Lord Goodman, suggests may well be the remedy, but we have not an amendment to that effect before us. No doubt it is a matter which the noble Lord the Minister would consider.

I am glad to hear what he says about rent officers. I hope and believe from what has been said that reconsideration could be given to the terms of this clause. I am not suggesting that the present Section 72(1) of the 1977 Act is perfect. I have been thinking of amendments I would make to that which I think would he far better, but they may only he far better in my opinion. They may well not he better in the opinion of the noble Lord the Minister, but if he could consider the position—we see the point as regards re-registration—on first registration and the inequitable result that will come principally to tenants, but which could also be unfair to landlords in the circumstances I have mentioned, perhaps we could have another look at it during Report stage. If the Minister were willing to say he could do that, I should feel able to withdraw the amendment.


I have to be very careful in what I say over these things, as I have learnt. I would only go so far as to say that some of the points that have been made, particularly by the noble Lord, and the noble Lord, Lord Evans, were interesting ones. I undertake that we will look at everything that has been said, and should points prove to have merit—because I repeat again that we want to get the best Bill we can—then of course we will do something about it. Beyond that I feel I cannot go.


I am willing, on the whole, to accept that. It seems to me that when we get to the Report stage there may be hundreds of Divisions, but I hope it will not come to that. I thank the noble Lord for what he has said and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 60 shall stand Part of the Bill?


The amendment to leave out Clause 60 is not to be moved.

Clause 60 agreed to.

Clause 61 [Cancellation of registration of rent]:

Lord GIFFORD moved Amendment No. 138A: Page 43, line 10, leave out ("subject to a regulated tenancy") and insert ("occupied as a residence by any person (other than an owner-occupier)").

The noble Lord said: Clause 61 deals with cancellation and, as I understand it, the purpose of the clause is that cancellation of a registered rent under the present law is rather difficult and it is the intention of Clause 61 to make it easier. A landlord will be able to apply to cancel and indeed have the registered rent cancelled after two years if the dwelling-house is not being let on a regulated tenancy. What the amendment proposes is to change that and allow cancellation only if the premises are not being occupied as a residence by anybody.

The point is that it may well be that a landlord applies to cancel when he has let the property on what he thinks is not a regulated tenancy: that is to say, a holiday let or a licence arrangement, which may or may not be a protected tenancy. He can apply to cancel without giving any notice at all, under the Bill, to the occupier of the dwelling-house, and the rent will then be cancelled. It may be then that some months later the occupier will wish to go to a court and obtain a declaration that he has been all along a protected tenant. If he succeeds in that, the position will be quite chaotic. Will he be able to obtain a rebate on the excess rent he has overpaid? Probably not, because the registration will no longer be in the rent officer's book. It is to meet that sort of objection, and in the hope of being constructive, that I beg to move this amendment.


The effect of Amendments Nos. 138A and 138B is to add a further restriction to the circumstances in which a landlord can apply to the rent officer for cancellation of a fair rent. Clause 61 provides that where the rent was registered more than two years earlier, where there is no current regulated tenancy in the dwelling, the landlord can have the old rent cancelled. The amendments alter the second condition. Instead of no regulated tenancy in the dwelling the proposal is that a rent can be cancelled only if no one other than an owner-occupier is living there. The purpose, presumably, is to ensure that someone who is letting a property outside the Rent Act in some way cannot at the same time cancel an old registered rent for it. I do not see the justification for such a restriction.

The purpose of allowing cancellation under Clause 61 is to prevent the landlord from being penalised by the existence of an out-of-date registered rent. At present there is no means of cancelling an out-of-date registered rent where there is no current tenancy. Once a tenancy has started, although a new rent can be registered, the increase from the old rent to the new rent is phased: so the out-of-date rent which the landlord cannot otherwise cancel reduces the amount of rent that he can recover after re-registration.

Clause 61 removes the problem by allowing cancellation of an old rent. This seems only fair to me, whoever is living in the property, always providing it is not a regulated tenant. For example, if someone has let a property to an aged parent or to a friend at a nil or a very low rent, why should he not be able to cancel a registered fair rent at the same time? There is nothing wrong with bona fide lettings outside the Rent Acts. These amendments imply that there is, because it prevents someone using the property in that way from availing himself of this proposed new means of cancelling an out-of-date rent. If a rent is out of date and if there is no regulated tenancy, it is only fair that the owner should be able to cancel it, even if he is putting the property to some other use in the meantime. That is what Clause 61 provides, and I hope that noble Lords will accept this and perhaps the noble Lord may feel able to withdraw his amendment.


We are getting on to slightly technical ground. I must take up the noble Lord when he talks about "letting outside the Rent Acts". The circumstances in which you can let outside the Rent Acts are very, very limited indeed and concern only friendly arrangements, holiday lets and things of that kind. Obviously I am not going to press this to a Division; but will the noble Lord, who knows quite well that there are constantly in big cities lettings that may or may not be outside the Rent Acts—disputed holiday lets and things of that kind—undertake to consider what the impact of a cancellation would be when someone is in possession without know- ledge of a cancellation and subsequently comes to be declared a protected tenant all along? That is the particular difficulty I have in mind.


I can only say, as I tried to do on the last amendment, that if we are not careful we shall indeed, in an attempt to avoid dividing the Committee—if that is what is decided—be building up for ourselves at Report stage a situation that will be absolutely impossible. I have no intention, from where I am, of doing that. I would only repeat—and if I did not make it clear earlier I now say it again—that where points have been raised that are considered to be important, I assure noble Lords that everything that is said is sifted carefully; where points are raised which in the Government's opinion are valid, in the sense that they have not been considered or they raise new matter which we ought properly to be doing something about, I give the assurance that they will be looked at very closely. I cannot say that that is the same as saying, "We will withdraw" or, "We will consider formally". I cannot do that, but I can say, of course, that everything is sifted in detail.


I am sure the noble Lord will take it from me that lawyers and courts, let alone landlords and tenants, can get into terrible tangles in understanding the Rent Acts. It is on such a point, not on a point of great principle, that I asked for and have received that assurance. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.


We said we would adjourn the Committee at approximately eight o'clock. I understand that if we go on to the next group of amendments, which rather naturally fall together, it could take us beyond a quarter-past eight. If one has said approximately eight o'clock and one goes beyond a quarter-past, then one is going beyond the spirit of the undertaking.

So perhaps I may move that the House do now resume.

House resumed.