HL Deb 25 July 1988 vol 500 cc50-76

5.24 p.m.

The Minister of State, Department of the Environment (The Earl of Caithness)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(The Earl of Caithness.)

On Question, Motion agreed to.

House in Committee accordingly.


Clause 17 [Succession to assured periodic tenancy by spouse]:

Lord Hesketh moved Amendment No. 40:

Page 13, line 11, at end insert ("or (c) he became entitled to the tenancy as mentioned in section 39(5) below.")

The noble Lord said: Noble Lords will be aware that Clause 17 established the right of succession to an assured tenancy for the spouse or common law spouse of a deceased assured tenant. The Bill in its original form did not provide a right of succession to an assured tenancy, but it was argued very strongly in the other place that tenants would not automatically negotiate joint tenancies for husband and wife, and there could be great hardship for widows who might be evicted if no automatic right of succession was provided. There was some force in those arguments, and so a right of succession was provided. However, it is a single right of succession for the spouse only. We believe the Rent Act rules which allow two successions err in their generosity to the tenant, and that a landlord should not be deprived of his property without his consent for up to three generations.

This amendment blocks a small loophole in the succession provision. It will be possible under Schedule 4 to the Bill for a family member of a Rent Act tenant to succeed to an assured tenancy on the death of that tenant, provided he or she has met the necessary residence qualification. That successor could himself or herself be a first successor or indeed a second successor already. It would be contrary to our intentions for the spouse of that assured tenant by succession to have the automatic right of succession to an assured tenancy. If the landlord is willing to grant the tenancy voluntarily, that is a different matter. However, we do not want to perpetuate successions over which the landlord has no control.

We are not here affecting the rights of existing tenants; we are simply ensuring that where there are successions which take place after commencement on the death of Rent Act tenants, the spouses of the successors do not themselves become automatic second generation successors. This is a small amendment to ensure consistency in our succession provisions, and I hope that it will be accepted as such.

On Question, amendment agreed to.

Clause 17, as amended, agreed to.

Clauses 18 and 19 agreed to.

Clause 20 [Assured shorthold tenancies]:

The Earl of Caithness moved Amendment No. 41: Page 14, line 26, after ("is") insert ("a fixed term tenancy").

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 42:0

Page 14, line 27, at end insert— ("(aa) in respect of which there is no power for the landlord to determine the tenancy at any time earlier than six months from the beginning of the tenancy; and").

On Question, amendment agreed to.

[Amendments Nos. 43 and 44 not moved.]

Lord Monson moved Amendment No. 45: Page 14, line 38, leave out subsection (3).

The noble Lord said: This is essentially a probing amendment. Incidentally, I should mention that my noble friend Lord Lytton is absent today because he is unwell and not because his enthusiasm for the amendment and for Amendment No. 47 has in any way waned.

Subsection (3) of the clause seems to propose an unnecessary bureaucratic restriction on the landlord and one which is unlikely to fire him with enthusiasm for putting vacant property back on the letting market. Let us suppose, for example, that he has converted a part of his home into a self-contained flat or maisonette which he then lets on an assured tenancy. He then hears from his son who happens to be working in the Gulf, in Nigeria or in California that things have not worked out quite as planned and that he—that is, his son—together with his wife and children intend to return to the United Kingdom in six months' time and would like to be put up.

Is it not reasonable that in such an instance a landlord should wish to transform the present assured tenancy into a shorthold tenancy with a life of six months so as to be able to provide accommodation for his son, daughter-in-law and their children, with a lower rent to the existing tenant as a quid pro quo? As the Bill stands, that option does not seem to be open to him. I beg to move.

5.30 p.m.

The Earl of Caithness

One of the basic principles of the new regime is that, once a tenant has been granted a full assured tenancy, he should have the benefit of long-term security of tenure of a kind broadly comparable to that currently enjoyed by tenants under the Rent Act. During the debates in another place the argument was advanced that an unscrupulous landlord might seek to undermine this protection for the tenant by persuading him to accept a new tenancy which was designated, by virtue of service of the appropriate notice, a shorthold. An unwary tenant might agree to such a proposal without realising its full significance and thus forfeit his long-term security. The Government accepted that it was right to guard against this eventuality. We therefore inserted the present sub-section (3) into Clause 20 to provide that a tenancy cannot qualify as a shorthold in the situation where it is granted to someone who was hitherto the tenant under a full assured tenancy and where the landlord was, immediately beforehand, the same person as the landlord granting the new tenancy.

Our view is that a safeguard of this kind is entirely reasonable. It seems virtually impossible to envisage any circumstances in which a landlord having granted a full assured tenancy with long-term security for the tenant would then have any justification for replacing that tenancy with a shorthold. If a landlord is genuinely unable to commit himself to long-term letting, the answer must be to grant a shorthold from the outset. I believe that that provision covers the point raised by the noble Lord, Lord Monson.

It is of the essence of our approach on security of tenure that tenants should know where they stand from the very beginning. The amendment tabled in the name of the noble Lord, Lord Monson, would run counter to that central principle. At this stage, I must say how sorry we all are that the noble Earl, Lord Lytton, is not present in the Chamber because he has a wealth of experience, being a surveyor, and we hope that he will be able to resume discussions with us shortly. The amendment could place tenants in a position of considerable uncertainty. Indeed, it might open the way to serious abuse.

Lord Monson

Once again the Government seem to have at the forefront of their minds the picture of a large impersonal landlord—or possibly a medium-sized one. They do not seem to realise the problems of the really small landlord. The Government make much play of their support for family life. But I am bound to say that their opposition to this amendment hardly seems to tally with their declared intention, because the noble Earl has not answered the question which I effectively posed in my introduction to the amendment. I asked what happens when the landlord's family wish to occupy the property in question..

However, I should like to consider the matter further during the Summer Recess. Therefore, for the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 46: Page 15, line 6, leave out ("and") and insert ('to").

On Question, amendment agreed to. Clause 20, as amended, agreed to.

Clause 21 [Recovery of possession on expiry or termination of assured shorthold tenancy]:

Lord Monson moved Amendment No. 47: Page 15, line 32, leave out ("two month's") and insert ("one month's").

The noble Lord said: Once again I am proposing an amendment to make shorthold letting more attractive so as to provide rented accommodation for people who cannot find it at the moment, as the Government want and, as I am sure, the Opposition also want. The Committee will not need reminding that the whole shorthold concept, introduced with such a fanfare by the Government some years ago, has so far been a dismal flop. It will remain a dismal flop until such time as potential shorthold landlords—I stress the word "potential"—feel that the dice have ceased to be loaded against them.

If I rent a house or cottage for six months, nine months, 12 months or two years, then six months, nine months, 12 months or two years, as the case may be, is exactly the period I would expect to stay in that property; no less, but certainly no more. If by chance the landlord should tell me towards the end of the tenancy that he can spare the property for another month or so, that is an added bonus—or could be if I wished to stay on, as of course I may not. However, it is not something I should expect as of right. I am sure that most Members of the Committe will feel the same way about this.

In its present form the Bill totally stands the normal form of contractual arrangement on its head. It provides that a tenant entering into, say, a 15-month contract should nevertheless be entitled to stay in the property pretty well indefinitely, unless the landlord gives him two months' notice on the day that the tenant has occupied the property for precisely 13 months. That seems to me to be extraordinarily inflexible and potentially extremely inconvenient for the landlord. The shorter period of notice of one month which we propose is still somewhat inflexible but rather less inconvenient in that it gives the landlord an extra month to decide whether he is in a position to re-let, whether he wants to re-let and, if so, for how long. I beg to move.

The Earl of Caithness

Clause 21 provides that a landlord who has let a dwelling as an assured shorthold tenancy has a mandatory right to possession when the fixed term comes to an end, or during any statutory periodic tenancy which follows it. In order to exercise this right he must give the tenant two months' notice that he requires possession. As the noble Lord, Lord Monson, has just explained, he would prefer that period to be reduced to one month..

In framing the new shorthold rules in this Bill we wanted to produce a form of the tenancy which would be both more attractive to landlords than the old style shorthold tenancy under the Housing Act 1980, and simpler to use. We have reduced the minimum length of a shorthold from a year to six months; we have reduced the normal period of notice from three months to two and we have simplified the possession procedure by removing the limitations on when the landlord can seek possession. So we have already gone a long way in the direction that the noble Lord wants and I hope that- he will acknowledge this. I think that what we have proposed meets many of the concerns that the small landlords—for whom he is speaking so well—have been at pains to point out to us are deterring them from letting. That is something we want to change..

The period of notice is of course a matter of judgment. There is no magic about any particular number. The present three months seemed to us too long; the two months in Clause 21 seems about right. For the tenant who is well behaved and has not broken any terms of his tenancy to be on just one month's notice of losing his house seems too short to us. I can understand the noble Lord's case, but I cannot agree with him that the two months should be reduced to one.

Lord Monson

I acknowledge that the Government have gone some way towards making shorthold letting more attractive. However, I do not think that they have gone far enough. I am glad to see the noble Lord, Lord Bellwin, in his place this afternoon because I remember so well his saying, on the first day in Committee, that there were 200,000 houses and flats waiting to come back on the market if conditions were made sufficiently attractive for landlords. As the Bill stands, I do not think that the conditions have been made sufficiently attractive for more than a tiny proportion of those 200,000 dwellings to come back on the market..

I shall not press the amendment because I have not received any support for it thus far. However, I shall try to work out a better argument than the one I have at the moment for at least some modification of the clause. Perhaps we may be able to compromise on the issue at the next stage of the Bill's proceedings. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Lord Graham of Edmonton moved Amendment No. 47A: Page 15, line 35, after ("end") insert ("provided that such a notice may not be served more than two months before the tenancy comes to an end nor more than three months before proceedings for possession are commenced").

The noble Lord said: I beg to move Amendment No. 47A tabled in the name of my noble friend Lord McIntosh of Haringey. The object of the amendment is to ensure that the notice required under Clause 21(1)(b), which states that the landlord requires possession of the dwelling-house", forms a genuine part of the procedure for recovery of possession and puts the tenant on notice at an appropriate time. Otherwise such a notice could be issued at the beginning of a tenancy and become a meaningless formality. At present proceedings for possession of a shorthold tenancy can be heard within 14 days of service on the tenant. The tenant would thus be deprived of the opportunities both to obtain legal advice and arrange representation, if appropriate. What is more important, it would deprive him of the opportunity to make alternative arrangements for accommodation.

In our view, the proposal would not jeopardise the free market position embodied in the provisions. It would be similar to the provisions of business tenancies provided by Part H of the Landlord and Tenant Act 1954. I hope that the Minister will understand that we are trying to amend the Bill so as to be reasonable to people who need just a little extra grace.

The Earl of Caithness

As the Bill is drafted, a landlord wishing to obtain possession of a dwelling let on a shorthold tenancy is required to give the tenant at least two months' notice to the effect that possession is required. There is no restriction as to the actual point at which the landlord must serve the notice. Thus, a landlord granting a shorthold and knowing that he will require possession as soon as the fixed term comes to an end may choose to serve notice on the tenant at the very outset of the tenancy. That will please the noble Lord, Lord Monson, who, alas, is not in his place, because then the tenant would know for certain when the term was coming to an end..

In another case the landlord might serve notice at some point during the course of the fixed term. In yet another case he might wait until the fixed term comes to an end or if he is happy for the tenancy to continue on a periodic basis even later. The crucial point is that the tenant will always have at least two months' notice that the landlord requires possession..

In moving the amendment the noble Lord, Lord Graham of Edmonton, has argued the need for a restriction as to the point at which notice can be given to the tenant. I do not find his argument persuasive. Our view is that where a landlord granting a shorthold knows well in advance, perhaps indeed from the very outset of the tenancy, that he will require possession at a particular time, there is no reason at all why he should delay giving notice of the fact to the tenant. To impose a requirement of the kind suggested by the noble Lord would be a quite unnecessary restriction from the landlord's point of view. One of the points frequently made about the old-style shorthold tenancy procedure is that the requirements for giving notice to the tenant are needlessly complicated. We want to get away from that in this legislation..

In any case, I should have thought that it would be in the tenant's own interest to have as much notice as possible that possession will in due course be required. The more notice he has, the more time there is to think ahead and make plans accordingly. So from that point of view the noble Lord's amendment would seem to me to work very much to the disadvantage of the tenant. Having been a tenant, I know the great advantage of the longer notice when having to find alternative accommodation because the landlord wanted the house back.

Lord Graham of Edmonton

The Minister may well be right. I know that he is not dogmatic and that his remarks are based on the empirical experience of himself and others. He argued that the provision would be to the disadvantage to the landlord. I am not primarily concerned with the landlords interests. I am primarily concerned with the tenant's interests. However, I accept that there are circumstances when one must be fair and reasonable. In his concluding two or three sentences, the Minister said that the amendment could well act to the detriment of the tenant's interests. He used his experience to point that out. I am grateful for the care and courtesy he has shown. Those inside and outside this place will read what he has said with care. We may come back at a later stage. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn. Clause 21 agreed to.

Clause 22 [Reference of excessive rents to rent assessment committee]:

Lord Hesketh moved Amendment No. 48:

Page 16, line 9, leave out ("if").

The noble Lord said: On Report in another place the Minister accepted the argument that the proviso contained in Clause 22(1) served no useful purpose and therefore undertook to delete it. The amendment fulfils that undertaking. I beg to move.

On Question, amendment agreed to.

Lord Hesketh moved Amendment No. 49:

Page 16, line II, leave out from ("above") to ("may") in line 14.

On Question, amendment agreed to.

[Amendment No. 50 not moved.]

Clause 22, as amended, agreed to.

Clause 23 agreed to.

Lord Dean of Beswick moved Amendment No. 51:

After Clause 23, insert the following new clause:

("Prohibition of premiums etc.

.—(1) Any person who, as a condition of or in connection with the grant, renewal, continuance or assignment of an assured shorthold tenancy, requires or receives, in addition to the rent, the payment of any premium, or requires the making of any loan (whether secured or unsecured) shall be guilty of an offence.

(2) Where the purchase of any furniture has been required as a condition of the grant, renewal, continuance or assignment of an assured shorthold tenancy, then if the price exceeds the reasonable price of the furniture, the excess shall be treated for the purposes of subsection (1) above as if it were a premium.

(3) Where an assured shorthold tenancy is granted, renewed or continued, any requirement that rent shall be payable—

  1. (a) before the beginning of the rental period in respect of which it is payable, or
  2. (b) earlier than three months before the end of the rental period in respect of which it is payable (if that period is more than three months)
shall be treated for the purposes of subsection (1) above as if it were a requirement for a premium, and any payment of rent in pursuance of such a requirement shall be treated as if it were the payment of a premium.

(4) Where under any agreement any amount is paid and that amount could not lawfully be required or received under subsection (1) above, the amount shall be recoverable by the person by whom it was paid.

(5) Any amount which a tenant is entitled to recover under subsection (4) above may, without prejudice to any other method of recovery, be deducted by the tenant from any rent payable by him to the landlord who received such an amount.

(6) In this section, unless the context otherwise requires— "furniture" includes fittings and other articles; and "premium" includes—

  1. (a) any fine or other like sum;
  2. (b) any other pecuniary consideration in addition to rent; and
  3. 57
  4. (c) any sum paid by way of deposit, other than one which does not exceed one-sixth of the annual rent and is reasonable in relation to the potential liability in respect of which it is paid.").

The noble Lord said: I shall speak also to Amendment No. 52. The purpose of the amendments is to apply to assured shorthold tenancies provisions broadly equivalent to those in the Rent Act 1977 which prohibit the charging of premiums and similar payments in respect of protected tenancies. As the Bill stands, landlords will be free to charge limitless premiums in the case of assured and assured shorthold tenancies. A prohibition on premiums, sometimes known as key money, is necessary if people on average or below average incomes are to have access to private rented accommodation after the passing of the Bill.

It is necessary to prevent hardship and the exploitation of tenants and prospective tenants through a practice which could well become standard. The Government's stated aim is to revitalise the private rented sector to meet the needs of people who cannot afford to buy a home. Those people tend to fall into one or both of the following categories—those whose income is too low to raise a mortgage or those who have insufficient savings to cover a deposit and the other initial costs of buying a home.

If landlords are permitted to charge premiums, it is likely that they will do so, especially in London and other areas of high demand for rented housing. Such areas constitute a sellers' market. The Government's overall policy objective is therefore likely to be frustrated as low-paid workers, unemployed people, and other low income groups such as students will be unable to afford the initial costs of a new letting. Hardship may result where tenants pay premiums. People anxious to secure accommodation but lacking resources to meet the cost of a premium may borrow the money. They will therefore find themselves in debt at the beginning of the tenancy and consequently will be more likely to fall into rent arrears with the accompanying threat of eviction and homelessness.

There is little doubt that some unscrupulous landlords will abuse the freedom to charge a premium. Camden Housing Aid Centre, for example, knows of three recent cases in the Belsize Park area where landlords have attempted to charge premiums ranging from £3,000 to £6,000 for the grant of protected tenancies even though that is illegal. In addition, premiums are frequently sought in connection with the grant of lettings outside Rent Act control where there are no legal restrictions on such payments.

The scope of the amendment is limited to assured shorthold tenancies where the charging of premiums will cause hardship and injustice. The assured shorthold scheme will provide tenants with minimal security of tenure only. It is wholly unreasonable in such circumstances to expect tenants to pay substantial sums in addition to the rent merely to obtain accommodation. It is also likely that some landlords will routinely charge additional premiums as a condition of renewing an assured shorthold tenancy. Tenants will, in effect, have to choose between making a further lump sum payment or losing their home to be replaced by someone willing and able to pay a further premium.

At the same time, the charging of premiums will provide landlords with the means to circumvent the limited rent control afforded by the scheme. It is right and proper that the Act should seek to protect tenants from those abuses.

The Government amended the Housing (Scotland) Bill on Report in this place on 6th July to prohibit premiums on assured tenancies. The wording of the Government new clause was:

("Prohibition of premiums etc. on assured tenancies.

Sections 82, 83 and 86 to 90 of the Rent (Scotland) Act 1984 (which make it an offence to require premiums and advance payment of rent in respect of protected tenancies and make related provision) shall apply in relation to assured tenancies as they apply in relation to protected tenancies (including protected tenancies which are regulated tenancies), but with the following modifications—

  1. (a) section 83(5) shall not apply; and:
  2. (b) section 88(1) shall apply as if for the references to 12th August 1971 there were substituted references to the date of commencement of this section.").

If the Government have prohibited premiums for assured tenancies in the Scottish Bill, I maintain that there is no reason at all that I can see why it should not be extended to this Bill. I think equal treatment is expected by all those concerned in this exercise; that is what they are entitled to. I beg to move.

Lord Ross of Newport

I am very much in support of these amendments because I fear that we shall be seeing the introduction of premiums on assured shorthold tenancies, particularly in areas of greatest stress, almost certainly in London, Brighton, and other of our great cities. I am sure that the noble Earl will know what is happening on leasehold tenancies in shops and commercial properties at present. Quite extraordinary premiums are being paid—key money. One cannot really say premiums; it is key money to get in. Some people paying these huge sums will get a nasty shock when the rating lists are published in 18 months' time when the new business assessments are published. Nevertheless, these amounts are paid now.

If we are serious about attempting—and I believe the Government are serious—to get some rented accommodation on to the market, surely the people whom we want to be in a position to obtain those tenancies are people who will not be forced out by having demanded of them vast sums such as those quoted by the noble Lord, Lord Dean of Beswick, in the cases of Camden and elsewhere. I suspect in some cases thousands of pounds may well be demanded. I think that the Government would be right, if they started by bringing in this form of assured shorthold tenancy, to ban or to continue the restriction on premiums. if we are to have market rents, let us have market rents but no nonsense about key money in addition. Therefore, I heartily support the amendments.

The Earl of Caithness

I am well aware that the issue of premiums, sometimes described, as both noble Lords have said, as key money has in the past been an emotive one. Nonetheless, I hope that I can persuade your Lordships to put emotion on one side and consider the subject in a purely objective way.

Premiums are illegal under the Rent Act. The justification for the prohibition is that without it landlords would resort to premiums as a means of getting round statutory rent control. In practice, the prohibition has never proved easy to enforce but the underlying logic is clear enough. However, under a deregulated regime the premium must inevitably be seen in a different light. Once landlords have the freedom to charge a market rent, as they will have under this Bill, the argument for prohibiting premiums no longer holds good. On the contrary, the freedom of the landlord and tenant to negotiate the payment of a capital sum as part of the charge for granting a tenancy can be viewed as a perfectly logical and reasonable feature in the operation of the market.

We have no reason to believe that premiums will be widely charged for the new style tenancies. But where they are charged, it must be the case in a free market that as a consequence the rent which the tenant pays will be reduced below that which would otherwise have applied. That is a principle which is already well established in the market for commercial lettings and long residential leases where premiums have long been accepted as a fact of life.

However, there are more immediate precedents too. Housing associations can at present charge premiums for tenancies. As the noble Lord, Lord Ross of Newport, will know, some do so. The noble Lord, Lord Dean of Beswick, will recall the Rent (Agriculture) Act 1976. This gave statutory security of tenure to farm workers in tied cottages but did not impose rent control. It allowed the charging of premiums for agricultural tenancies. Perhaps most relevant of all, premiums have been permitted under the old style assured tenancy regime and to the best of my knowledge have never been the subject of a single complaint during the eight years that regime has been in existence.

Against this background we have concluded that there is no compelling argument for including a prohibition on premiums for either full assured tenancies or shorthold tenancies to which this amendment relates. To reverse this decision would, we believe, fly in the face of a free market principle which is fundamental to the Bill. Surely logic, consistency with other forms of tenure and simplicity of legislation all point against prohibition.

The noble Lord, Lord Dean of Beswick, raised—and rightly so—the question of what happened on the Housing (Scotland) Bill. I must remind Members of the Committee that there are substantial differences in the position north and south of the Border on this matter. That is not unusual. As I have said, the concept of the premium is already well established in England and Wales. This is not the case in Scotland. There are no long residential leases under Scottish law. Nor do the Scots have old style assured tenancies or the same agricultural tenancies as we have in England and Wales. Registered housing associations in Scotland are not permitted to charge premiums. Consequently premiums have never been an accepted feature of the housing market north of the Border.

These legal and historical differences between England and Wales on the one hand and Scotland on the other seem to us to justify a divergence of approach on the issue of premiums. I realise that some Members of the Committee feel very strongly about this, but if we are to move into a free market where the landlord and tenant can agree a lower rent if a premium is charged, why should they not do so?

Lord Taylor of Gryfe

I am tempted to intervene in this discussion only because I think I heard the Minister say that key money or premiums were not a familiar feature of the Scottish housing situation. I must say that I disagree entirely with that point of view. We discussed the matter on the Scottish Bill at very great length in this Chamber. The Minister's noble friend Lord Sanderson resisted the abolition of the premium at an early stage but agreed to give it further consideration.

On further consideration, the Government agreed that premiums or key money were an undesirable feature. Consequently they conceded the amendment which would abolish premiums or key money. For the life of me, I cannot understand why it is an undesirable feature of housing legislation north of the Border but is being allowed for our less favoured friends south of the Border. I wish to resist the proposition that it has never been a serious feature of Scottish housing practice.

Lord Stallard

I find the discussion a wee bit unreal, particularly the remarks of the Minister. In the real world we know—and almost unanimously critics of the Bill have said—that this shorthold or assured tenancy will be a dead letter before very long. Landlords will have no incentive to let on this basis when they can have an assured shorthold tenancy. They will all go for the shorthold because it gives them an outright power to do a number of things.

First of all, they can evict; they can give notice after six months. They are not going to give an assured tenancy if they can get an assured shorthold with that incentive for eviction. They will waive all the other rights that tenants have—for example, the right to registration, the right to repairs—because it will react against them if they intend to apply for a further extension or for a further tenancy. They will not complain about anything at all if the minute they do the notice to evict them is effective.

The argument that shorthold market rent levels will be lower as a quid pro quobecause of the insecurity does not add up either in our view, for the same reasons. Although these shorthold tenants will have a right to apply to a rent assessment committee during the first fixed term, very few will do so for the reasons that I have just mentioned. Which tenant is going to apply to that committee or argue about the rent or any other aspect of the tenancy, including key money, if he knows that that could lead to an eviction notice which he already dreads getting?

As regards key money, I understand that some of these tenancies will be for private tenants and other people such as the homeless who are seeking accommodation and who, in desperation, will be only too pleased to take on an assured tenancy and pay key money. But where will they get the key money from? That provision will rule out people who really need rented accommodation as none of them will be able to afford the kinds of sums that my noble friend mentioned. Those sums exist, certainly in the borough where I live. In that borough key money and premiums run into thousands. No one desperate for rented accommodation will be able to afford key money even if after obtaining the tenancy they were bold enough or brave enough to raise the kind of objections that the Minister considers they will make. They will not make those objections because in reality they would be thrown out of the accommodation and they would not be granted any further tenancy on that property. The whole matter is a mess. It cannot work and it will not be of any help at all to the people who really need rented accommodation.

6 p.m.

Baroness Fisher of Rednal

I wish to support my noble friend Lord Stallard regarding premiums. That money will be difficult to find, especially for those whom the Government have said they wish to help rehouse. The situation will be particularly difficult in London.

If those people are at present living in appalling housing conditions, surely to goodness they will not he able to put down a premium, as my noble friend has just pointed out. This provision is not going to help those people who really need help. The Government must be concerned at the present moment as regards the houses for sale market because of the gazumping that is going on. The same thing will occur with premiums. I could offer £250 to a landlord as a premium and somebody else could then offer £300. The rented sector premium will become subject to the same kind of gazumping that applies to prices in the houses for sale market. I should not have thought that the Government wanted that phenomenon to occur in the rented market.

Lord Bellwin

I think that we are losing sight of what the Bill is trying to do. The Bill is trying to encourage landlords who at present have dwellings and who will not rent them out because of lack of security of tenure and because of their inability to obtain reasonable rents for those dwellings. The more we impose restrictions, the less likely it is that those dwellings will become available. Surely that is the underlying nub of what we are seeking to do.

As the Minister has told us, there is no substantial record of landlords demanding premiums. If we wish to release all these hundreds of thousands of empty dwellings that we are told about by persuading landlords that it is worth while renting the dwellings out, the more we impose restrictions on landlords the less likely it is that they will rent their dwellings out. I confess to being unclear as regards why the situation in Scotland is different from the situation in the rest of the country. Therefore I shall just have to listen to what is said about that. I make no comment on it at the moment.

I know that some Members of the Committee are anxious about premiums. That concern is very properly expressed, but I do not think that in practice one can ask for more rent than people can pay or that one can ask for premiums that people cannot pay. It is a market situation. But we must try to persuade people who own accommodation in the private sector to make it available for rent.

I have a final point to make about housing and rent. The more units that are available and taken up, the more there will be available for others. When units are blocked out for any reason, people cannot take advantage of them. If some do, it leaves room at the other end. So, for example, when council tenants move into the private sector their dwellings become available for other people in the public sector. The more the entire stock of housing is brought into use, the more help it is to those who most need accommodation. I am only concerned about the point of the different situation in Scotland as compared with England. That is not clear to me. But I am not as concerned about the other aspects of this matter as are those Members of the Committee who have expressed fears.

Lord Stallard

Will the noble Lord expand on a point that he mentioned? He said that he was concerned about getting homes for the people who most needed them. That is my concern also. There are 2½ million homeless people. How will the premium. the maximum rents and all the other incentives to landlords that the noble Lord, Lord Bellwin, mentioned ease the problems of the homeless? Most of those 2½ million homeless people are on supplementary benefit or its equivalent.

Lord Bellwin

But the fact is that if dwellings remain empty, for whatever reason, that helps no one at all. If landlords do not make them available for rent, it helps no one. I submit, and I am sure the Minister submits also, that the whole purpose of this part of the Bill is to make more dwellings available. I remember very well introducing the shorthold concept in this Chamber. Members opposite said that it would be the policy of their party, when it returned to office, to do away with the concept of shorthold tenancies. That put quite a kybosh on that whole concept. It discouraged landlords who might have been willing to offer dwellings for rent.

Let us be consistent about this and let us remember that what we are really about is trying to get these units of accommodation brought into the housing stock so that people can occupy them. That is what I understand this Bill is about.

Baroness Macleod of Borve

I agree with all Members of the Committee who have spoken except the noble Lord who has just spoken. I thought that the intention of the Bill was to help people who did not have homes of their own. That is why the Government want to make far more accommodation available for rent.

As has been said by other Members of the Committee, if one allows rent to become expensive and one allows a premium to be imposed as well, the people who cannot afford to buy and who need to rent will be in an impossible situation and the whole purpose of what the Government are trying to do will be undermined. I cannot see that that is fair to the people who want rented accommodation.

Money is very short for people up in the North. They want to get jobs down in the South. They do not have homes and they cannot afford to buy homes in the South. They need rented accommodation, but if on top of rent they are asked to pay Rachmanite key money I think we shall have put a coach and horses through what the Government are trying to do.

Earl Russell

I was a little perplexed by the reference made by the Minister to free market principles. I am aware that rents in shorthold tenancies are market rents. However, there is a procedure in Clause 22, if I have read it correctly, for those rents to be referred, checked and controlled. That means that although they are market rents, they are not entirely free market rents.

So the Minister has recommended a market which is partly totally free and partly not entirely free. That is likely to have the effect that such measures have had ever since the reign of King Henry VIII of causing premiums to soar while rents remain under control. 'That is likely to cause certain problems.

I have a special interest in these matters. Teaching in London as I do. I am well aware of the difficulties suffered by students in finding accommodation in London at suitable prices. That is a matter on which my noble friend Lord Flowers was consulting with Mr. Jackson last week. It is a matter on which the Minister might usefully be in touch with the Department of Education and Science. It should be borne in mind that most undergraduates are not equipped with large sums of capital and are not in a good position to pay large premiums.

Lord Diamond

When the Minister comes to reply to the debate, perhaps he will clear up a point on which I am confused. As I understand it, under the proposed new tenancies it will not be illegal for a landlord to propose a premium on residential property, by whatever name it may be called. Assuming that I am right in supposing that it is the Government's intention that landlords and tenants should get together and agree the terms of a tenancy, it may be that in some cases it will suit both parties for a small premium to be paid rather than a larger rent and in other cases perhaps a slightly larger rent will be charged with no premium. What will the effect of all that he on the relief and housing benefit which the Minister has promised will fully take the place of increased rents rising through market forces? Will the premium, whether it be small or large, be taken into account and spread over the period of the tenancy?

Lord Ross of Newport

Perhaps I may put the point to the Minister that what often upsets decent landlords is a tenant who is in an assured tenancy and charges a premium for the transfer of the tenancy. Presumably that is what will happen in this case. A tenant may well, after six months, turn around and demand a premium from someone else who is coming in.

I listened to the noble Lord, Lord Bellwin, with interest. The whole matter is one of supply and demand. There will not be any supply if, right at the outset, the only people who rent the properties are extremely wealthy, want them for short periods and are able to pay sizeable sums of money for a premium. If we want to get market rents, let us ban premiums. Then the rent assessment committees can say whether or not the rents are fair. The noble Earl, Lord Russell, has rightly pointed out that under Clause 22, if the charge is far too high, the RACs will decide accordingly.

We want to see the Bill work. However, most of us feel that if premiums are allowed it will not work in many parts of the country. In other parts of the country where there is a surplus, the premium is not necessary in any case.

Lord Trafford

There is a slight contradiction in what Members opposite have been saying. I understand that many of them do not like the concept of market rents and a free market in housing. Fair enough. However, for those who feel that the Bill may make a contribution to an increase in general housing stock and help to alleviate the shortage, it seems unfortunate to put too many trip-wires in the way of those who might otherwise be tempted to bring forward part or all of their own properties for rental. I do not have in mind an enormous company owning hundreds of flats. I have in mind the smaller landlord.

Estimates have been made and announced in this House of anything up to 200,000 properties which may be brought onto the market in the private rented sector. We have heard talk about another 200,000 properties which the Government have locked away in the MoD and various other places which are lost, in one way or another, to present housing use.

Lord Graham of Edmonton

The Ministry of Transport.

Lord Trafford

Someone is shouting, "Ministry of Transport". That may be so as well. There may be an equivalent, or even larger, number of properties with local authorities. The Bill is trying to increase the amount of housing stock that is available for the purpose of housing people. One of the ways of encouraging one end of the spectrum—the private sector—to bring housing onto the market is by making the market as free as possible.

I take the point made by the noble Earl, Lord Russell, on rent assessments. However, we must remember that the rent assessment is against a market rent and other assured tenancies. It is not the same as the present and previous rent tribunals. The more difficulties we put in the way of those who are likely to bring for-ward one or two properties or part of their own property, the more they will say, "I do not think I am going to be bothered to do that".

I am not speaking of enormous companies or the man who is in major property development. They may well be looking far more carefully (for all sorts of reasons which the smaller landlord will know only too well) at a much longer term of tenancy. I believe that this type of tenancy is ideally suited to the small landlord who has one or two properties. The more difficulties we put in his way, the more difficult it will be to make that part of the rented sector work. It will reduce mobility of labour as well. Those would be unfortunate consequences.

6.15 p.m.

Lord Dean of Beswick

I do not wish to join in a Second Reading debate. However, the Government have been questioned about homelessness week after week and month after month, and we are always being told to wait for the forthcoming Housing Bill. We have been told that it will make a tremendous impact on the situation. I have heard nothing to date which will do that.

The Minister has been poorly briefed if he says that there is no historical evidence of the practice of key money being widespread. Key money was a feature in most housing that was rented before the large slum clearance schemes started. I paid key money for the first house in which I was a tenant in Manchester, and so did many other people.

I shall not speak of London because I was chided in a friendly way earlier in our debates when I referred to London as the pressure-cooker in the housing situation. However, the Minister has not convinced me that there is any difference between those people who want rented housing in Manchester, Liverpool, Sheffield or Leeds and the people in Glasgow. Why should there be a differential? Why should people who need houses to rent in England be treated differently from those in Scotland? I appreciate the point made by the noble Lord, Lord Taylor of Gryfe, when he gave us his vivid portrait of what actually takes place. He talks from experience about Scotland. I am also grateful to the noble Baroness, Lady Macleod of Borve, for her support. She said many things in her charming and humane way better and more forcefully than I could.

What type of key money are we talking about? If we are talking about the pressure-cooker of London, £125 or £150 per week is not a high rent. Where will people get down-payments for such properties? We are speaking of people whom the Government are supposedly dedicated to helping. We are not speaking of people at the top end of the market who tend to buy houses rather than rent them. We are talking about people who need houses badly and who will always need a substantial amount of assistance towards their rent.

Across the country over 50 per cent. of the people who are at present tenants of various types of housing ranging from local authority housing, housing associations and so on are receiving substantial financial support from the Government. To allow someone to be asked for key money—that is all we are talking about—in the centre of London or Manchester and the landlord to say that they can have the tenancy at £150 per week but they must put down £3,000, which is three or four months' rent, before they start to pay rent, will not take one homeless person off the streets of London or Manchester.

I am afraid that if the Minister cannot give a better reply—and he has not convinced me of the Government's case—I have no alternative but to test the will of the Committee.

The Earl of Caithness

Before the noble Lord decides finally, I think that it would be appropriate if I were to reply to some of the points which have been raised. I should like to stress to my noble friend Lady Macleod of Borve that housing associations can at present charge premiums for tenancies and that some do. Premiums can be charged under the Agriculture (Miscellaneous Provisions) Act of 1976.

I said that I had not heard of any complaint during the eight years of the old style assured tenancy regime. I think that the noble Lord, Lord Dean of Beswick, understood me to be speaking on a wider basis when I said that I had not heard of any complaint. There have been complaints, but to my knowledge they do not relate to the old style assured tenancy regime. However, where they do, it goes to show just how difficult it is to enforce the banning of premiums. Because of the restricted market some landlords have sought to get round the ban on premiums under the Rent Act.

I am grateful to the noble Lord, Lord Diamond, for raising the important point of housing benefit. I confirm to him that housing benefit is not payable on the premium; it is payable only upon the rental. We have agreed to increase that to take account of market rents. However, we doubt that that would put the tenants dependent upon housing benefit at a disadvantage. The reason for that is that the proportion of private tenants claiming benefit is such that if landlords were to charge a premium the choice of tenants who might apply to them would be reduced very severely.

The noble Lord, Lord Ross of Newport, suggested that if we do not prohibit premiums the scheme in the Bill will not work and the supply of rented homes will not be forthcoming. I fail to agree with him on that argument. I would turn the argument on its head, as my noble friends Lord Bellwin and Lord Trafford have just done to great effect. If we do not give landlords the freedom to charge market rents and, if the market justifies it, a premium, the supply certainly will not be forthcoming. To put barriers in the way of landlords who want to get tenants into empty property—as I am sure all Members of the Committee would want£can only be detrimental to the aims of the Bill.

The noble Lord, Lord Taylor of Gryfe, took me to task about Scotland. I challenge him on that point. Can he show me where premiums have been legal under any branch of Scottish law?

Lord Taylor of Gryfe

When this matter was discussed in the Chamber we made representations on the issue on the basis of the advice and briefing of Shelter, the National Federation of Housing Associations and all the other organisations which were deeply concerned with Scottish housing legislation. It was on their representation that it was desirable to abolish key money that we managed to convince the Minister's noble friend that it was desirable and an appropriate amendment was made.

The Earl of Caithness

I think that that goes to prove my point that, although some landlords in Scotland might have been trying to charge a premium, they would not have been doing so legally under any branch of Scottish law for the reasons that I gave. Premiums have never been an accepted feature of the housing market north of the Border, whereas they certainly have been south of the Border.

The noble Earl, Lord Russell, reminded the Committee about Clause 22 and the rent assessment committee's powers. Where a tenant has referred a shorthold tenancy to it, the Committee will have power to consider the level of rent. However, I would just say to the noble Lord that when it does so it will also take account of any premium that has been paid so that the tenant will not be at a disadvantage as a result.

The noble Lord, Lord Stallard, raised a point which was discussed on the first day of Committee. I did not answer it in full on that occasion and perhaps this might be an opportunity to do so. The point was why any landlord should let on an assured tenancy in preference to a shorthold tenancy.

It seems reasonable to assume that, in a situation where rents are determined according to market principles, the rent for a particular tenancy will reflect the degree of security provided by that tenancy. One would therefore expect that, other things being equal, a full assured tenancy, offering long-term security of tenure would command a somewhat higher rent than a shorthold tenancy offering only limited security of tenure. Thus, for any landlord who is serious about long-term investment in rented property and who wishes to maximise the return on his investment, one very clear incentive to opt for a full assured tenancy rather than a shorthold is the prospect of obtaining a higher rent.

A further incentive arises from the fact that, as Members of the Committee will he aware, under the extended business expansion scheme for which provision has been made in this year's Finance Bill, generous tax relief is available on investment in companies specialising in letting property on full assured tenancy terms. Properties let on shorthold terms will not be eligible for that assistance.

Perhaps I could also remind the Committee that the way the legislation is drafted will ensure that any tenancy which does not satisfy the specific requirements for a shorthold, including in particular the requirement that the landlord serve the appropriate notice at the outset, will be a full assured tenancy. There is thus no reason to fear that the tenant will be at a disadvantage in a situation—and experience shows that it is not an uncommon situation—where the landlord and tenant are unclear about the law's provisions. Failure by the landlord to comply with the statutory requirements will simply have the effect of giving the tenant the benefit of a full assured tenancy. I believe there are sufficient safeguards to provide a wide spread of types of tenancy, from full assured to shorthold tenancy.

The noble Lord, Lord Dean, said that premiums would not help to house homeless people. It is true that a homeless person who is dependent on housing benefit will not be able to take a tenancy if the landlord charges a premium. However, it should be the total supply of housing which concerns us. If that increases as a result of the Bill it is bound to help the homeless. That is the difference between us on this side of the Committee and noble Lords opposite. We want to increase the amount of housing that is rented, and the more obstacles that are put in the way of the landlord or the more the free market is interfered with the fewer landlords will voluntarily come forward with houses which we know are empty and which we want them to let.

Lord Dean of Beswick

The flood of tenanted houses that according to the Minister's reply was to become available has already been reduced to a trickle. He said in one breath that there was no evidence of key money or of this practice taking place; in the next breath he said that there was evidence of down payments and it seemed to work.

The Earl of Caithness

Perhaps I might just correct that statement. I said that there was no evidence of complaint in the eight years during which premiums were permitted as a result of the old style assured tenancy.

Lord Dean of Beswick

The point has been made before that there will not be any complaints. In my view the Minister has let the cat out of the bag. It will have little or no effect at all on the homeless people the Government have been talking about all the time. On the basis of that fact and the way the argument has developed in the Committee, I see no alternative to testing the views of the Committee.

6.30 p.m.

On Question, Whether the said amendment (No. 51) shall be agreed to?

Their Lordships divided: Contents, 69; Not-Contents, 129.

Addington, L. Jacques, L.
Airedale, L. Jeger, B.
Ardwick, L. Jenkins of Hillhead, L.
Aylestone, L. John-Mackie, L.
Banks, L. Kennet, L.
Blackstone, B. Lockwood, B.
Bonham-Carter, L. McIntosh of Haringey, L.
Brooks of Tremorfa, L. Macleod of Borve, B.
Bruce of Donington, L. McNair, L.
Carmichael of Kelvingrove, L. Masham of Ilton, B.
Carter, L. Mayhew, L.
Chandos, V. Meston, L.
Cledwyn of Penrhos, L. Morton of Shuna, L.
Cocks of Hartcliffe, L. Nicol, B.
Dean of Beswick, L. O'Neill of the Maine, L.
Diamond, L. Oram, L.
Dormand of Easington, L. Pitt of Hampstead, L.
Ennals, L. Ponsonby of Shulbrede, L. [Teller.]
Ewart-Biggs, B.
Fisher of Rednal, B. Rea, L.
Gallacher, L. Rochester, L.
Galpern, L. Ross of Newport, L. [Teller.]
Graham of Edmonton, L. Russell, E.
Gregson, L. Seear, B.
Grimond, L. Shackleton, L.
Hampton, L. Stallard, L.
Hanworth, V. Stewart of Fulham, L.
Henniker, L. Stoddart of Swindon, L.
Hooson, L. Strabolgi, L.
Houghton of Sowerby, L. Taylor of Blackburn, L.
Hughes, L. Taylor of Gryfe, L.
Taylor of Mansfield, L. Winchilsea and Nottingham, E.
Underhill, L.
Wallace of Coslany, L. Winterbottom, L.
Walston, L. Young of Dartington, L.
White, B.
Ampthill, L. Lauderdale, E.
Arran, E. Lawrence, L.
Auckland, L. Layton, L.
Beaverbrook, L. Lindsey and Abingdon, E.
Bellwin, L. Long, V.
Beloff, L. Lucas of Chilworth, L.
Belstead, L. Lurgan, L.
Blatch, B. Lyell, L.
Blyth, L. McAlpine of West Green, L
Borthwick, L. Mancroft, L.
Boyd-Carpenter, L. Manton, L.
Brabazon of Tara, L. Margadale, L.
Brougham and Vaux, L. Marley, L.
Broxbourne, L. Marshall of Leeds, L.
Caithness, E. Merrivale, L.
Cameron of Lochbroom, L. Mersey, V.
Carlisle of Bucklow, L. Monk Bretton, L.
Carnegy of Lour, B. Monson, L.
Carnock, L. Mottistone, L.
Cathcart, E. Mowbray and Stourton, L.
Clitheroe, L. Munster, E.
Coleraine, L. Murton of Lindisfarne, L.
Colwyn, L. Napier and Ettrick, L.
Constantine of Stanmore, L. Nelson, E.
Cottesloe, L. Newall, L.
Cox, B. Orkney, E.
Crickhowell, L. Orr-Ewing, L.
Davidson, V. [Teller.] Oxfuird, V.
Denham, L. [Teller.] Pender, L.
Dilhorne, V. Penrhyn, L.
Dundee, E. Peyton of Yeovil, L.
Eden of Winton, L. Platt of Writtle, B.
Elibank, L. Quinton, L.
Elles, B. Radnor, E.
Elliott of Morpeth, L. Rankeillour, L.
Fortescue, E. Reay, L.
Fraser of Kilmorack, L. Rees, L.
Gainford, L. Renton, L.
Gardner of Parkes, B. Renwick, L.
Glenarthur, L. Rodney, L.
Goschen, V. Romney, E.
Gray of Contin, L. St. Germans, E.
Greenway, L. Saltoun of Abernethy, Ly.
Gridley. L. Sanderson of Bowden, L.
Hailsham of Saint Shannon, E.
Marylebone, L. Somers, L.
Halsbury, E. Southborough, L.
Hardinge of Penshurst, L. Stanley of Alderley, L.
Harmar-Nicholls, L. Stevens of Ludgate, L.
Havers, L. Strange, B.
Henley, L. Sudeley, L.
Hesketh, L. Swinton, E.
Hives, L. Terrington, L.
Holderness, L. Teviot, L.
Home of the Hirsel, L. Thomas of Gwydir, L.
Hood, V. Thomas of Swynnerton, L.
Hooper, B. Torrington, V.
Hylton-Foster, B. Trafford, L.
Jenkin of Roding, L. Trefgarne, L.
Johnston of Rockport, L. Trumpington, B.
Joseph, L. Ullswater, V.
Kaberry of Adel, L. Waldegrave, E.
Kimball, L. Wise, L.
Kinloss, Ly. Wynford, L.
Kitchener, E. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

6.30 p.m.

[Amendment No. 52 not moved.]

Clause 24 agreed to.

Schedule 3 [Agricultural worker conditions]:

Lord Hesketh moved Amendment No. 53:

Page 101, line 35, leave out ("five") and insert ("two").

The noble Lord said: This is a consequential amendment which was overlooked when the qualifying period for succession to a Rent Act or Rent (Agriculture) Act tenancy was reduced from five to two years. I beg to move.

On Question, amendment agreed to.

Schedule 3, as amended, agreed to.

Clause 25 agreed to.

Clause 26 [Rehousing of agricultural workers etc.]:

Lord Stanley of Alderley moved Amendment No. 54:

Page 18, line 32, at end insert— ("(2) In section 28(7) of the Rent (Agriculture) Act 1976 the words 'use their best endeavours to' shall be omitted.").

The noble Lord said: Although it is mentioned in the explanatory note, and indeed my noble friend Lord Caithness stated at Second Reading that Chapter III, and in particular Clauses 24, 25 and 26, make provision for rehousing agricultural workers similar to that in the Rent (Agriculture) Act 1976, I cannot see that it does. The purpose of this amendment is to ensure that it does just that. If my noble friend Lord Caithness were in the Chamber he would remember that the situation at the moment under the Rent (Agriculture) Act is that when a farmer wishes to repossess a house for the efficient working of that farm he applies to the Agricultural Dwelling House Advisory Committee (ADHAC) to assess needs. Subject to ADHAC supporting such need, the local authority must use its best endeavours to rehouse the ex-farmworker. Despite my reservation, and indeed that of the Conservative Party, about the effectiveness of the words "best endeavours" when the Bill went through this Chamber in 1976, councils have in the great majority of cases rehoused agricultural workers eventually.

However, the situation in the future will be different. Councils will have less rented accommodation. In fact, in Anglesey the council hopes to sell off the whole of its housing stock. With the best will in the world it will not be able to offer suitable accommodation. I emphasise the word "suitable" because that is enshrined in the Rent (Agriculture) Act. Bed and breakfast accommodation would not be within the law as alternative accommodation.

I realise that the farmworker may be in a similar situation to the homeless, but I suggest that his position is worse. Whereas the local authority will still have a statutory duty to rehouse the homeless, it will need to show only that it has used its best endeavours so far as concerns farmworkers. My amendment would make it possible for the local authority to rehouse an agricultural worker whose house was needed by the business and whose rehousing had been recommended by ADHAC in line with the wishes of the majority of noble Lords and the Conservative Party when the Rent (Agriculture) Act went through this Chamber in 1976.

To put the problem in layman's language, it was relatively easy for a local authority which had its own housing to use its best endeavours to secure a house. When it has little or no housing it must surely require much more effort than before. I believe that this Bill must require some form of strengthening of the words "best endeavour". I am aware that my noble friend may well say that Clause 123 of this Bill will allow the Secretary of State to make sure that, before a council sells off its housing stock, sufficient provision is made for housing the agricultural worker. I really do not see how he, or indeed the local authority, can possibly make provision for rehousing an agricultural worker when it has only to use its best endeavours. Both could, and might, by legal interpretation of that phrase be forced to avoid this responsibility. Indeed, Clause 123 refers to the Housing Act 1985, which does not deal in that part with the need to rehouse. It deals only with the terms of the tenancy.

There is one other smaller point which affects agricultural housing. I have to ask my noble friend why Case 16 in Part II, Schedule 15 to the Rent Act 1977, is not included in Schedule 2 to this Bill? I have read the answer of my noble friend Lord Dundee as it applies to the Scottish Bill. But if this case were included in Schedule 2 it would give more flexibility than letting such tenancies be dealt with under the assured shorthold tenancy. For instance, the notice to quit under the assured shorthold tenancy is a minimum of six months; under Case 16, it is a month. Unless Case 16 is included in Schedule 2 it may well discourage landlords to let—a point made most forcefully by my noble friend Lord Bellwin on a previous amendment. I beg to move.

6.45 p.m.

Lord Carter

The noble Lord, Lord Stanley of Alderley, has pointed out that there is considerable concern in the agricultural industry about the effects of this Bill on the tied cottage situation. His right honourable friend the Minister for Housing and Planning Mr. William Waldegrave, wrote to me on this matter in response to a question. He stated: You also raised the question what the position of the ADHACs would be if the entire stock of a local authority were taken over by another landlord. If its stock transfers, the local authority nevertheless retains its existing responsibilities for the homeless. Its duties to take account of the recommendations of an ADHAC are allied to this. When a local authority seeks approval to a transfer, it will need to prove to the Secretary of State that it has made arrangements (probably with the new landlord) to enable it to fulfil its statutory functions, including the need to provide accommodation on the advice of the ADHAC". I understand that to mean that the Government intend that if the local authority transfers its housing stock to a new landlord, it will place obligations on the new landlord to provide housing for farmworkers if the ADHAC requires this. We cannot find this proposal on the face of the Bill. It is left to the discretion of the local authority and of the Secretary of State as to whether this obligation will be transferred. We should like an assurance that the present arrangements will continue if the stock of housing is transferred.

The Earl of Radnor

I should very much like to support this amendment. It is a simple problem which deserves a simple answer. The simple problem has not been stated in so many words. It is that the agricultural system will fall down if workers of importance get stranded in cottages which are wanted for the person who would carry on the job which they are no longer doing. It seems very inefficient to rely on other parts of the Bill which are under some suspicion—as both the previous speakers have said—when there is such an obvious alternative open which is embodied in this amendment.

If councils had to follow this amendment, it would make absolutely certain that at the end of the day they kept enough stock of houses to deal with this problem. We are not talking about the other problems at the moment. They must keep enough houses so that the problem can be dealt with when it arises. We have heard what may happen in Anglesey. Perhaps the same problem is looming in other areas of England.

I cannot put the point too strongly. The agricultural system still depends on the tied cottage to a certain extent. I was against the old system being abolished at the time. I readily admit that the ADHAC system works extremely well. But at the end of the day it must depend on finding a house in which to put those workers when the ADHAC committee says that the cottage which they are in at the present time must be released. I strongly support the amendment.

Baroness Faithfull

When the Minister replies perhaps he will explain to me the Housing (Homeless Persons) Act. When I administered that Act, the local authority was under a duty to house homeless families in the way that suited that area the best. Does this not now apply, or does it not apply in country areas? I had thought that every local authority must by law under the Housing (Homeless Persons) Act house people who are homeless through no fault of their own. I should be very glad of clarification of that.

Lord Renton

Before my noble friend sits down I wonder whether she could clarify this point on the obligation to which she has referred with regard to homeless people. I understand that the local authorities are obliged by statute to provide immediately temporary accommodation for the homeless. However, then the homeless go on to housing lists, and have to wait their turn on housing lists before they can move from temporary to permanent accommodation. Is that not right?

Baroness Faithfull

Yes, it is right as I understand it, but if the local authority takes a long time—one, two or three years—to supply the accommodation for that family, they will remain in whatever accommodation has been found for them. We shall come to an amendment later which concerns bed and breakfast. This is why so many people are in bed and breakfast accommodation for so long—they have not been offered accommodation by the local authority.

Lord Stanley of Alderley

If I may I shall interrupt on that point because it is rather important. Under the Rent (Agriculture) Act these families will not even be put on the list. On the point made by my noble friend Lady Faithfull about the homeless, they are at least accommodated and are waiting to be put on the list. I merely want my people to wait.

Lord Ross of Newport

I have much sympathy with the amendment and interesting questions have been raised during the course of the debate. I hope that the Minister will be able to answer some of them. We read in the housing weekly bulletins, particularly those in the housing association movement, that certain councils in the country are already negotiating for the sale of the whole of their council stock. Torquay was said to be in a very advanced state of selling the lot. Gloucester was another city that was mentioned. Anglesey has a scheme of its own, and no doubt there are others.

Can we take it therefore that negotiations are taking place between the department and the authorities concerned to ensure that an obligation is being passed on to the successors in title of these properties, in some cases large housing associations, that they will have to take on board the responsibility for housing homeless people? If that is not the case, what will happen? They will have to stay in bed and breakfast accommodation for ever more and that cannot be acceptable to anybody in this place I am sure.

I agree that on the whole the system that was worked out for agricultural workers who were obliged to leave for one reason or another has worked. It certainly has in my part of the world. But it seems to be in some difficulty now. I am well aware that we have built fewer council houses in the last few years than at any time since the early 1920s. I was looking at the figures for housing associations and this year it is the worst year but two. We are building only about 20,000 units. But in spite of that and the additional burden that we are placing on the authorities to find these people homes, I still think it is right that agricultural tenants should be included under this protection. Therefore I hope the amendment will be supported.

I do not think there can be many people involved. I do not know how many people still have agricultural workers living on their farms, but we seem to be selling off every agricultural cottage in the country and every barn too. I do not think there is a single barn left in Shropshire that has not been turned into a house. Nevertheless we are not talking about very many people. I believe that the noble Earl agrees with me, but the few people we are considering ought to be included in this measure.

Lord Hesketh

This amendment would have us impose a duty on local authorities not actually to use their best endevours to provide suitable alternative accommodation for farmworkers whose landlords are seeking possession from them but actually to provide it themselves. In the majority of cases settled under Section 28(7) of the Act, it is of course the local authority who provides the suitable alternative accommodation. I think that there may be underlying this amendment a concern that, as local authorities are changing their role, and gradually becoming not so much providers of housing as enablers—getting other people to provide it—the position of the agricultural worker with rights under this Act may be adversely affected. It might help if I say a few words about this.

A system was established under the Rent (Agriculture) Act 1976 whereby a farmer who wants to repossess his property from a sitting agricultural tenant, possibly a retired one, in order to house an incoming worker, may apply to the local authority to rehouse the worker. The local authority may then seek advice from the agricultural dwelling house advisory committee—I hope noble Lords will forgive me if I refer to those as ADHACs from now on—for its area, and the ADHAC will make a recommendation to the authority to rehouse the worker if it considers the farmer has a genuine agricultural need for the property in question. The system, as my noble friend Lord Radnor said, has worked very well and is much appreciated by both sides of the agricultural industry. We have decided that it should continue to be available under the new regime of assured agricultural occupancies under this Bill, and this too has been welcomed.

Since local authorities on the whole rehouse agricultural workers from their own stock, I believe there has been concern as to what might happen if a local authority were to transfer all its stock to another owner. Would it then be able to fulfil its obligations towards agricultural tenants under the Rent (Agriculture) Act and under our Bill, as various noble Lords have asked?

The answer is that the local authority's duties to displaced agricultural workers are not dissimilar to its responsibilities under the homelessness legislation. When a local authority seeks approval from the Secretary of State to a transfer of its stock, it will need to prove to him that it has made arrangements, probably with the new landlord, to fulfil its statutory functions. The Secretary of State would not allow a transfer if he thought that a new landlord, or other bodies, could not rehouse agricultural workers as necessary in accordance with this legislation.

My noble friend Lord Stanley raised the point of a local authority fulfilling its obligation. I can only re-emphasise that by saying that it would be wrong to make local authorities provide housing in every case. The phrase "best endeavours" enables the local authority to use other agencies as well. This might need to be tested in the courts, but if the local authority had not found accommodation, the court might not find that it had fulfilled its best endeavours as laid down in the Bill.

Furthermore the noble Lord, Lord Carter, felt that the relationship of ADHACs should be put on the face of the Bill. It is already on the face of the Bill in Clause 26(1)(a) and (b), which cross-relates the provisions in the Rent (Agriculture) Act with assured tenancies in the Bill.

Finally, the noble Lord, Lord Ross, was concerned about negotiations with regard to new landlords. The duties of local authorities under the Rent (Agriculture) Act and this Bill are certainly being discussed with prospective landlords.

Lord Carter

It was not the role of the ADHAC that I wanted on the face of the Bill but the responsibility of the Secretary of State to ensure that the duty was carried out. Under Clause 123 the Secretary of State can taken into account any matters which he regards as relevant and we wonder whether that should not be spelt out. The matter which is relevant is the rehousing of agricultural workers.

Lord Hesketh

I am sure that the noble Lord, Lord Carter, will understand when I say that I cannot go any further than my honourable friend in another place and the letter which the noble Lord so eloquently quoted to the Committee earlier.

Lord Stanley of Alderley

I thank the Committee for the interest it has shown in this debate. I should like to comment on a few matters raised by my noble friend on the Front Bench. He said that the position of the agricultural worker was not dissimilar to that of the homeless. That is the point I am trying to make. It is dissimilar. In the case of the homeless there is a duty. In the case of the farmworker it is not a duty, and I shall explain exactly why I am worried about that duty having been weakened.

My noble friend went on to say that the position might have to be tested in the courts. That is just what I thought that the Committee was here for—to make sure that as little as possible is tested in the courts. That is what I am trying to do—otherwise it would have made my noble friend Lord Renton richer at an earlier stage!

The problem once again revolves round the words "best endeavours". I am pleased that my noble friend Lord Caithness is here because I suspect that he has heard this phrase before in past life. He has faith in the words, perhaps because they have worked in the past. But now the Government have moved the goalposts and I feel that I must alter the shot, and so must they.

I must ask my noble friend when he is on the beach this summer to read Shaw's Guide to the Rent (Agriculture) Act, 1976 by Mr. Hugh Rossi, published in 1977, pages 82 to 84. In that publication the words "best endeavours" are described. Quoted against them, among others, are two conflicting judgments. I am concerned most by the paragraph which states that because the Government are cutting back on the resources available to the local authority, the ability—indeed, the legal need—for the local authority to rehouse becomes much less. I believe that the duty becomes minimal and that worries me.

I realise that under Clause 123 it can be argued that the Secretary of State must ensure that before all the housing is disposed of those facts must be taken into account. However, looking carefully at the clause I do not believe that that is spelt out at all. As I said earlier, the clause refers to Sections 32 and 34 of the Housing Act 1985 which relate only to the terms and tenancies, not to the need to rehouse.

I hope that my noble friend will look at the matter. If he cannot accept the statutory need—I understand the problem which means that he may not wish to do so—I believe that we should look at Clause 123 in order to clarify the matter and to ensure that local authorities and the Secretary of State understand the need.

I do not believe that my noble friend replied to my query about Case 16. Perhaps he would rather do so at another stage—unless he wishes to do so now. No, he does not. I shall therefore have to raise the issue on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 agreed to.

Lord Hesketh

I suggest that this is a good time to break for dinner. I beg to move that the House do now resume.

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

House resumed.