Merchant Shipping Bill – in the House of Commons at 12:00 am on 30 March 1979.

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2.25 p.m.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

I beg to move amendment No. 1, in page 17, line 43, leave out 'one twenty-fifth' and insert 'one-fiftieth3/10/2007'.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

With this we may take the following amendments:

No. 2, in page 17, line 44, at end insert: 'or twenty-five times the amount of the annual rent.'.

No. 3, in page 18, line 19, leave out from ' tenant-at-will' to end of line 23 and insert: 'shall pay his own expenses and the landlord shall pay his own expenses in conveying the interest to the land to the tenant-at-will and the landlord shall bear responsibility for providing any plan or drawing of the tenancy land necesary for the conveyance.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

These are three associated amendments. I emphasise to the Lord Advocate, who is here to reply on behalf of the Government, that these three amendments are alternative to each other in terms of dealing with the question of compensation in obtaining title for tenants-at-will. They are alternatives and not cumulative provisions to be taken together.

Photo of Mr Ronald Murray Mr Ronald Murray , Edinburgh Leith

That is very helpful to me. I had not been aware of that.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

That may well mean that the Lord Advocate will be reconsidering his response today, since he was not aware of the position until now.

I first raised this matter when the Bill went to the Scottish Grand Committee on 15 March. It relates to tenants-at-will in the North-East of Scotland who are in a peculiar type of legal limbo. They are neither the feudal proprietors of the land nor tenants in the accepted sense of the word. They are people who have the right to the property built on the land—that is, the house built on the land—but who have no right to the land itself.

This form of tenure has existed in the North-East for a considerable period. Tenure was given mainly to build up the fishing villages in the North-East by landlords who wished to increase the size of the villages. The tenant-at-will pays an annual rental for the land on which the premises are sited and he himself has title to the house situated on that land.

This system worked quite well for a long time, in that the tenant was able to sell the House to someone else or transfer it to his heirs without any incumbrance or difficulty, rather in the same way as a motor car can be sold. A notice is simply sent to the landlord and an entry is made in the estate records that the tenant-at-will on a particular location was Mr. A as opposed to Mr. B. The system worked quite well until inflation increased land values and it became more difficult for tenants-at-will to find finance to buy such houses. It also meant that, because they did not have a feudal title, they were unable to obtain improvement grants from the local authority because they could not exhibit a valid title. During the five years that I have been in this place, I have asked that tenants-at-will be taken out of this legal purgatory and put into a position where they have the same property rights as anyone else.

2.30 p.m.

I acknowledge that the Government and the Lord Advocate have shown a great deal of sympathy and understanding about the position of tenants-at-will. We see the fruits of that in the present Bill. I want to make it quite clear that despite what I say today I in no way want to hold back the Bill's progress. It is very important that tenants-at-will should be given the right to buy their own property.

Photo of Mr Ronald Murray Mr Ronald Murray , Edinburgh Leith

The hon. Gentleman has been very kind in his tribute. However, he does not need to say anything more if he does not want to.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

I have no doubt that that would greatly accommodate the Lord Advocate.

Photo of Mr Enoch Powell Mr Enoch Powell , South Down

This is the last opportunity that the Lord Advocate will have.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

Yes, this is his last appearance.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. I would remind the Lord Advocate that there is to be a general election on 3 May.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

That is a useful observation, Mr. Deputy Speaker, to all of us. But the remarks that I am making are in no way related to a general election. They are related to the matter that is contained in these amendments. The issue at stake is the terms under which a tenant-at-will will be able to obtain full title to the property.

The Government's proposals are contained in clause 20. I believe that they are rather onerous terms for the tenant-at-will. My amendment seeks to alter these terms more in favour of the tenant-at-will. In amendment No. 2, which is being discussed at the same time, I have suggested a formula of 25 times the amount of the annual rent. That would have a great advantage in that it would follow the same course under which we agree to have feu duties redeemed. Feu duties are redeemed on a factor that is multiplied by the amount of the feu duty, and it is, therefore, a relatively certain sum.

Under the Government's proposal, as at present in the Bill, a valuer would be required to put a value on the land, and the buildings thereon, if the formula suggested in clause 20(3) were to be accepted This would involve the tenant-at-will in the payment of professional fees which I believe would be quite unnecessary. But if this were simply a multiple of the annual rent—I have suggested 25 times as being a reasonable amount—there would be no need whatever for a valuer to be involved, and no additional fee burden would be placed on the tenant-at-will.

The other possibility relates to the payment of expenses. If the clause were left as it is, on the one-twentyfifth formula it could be that the tenant-at-will would be paying somewhere around £400. In addition, he might have between £300 and £400 to pay for legal expenses, surveyor's expenses and other incidentals in order to register his title. Therefore, it would cost about £800, perhaps even up to £1,000 in some cases, in order to transfer the right in the land to the tenant. I do not think it can be the Government's inten- tion to burden tenants-at-will with about £1,000 in order to gain this particular advantage. Indeed, many tenants-at-will might find it necessary to take out a mortgage on their houses in order to pay for these expenses.

When I raised the matter in the Scottish Grand Committee on 15 March, the Under-Secretary of State for Scotland—the hon. Member for Stirling, Filkirk and Grangemouth (Mr. Ewing)—who replied on behalf of the Government, said that he was prepared to look at the matter at a later stage. When on 27 March I raised it again in Scottish Standing Committee, which dealt with the Bill ex-peditiously, the Lord Advocate himself said: I shall look into this matter further to take into account the points which have been made."—[Official Report, First Scottish Standing Committee, 27 March 1979; c. 49.] I hope that today the right hon. and learned Gentleman will be able to announce that he has looked at this matter fairly, as I would expect him to, and that he feels that at least one of these proposals will be acceptable to the Government and can be incorporated in the Bill so that at long last tenants-at-will will have their disadvantages removed at a reasonable price. I hope that we shall have that response from the Lord Advocate.

Photo of Mr George Younger Mr George Younger , Ayr

We are grateful to the hon. Member for Aberdeenshire, East (Mr. Henderson) for raising this matter again. Before the Lord Advocate gives us his views upon these amendments, and what he feels can be done about them, I should like to say that it was a fairly unanimous view in the Committee that this would be a good opportunity, if possible, to regularise the position of tenants-at-will, who in some senses constitute a strange anomaly compared with the rest of Scotland. I hope that the Lord Advocate will do all that he can to respond to what the hon. Gentleman has said, bearing in mind that it is the wish of hon. Members on all sides of the House to take this opportunity of regularising the position of tenants-at-will.

I do not know whether the amendments are technically correct. I am not a lawyer, and I am not familiar with the law as to tenants-at-will. I hope that the Lord Advocate will bear in mind the views of the Committee as a whole, which was very sympathetic to the situation of these tenants.

Photo of Mr Ronald Murray Mr Ronald Murray , Edinburgh Leith

At the outset, I would like to make it clear that the Bill—the hon. Member for Aberdeenshire, East (Mr. Henderson) was generous in his tribute—regularises completely the substantive rights of tenants-at-will. The issue that arises in respect of these amendments is a peripheral or side issue as to the expenditure involved in achieving that regularisation. One must be absolutely clear about that. The position of tenants-at-will is regularised. They are given a status of the kind that they have been seeking but have never yet achieved.

Although this is a peripheral issue, it is nevertheless, an important one. I am happy to be able to say something further about it, as I undertook to do during Committee. It may be useful if I first dealt with the merits of the amendments. The hon. Member for Aberdeenshire, East was frank in telling me that these amendments are intended to be alternatives. I am afraid that must lead me to tell him that, unfortunately, they are defective, because as drafted they do not operate as alternatives in terms of the clause. However, the technical defect argument is not enough. I want to deal with the merits as well, because I am sure that the House would like to decide this matter on principle. I hope to satisfy the House that what the Bill does is reasonable and fair. I do not say that another view might not be taken, but all I argue is that what the Bill contains is reasonable and fair and I ask the House to accept the Government's drafting on that basis.

The first amendment seeks to replace the fraction of one-twentyfifth with one-fiftieth. It may perhaps be helpful if I point out the context in which this change in fraction takes place. The clause with which we are dealing provides in subsection (3) for the payment to be made for a tenant-at-will to his landlord by way of compensation in respect of acquisition of tenancy land. It is common ground, and this is accepted in the amendment, that there is nothing whatever wrong with the provisions so far. In other words, it is accepted in principle that, in order to regularise this situation, it is reasonable that the tenant should compensate the landlord for what he is conveying to him. Therefore, that is common ground and is not challenged in any way.

What is challenged is the next bit. At present the Bill provides three bases upon which compensation can be assessed. The first is the most equitable of all—by agreement. In other words, if the parties agree that a certain sum should be payable, that is the sum which the law says shall be payable. We then come to two cases which arise if there is not agreement. Again, let me stress that neither of these is challenged by the hon. Gentleman. The second one is the value of the tenancy land, not including any buildings thereon but assuming that planning permission for residential purposes has been granted for it.

The value as assessed in that second leg may be the one that is required. I shall come shortly to the question of how one chooses between them.

The next alternative—there are really two alternatives together, because 2 and 3 are really alternatives—and the third option, as the Bill stands, is one-twenty-fifth of the value of the tenancy land. I think that the hon. Gentleman perhaps implied that his amendment was for one-twentyfifth, but his amendment is for one-fiftieth.

These are the three options. As I have pointed out, the second and the third options are true alternatives. One finds that out by turning over to the next page of the Bill, page 18, where one is told that it is "whichever is the lesser"—that is, of these two, because obviously agreement excludes both of these two.

The hon. Gentleman is saying, therefore, that (b) should be one-fiftieth. First, that would produce a disconformity between paragraphs (a) and (b) because (a) and (b) have been worked out objectively on the basis of the factual information supplied by Inland Revenue valuers in Scotland. There is a balance between the two. I think that the House will appreciate that if one had an alternative which was not reasonably balanced—in other words, if one was always derisory as compared with the other—obviously the derisory option would be the one that universally applied. Therefore, one must have the two options. Therefore, it is reasonable that (a) and (b) should be fairly balanced.

I must tell the House that one-twenty-fifth is the average or median figure which is brought out in voluntary cases of conversion of tenancies in the experience of those accustomed to dealing with the matter. I do not think that anyone could have devised a fairer way, in a Bill of this kind, of assessing what is a reasonable fraction. It must be accepted that when one is putting a fraction in a Bill there is always an element of arbitrariness about it. I should have thought that in this particular case it would be very difficult to say that a figure so arrived at has any arbitrariness that could possibly be avoided.

I think that that deals substantially with the merits of the first amendment. I hope that the House will reject it. In fact, I hope that the hon. Gentleman has been convinced by my argument and will be convinced by what I have further to say—I see that he is shaking his head. However, I shall do my best with him, notwithstanding.

The second amendment seeks to add an additional option—I think that that is the effect of what the hon. Gentleman has told me—so that instead of having the valuation determined by agreement or by alternative (a) or alternative (b), he wants a further alternative (c) three legs if one does not get agreement between the parties, and again we take the lesser. I think that the hon. Gentleman is accepting that.

If we take that, then we have, in addition to these other two legs, the third option, 25 times the amount of the annual rent. As clause 20(8)(b) acknowledges, ground rents for tenancies-at-will are redeemable, and some have been redeemed. In the case of redeemed rents, there would be no existing base figure for capitalisation in order to produce a valuation in terms of this amendment. In other words, the amendment could not cut in those cases.

There is a further point, because some tenancies-at-will will command only nominal rents. Some will be as low, I am told, as 50p. Others have been brought up to a more modern and realistic figure, a factor of many times more than 50p. As the House will see, this would introduce a radical inconsistency in terms of which for substantially the same sort of holding one tenant would be paid compensation at a factor of many times greater than a corresponding tenant-at-will with exactly the same sort of holding who was paying a nominal rent. Apart altogether from the obvious inequity of that, one would be compounding the position by, as it were, putting a premium on those landlords who have been most grasping and have sought to increase the rent to the maximum extent before the Bill bites.

I should have thought that if my first argument does not carry compulsion to the hon. Gentleman, perhaps that second argument would do so, certainly in regard to that clause.

I turn to the third argument, which is, I think, the strongest argument that the hon. Gentleman has put forward. Clause 25 requires the tenant-at-will to reimburse expenses reasonably and properly incurred by the landlord in conveying his interest in the tenancy land. In my submission, that clause is equitable and it certainly reflects the general practice in comparable fields. I think that the best field which I can use to illustrate that is the Crofting Reform (Scotland) Act 1976, a comparatively recent Act. Under section 1 of that Act, a crofter can obtain an order of the Land Court entitling him to a conveyance of croft land from his landlord, and under section 4(3) the Land Court can order that expenses necessarily incurred by the landlord in connection with the conveyance are to be borne by the crofter. That is a close analogy, allowing for the different nature of the more complex operation that was involved in the Crofting Reform (Scotland) Act because, as the hon. Gentleman knows, that involved the dwelling house and the croft land itself. Sometimes that included the dwelling-house and sometimes it did not. This is a close analogue with the situation under the clause. In each case the tenant, or the crofter, as the case may be, has a statutory right to be granted a recordable title, which, of course, is a substantial benefit being conferred on him and taken away from the landlord.

2.45 p.m.

However, one can put the point higher. In the Bill, the rights of the tenant-at-will are considerably higher than the rights of the crofter, because, under the crofting Act, the Land Court can refuse the crofter's application to obtain what is in effect the ownership of his land. Under the present Bill, that is not so. If the tenant-at-will wants a recordable title, he must get it.

Therefore, it seems to me that, for that reason as well, it would be odd if one were to put, in terms of expenses, the tenant-at-will in a position substantially better than the position of a crofter in a somewhat analogous situation.

In conclusion, let me say that the conveyancing element in these expenses will be subject to the scale of fees of the Law Society of Scotland. Should the tenant-at-will feel that any expenses are not—I reflect the words I have already used in Committee—reasonably and properly incurred, he has the remedy not only of taxation, which I have mentioned before, but, under clause 21(1)(iv), of making an application to the Lands Tribunal for a determination of these expenses.

I think that I have gone a long way towards meeting the substance of the hon. Gentleman's points, although I am bound to advise the House against accepting any of these amendments. However, I give a further undertaking, which I hope the hon. Gentleman will accept in this situation, to see what administrative steps can be taken to ensure that a moderate scale of fees would be applicable to these transactions, and that that will be known to those who are concerned.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

I shall not conceal the fact that I am extremely disappointed by the Lord Advocate's reply. It seems that the Government are leaning over backwards to help the lairds and landlords in the North-East of Scotland as against tenants-at-will. I am extremely disappointed that they are doing this.

I am afraid that the Lord Advocate did not deal with the 25 times annual rent point, in the sense that this would give a certain value which the tenant-at-will could calculate for himself. There would be no need to bring in surveyors, charging expensive fees, to work out the valuation of a house and the land.

The Lord Advocate mentioned the crofting Acts. I think that he must be aware—it is certainly my information—that this legislation has been a bonanza for surveyors throughout the Highlands.

Enormous fees are being earned on the basis of the formula laid down in the crofting Act. I would have hoped that we would not make that mistake again here.

The Lord Advocate referred to the Lands Tribunal and said that tenants-at-will would be able to go to it. It may be all right for lawyers to talk in that way, but that is not a very good answer for ordinary people who have a small house and want to own the small piece of land on which it is situated. The Lord Advocate was a bit out of touch with reality when he referred to the Lands Tribunal as being the remedy for people in that situation.

I hoped that, by adopting a fixed method of compensation, we would have overcome many of these problems and avoided a great deal of expense to tenants-at-will in acquiring titles. However, the Lord Advocate has put the Government's position. I do not want in any way to jeopardise the possibility of tenants-at-will getting the justice which has been long overdue. I should have thought that if anything were done in the Bill, it should have erred on the side of generosity to the tenants, to compensate them for the many years during which landlords have kept them in such a state that they have not been able to put in a modern bathroom or a modern kitchen because they could not get a title. Landlords have been pushing tenants to pay sums of £1,000—£1,500 in some cases—for a small strip of ground which is worth nothing like that sum.

I would have thought that if the Government were to lean in any direction, it would be towards these people who have had a raw deal over a long period and are only now coming to a state where they can get a proper title. I do not know what steps the Lord Advocate can take in an administrative way, to which he referred in his closing remarks. Is it possible that he could have an agreement with the Law Society that there could be a fixed-fee, irrespective of the tenancy-at-will, charged in legal fees? That would be a help. I am disappointed with the way that he and the Governent have dealt with this point. I do not want to jeopardise the chances of the tenants-at-will getting the justice that is long overdue to them. For that reason, I must, with great reluctance, beg to ask leave to withdraw the amendment.

Question put forthwith, pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed, with amendments.