HL Deb 29 October 1981 vol 424 cc1162-81

5.48 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin) rose to move, That the draft order laid before the House on 19th October be approved.

The noble Lord said: My Lords, the order is made under Section 52(4) of the Housing Act 1980. Its effect is to lift compulsory rent registration for all short-hold tenancies granted after 1st December 1981 in all rent registration areas in England and Wales other than those in Greater London. In accordance with Section 151(2) of the Act, this order is subject to affirmative resolution of both Houses.

I do not need to remind your Lordships that the manifesto on which this Government won the election in 1979 contained a commitment to do everything possible to revive the private rented sector. That is still our policy, and one of the important means by which we are trying to do it is through the introduction of shorthold, as foreshadowed in the manifesto. The shorthold provisions were an important part of the Housing Act passed last Session and are contained in Section 51 to 55 of the Housing Act 1980. They came into effect on 28th November last year. Short-hold makes it possible for any non-resident landlord to let to a new tenant for a fixed term of between one and five years with the certainty of being able to regain possession at the end of the fixed term if he so wishes.

It is our firm view that the Labour Rent Acts, by conferring lifetime security of tenure on tenants, have deterred landlords from letting because they are not prepared to give up possession of their property for the rest of their lifetime. Nor do we believe that lifetime security helps the sort of young, mobile people who are now looking to the private rented sector for their accommodation; and we illustrate this from the findings of the National Dwellings and Housing Survey commissioned by the last Labour Government. That showed that at the end of 1977 half a million lettings in England, that is, over 20 per cent. of the whole of the private rented sector, had been made within the previous year. It is therefore essential to ensure that there is an adequate supply of short-term accommodation, and that is what shorthold is designed to achieve.

The lack of lifetime security is unlikely to worry those tenants looking for this sort of short-term rented accommodation. They neither want, nor expect, to stay in the private rented sector for the whole of their lives. That is why we hoped that the Opposition would be able to agree with us that shorthold could make a useful contribution to meeting housing need, particularly for these young, mobile people. In formulating our shorthold proposals we were very anxious to do all we could to secure a bipartisan approach. We recognised that it would be in the national housing interest if private landlords could be encouraged to let in the sure knowledge that the shorthold provisions would survive beyond the life of this Parliament. That is why we tried so hard to secure the agreement of the Labour Party to our proposals.

But during the passage of the Bill it became clear that the safeguards that the Labour Party were asking for were not designed to help tenants within the framework of a workable shorthold scheme, but were intended to prevent shorthold from ever getting off the ground. Indeed, astonishing though most people would think, during the passage of the Bill in the other place Mr. Kaufman made it quite clear that he would actually prefer properties to stand empty rather than be let on shorthold. The Environment Select Committee's Report on the Sale of Council Houses took a rather different view. It made the point, with which I would have hoped your Lordships could all agree, that vacant properties are not benefiting anyone.

I am afraid that I have to tell your Lordships that the passage of time does not seem to have made the Labour Party more reasonable. In the debate on this order in another place on Monday night, the Opposition repeated their threat to repeal the shorthold provisions of the 1980 Act if they are returned to power after the next general election and to give tenants on shorthold at that time security of tenure. It is their clear and openly expressed intention, as part of their campaign against the private landlord, to undermine confidence in shorthold and to deter landlords from letting on shorthold. Yet there is a clear need for short-term accommodation, which simply cannot be met solely by the public sector. Furthermore, no one benefits if landlords are deterred from letting, least of all tenants who are looking for accommodation.

So, in view of the consistently negative attitude of the Labour Party and their far-fetched claims, I think it vital that once again I should stress the important safeguards for tenants that are contained in the short-hold proposals. First, we have made it impossible for a tenant who is already a fully protected tenant to have his tenancy converted to a shorthold. This means that there can be absolutely no question of shorthold taking away security of tenure from existing tenants. Secondly, we have made it an essential precondition for the creation of a shorthold tenancy that the landlord must serve a special prescribed notice on the tenant before the start of the tenancy, so that the tenant is fully aware of his rights under shorthold, including the fact that the landlord has the right to reclaim possession at the end of the shorthold term. Thirdly, since the introduction of shorthold last year, the registration of a fair rent has been compulsory for a letting to qualify as a shorthold. This requirement goes further than any Rent Act introduced by the Labour Party has ever gone.

The mandatory possession cases introduced by the Labour Party, for returning owner-occupiers and the owners of retirement homes, where the tenant has similar security to that under shorthold, have never had a requirement for compulsory rent registration, and, unlike with shorthold, there is no provision in the legislation which would make it possible for rent registration to be made compulsory. However, it seemed right to us that we should include such a provision in our shorthold proposals. It also seemed right that, at least initially, compulsory rent registration should be a requirement for shorthold in the whole of England and Wales. As I have made clear, we had hoped that by making such a central feature of the Labour Party's Rent Acts as the registration of a fair rent an integral part of the new form of shorthold tenure, we might achieve the support of the Labour Party in this important new development in the private rented sector. Indeed, we went even further than that during the passage of the Bill to meet the Labour Party's worries, not only by requiring the registration of a fair rent, but by making provision, by an adaptation of the certificate of fair rent procedure, to ensure that no more than the registered rent could be charged from the very start of the tenancy.

Shorthold, with compulsory rent registration, has been in operation for nearly a year. The department's monitoring through rent registration statistics now gives information about shortholds up to the middle of August. The figures show that by then there were nearly 3,500 rent registrations in England and Wales where the letting was identified as shorthold. I should stress that those figures do not represent the total number of shorthold lettings taking place—only those known to the department. But, even so, frankly we regard it as disappointing that the number of shorthold lettings is not higher. In our view the main reason for this is the irresponsible attitude of the Labour Party, whose threat to repeal shorthold has inevitably discouraged landlords from making accommodation available on shorthold to would-be tenants, who would be perfectly happy with the terms that shorthold offers.

But, apart from that, we are bound to recognise the force of the argument put to us by, among others, the British Property Federation, that the requirement for the compulsory registration of a fair rent has deterred some landlords. Had the inclusion of the requirement succeeded in making shorthold acceptable to the Labour Party, I think that landlords might have seen it as a price worth paying for the benefits that would spring from a bipartisan approach. But that was not to be. It therefore seems right that we should make use of the power which is included in the Act to lift the requirement for compulsory rent registration.

In view of the comments made in another place on Monday, let me emphasise that the power to lift the compulsory registration requirement was in the Housing Bill from the time that it was introduced. As I and my honourable friend the Minister for Housing and Construction made clear during the passage of the Bill, it would never have been there if we had not envisaged that it might be used.

If approved, the order will lift the requirement for compulsory rent registration for all areas in England and Wales outside Greater London. I hope that this will have the effect of encouraging landlords who would be prepared to let on shorthold if they could agree with their tenants the rent to be charged, but who have been deterred by the involvement of the rent officer.

I should like to make clear that I would not accept that, because the order is designed to encourage landlords to make accommodation available, it must therefore be against the interests of tenants. It is in nobody's interest if accommodation is kept empty. There has to be a balance between encouraging landlords to make accommodation available and providing safeguards for tenants, which, however desirable they may seem in theory from the tenant's point of view, lead to a drying up of the supply of rented accommodation. I believe that so as to help those looking for accommodation, landlords must be encouraged to take advantage of the shorthold provisions. But I cannot stress too strongly that even in areas where compulsory rent registration has been lifted, shorthold tenants and landlords will retain the voluntary right, as with any other regulated tenancy, to apply to the rent officer at any time for the registration of a fair rent. Nor will the lifting of compulsory rent registration for new shorthold tenants affect in any way fair rent registrations for shorthold tenancies that have been made before the order comes into operation.

One of the concerns that have been expressed in the past by the Opposition about the effect of lifting compulsory rent registration for shorthold is that tenants will be afraid to apply to have a rent registered because they will be worried about not being allowed to stay on beyond the end of the shorthold term. I entirely refute that argument. In the first place, we have never denied that it is a central feature of shorthold that the landlord can regain possession at the end of the fixed term, and no tenant can therefore expect to rely on being able to stay beyond the fixed term, which may be anything from one to five years. Secondly, if a tenant does apply to have a fair rent registered, there is no advantage to a landlord who wants to go on letting to seek repossession, because the fair rent already registered will apply in just the same way to any new tenant. Thirdly, I would remind the Opposition that if they are really concerned about the problems of tenants whose landlords are worried about letting them stay on beyond the fixed term, it is in their power to eliminate the biggest threat deterring this; namely, the Labour Party's commitment to repeal shorthold.

This order does not affect Greater London, where we are retaining the requirement for compulsory rent registration. This is because we recognise, as I am sure all your Lordships do, that there are special considerations in London. The competition for private rented accommodation, much of it from people who are staying only for short periods and who do not need the protection of the Rent Acts, has had its effect on the level of rents. We therefore feel that in the special circumstances which exist in London, tenants under shorthold still need the added protection of compulsory rent registration. This order does not, therefore, apply to any rent registration areas in Greater London. In London, it will continue to be a requirement for shorthold to have a fair rent registered in the way that has applied everywhere up to now. The fundamental belief that encouraged us to introduce shorthold was the conviction that the private rented sector can play an important and continuing part in helping to meet housing needs. We have introduced this order because we believe that the removal of the requirement for compulsory rent registration outside London would enable shorthold to make a greater contribution. I commend the order to your Lordships.

Moved, That the draft order laid before the House on 19th October be approved.—(Lord Bellwin.)

6.2 p.m.

Baroness Birk

My Lords, I have the feeling that the noble Lord the Minister, with whom I have had a number of friendly tussles across the Chamber, is not quite as relaxed and at his usual affable ease tonight as he is usually. The reason for that is quite simple. The poor man is having to argue an absolutely impossible and awful case. It is very unlike him, if he wants a political punch up, and so let us get rid of that idea first before discussing what has really happened and what is happening now.

The noble Lord referred to my honourable friend in another place, Mr. Kaufman, and his threats that the Opposition would repeal shortholds when they came back into power. What was said at that time, through the passage of the Bill which became the Housing Act 1980, was that if the safeguards which were asked for regarding shorthold were given by the Government and kept, then this would certainly be a very strong consideration. It was also pointed out then—and pointed out the other night—that the Government incorporated only a few of the safeguards which were in the original Private Members' Bill which Sir Brandon Rhys Williams and other Conservative MPs supported. The Government went even further and did not put the man who was the father of this infant, which is now being strangled at birth, on the Select Committee which was considering this matter in another place.

It is really quite extraordinary—I say this quite seriously—to base the case for this order and for taking what are really draconian powers, which I agree were inserted in the original Act, on blaming the Labour Party and the Opposition for the failure of landlords to take up shorthold. If it were not so ludicrous it would be quite sad. We are reminded on many occasions that, unfortunately, we have been in a state of internecine warfare for some time. One of the "beefs" which many of us in the party have is that not enough time has been spent on dealing with exactly the policy measures which the Minister is talking about. So let us just get that out of the way.

I am sure that some of my colleagues will feel amazed, and perhaps even a little puffed up with pride, to feel that what the Labour Party says in Opposition can really lead to something like this order being put before us tonight. I should like to take noble Lords back for a moment to what really did happen. They may remember that we had a long struggle over short-holds in this House. Indeed, when I moved that the relevant clause should not stand part of the Bill (at that time it was Clause 51 and now it is Section 2) the voting, I am sure the Minister will remember, was 99 in favour of the clause and 91 against. There was a minute majority of eight in favour of including shortholds in the Bill. The disquiet expressed on all sides of the House was quite tremendous. The noble Lord, Lord Goodman, said that he faced a tremendous dichotomy over this. In the end he abstained on the basis that he thought that the Government would find some way of introducing even further security into shortholds. One of the reasons why shorthold was accepted, even by this very small majority, was that an amendment was introduced earlier by the noble Lord, Lord Bellwin. This all took place on 2nd July 1980.

If I may remind the noble Lord, when he introduced the amendment to make fair rents registration compulsory he said, and I quote from the Official Report (col. 351): This amendment ensures that the fair rent will apply from the onset of the tenancy". He went on to say: At present the Bill requires that the registration of a fair rent is applied for within 28 days of the tenancy commencing. Although this in itself is a unique protection for the tenant, the point has been made in another place that there will be no fair rent until the rent is registreed by the rent officer—perhaps three months after the tenant moves in. Our amendment bridges this gap". This enabled the Minister to say on the same day, during the debate over whether the clause should stand part, when referring to the considerable amount of alarmist talk about shorthold, that there were important shortholds safeguards and 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 … the Bill now ensures that the tenant will pay no more than the fair rent right from the start of the shorthold". In view of what the Minister has said when he pointed to the Rent Acts when this was not introduced, perhaps I may point out that he was referring to the fact that there, security was built in, but here we are dealing with shortholds where there is not complete and entire security for the tenant. Grave anxiety was also expressed in this House about reserve powers given to the Secretary of State to alter this rule. Indeed, because of pressure not only from the Opposition, but also from the noble Lord, Lord Boyd-Carpenter, and the noble Lord, Lord Foot, as well as from my own noble friends the Government came back at Report stage and made the order subject to affirmative rather than negative resolution. Now less than a year after the introduction of shortholds the Government have swept away not only the compulsory fair rent registra- tion but also the requirement that registration of a fair rent is applied for within 28 days of commencement of tenancy—although the Minister had described this as "a unique protection for the tenant". Circumstances have not changed. Why did the Government include compulsion in the first place but discard it now when obviously it was included as a necessary safeguard for the tenant? No reason has been given except that the Labour Party has spoilt it all for the Government.

The Government have an overall majority in the other place. The Government are running local authorities with the most severe draconian powers. The Government pride themselves on being a very tough, inflexible and rigid Government when it comes to the economy and almost everything else. Yet here the Government are so frightened by the Labour Opposition, and goodness knows that we have enough problems of our own, that they say, "This is the end of shorthold. This is what is stopping the landlords coming forward".

There has been no proper research, and no evidence has been brought forward. It really is (I am trying to find a polite word that will not upset the bishop) a disgrace and, in fact, an insult to this House and to Parliament. No reason has been given, apart from those I have mentioned, which were just nonsensical, except that the Government have a hunch that more shortholds will come on the market as the landlords' ante is put up. What a way to legislate; what a disgraceful U-turn; what contemptuous use of the reserve powers, and what a way to treat this House!

The reluctance of the House as expressed in the vote was concern for tenants. How, then, can we be expected to throw that concern out of the parliamentary window when the Government assured us so strongly and so often in both Houses that the tenant was amply protected and was going to remain protected? It is absolutely disgraceful that a Government should break their word so irresponsibly without any viable reason. The phoney explanation that this will not really affect tenants' rights just does not stand up. If the reason is to persuade landlords to let on shorthold, the incentive must therefore be that there will not be a fair rent. If it does not have an effect on tenants' rights, as the Government protest—and they protest much too hard about this—then where is the incentive to the landlords?

This is not to mean that landlords are all bad. Of course they are not; it would be ridiculous to say that. I am merely pre-empting the Minister, so that when he comes to reply he does not say that I am only against the landlords. But what the Government have done is to give landlords power over their tenants. Not all landlords are good, any more than all tenants are good. Also, landlords are human, as other people are, and many landlords, if offered the chance to "make a quick back", will take it, as people will in other spheres or in things with which they are connected.

So what this means in practice is that the landlord has now been given the power of blackmail over the tenant. First of all, if the tenant comes in, as he will have to now, without a rent being registered, he can say this to the tenant. I understand that it can take up to six months, in fact, to get a rent registered, so the landlord will be able to say to the tenant—otherwise, there does not seem to be much purpose in doing this—"We will agree a rent". It may be higher than the tenant wants, but if you are homeless you really have to afford almost anything to get a roof over your head, which is the first necessity for human beings. Then the landlord will be able to say, "If you continue to pay that rent, then at the end of the year", which is the first point at which the landlord can give notice to the tenant, "you can stay on. But if you start going round and getting a fair rent registered, then I do not want to see you again after the end of the year". In addition to having to pay over the odds, perhaps, in many cases, the tenant will also have to pay a deposit, which, of course, would be much higher than the deposit if a fair rent was registered.

The Minister made great play about empty properties, and, of course, it is absolutely true that no one wants to see properties kept empty. It upsets me just as much as it does the Minister when I see houses boarded up, whether they are boarded up and kept empty by local authorities or by private landlords. There is, however, no way of knowing that the properties that are being used are from this source or from other sources. All I would say is that the trends show that wherever it is possible a landlord would prefer to sell his property rather than to let it on shorthold, or use it in any other way. The figure for empty properties that was floated around at one point of about half a million is quite nonsense. It is a very wide margin, I know, but it has been estimated that the number of empty properties ranges between 8,000 and 50,000.

The decline in the private rented sector is historic, as the Minister knows well. It has been declining (even when the controls were lifted at one point) almost since the beginning of this century. Short-holds increase the incentive to sell through more frequent opportunities; and, again, there is no reason why people should not buy their own homes. In fact, I am absolutely in favour of it if they can; but what is needed is a long-term housing strategy. We all know—and it would be stupid to deny this—that the future of rented property, particularly for lower-income groups, must lie with housing associations and with local authorities, with proper security. With local authority "starts" likely to be not even 27,000 this year but around 20,000, and with the construction industry in one of the deepest depressions it has ever been in, with higher unemployment than in any other industry, it does not look a very rosy housing future for those who are in need of a home.

The myth that shortholds would help young, single people has also now been exploded, and, again, that was something which was pressed upon us. I would say immediately that anything that would help the young singles to find somewhere to live, as well as families, is very important. Although they might not have had security beyond a year before this order was laid before us, they would have had a fair rent registered for that time. But now they are in a position, which has been set out by the National Union of Students (I am sure the Minister has seen it as well as I have), where there is not only difficulty in getting accommodation but where, even if they were fortnuate enough to get a shorthold, they would find that the rent was probably far beyond their means and certainly beyond the grant, or even a rent allowance if they were entitled to it.

Then there is the problem of rent allowances. The DHSS allows only up to fair rent levels. There can be exceptions in some cases—assured tenancies and one or two other cases—but the shorthold is not one of these; and one sees a completely non-political body like the Association of Citizens' Advice Bureaux desperately worried about this because they see, as all of us do, the delay between the date of application and the date of registration which will result from this order, and the fear of the termination of a tenancy at the end of the minimum period of shorthold. They are very concerned about homelessness among the people who come regularly to see them, and they really have their ears and eyes to the ground and know what is going on in these areas of want.

Increased homelessness will add more to waiting-lists and also to human misery. The organisations most concerned with housing are extremely worried. The Association of Metropolitan Authorities, the AMA, are worried because of the effect on local authorities. They can see that people who may have had a chance to take a shorthold when the fair rent had to be registered, because that was some security or safeguard to them, will now be descending on the local authorities, who are having their money cut anyhow by the Government and whose housing programmes have been cut as well. The Association of District Councils has not yet discussed this; and all the voluntary housing organisations like Shelter, CHAR, SHAC, are horrified by this. So far as I can gather, there has been no consultation or indication of previous intention given to them about it, except that they knew of the Secretary of State's reserved powers in the Bill.

At the moment this does not apply to London. In the debate in another place the Member for Paddington, Mr. John Wheeler, said in his speech that he supported the Government very reluctantly even when the situation being discussed was outside London, but he gave notice that he certainly would not be able to support the Government as a good Tory Member if in fact this happened in London. I should like the Minister to give an assurance that London will not be mopped up in the reserve power; alternatively, to let me know why London was left out; or to tell me what the position is with regard to London. I should like him also to tell me whether this is the start of a complete erosion of fair rents and the introduction of a glorious free-for-all. This is complete decontrol across the board, but it is not glorious for those who cannot afford it. This is so squalid that I find it difficult to find words to describe it.

I must be more naive than I thought, but, quite honestly, in July 1980 when that safeguard was put into the Bill in this House and when the Minister reiterated it in the debate on shorthold I was convinced that the Government meant what they said. The idea did not occur to me that in barely less than a year an order of this kind would be brought forward. I innocently thought—and this is the way in which it was described in another place by Mr. Geoffrey Finsberg—that it might be possible when circumstances change to lift the compulsion; but this was all seen and understood in the context of security for tenants and probably an increase in housing generally. I can only say, finally, that I hope that by 1984, or preferably before, we shall see the end of this Government's shorthold.

6.21 p.m.

Lord Winstanley

My Lords, may I intervene briefly in what for a time, during the speeches of the noble Lord, Lord Bellwin, and of the noble Baroness, Lady Birk, sounded like a private quarrel between the Conservative Party and the Labour Party about the virtues of private landlords. I should remind the House that we are not debating the wholly academic question of what a future, hypothetical Labour Government would or would not do about the Housing Act and shorthold tenancies.

The noble Lord, Lord Bellwin, began his speech by talking about this; but this is not what we are discussing. What we are discussing is an order which puts at nought an amendment to the Housing Act moved by the noble Lord, Lord Bellwin, himself, and carried in this House—an amendment which Lord Bellwin commended to us in the most glowing terms, terms which the noble Baroness, Lady Birk, has repeated. He said that this amendment provided another important safeguard for the tenant under the Government's shorthold proposals. The noble Baroness, Lady Birk, quoted more of the noble Lord's words about this amendment. Never have I seen anybody swallow his words with such apparent satisfaction and, as a doctor, I feel that by now the noble Lord, Lord Bellwin, ought to be showing some signs of indigestion; because here was an amendment which the noble Lord, Lord Bellwin, told us provided vital and important new safeguards with regard to shorthold tenancies. This House carried that amendment and now we have an order which virtually puts that amendment at nought.

I am bound to say that I do not wholly take the same view as noble Lords on the Opposition Benches with regard to shorthold tenancies. I do not take the view—and I know that the noble Baroness does not take that view either—that it is better to have places empty than to have them let on shorthold tenancies. My noble friends and I on these Benches believe that if there are ways of facilitating shorthold tenancies, that is undoubtedly to the benefit of many homeless people, provided that there are certain safeguards. The amendment which this House brought in in July 1980 provided one of those important safeguards. The order that we are now asked to approve removes that safeguard, a safeguard whereby, before a shorthold tenancy comences, the tenancy had to be registered and a fair rent fixed.

I know that the noble Lord, Lord Bellwin, will tell us that after the passing of this order, if this order is passed, there will be nothing to prevent the tenant from going forward at a later stage to the rent officer and having a fair rent fixed. There is nothing to prevent that and he will be able to do it. But when one considers tenancies in general, the only real protection for a tenant who is in dispute with a landlord about rent is security of tenure; and security of tenure is precisely what the shorthold tenant, by definition, does not have. Therefore, the shorthold tenant will not go along at a later stage to have a fair rent fixed; he will merely leave things.

The noble Lord, Lord Bellwin, asked what possible advantage there could be to the landlord to terminate a tenancy at an earlier stage, say, at the end of 12 months; because the rent would be registered and it would have to be the same rent for a new tenant. That is not the case; because the tenant will not have taken those steps and the rent will not have been registered. The whole business will have been neutralised by the uncertainty which surrounds shorthold tenancies. I feel it regrettable that we are asked to pass an order which virtually negatives a very helpful amendment which the noble Lord, Lord Bellwin, commended to us when he introduced it previously.

He will also tell us, I know, that we are leaving out London, for necessary and obvious reasons; but the reasons which apply to London surely apply to Merseyside and perhaps to Greater Manchester. I know we are not dealing with many shorthold tenancies, but 92 per cent. of them are outside London and yet London is being excluded. The noble Baroness, Lady Birk, went into detail about the various parties concerned.

Before I sit down, I, personally, would merely say that I am concerned about one category of people who could potentially benefit from shorthold tenancies, if the holding of those shorthold tenancies is facilitated by the Housing Act in the way we had in mind when we passed that amendment. I refer to students. I am concerned about the situation of students, not just in London, but in many universities and many cities. Many are in desperate difficulties with regard to tenancies in multiple occupation for very high rents. I do not believe that students are the people who are going to go forward at a later date to have a fair rent registered. If we had this provision which this House so wisely inserted into the Act, whereby a fair rent would be registered at the commencement of the tenancy, then I think that that would have improved things. Now we are leaving a group of people, perhaps not of the type that are necessarily going to take active steps at an early stage of their tenancy, when they feel very insecure by the nature of their circumstances, to register a fair rent. I think that they will leave things as they were. Therefore, many objections which many noble Lords in the Labour Party have towards shorthold tenancies as a whole become intensified and more real with the passing of this order than they would have done had we left the Act as amended by this House.

It is extremely unusual for the noble Lords here to vote against an order. I think that, in general, we believe it to be inappropriate, when an order is laid, that we should vote against it. But in this case, when the order has the effect of putting at nought an important amendment to the Housing Act which was carried in this House, and carried with various undertakings given by the noble Lord, Lord Bellwin, who is now asking us to pass this order, I am bound to say that had the noble Baroness decided that she would ask her cohorts to go into the Lobbies to vote against this order, then I myself would have done my best to persuade my noble friends to follow her.

Baroness Birk

My Lords, before the noble Lord sits down, may I say that the reason why I did not ask my noble friends to go into the Lobbies was not because I was convinced by what the Minister had said, but because of the arrangements existing in this House. Reluctantly, I have had to accept the pressure on me. I am sad about that and I detest it.

6.30 p.m.

Lord Swinfen

My Lords, I had intended asking a question of the noble Baroness, Lady Birk, before she sat down. However, unfortunately the noble Lord, Lord Winstanley, is a much fitter parliamentarian than I am and he beat me to the "draw" and was on his feet very much faster. As the noble Baroness is not in a position to reply to my question, I shall address it instead in a slightly different form to my noble friend Lord Bellwin. Would be confirm that a tenant who is aggrieved at the amount of rent on a property is able himself to apply for a fair rent to be registered? Would he also confirm—

Lord Bellwin

My Lords, would my noble friend repeat the question, if he would not mind?

Lord Swinfen

I am sorry, I did not hear the noble Lord.

Lord Bellwin

Would my noble friend repeat the question?

Lord Swinfen

My Lords, my question is: Would my noble friend confirm that where a tenant is not satisfied with the rent that he is paying or has to pay, that the tenant is in a position to apply for a fair rent to be registered? Would he further confirm that from the time of an application for the registration of a fair rent the normal period is about eight weeks and not the six months, as mentioned by the noble Baroness, Lady Birk?

The noble Baroness also mentioned that higher rents would put up the size of deposit that tenants would have to pay. It has always been my understanding that any deposit paid towards rent counts as rent paid in advance and therefore a tenant can take that into account when making future payments. The size of deposit would only be towards any damage or something of this kind to a property. I wonder whether my noble friend could confirm that this is also the case? Otherwise I feel that the position may be slightly misleading.

6.33 p.m.

Lord Gifford

My Lords, I feel angry tonight, not only at the content of the measure that is before us, but at the means which is being used to put it through. This is an order being put through at the "fag end" of a parliamentary Session in a virtually empty House, with no possibility of our being able to amend it, with very little notice and precious little opportunity for public debate. The content of the measure that we are debating is in practical terms in the nature of its effect nothing less than the effective de-control of rents in the private rented sector outside London.

Let me make that argument good by reference to the kinds of situation which will happen after the passing of this order. The vast majority of people who will answer advertisements and who will take up tenancies in the future will be those who are looking for a long term or an indefinite term residence. There is we know, a desperate shortage of housing, not only in London but in many cities. No landlord in his economic senses from now on will offer anything but a shorthold and he will offer one at the so-called market rent with all the scarcity element included in that, which will be rents which people will find enormous difficulty in affording. Those will be the terms on which one-year shortholds will be agreed.

The person who needs to live in that property for a long term or an indefinite term will of course not apply to a rent officer to register the rent because that person will thereby forfeit any hope of a renewal of the shorthold. Most landlords who let property want to let it for so long as they can get a rent which satisfies their economic demands. In the majority of cases these are not houses which are only being let for a short term; they are being let for so long as an exorbitant rent can be obtained from them. Therefore, the situation will appertain that used to appertain in the furnished rented sector; that is, although there was in theory a provision for the fixing of a rent which would he a reasonable rent—it was not quite the fair rent system but was in practice equivalent—it was hardly ever used because the people who were advised that they could use it were also advised that there could then be a notice to quit served with a six months' extension of security at the most and they would probably be out of their property within about nine months, which is exactly the kind of time scale we are thinking of with a one-year shorthold tenancy.

That is why I say that in practice there will be very few applications for fair rents. In practice, all new lettings, whether to short-term or long-term occupants, will in fact be unprotected shortholds. Some people of course actually only want a one year letting, although they will be very few in number. Even in their case the protection of a fair rent is of very limited value because of course in the Housing Act, against fierce opposition from these and the Liberal Benches, a change was made which meant that the registered rent would only become effective from the date of registration and not as previously happened from the date of application.

I am quite sure that if we had been told last year that the Government was set on a system of shortholds without the protection of a previously registered rent, and there was no way of changing that intention, we would have at least fought tooth and nail to get an amendment which said: if there was an application for a fair rent it would be effective from the date of application. As it will be, the person wanting a year's letting who applies for a fair rent in the first months will then enter a protracted war with his landlord—the landlord seeking by all means to defer the registration of the rent for so long as possible and the tenant seeking to accelerate it. We have been informed I think by the Association of Municipal Authorities that the time spent can be up to six months and then an astute landlord, wanting to have adjournments and take points of law, could extend that for a longer period still.

Whether it is a short term or longer term affair there will be no benefit from the notional theoretical residual protection of the Rent Acts which the noble Lord is relying on. I know that the noble Lord, Lord Bellwin, will probably rejoin that there is a housing shortage and that there are disincentives to let properties and there are empty houses unlet. There are all sorts of ways of dealing with properties that remain unlet. We have debated them in the past and we can debate them in the future. The one answer not to provide for the problem of unlet properties is to provide a charter for the exploitation of tenants.

The position of someone at the bottom end of the economic scale, one of the many millions of people who are on supplementary benefit, will be even the most precarious of all. Those on supplementary benefit who are going to be in a shorthold paying a market rent will be told on the one hand in effect by the landlord that if they register the rent they will not get a renewal of their shorthold; on the other hand, they will be told by the supplementary benefits office that if they do not register the rent they will not get the full rent allowance provided by the supplementary benefits scheme. That kind of dilemma will be one which will be bitter and which will be impoverishing and which has not been thought of by the Government when they think of introducing a scheme like this at a time of great unemployment and economic recession.

6.39 p.m.

Lord Monson

My Lords, I think that it is time that somebody other than the Minister rose to welcome this order. This I gladly do. However, what a tragedy from the point of view of those who have been looking for accommodation over the past 12 months that the Government did not listen to those with experience in property and those with knowledge of the laws of economics and get things right in the first place! However, better late than never.

As for the Opposition—and by this I mean both the Labour and Liberal Opposition—really, words fail me. How can such intelligent and talented people be so economically illiterate? Do they not understand the laws of supply and demand Do they not realise that there are many, many house and flat-owners who would dearly love to let their property rather than sell it, but that in some parts of the country fair rents are fixed at a level which gives a return of less than one-half of 1 per cent. on the vacant possession value of the property' Do they not realise that by their opposition to the whole concept of shorthold they are acting against the wellbeing of students, of young couples saving up to buy their first house, of people who have lost their jobs and are trying to move to another part of the country to find work and who need rented accommodation? Do they not realise they are acting against the best interests of these people? It seems, my Lords, impossible to get this through. I have tried to make this point to the Opposition on several earlier occasions. All I can do is to conclude by saying that I do welcome this order.

Baroness Birk

My Lords, I was about to ask the noble Lord whether he would give way so that I could put a question. How is the student who has not got a large sum of money behind him going to be able to pay the rent of a flat or house, or whatever it is, if there is no sort of control at all? What is the evidence the noble Lord can bring forward to show that there are going to come into the rented market all these hundreds of buildings, when we have seen a decline over the years even when there was no control?

Lord Monson

My Lords, I would gladly answer that question. If landlords had the assurance that there was no political sword of Damocles hanging over their heads, they would put their properties on the market if they could get a decent return. In many parts of the country the market rent is only 20 per cent. or so above the so-called fair rent; so I do not think it would be impossible for students to afford it—and the more property that comes on to the market, the more quickly rents will settle down at a reasonable level.

6.42 p.m.

Lord Harmar-Nicholls

My Lords, in addition to the very cogent point put by the noble Lord, Lord Monson, I see this as part of a bigger and wider strategy which the noble Baroness just does not seem to see. For years —

Baroness Birk

My Lords, with respect, I do not think the noble Lord was here when I spoke.

Lord Harmar-Nicholls

My Lords, I heard the noble Baroness ask her question. That is what I am referring to, and I have no doubt, knowing, her well, that she puts the whole of her argument into one question when she really tries. But she put a question to my noble friend, asking how certain people would be able to afford it and she is viewing this in the narrow, short term. Looking at it from that point of view there is a certain logic in the point she makes, but I am asking the noble Baroness, and indeed my noble friends, to look upon this as part of the bigger strategy. Those others who have tried to deal with housing matters in both Houses have recognised for years that the private sector has not been making the contribution it could make to provide houses for rent, and the reason is because they have been "clobbered" on every hand and it literally has not been worth their while to think in terms of such an investment. I am hoping—this is the point I should like to put to my noble friend—that this is only a beginning. I hope this is getting the toe in the door and really recognising that a great contribution can be made in regard to the housing shortage, which is the real problem—not the one about students and others. There is a housing shortage which is—

Baroness Birk

I said that.

Lord Harmar-Nicholls

—which is being kept as part of our problem because we have not given the encouragement that the private houseowner and landlord are entitled to have, and which they did have for years until it was taken away.

Baroness Birk

My Lords, may I ask the noble Lord whether he will do me and also the rest of the House a favour, and go away and read my speech? Because a lot of the things he said—really, I do take exception to somebody who comes in in the middle of a debate and attacks me, not having even been here to hear my speech. I think it is discourteous, to say the least.

Lord Harmar-Nicholls

My Lords, if I may say so to the noble Baroness, who is one of my pin-ups, I think I must say to her that she really must not be touchy, because the object of Parliament is to share minds on these matters; and whether one has been in at the beginning of a debate or at the end, if there is a contribution to be made it should be made, and if there is a good point to be made then it should be made. One has not to think of the susceptibilities of the noble Baroness or of anybody else. I hope that we are going to have the beginning of a real housing development, one where the private sector will be able to make a real contribution.

Lord Winstanley

My Lords, before the noble Lord sits down, in the light of what he has said just now, could he tell us why it was that he supported the amendment which this order now seeks to vary?

Lord Harmar-Nicholls

My Lords, nobody knows better than the noble Lord, because he and I sat in another place, that there are many ways of reaching the object. Indeed, it was explained to me very clearly once by Sir Robert Menzies, who I suppose, along with Sir Winston Churchill, was one of the outstanding parliamentarians of all time. When he was explaining the sort of problem which the noble Lord has put to me, he said: "People who do not understand Parliament do not understand that if you want to get from one point to another you cannot go in a straight line. Realising the parliamentary problems, you go forward two steps, back one, chassé to the left, and go forward three"—but as long as you get to the point in the end, the noble Lord and I both know that is the only way you usually achieve what you are after.

6.46 p.m.

Lord Bellwin

My Lords, perhaps I may now join in: I have been waiting to do so for a while. The noble Baroness said at the beginning that she thought I was not in my usual affable mood. Perhaps some subjects make us a little more or less affable than others. May I begin by saying that, frankly, the whole point of what this is all about is being missed. The whole point is about accommodation being available. This is what we said right at the beginning when we introduced shortholds. And may I remind the noble Baroness that the opposition to shorthold which was shown by the Labour Party when we first brought it in was as fierce as it is today, and it was no less fierce before or after we proposed the introduction of this particular measure about registering the rent initially.

Therefore, I would have to come back to what this is all about, and that is the fact that for years and years, and in particular since the introduction of the Rent Acts, the rate of decline of private accommodation has been one of the great phenomena of the whole of the housing scene. Everybody said: "Why does nobody want to rent? What has happened to the private sector?" Do we really want to see the kind of scene pianted by the noble Baroness, where we have municipal council housing and some housing association housing on the one hand and, on the other hand, home ownership? These would then be two polarised situations. Is that really what we want to see? It is not what I want to see and it is not what people on the Labour side with whom I used to discuss housing years and years ago ever wanted to see—because what we really want is a mix of housing tenure so that we should not be able to distinguish between the various levels.

But if the private rented sector goes on declining, certain types of accommodation will no longer be available. You can forget all about your short-term accommodation and the issue of whether you will have a registered rent or any other kind of rent: it simply does not apply. The fact is that the Opposition have been happy to see the private rented sector declining at this rate for years. When we came along with something new it was at least an attempt—and I said all along when I introduced it that there was no guarantee that the objective would be achieved, but at least it was an attempt—to do something, whereas for so many years nobody was willing to do anything except deplore the decline in the private rented sector. When the noble Lord, Lord Gifford, talks to me about people being able to afford what the rents will be, I say they will not have to be concerned about what the rents will be, because there is nothing to afford—the accommodation just is not there.

When the Francis Committee, of which I was privileged to be a member, pointed out what would happen when you introduced total security for furnished accommodation, the Labour Government took not the the slightest notice; yet every word we spoke has been proven to be true. The decline of the private rented sector has continued, and will go on until someone is prepared to find some solution that will make this kind of specialised accommodation—because that is what it is—available. That is what shorthold is about.

It is because we are so concerned that it is not being taken up at the rate we had hoped, that we looked to another possible measure and took safeguards in the Bill to use that, if we had to. No one could deny that we did. It is no good the noble Lord, Lord Winstanley, asking why was I concentrating on the Labour Party's objections to this. It is because of their avowed intention, whether we like it or not, should they ever come to power again. It is not totally impossible, though unlikely, certainly.

The fact is that there are landlords who say that it is not just something that we can take a chance about. We are talking about giving security for the whole of a lifetime, and who in this House would give security knowing full well that it is for the whole of a lifetime? I wonder how many of your Lordships would do it. Yet private landlords are expected to do it, and I am leaving out completely the issue of what should be the levels of rents.

I can pick up all the various points that have been made such as the one about London, and I shall do so because it is time that I said something in answer to some of them. If we lose sight of what we are really talking about, which is an attempt, at last, by someone to do something to encourage people to rent their accommodation, then we are missing the whole point. The noble Baroness said that tenants will have to pay higher deposits, but I just do not consider that that is so at all. The whole point of shorthold is that it is for a fixed term and, as the noble Lord, Lord Winstanley, said, there is an option to go and get a rent registered. All this is saying is that you do not eat up the time of the initial shorthold tenancy being established. As to the fact that you can go the next week, I should have thought noble Lords would have used that as an argument and would have asked: why do it at all? But they did not, because they were more concerned with the principles, and perhaps that is right.

The point of consultation should be obvious. If you start by consulting with somebody about the possibility of doing this kind of thing, you put into immediate limbo the likelihood of any shorthold tenancy being made until the matter is resolved and brought out. As to why London is left out, I thought everyone would have recognised that London is a special situation. The very fact that such a small percentage of shortholds taken up so far have been in London emphasises the need to look at ways and means of doing even more. My noble friend Lord Harmar-Nicholls asked what more will we do and whether this is a beginning. Would that I could say to him "Yes, it is and I have other things in mind". If he, or anybody else, has any bright ideas about what we can do to bring more private rented accommodation on to the market, I shall be very interested to hear about them, because they are very necessary.

I was interested when the noble Baroness, Lady Birk, said she did not think it was necessarily a good thing that private property should be empty. She is flying in the face of what her colleagues have said in another place. They are on the record—and if she wants, I will turn up the quotations—as saying and repeating, "Rather empty than shorthold". What an indictment of anybody who professes to be concerned about housing to say "Rather empty than shorthold"! If that is not blatant dogma, then I do not know what is. I do not think it is incumbent upon the party opposite to berate us for what we are trying to do, when they are prepared to take that kind of attitude to the whole of the housing scene. I think that that supersedes everything else that has been said.

However, to try to pick up one or two at least of the points made, the noble Lord, Lord Winstanley, said that shorthold tenants need compulsory rent registration, because they have no security of tenure. I should like to remind him that shorthold is one of 10 mandatory possession cases in which a tenant does not have full security. We can talk about that at length, if needs be. But I was pleased to hear him say—and he made no bones about it—that he does not want to see properties stand empty—

Baroness Birk

Neither do I.

Lord Bellwin

If the noble Baroness is now saying that neither does she, I am absolutely delighted to hear her say so, and I hope she will tell her friends in another place that she does not approve of what they are saying. As to the point about students, they will be in the same position as any other tenant, with the same right to apply to rent officers. I take note, and not without some appreciation, of what was said about the fact that they will be reluctant to go along afterwards. That is a point of view. I am not sure that I agree with it, but I recognise and understand it.

My noble friend Lord Swinfen asked me to confirm—and I gladly do confirm—that when tenants are not satisfied they can apply to the rent officer; that it is eight weeks and not six weeks that we are talking about and that the deposit can be applied in the way that he suggested. I am glad to confirm that to him. At this hour, I am not sure as to what extent I should pick up all the other details. I listened to what the noble Lord, Lord Gifford, said, because he and I have not only crossed swords about housing in the past, but have found quite a measure of agreement on a number of aspects, such as fair rents and so on.

He said that tenants could fear that they might not get a renewal of shorthold, and he was darned right that they might not get it, because shorthold is exactly what it says. It is a shorthold. It is a tenancy for a fixed term. When you are granted a shorthold tenancy, you are not by any means being granted an automatic right of renewal. That is what it is about, and that is the inducement to the landlord to bring forward accommodation which was not available before. So, yes, he is right and there will not be any guarantee of renewal. On the other hand, there may be. It will be a matter for negotiation when the time comes.

I entirely disagreed with him when he said that what this does is effectively to decontrol rents in the private sector outside London. I would say that that is nonsense, were it not for the fact that I do not want to use the same emotive terms as the noble Baroness, Lady Birk, was using earlier, and because I want to return to the affability that she accused me of not adopting earlier—

Lord Gifford

My Lords, will the noble Lord address himself to the point I made?—which is that the empty properties that he is talking about are not the house which is free for a year, but properties which the owners desire to let as a business at the highest rent they can over a substantial period. Is that not why the fear of non-renewal is a real one?

Lord Bellwin

No, my Lords. I do not take that point at all. The noble Lord is referring to some kind of accommodation. We are saying that there is in this country a vast area of accommodation that could be made available for short-term lettings, if only the landlords were able to be sure of getting it back. That is what shorthold is. Some would go even further, like the noble Lord, Lord Monson, who said that if it were not for the fair rents that will still have to apply, there would be a whole flood of accommodation becoming available. That is quite possible, but it is another issue entirely.

The hour is late and I do not want to go on any longer. I finish, as I have finished more than once in my winding-up remarks, by saying that we are firmly committed to trying to do anything that will bring more accommodation on to the market. It must be right to try to do that, and we must try to avoid anything that will prevent it. That is what we are doing by this order—

Baroness Birk

My Lords, I am sorry to delay the noble Lord. I know he wants to get off and I appreciate that, but he has not answered the basic point. If the Government felt as he has expressed himself tonight, why did they move that amendment in July 1980 to make fair rents compulsory? The noble Lord, Lord Monson, is, at least, consistent. He never agreed with it and said that the Government should not have done it. Why on earth did they do that, and then bring in this draft order a year afterwards?

Lord Bellwin

My Lords, the real answer is twofold. First, the fact that we have it in the Bill, and that we retain the right to do what we are doing by this order, shows quite clearly that there is no stop and start, begin and end. The fact that, at the time we did that, we were endeavouring to do what we could to be helpful and to give the maximum encouragement to people is one thing. At the same time, we made the alternative quite clear, and have done all along, if we saw that shorthold was failing. But I am not saying that it is, by any means, because some would say that 3,500 or 5,000 so far is very good. There are now 5,000 families in accommodation that they would not have had were it not for shorthold. So how far one can say whether or not it is succeeding is one thing, but in my view the number is disappointing so far. This is because of what the Labour Party are saying to the landlords. We are not alone in our view. We are told by the landlords' associations that this is so. We have to listen to what they say and we have to be willing to do anything we can within the powers which the Act gives us to improve the situation. This is what we are doing and that is why we are doing it.

On Question, Motion agreed to.