I beg to move Amendment No. 40, in page 14, line 1, to leave out subsections (1) and (2) and to insert:
(1) In determining for the purposes of this Act what rent is or would be a fair rent under a regulated tenancy of a dwelling-house the following provisions shall apply, namely, that a fair rent shall be—
Provided always that the figure ascertained in accordance with paragraphs (a), (b) or (c) of this subsection may be adjusted in order to arrive at a fair rent by taking into account the age, character, locality and state of repair of the dwelling-houses.
I have been informed by the Opposition that they would suggest that with Amendment No. 40 we should take Government Amendments Nos. 41 and 42; Amendment No. 43, in page 14, line 5, leave out "age"; Amendment No. 44, in page 14, line 5, after "character" insert "rateable value"; and Amendment No. 45, in page line, line 6, at end insert:
and to the amenities of the dwelling-house and of the locality".
These Amendments can be taken together if the House as a whole has no objection.
We come now to the Clause in the Bill which is the direction to the rent officer and rent assessment committees as to matters which they shall take into account in determining a fair rent. This is an important Clause, but as it stands at the moment this is left very much to guesswork and not even to estimation or evaluation by the rent officer or the rent assessment committee. This Amendment is a twofold effort, first, to bring more precision to the definition of a fair rent, and, secondly, to see that the fair rent does not deter those who otherwise would be willing to supply houses and flats to let.
In the Clause as it stands, in subsection (1) rent officers and rent assessment committess are directed to take into account all the circumstances and, in particular,
to the age, character and locality of the dwelling-house and to its state of repair".
That is the first job, to look at all the circumstances. It does not indicate to them what they should do when they have looked at all the circumstances and how they should value them. They are left with the assumption to make in subsection (2)
that the number of persons seeking to become tenants of similar dwelling-houses in the locality on the terms (other than those relating to rent) a the regulated tenancy is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms.
That is an extremely difficult assumption, certainly for a layman, as the rent officer will be, to make in assessing the rent of a property.
Under the Bill as it stands the rent officer would determine the rent by guesswork and would be little guided by any facts on valuation. The leader in The Times of 29th June has already been mentioned. I quote one paragraph which is very much in point on the argument I wish to put before the House on this Amendment. The leader writer says:
The two points at which the legislation is in danger of breaking down are the definition of 'fair rent' and the administrative machinery for arriving at it. Fair rent is defined without reference to any actual or ascertainable rental or value. This weightlessness of the concept might be excusable if it did not also contain a logical absurdity: it must be assumed for the purpose of fixing a fair rent that the number of people seeking dwellings of the kind in the locality is not substantially greater than the number of such dwellings available for letting. But an indispensable term in these supply-and-demand equations is the price. No meaning attaches to any assumption that the supply and demand of housing are in balance which ignores the price at which the balance is struck.
Faced with an uninterpretable brief, the officials and tribunals responsible for fixing fair rents will be forced to exercise a wise discretion.
In this Amendment I have endeavoured to set out three broad factors which should have the attention of the rent officer and the rent assessment committees. They are set out in paragraphs (a), (b) and (c) They are, first, an agreement as to rent between the parties, secondly, if that does not apply and it is a new building or a comparatively new building, the cost of providing that building, and, if that does not apply—if we are dealing with an older building—then the cost of that building; in other words, as I have expressed it in the Amendment, the compulsory purchase price if it were subject to compulsory purchase.
There is the proviso as a safety valve which deals with the point to which the rent officer is bidden to give attention by the Clause as it stands in the Bill—
the age, character and locality"—
and so on. They come in only as a safety valve. Subject to that, surely the first thing we should say when estimating a fair rent is, what do the parties agree between themselves? If the parties agree on a rent, why should we appoint a rent officer to be a sort of busybody between the parties, increase the work of the rent officer and thereafter of the rent assessment committees, by making them act in a sort of grandmotherly position to the parties?
Why should they say, "No matter what you have agreed as rent between yourselves we do not think it is a proper rent. No tenant should pay this rent and no landlord should receive it. Therefore, we shall register some different rent altogether"? If we set aside that sort of rule, which would apply if the Bill remained as it is, we would say that the rent agreed between the tenant and the landlord shall be the rent recoverable which would remain as the registered rent for a period of three years subject to the proviso which appears in the Schedule on page 32, on the ground that the circumstances have changed. Then a new rent could be registered.
If the parties are unable to reach agreement, my proposal in the Amendment is that the rent should be based on a capital value, a calculation of rent from the cost of providing the house or flat to let. Here I come to the second purpose of the Amendment, that the fixing of fair rents under the Bill should not be done in a manner which would deter those who would be willing to supply houses and flats to let. We have already seen an example in the newspapers in the last day or two of a large developing company being frightened by this Clause, frightened that it might have the effect of so reducing the company's returns from its property that it would not be worth while providing houses and flats in future.
I am interested that the hon. Member should make that point, because many of us think that a stage has been reached in the exploitation of property at which many development companies need scaring by action in this House.
If the hon. Member catches your eye, Mr. Deputy-Speaker, perhaps he would like to make a speech on that point and name the companies to which he refers.
The figures I have put in this Amendment suggest a reasonable return from investment in property. The Milner Holland Report proved, if it proved anything, that it is absolutely necessary if we are to solve the housing problem to have the assistance of the private developer and private holder of property to let. It is quite impossible to throw the whole burden on to local authorities or new town corporations for the housing of the people who wish to live in houses which they can rent. We shall never succeed in providing those houses unless we can attract the private developer into holding property to let to a far greater extent than he does at present.
Paragraph (b) of the Amendment deals with dwelling-houses which have been provided in the last five years. This was intended to apply to new buildings providing homes and to judge what would be the proper return from those, to calculate the cost of providing them in cases where if they were built in the last five years there is probably still good evidence of the actual cost of the provision of the building, and to say that the owner should be entitled to a 10 per cent. return on his money. It is arguable whether a margin either side of 10 per cent. is needed. I should have thought that 10 per cent. is not only a fair return for someone who builds property and provides it for letting in this way. Tenants would also regard it as a fair basis for rent.
Paragraph (c) deals with properties which are more than five years old. No doubt the evidence of the cost of providing the buildings is no longer available and, therefore, some estimate must be made. I suggest that the basis on which the capital value should be estimated should be the same basis as that on which a district valuer estimates the value for the purpose of compulsory purchase, assuming that it is not one of those cases where the property can be acquired at site value. The district valuer is an experienced person who can estimate the capital value of the dwelling. I have put the figure of 9 per cent. return on that.
It is arguable that the man who provides an older house to let is entitled to a greater return on his money than the man who provides a new house, because the maintenance costs in the first case will be greater. I have deliberately put it at 10 per cent. for the new house and 9 per cent. for the old house to encourage developers to come into the business again and provide new houses to let.
This may be an inelegant Amendment, but it is an effort to provide some facts on which the rent officer can base his estimate. Without this, one can only be very anxious about how the different rent officers and different rent committees will interpret the Clause. Unless there is some basis of fact of this kind on which they can work, there will be a variety of decisions throughout the country.
I hope that the Minister will treat this Amendment sympathetically. It would help in the implementation of the Measure. I am even more convinced that he should treat it sympathetically having heard his speech on a previous Clause. It may be that no guarantee can be given that there will be official valuers. If the matter is to be left to some extent to laymen, although they may have a good knowledge of property and property valuation, they should be given more specific instructions as to how to arrive at the value than appear in the Clause as it stands. Unless they are given more specific instructions, there will be so many anomalies that the system will break down, because of the disruption and ill feeling that will be bred.
I am not satisfied that the figures mentioned in the Amendment are necessarily right. I am satisfied that the main aim of having something more specific to guide rent officers and rent assessment committees is absolutely right. As I tried to make clear in an earlier intervention which was not taken too kindly, it is important that there should be a nation-wide relationship between the values arrived at. If some committees are to have the benefit of professional advisers whereas other committees will have experienced, though not professional, people on them, different values will be set and chaos will be created.
I would support the Amendment, but I hope that, if it is acceptable to the Government, the Minister will give a little more thought to the figures. If a landlord and a tenant can mutually agree as to what is right, that should be accepted over and above everything else, particularly as a tenant would agree in the knowledge that he had the protection of the Measure behind him. If it is mutually agreed it should be accepted.
As to new houses, my hon. Friend the Member for Crosby (Mr. Graham Page) is absolutely right. I have some knowledge of the building industry and the property industry generally. It has provided many houses for letting over the last 50 years, but it has now reached a stage where it has no confidence in investing in property to let. If the needs of the house hungry are to be met, the central Government, local authorities and private developers must work together. If the private developer is to make his contribution to providing houses to let at a rent which is fair, before he starts on his development he must know what return he can expect. Not only does he want to know this for business reasons. Usually, he must get finance; he must go to a bank or a finance house. Before they will consider lending him money to get on with the development, he must establish that the investment will result in a return which will enable him to pay the interest and repay the loan.
If it was not possible to know what rent could be obtained, which is what would happen under the Clause as it stands, so that it would not be possible to tell what return would result from the investment, there would be no ground for submitting the scheme to a bank or to a finance house. Thus the development could not even be considered, much less started.
Ten per cent. is the figure put into the Amendment. This is what is considered to be the fair return on property such as offices and some types of shops, where there is not the expense of internal fittings and plumbing which is applicable in the case of houses. Ten per cent. is generally acceptable in the case of offices and shops, where there is a good floor space and the certainty of stronger tenants. I doubt whether 10 per cent. is a sufficient return in the case of private lettings to ordinary individuals, because the cost of extra plumbing, repairs and maintenance is much higher. Although I would accept 10 per cent. if it were acceptable to the Treasury Bench in place of the Clause as it stands, I do not think that the figure is generous.
Nor do I altogether accept a 9 per cent. return on older houses. It would not be fair to say that it would have to be on the basis of the district valuer's report on a compulsory purchase basis and then be 9 per cent. If the valuation put on older property was the market value in the area, I think that 10 per cent., the same as that applicable in the case of new houses, would be fairer.
I said two minutes ago in a rather presumptuous way that I claimed to have some knowledge over a good number of years of things connected with property and letting. I assure the Minister that, in terms of implementing what I think he has in mind, he would be doing the job very much better and would be more likely to get the desired results if he gave more precise instructions than appear in the Bill at present. I do not mind whether he chose the figures named in the Amendment or other figures which appear to him and his advisers to be more appropriate.
I beg the Minister to amend the Bill to make it more precise than it stands at present.
I have listened carefully to the arguments which have been advanced in support of the Amendment. I appreciate the purpose of the Amendment, but I do not think that it complies with what it is desired to do. The idea of an agreement between a landlord and a tenant has been very carefully examined for many years. The purpose of the Rent Acts was to avoid any injustice that might arise from an agreement between a landlord and a tenant where the tenant, in consequence of the plight, in which he found himself, was unable to avoid entering into an agreement to pay an exorbitant rent.
That has been the case since 1915, and the trouble is that members of the Opposition party have still not awakened to the fact that advantage has been taken of tenants who have been induced or compelled to sign agreements which afterwards they have had to go to a court to alter.
Does the hon. Gentleman not recognise the difference between a tenant entering into an agreement to pay a rent when there is no statutory protection to fall back on, and entering into an agreement with the owner of a property knowing that if an exorbitant price is put on it he has the statutory protection to fall back upon?
The Amendment says in subsection (1,a):
(1) In determining for the purposes of this Act what rent is or would be a fair rent under a regulated tenancy of a dwelling-house the following provisions shall apply, namely, that a fair rent shall be—
I do not understand the intervention of the right hon. Gentleman. It means that if a tenant and a landlord agree to a rent, that shall be the rent. That is sheer nonsense, because for years we have recognised that to be the position. In spite of all the attacks of the Conservative Party attempting to destroy the Rent Acts, which they almost effectively did by the 1957 Act, the fact remains that landlords took advantage of tenants, and that is why the original Act said:
(a) the rent agreed by the tenant and the landlord to be payable".
Any agreement to the contrary not withstanding, the following provisions shall apply …
As a result, people were protected from exorbitant rentals in that they had an opportunity, even if they had agreed that a rent should be paid, to go to the courts and tribunals to have it decided whether
or not that was a wrong rent in the circumstances.
That has been at the back of the whole of the rent legislation for years, and it is because the Opposition have never wanted to protect a tenant by virtue of these Acts that they have sought every possible opportunity of wrecking them. That is why we now have to come with a new Act, the Rent Act of 1957 having done such terrible damage.
I would like the House to realise that we were told at the time of the 1957 Act that it was no longer necessary to have protection because the market was open and there were plenty of houses. As a result, the controls were removed. But what is the true position? It is that there are not plenty of houses and people have to agree to pay higher rents, and rely upon the remnants of the Rent Acts to protect them against exorbitant rents.
The first subsection of the Amendment strikes at the whole intention and is dead against what the country wants and what the country knows to be absolutely essential for the protection of tenants because of the scarcity of accommodation. We say on this side that a rental should be fixed at such a level as will not take into consideration the scarcity of housing. That is the only method by which you can arrive at a rent which is a reasonable and proper rental; otherwise, rents can soar to any height.
The hon. Gentleman was talking about rents being fixed at a certain level, but what is to happen in an area where accommodation is really needed if people are compelled to pay enormous prices for sites, entirely out of reason? Will the hon. Gentleman or his party protect the country against that kind of exorbitant price? What does he intend to do about it? How will he fit in the needs of the people with his outlook and that of his party in respect of the continually rising price of land?
He is not saying that at all. The cost of the site has to be taken into consideration as well. I see no reason why we should not come to the conclusion that it is proper and reasonable to charge a person a rent which is consistent with what would be chargeable if there were not a shortage existing in certain areas. When a person buys or erects a property, he should be able to take that into consideration.
I appeal to the House to understand that the trouble is that there is not sufficient accommodation. People are being charged exorbitant prices, and one cannot depend upon an agreement between a landlord and a tenant in that respect.
I was amazed to hear the kind of argument about the result of setting up tribunals for furnished lettings. The impression which has been given to the House is quite wrong. I use it in this particular context because here will be a question where tribunals will have a say in the matter. The fact is that the tribunals which were set up did not in the vast majority of cases comprise professional people. Very many of them were laymen, and they did their job because they themselves knew values in their own areas and consequently did not have to depend entirely on professional people, though obviously some professional people were there and were resorted to in certain cases that came before the tribunal. However, these tribunals which are to be set up for the purpose of dealing with the question of fair rents, whether they be individual rent officers or appeal tribunals, will be able to deal with the matter and satisfy people that at least their case is being attended to and that they are not being put to an exorbitant charge.
I should like to draw the Minister's attention to Amendment No. 44 which the Chair kindly allowed to be discussed with this one. I hope that the Minister may sympathetically consider the suggestion in it that among the items to be taken into consideration by the rent officer shall be the rateable value. We have a situation in which there are unqualified rent officers who are being asked to disregard the only criterion arrived at by a qualified valuer, namely the rateable value. On Second Reading the Minister was at great pains to say that he had considered carefully fixing a rent related to the rateable value but had rejected it because in many cases the rateable value was perhaps not fairly fixed.
This does not seem to me to be a reason for disregarding this one qualified criterion entirely. It seems to me that where errors have been found in the fixing of rateable values this is an opportunity for altering them as a result of review. I ask the Minister to consider seriously whether or not, without attaching a fixed relationship to rateable value, it would be right that rateable value should be among the things considered by the rent officer.
The House will not expect a long and detailed speech at this stage in our proceedings, because a good many of us have discussed this matter for many hours already and the basic principles have been argued out thoroughly among us. Perhaps I might say a word or two first about my own Amendment. At the request of hon. Members on both sides of the House I have decided to insert words to make clear that the personal circumstances of the tenant and the landlord are not to be considered. I think that my wording is better than the wording of Amendment No. 42 which has exactly the same purpose. I think that ours is slightly superior.
I appreciate very much the courtesy of hon. Members who have not spoken to their Amendments, assuming that I understand them, and I hope to treat each Amendment fairly on its merits. I start first with Amendment No. 40 because it is a response to a challenge which I made in Committee. I said then that we had not had from the Opposition what they felt was the real alternative to Clause 22. I shall not criticise the Amendment on legalistic grounds. In opposition one is not always in a position to draft Amendments satisfactorily. I will take the substance of the Amendment assuming that if need be it could then be taken by the Parliamentary draftsmen and processed.
It is extremely valuable to have this Amendment on record, because it makes perfectly clear the profound division between the two sides of the House on the nature of rent regulation. I laid it down that the kind of definition of a fair rent which I wanted must not, on the one side, be a rigid formula—I will come to rateable value later—as in the 1957 Rent Act and on the other side it must explicitly prevent rents being fixed in terms of scarcity prices.
In a sense Amendment No. 40 deliberately and consciously violates my principle. Once the formula of 10 per cent. and 9 per cent. is brought in, however one works it, it has the grave disadvantage that far from eliminating scarcity it ensures that rents will be fixed in relation to scarcity prices. Rents will rise with prices. I am grateful to my hon. Friend the Member for Leicester, North-West (Sir B. Janner) for pointing this out. I need not go over his argument. It is a legitimate view to hold that one must be allowed a sound return on one's investment, and it is claimed that the best way of calculating the rent is to calculate what the man who invests his money can fairly expect from it. But if one allows that to happen in a place of scarcity value the Amendment means that if a man has invested in land far beyond its value, right at the top of the market, then he is to be allowed a percentage and the rent is to be related directly to scarcity.
The point of Clause 22, as we have defined it, is to forbid assessment committees to relate rent to scarcity in this way. Therefore, we have in these two instances a perfectly clear-cut distinction between the Opposition and the Government. The Opposition are convinced, in terms of sound business, that it is only reasonable that where property has been acquired and built in scarcity circumstances the landlord should have a fair return on his money. I do not say for a moment that if this were implemented it might not well make private building of rented houses a profitable investment once again, but it would be at the cost of permitting rents to rise to levels where it would be ridiculous to talk of rent regulation.
I turn now to Amendment No. 43 which asks me to eliminate the word "age" from the Clause for all the reasons given by the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers). On balance, I will not do it. The Clause has been drafted extremely carefully, and although I cannot give the hon. Lady a specific reason why it makes a tremendous difference to keep the word in, I do not think that it is worth taking it out and I wonder whether she really felt strongly about it.
I come now to Amendment No. 45 and the word "amenities". This is an Amendment which I considered carefully as I promised. I am perfectly clear that "locality" adequately covers all the meanings of "amenities" which a professional valuer or lawyer would need to have in his mind, and by adding the word "amenities" one merely points out how many other words could have been added. I prefer to rely on my professional legal advisers who tell me that there is no doubt that any professional valuer or lawyer or any member of a rent assessment committee reading Clause 22 will know that what is meant by "amenities" must be considered by anybody in assessing a fair rent for the house.
I now come to Amendment No. 44. I was a little disappointed with the hon. Member for Basingstoke (Mr. Mitchell) because either I talked very obscurely in Committee or he rather wilfully misunderstood me.
I must have said two or three times in Committee that there was no question of disregarding rateable value and that every sensible rent assessment committee and rent officer will normally regard rateable value as one of the obvious yardsticks by which to measure the fair rent of the house.
I am puzzled. The right hon. Gentleman specifies the things which are to be taken into consideration and therefore one naturally assumes that the things which are not listed are not taken into consideration.
I apologise to others for the odious repetition of what I have said on three occasions in Committee. The issue is not whether rateable value should be taken into account. I would reply to the hon. Member that rateable value, in one sense, is a numerical reflection of the objective factors listed in this Clause. Rateable value is the money value we give to the size, character and objective facts of a house and property. Rateable value is a way of assessing or calculating in money or poundage terms the objective facts.
Therefore, when I say that someone must study the objective factors listed in subsection (1), it is perfectly clear that one of the factors which he will study is, so to speak, what the valuation officer's estimate was of all those objective factors which he is set to take in to account. I explained to the Committee at some length why, although, of course, it is true that any sensible rent assessment committee or rent officer will normally take rateable value into account and will be expected to do so, I had nevertheless decided not to write a reference to rateable value into the Bill.
There are a great many other factors which one could have written into the Bill. There is a particular difficulty in writing rateable value into the Bill which comes from the fact—this was what Milner Holland discovered about London—that in a really large minority of cases the rateable value is a positively misleading factor in relation to a house. Unfortunately, under the new valuations, it is reckoned that in some areas more than a quarter of the rateable values are unfair. One of the strange facts is that, though they are unfair, not all people have appealed against them. No doubt, some people may be studying our debates, and I sometimes wonder whether we shall stimulate an increasing number of appeals. But what I state is a fact.
I have read the Milner Holland Report, the special study of London, and there is little doubt that in a large number of cases, a substantial minority of cases, one can find the same rateable values for houses which are not, in fact, identical. For example, two houses in a street may look identical from the outside, but one has a bathroom and one does not. The valuer has stood at the end of the street and said to himself, "They all look roughly the same. I shall block them together". No one criticises the valuers for doing this. They had to prepare 14 million valuations quickly for the purpose of rating assessment. They did not, therefore, go into each house. They did not do what our rent officers will have to do in each case, that is, go in and study the actual structure and specific detail of the house. They could not make what I call an individual assessment of a house because they did not have time. They could not possibly have done so and kept up with the job of providing a basis for local taxation.
As a result, there are differences, although the situation varies from district to district. Broadly speaking, in the Provinces rateable value is a far more reliable test than it is in parts of London, although even in the provinces there is a good deal of variation. I am told that in Birmingham up to 80 per cent. of houses, roughly speaking, can be said to have a good rough and ready relationship between rateable value and actual rentable value. But it nevertheless remains true that in 20, 25 or 30 per cent. of the cases it is unfair.
If we write rateable value into the Clause, the danger is that, if it is disregarded, it can then become a cause of legal action, and my legal advisers assured me that the one thing we did not want to do was write something into the Clause in such a way that the person who has the money, that is, on the whole, the landlord, and who can pay for legal advice would be able to make a legal case for appealing against the decision of the rent assessment committee. I think that we all agreed that the rent assessment committee should be the final court of appeal on the rent, that is, apart from any legal issues. We can never stop someone appealing on a strictly legal issue. What we want to avoid is making what should be an issue of substance, that is, rateable value, a legalistic issue or an issue which transforms the rent assessment into a forensic argument in the courts.
I spelt this out at some length, and I am sorry to repeat it again. It is of crucial importance that it be understood, and understood widely outside, that in not writing rateable value in here one is not implying or suggesting that it should not normally be taken into consideration. But, after it has been taken into consideration, a rent officer or rent assessment committee will be perfectly entitled, having considered it, to say, "This is one of those instances where rateable value does not work as a yardstick and it should be disregarded". It is safer to enable them to do that, surely, than to write into the Bill an instruction that it must be taken into account.
The right hon. Gentleman made the point about litigation in Committee, and I asked him then how the phrase "all the circumstances" could not be used by a litigant who might say, "As this phrase is included in the Clause and the rent assessment committee has not taken rateable value into account, that is the ground for action".
I took that to my legal advisers, and they simply told me that they did not think it likely that it would be a substantial ground for taking action under the Clause. One of the difficulties for a layman in this kind of phraseology is that it is most important that one should use every word in terms of our rent legislation, using words in the sense and with the specific meaning to which people have been accustomed during the past 30 years. Broadly speaking, this Clause as drafted is a kind of traditional Clause in the sense that each word is carefully used in the regular traditional legal sense which those who have interpreted our rent Acts over 30 years understand to have specific meaning.
For these reasons, we have decided to leave out any reference to rateable value. As I say, this does not mean that normally speaking, it should not be considered.
I am sure that the right hon. Gentleman realises what he is saying, that the structure of the system will be such that rent assessment committees and rent officers will set up a new rating system and pattern which may well be used in other circumstances for valuation purposes.
They will not set up a rating system. They certainly will set up a system of rents, and in some cases the rents may be strangely out of relation with any normal numerical or mathematical link with gross value for rating. Broadly speaking, there ought to be such a relationship. It would have been far more convenient to be able to find a mathematical relationship between gross value and rent. We could have dispensed with the whole machinery of tribunals in that case. I should have preferred to do that, but it struck me very much in Committee that, as we came through this, all hon. Members, apart from one or two of my hon. Friends who are not here today—and even they were a bit shaken by the evidence, I think—grew increasingly to feel that, although rateable value should be taken into account, a simple link to, say, once gross value or 1.3 times gross value would not be a satisfactory solution. I got the impression that there was really no one in the end, except, perhaps, one or two of my hon. Friends, who did not come to that view.
Once we give up the simple link, there is something to be said for the view that the Clause should be made as concise as possible. I know that right hon. Gentlemen opposite like to say that it is a vague Clause, but it is not all that vague. The opposition to the Clause is that it is extremely precise in certain respects. One can see how precise it is by comparing it with the alternative now put before us. The Opposition's alternative would permit the putting up of rents to scarcity levels. Our Clause forbids the valuer to consider scarcity prices.
I come now to the last point. How can this injunction be carried out? No doubt, I should be asked that by a valuer. My reply is that the Clause was worked out for my by Mr. Pilcher, who is, I think, a past-president of the Royal Institution of Chartered Surveyors and who was a member of the Milner Holland Committee. He was largely personally responsible for this Clause, so that there is at least one valuer who thinks that it makes sense. I was deeply impressed by the fact that he believes that this is the best Clause that we can frame.
That is a new advance. It is not quite the argument we have had on the Clause before, and it is not what the hon. Gentleman's own Front Bench would say about it. There are different arguments, of course.
There will be disagreements about it. There are those who think that we must keep it flexible and leave it to the tribunal, having given the instruction, "Value objectively; disregard scarcity, but look at everything else". I am convinced that we need clear-cut decisions, with expert opinion on the panels which make them.
I repeat that the decisions of the Rent Assessment Committees will create the precedents for all future fixing of rents. If, as I expect, the London Rent Assessment Committee is the first to be created and is running for some time before the others get going, then its big decisions will be of the greatest importance in setting the tone for all future decisions afterwards.
It is my conviction that the form of words we have chosen here is the most precise that we need and that everyone who is an expert will know what is needed. These people will know very well what scarcity is and what the difference is between the price one pays for a house in a non-scarcity area and the price one pays for an identical house in a scarcity area. They can tell the difference because they are professionals. Therefore, there is little doubt that the Clause is understandable.
I do not deny that the Clause is radical. It forbids rents to be fixed at scarcity level. It may well lay down, in certain instances, that a rent must be reduced to a point where there is no return on the money if the landlord obtained the house at an inflated price—which I do not think he has any right to do—and where he will simply lose money at that level.
If we are to regulate rents to protect tenants from exploitation, we must be prepared to accept that, in certain circumstances, this may mean forcing a man who has bought at the top of the market to accept a loss on the rent of the house. There is no concealment of it. That is what the second part of the Clause may imply in certain cases, just as it might, as I had to tell my hon. Friends last night, mean that people who have been controlled tenants for some time must accept increases in rents more than they like.
Fixing rents must mean that some people will get less and that others will have to pay more than they like. No system will escape that. I ask the House to judge the Clause by the test I put. Apparently we all assume that there is no simple mathematical relationship. Once that is accepted and we have some system of tribunals then subjective personal judgment has to come into it. We have to have people to do the job of setting the rents fairly. Assuming that we can get good and intelligent people on these committees, we must ask ourselves what kind of framework they should have in which they can work without being embarrassed or having their work made difficult by being overloaded with things that may bring legal trouble in the courts.
By that judgment, I believe that our formula has passed some very severe tests. We were told in The Times, rather abruptly, that we were sometimes silly or idiotic and that all we wanted was a simple definition. I waited some weeks for The Times to give a simple definition. It is very good at writing leading articles but it has never put a sentence in to suggest what it says should be so easy to do—which is to write a better definition than this one.
I am glad that I have enticed out of the Opposition the facts of their proposal. They are really telling the country what the difference is between the Opposition and the Government about fixing rents. The Opposition believe that rents should go high in scarcity periods and be linked to scarcity. The Amendment refers to
… ten per cent. of the estimated cost of the provision of the said dwelling-house …".
They therefore want to link rents to a fair return on his money to a landlord who may have bought at the top of the market. That would mean linking rents to scarcity levels in certain cases.
We are talking a little provincially if we talk about a land value of one-seventh. It is not so in London but there is scarcity value there, as there is elsewhere, of course.
I want to respond to the brevity of the Opposition on this issue. This is a tremendous issue. It is the issue of the rôle of rent officers and how we define fair rent. It is tremendous in the sense that, if we are right, we shall have made a tremendous break-through and we shall be able to break down, I hope, the bad relationships between landlord and tenant and provide what we have all been waiting for—a genuine sense that fair rents can be achieved.
If the Opposition are right, they will know in a few months because they prophesy certain disaster and "schemozzle". We shall all be able to know in a few weeks whether the method we have chosen is right. The longer I have listened to the discussion the more convinced I have become that we have found the correct formula and also that we shall find that, on the basis of that formula, those concerned will be able to fix fair rents.
The House will not think me discourteous to the right hon. Gentleman and will be somewhat relieved if I do not reply to him at equal length. That is not because I disagree with him about the importance of the matter raised by this series of Amendments, for it amounts, in substance although not strictly in form, to the total issue of the Clause itself.
The Amendments are, of course, fundamental to the Bill. As The Times leading article, which has been quoted twice today, made clear, this is one of the two major issues on the workability of the Bill. I would say, in passing, that, to my knowledge, I have never used the word "schemozzle" as an indication of what might happen. No doubt that is a Wykehamist expression which would not be for me to use.
If I do not, however, reply at equal length, it is for the reason that we have made clear our views again and again on the issue raised by the Clause and I doubt very much whether much useful purpose will be served by restating it. But I will quickly refer to one or two points raised by the right hon. Gentleman.
I am glad that he has put down Amendment No. 41. He will recall that I raised on Second Reading the issue whether the term "all the circumstances" in the Clause included the personal circumstances of either landlord or tenant. The Secretary of State for Scotland, whose absence we regret and fully understand, misunderstood me and thought I was urging that personal circumstances should be taken into account. I made it clear that this was not so. I was extremely doubtful as a matter of construction whether a court, tribunal or rent officer might not take the view that "all the circumstances" did include the circumstances of the landlord and tenant. I am glad, from the point of view of obtaining proper certainty of drafting, that the right hon. Gentleman has decided to prevent such doubt arising by Amendment No. 41, which we welcome.
On the main issue raised by our own Amendments, it is unnecessary, as I have said, to restate our position. It is clear and on record. We feel that, particularly since the Clause is to be interpreted in the first instance by people without professional qualifications, it is too imprecise and lacks any firm guiding light or yardstick.
The purpose of Amendment No. 40 is to provide some firm basis for the calculations which the rent officers and rent assessment committees will have to make. It does not seek to give them something which they must apply automatically and without taking account of the other relevant factors because, as I do not think has yet been mentioned, the proviso says:
Provided always that the figure ascertained in accordance with paragraphs (a), (b) and (c) of this subsection may be adjusted in order to arrive at a fair rent by taking into account the age, character, locality and state of repair of the dwelling-houses.
There is, therefore, some exercise of discretion, but it is an exercise of discretion which is based upon views formed on certain firm criteria. This seems to be a better and more effective basis for these difficult decisions than is the Clause.
I was interested in what the right hon. Gentleman said about the parentage of the Clause. Perhaps it was an unusual disclosure for a Minister to make. The answer is that though that distinguished valuer may have produced a Clause which any other distinguished valuer might have no difficulty in applying, it is probably particularly difficult for a distinguished valuer to present a Clause which people less professionally instructed would find easy to apply. The mysteries of one profession are not necessarily very clear to those not acquainted with those mysteries.
It was no doubt owing to tiredness as a result of so much debate yesterday, but I should not have said that he drafted the Clause. He put forward the idea of the Clause, of leaving scarcity out, but, of course, he did not do the drafting. I must say that I borrowed the whole concept of the Clause from him.
It is a concept which The Times once described as an economist's concept, but a lawyer's nightmare.
I will be very brief in my comments on the criticisms of our subsection. The right hon. Gentleman spent a good deal of time saying that it would introduce scarcity. There is some truth in what he said about paragraph (b), but applicable only to the land and not to the construction of the house. There is some truth in respect of paragraph (c), because to some extent the district valuer would have to take that into account in deciding what the compulsory purchase price would be. However, it is our common experience that district valuers are apt to take a somewhat restricted view of this aspect of the price.
Almost unwittingly, the right hon. Gentleman brought out one of the big issues which lie between us. He did not think that it was necessary to give to those who provide new houses to rent a fair return on their capital; nor did he think that the man who purchased at a high price should receive any return on his capital if letting the house.
Fair enough. I think that the House fully understands what the right hon. Gentleman says. I wonder whether the House would pause for a moment to reflect on the consequences. It is no use providing that there shall be low rents for those who want them if there are not the houses to rent. Our subsection would give some incentive to people to provide new houses to let. It would do something to restore the willingness of private enterprise to provide houses to let.
The right hon. Gentleman has dealt with the criti- cisms of his paragraphs (b) and (c) and has accepted that there is something in them, but surely he would agree that the hub of his Amendment is in paragraph (a)—the rent agreed by the tenant and landlord—which, inevitably, would mean that, once again, houses would be put to let to the highest bidder.
Unusually for him, the hon. and learned Gentleman is somewhat disingenuous in saying that. Anyone disagreeing with the rent would know what the rest of the provision said and would know that if he did not want to agree to a rent at a particular figure, alternatives would be open to him. Rents would be agreed against that background, which is the significant point.
Against the background of not being compelled to agree to a rent at a level which was excessive, because there would be alternatives provided in paragraphs (b) and (c).
I return to the point I was making and on which I intended to conclude. If something like our proposal were included, there would be a chance of getting people back into the market of providing accommodation to let. There would be a chance to get the man who had bought at a high price to let the house.
I do not know whether the right hon. Gentleman realises that the effect of what he has said is to give an overwhelming inducement to anyone who has acquired a house at that sort of price never to let it but to sell it again. Therefore, the effect of the Clause unamended, as the effect of the Bill as a whole, must be to accelerate the decline in the provision of privately owned accommodation to let. It would be a sorry triumph for the right hon. Gentleman to be able to say, "Look! I have reduced your rents and if only there were houses for you to rent, how cheap they would be!"
As the Minister knows, I have no objection whatever to the principle of his Clause and I should like explicitly to dissociate myself from his accusations against the Opposition. I have always said that scarcity could be disregarded in arriving at the fair rent. The only difference between me and the Minister concerns the formula.
Having listened to the Minister's arguments in Committee and this afternoon, I still maintain that we should have done well to ask the rent assessment committees to take account of the gross rateable value. I have expressed the fear that anomalies will creep into rents in relation to rateable value in different parts of the country, and those fears have been confirmed by our discussion this afternoon.
I am certainly not a Parliamentary draftsman, any more than the writer of the leading article in The Times is, and I do not claim that the wording of my proposal is absolutely perfect, but I think that its principle is much better than the present vague phraseology of subsection (1)—
age, character and locality of the dwelling-house".
I cannot understand why those features were selected.
I pointed out to the Minister in Committee that there might be a Queen Anne house which would have a very much higher potential letting value than one built in 1965. Therefore, there would not be even a statistical relationship between the age of the property and the amount of the fair rent which could be demanded for it. In spite of all the anomalies in our rateable values, at least the Minister would go as far as to say that there was a statistical relationship between rents and gross rateable values.
I agree with the Minister's dislike of the rigidity of Amendment No. 40, but in discussing this matter one would do well to admit that there is no incentive to providing new dwellings for letting at the moment. There has been no such incentive over the last few years when there has been no restriction on rents which could be demanded for new properties erected for private letting. Yet, since the 1957 Rent Act the number of properties available for private letting has fallen by about 4 per cent. per annum. The simple reason has been that landlords of controlled properties who have gained possession have sold them for owner occupation. We would do well to recognise that the Bill will accelerate that process, but I am perfectly willing to admit that and to accept the consequences, which are that we should have a much expanded public housing programme, particularly in areas such as Greater London, where there is much older controlled property.
This afternoon, the Minister said that the London Rent Assessment Committee would probably be established a few weeks in advance of the remainder and would set the tone. I would ask him to reflect on this, because if what he says is true, then the other rent assessment committees, which, he implies, are to follow the lead given by London, will not be able to take account of the locality of the dwelling-house.
I used the word "tone" very carefully. I did not mean that London rents should be a precedent for those in the provinces. They will show how to set about the job and that is why I used the word "tone" and not "precedent"
Then it is only proceedings of the rent assessment committees that the Minister is talking about and not the rents. I am grateful to him for correcting me on that but this led me to think that probably, in many cases, the decisions of the rent officers would be by reference to the pevious fair rents decided on for similar properties. I think that it must be admitted that we would have done well to write into the criteria something about the fair rents of similar properties in the locality.
As I envisage it, what will happen is that the rent officer will assess a fair rental for a three-bedroom, semi-detached house, with a garden 20 feet long and 15 feet wide. When he comes to another similar property he will look this up in his records and say, "That is the rent I arrived at for that property". So there is no need to go back to first principles at all. One is doing the whole thing by reference and one will build up a kind of case law, which it might have been a good idea to make explicit in the Bill, as guidance to rent officers on how they should proceed.
However we may criticise Clause 22, and I have been among the sternest critics of all, I agree with a lot of what The Times said in this connection. I think now we have come to this stage in the Bill when we must express the hope that it will work fairly and that the fears we have expressed will not be too serious, and we must wish the rent officers and the rent assessment committee well in their task.
|Division No. 225.]||AYES||[8.15 p.m.|
|Albu, Austen||Gourlay, Harry||Morris, Alfred (Wythenshawe)|
|Allaun, Frank (Salford, E.)||Greenwood, Rt. Hn. Anthony||Morris, Charles (Openshaw)|
|Allen, Scholefield (Crewe)||Gregory, Arnold||Neal, Harold|
|Armstrong, Ernest||Griffiths, David (Rother Valley)||Newens, Stan|
|Bagier, Gordon A. T.||Griffiths, Will (M'chester, Exchange)||Oakes, Gordon|
|Barnett, Joel||Hale, Leslie||Ogden, Eric|
|Beaney, Alan||Hamilton, James (Bothwell)||Oram, Albert E. (E. Ham, S.)|
|Bellenger, Rt. Hn. F. J.||Hamilton, William (West Fife)||Oswald, Thomas|
|Bence, Cyril||Hamling, William (Woolwich, W.)||Owen, Will|
|Bennett, J. (Glasgow, Bridgeton)||Hannan, William||Padley, Walter|
|Bishop, E. S.||Harper, Joseph||Page, Derek (King's Lynn)|
|Blackburn, F.||Harrison, Walter (Wakefield)||Paget, R. T.|
|Boardman, H.||Healey, Rt. Hn. Denis||Palmer, Arthur|
|Boston, T. G.||Heffer, Eric S.||Parker, John|
|Boyden, James||Henderson, Rt. Hn. Arthur||Parkin, B. T.|
|Braddock, Mrs. E. M.||Hill, J. (Midlothian)||Pearson, Arthur (Pontypridd)|
|Bradley, Tom||Holman, Percy||Peart, Rt. Hn. Fred|
|Bray, Dr. Jeremy||Hooson, H. E.||Pentland, Norman|
|Broughton, Dr. A. D. D.||Horner, John||Popplewell, Ernest|
|Butler, Herbert (Hackney, C.)||Howarth, Harry (Wellingborough)||Price, J. T. (Westhoughton)|
|Butler, Mrs. Joyce (Wood Green)||Howarth, Robert L. (Bolton, E.)||Pursey, Cmdr. Harry|
|Carter-Jones, Lewis||Howie, W.||Randall, Harry|
|Chapman, Donald||Hoy, James||Rees, Merlyn|
|Coleman, Donald||Hunter, Adam (Dunfermline)||Rhodes, Geoffrey|
|Craddock, George (Bradford, S.)||Hunter, A. E. (Feltham)||Robertson, John (Paisley)|
|Cronin, John||Hynd, H. (Accrington)||Rodgers, William (Stockton)|
|Crossman, Rt. Hn. R. H. S.||Irving, Sydney (Dartford)||Rogers, George (Kensington, N.)|
|Dalyell, Tam||Janner, Sir Barnett||Sheldon, Robert|
|Darling, George||Jenkins, Hugh (Putney)||Short, Mrs. Renée (W'hampton, N. E.)|
|Davies, G. Elfed (Rhondda, E.)||Jenkins, Rt. Hn. Roy (Stechford)||Silkin, S. C. (Camberwell, Dulwich)|
|Davies, Ifor (Gower)||Johnston, Russell (Inverness)||Slater, Mrs. Harriet (Stoke, N.)|
|de Freitas, Sir Geoffrey||Jones, Dan (Burnley)||Slater, Joseph (Sedgefield)|
|Delargy, Hugh||Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)||Small, William|
|Dell, Edmund||Kelley, Richard||Steel, David (Roxburgh)|
|Diamond, Rt. Hn. John||Kenyon, Clifford||Steele, Thomas (Dunbartonshire, W.)|
|Dodds, Norman||Lawson, George||Summerskill, Hn. Dr. Shirley|
|Doig, Peter||Leadbitter, Ted||Taverne, Dick|
|Driberg, Tom||Lever, L. M. (Ardwick)||Thomas, Iorwerth (Rhondda, W.)|
|Duffy, Dr. A. E. P.||Loughlin, Charles||Thornton, Ernest|
|Dunnett, Jack||Lubbock, Eric||Tinn, James|
|Edwards, Rt. Hn. Ness (Caerphilly)||Mabon, Dr. J. Dickson||Tomney, Frank|
|English, Michael||McCann, J.||Urwin, T. W.|
|Ennals, David||MacColl, James||Varley, Eric G.|
|Evans, Albert (Islington, S. W.)||Mclnnes, James||Wainwright, Edwin|
|Finch, Harold (Bedwellty)||McKay, Mrs. Margaret||Warbey, William|
|Fitch, Alan (Wigan)||Mackenzie, Gregor (Rutherglen)||Watkins, Tudor|
|Fletcher, Sir Eric (Islington, E.)||Mackie, George Y. (C'ness & S'land)||Weitzman, David|
|Fletcher, Ted (Darlington)||Mackie, John (Enfield, E.)||Wells, William (Walsall, N.)|
|Fletcher, Raymond (Ilkeston)||McLeavy, Frank||White, Mrs. Eirene|
|Floud, Bernard||Mallalieu, J. P. W. (Huddersfield, E.)||Whitlock, William|
|Foley, Maurice||Manuel, Archie||Williams, Alan (Swansea, W.)|
|Ford, Ben||Mapp, Charles||Williams, W. T. (Warrington)|
|Freeson, Reginald||Mason, Roy||Winterbottom, R. E.|
|Galpern, Sir Myer||Mellish, Robert|
|Garrow, A.||Miller, Dr. M. S.||TELLERS FOR THE AYES:|
|George, Lady Megan Lloyd||Milne, Edward (Blyth)||Mr. Charles Grey and|
|Mr. Brian O'Malley.|
|Alison, Michael (Barkston Ash)||Bennett, Dr. Reginald (Gos & Fhm)||Bullus, Sir Eric|
|Allan, Robert (Paddington, S.)||Biffen, John||Burden, F. A.|
|Allason, James (Hemel Hempstead)||Birch, Rt. Hn. Nigel||Butcher, Sir Herbert|
|Anstruther-Gray, Rt. Hn. Sir W.||Black, Sir Cyril||Carlisle, Mark|
|Astor, John||Bossom, Hn. Clive||Carr, Rt. Hn. Robert|
|Atkins, Humphrey||Box, Donald||Chataway, Christopher|
|Awdry, Daniel||Boyd-Carpenter, Rt. Hn. J.||Clark, William (Nottingham, S.)|
|Balniel, Lord||Braine, Bernard||Cole, Norman|
|Barlow, Sir John||Brewis, John||Cooke, Robert|
|Batsford, Brian||Bromley-Davenport, Lt.-Col. Sir Walter||Corfield, F. V.|
|Beamish, Col. Sir Tufton||Brooke, Rt. Hn. Henry||Costain, A. P.|
|Bell, Ronald||Bruce-Gardyne, J.||Craddock, Sir Beresford (Spelthorne)|
|Bennett, Sir Frederic (Torquay)||Buchanan-Smith, Alick||Crosthwaite-Eyre, Col. Sir Oliver|
|Curran, Charles||Jones, Arthur (Northants, S.)||Price, David (Eastleigh)|
|Dance, James||Joseph, Rt. Hn. Sir Keith||Prior, J. M. L.|
|Davies, Dr. Wyndham (Perry Barr)||King, Evelyn (Dorset, S.)||Ramsden, Rt. Hn. James|
|Dean, Paul||Kitson, Timothy||Redmayne, Rt. Hn. Sir Martin|
|Deedes, Rt. Hn. W. F.||Lambton, Viscount||Ridsdale, Julian|
|Dodds-Parker, Douglas||Lancaster, Col. C. G.||Robson Brown, Sir William|
|Eden, Sir John||Legge-Bourke, Sir Harry||Roots, William|
|Elliot, Capt. Walter (Carshalton)||Lewis, Kenneth (Rutland)||Royle, Anthony|
|Emery, Peter||Litchfield, Capt. John||Scott-Hopkins, James|
|Errington, Sir Eric||Loveys, Walter H.||Sharples, Richard|
|Fletcher-Cooke, Sir John (S'pton)||McAdden, Sir Stephen||Shepherd, William|
|Fraser, Ian (Plymouth, Sutton)||MacArthur, Ian||Sinclair, Sir George|
|Galbraith, Hn. T. G. D.||Maclean, Sir Fitzroy||Smith, Dudley (Br'ntf'd & Chiswick)|
|Gammans, Lady||McMaster, Stanley||Soames, Rt. Hn. Christopher|
|Gibson-Watt, David||Mathew, Robert||Spearman, Sir Alexander|
|Goodhart, Philip||Maude, Angus||Stodart, Anthony|
|Goodhew, Victor||Mawby, Ray||Studholme, Sir Henry|
|Gower, Raymond||Maydon, Lt.-Cmdr. S. L. C.||Taylor, Sir Charles (Eastbourne)|
|Grant, Anthony||Meyer, Sir Anthony||Taylor, Edward M. (G'gow, Cathcart)|
|Gresham Cooke, R.||Mills, Peter (Torrington)||Thatcher, Mrs. Margaret|
|Grieve, Percy||Mills, Stratton (Belfast, N.)||Thompson, Sir Richard (Croydon, S.)|
|Griffiths, Eldon (Bury St. Edmunds)||Turton, Rt. Hn. R. H.|
|Griffiths, Peter (Smethwick)||Miscampbell, Norman||Vaughan-Morgan, Rt. Hn. Sir John|
|Harris, Frederic (Croydon, N. W.)||Mitchell, David||Walker, Peter (Worcester)|
|Harris, Reader (Heston)||More, Jasper||Ward, Dame Irene|
|Harrison, Brian (Maldon)||Morrison, Charles (Devizes)||Weatherill, Bernard|
|Harrison, Col. Sir Harwood (Eye)||Munro-Lucas-Tooth, Sir Hugh||Wells, John (Maidstone)|
|Hastings, Stephen||Murton, Oscar||Whitelaw, William|
|Heald, Rt. Hn. Sir Lionel||Neave, Airey||Wills, Sir Gerald (Bridgwater)|
|Hendry, Forbes||Nicholls, Sir Harmar||Wilson, Geoffrey (Truro)|
|Higgins, Terence L.||Nugent, Rt. Hn. Sir Richard||Wise, A. R.|
|Hill, J. E. B. (S. Norfolk)||Onslow, Cranley||Wolrige-Gordon, Patrick|
|Hutchison, Michael Clark||Page, R. Graham (Crosby)||Woodhouse, Hn. Christopher|
|Iremonger, T. L.||Pearson, Sir Frank (Clitheroe)|
|Irvine, Bryant Godman (Rye)||Peyton, John||TELLERS FOR THE NOES:|
|Jennings, J. C.||Powell, Rt. Hn. J. Enoch||Mr. Francis Pym and|
|Mr. R. W. Elliott|