§ 2. p.m.
§ Lord Bellwin rose to move, That the order laid before the House on 6th July be approved.
§ The noble Lord said: My Lords, this modest order increases payments made by local authorities to owners 491 and tenants of houses that have been declared to be unfit but which, nevertheless, have been well maintained. It has long been a feature of the compensation code that the structure of a house declared unfit is considered to be worthless. When such a house is compulsorily acquired for demolition, the "site value rule" applies; that is, compensation is restricted to the value of the site, cleared of buildings.
§ However, it was seen that the site value rule could prove to be harsh, where the owner or occupier had spent, maybe, considerable sums in maintaining the property, so additional payments were introduced. First, virtually all owner-occupiers now receive an "owner-occupiers supplement". This means, in practice, that they receive the market value of the dwelling. Where the house is subject to a demolition or closing order, and the local authority are not acquiring the site, the owner receives the supplement only, since he retains the site. Secondly, where there is no entitlement to an "owner-occupiers supplement", either because the house is not owner-occupied or the owner has not been in residence for the qualifying period of two years, a payment may be made for good maintenance. This recognises that it is possible for an owner or tenant to spend time and money in maintaining the house in good condition, notwithstanding the inherent defects which make it unfit, and it is these payments which the order increases.
§ A well maintained payment may be made to whoever has been responsible for the good maintenance, be it landlord or tenant, or it may be apportioned between them. It is for the local authority to decide. The amount of a payment is calculated by multiplying the rateable value by a "prescribed multiplier"—currently 3⅛. Where the house has been well maintained internally or externally only, half this amount is paid. The sum cannot exceed the difference between the site value and the market value of the property, as it would make nonsense of the compensation code if, in total, more than the market value were to be paid for an unfit house.
§ Well maintained payments have not been increased since 1972. On the other hand, repair and maintenance costs have risen considerably since then, and it is time that well maintained payments were brought up to date. We estimate from the RICS General Maintenance Index, that repair and maintenance costs rose by some 338 per cent. between the fourth quarter of 1972 and the second quarter of 1982. This order, therefore, increases the prescribed multiplier by the same proportion, with some rounding up to allow for increases in the index during the third quarter of 1982. The order increases the prescribed multiplier from 3⅛ to 14, and will apply to all payments where the compulsory purchase demolition or closing order from which the payment originates was made on or after 6th July 1982 (which was the date the order was laid before Parliament). We hope that this will further encourage owners of houses which are approaching the end of their lives, to keep them in good repair, and will bring greater justice to those who lose their property or home through slum clearance. I commend the order to your Lordships. My Lords, I beg to move.
§ Moved, That the order laid before the House on 6th July be approved.—(Lord Bellwin.)492
§ Lord Ponsonby of Shulbrede
My Lords, may I thank the noble Lord for explaining the purpose of this order. It was considered by the Joint Committee on Statutory Instruments which had no comment to offer. The well maintained allowance is something which, as the noble Lord said, was introduced some years ago and it remedied an ill at that time which arose in slum clearance schemes. I am sure that the proposal that the multiplier should be increased is the correct one. It is true that the well maintained allowance would have increased automatically when there was an increase in the rateable value, and from time to time during the past 10 years the amount of the rateable value will have been increased as various revaluations took place. I wonder whether the noble Lord could say how these two factors will affect the amount of the allowance. Also, is this new multiplier now being introduced because the last revaluation of properties has not come forward as quickly as might have been expected? My Lords, we support the order.
§ Lord Bellwin
My Lords, I think that what the noble Lord is asking is what would be the effect of the order on a house. If I may, I will give an example which could help. A wholly well maintained payment on a house with a rateable value of, for example £75 would be £243.37½ at present, whereas the new payment would be £1,050, which is quite substantial. For a partially well maintained house, the existing payment would be £117.19 and the new payment would be £525. They are quite substantial increases—and so they should be, after all this time.
§ Lord Ponsonby of Shulbrede
My Lords, the point I was making was that if there was a revaluation of rateable values in an area and, in the process the rateable values were brought up to date and doubled, that would similarly have an effect on the well maintained allowance.
§ Lord Bellwin
My Lords, it would. But of course, as the noble Lord knows, there has been no revaluation since 1973.
§ On Question, Motion agreed to.