Security of Tenure

Clause 5 – in the House of Commons at 6:30 pm on 9th November 1988.

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Lords amendment: No. 6, in page 3, line 41, at end insert— and, accordingly, the service by the landlord of a notice to quit shall be of no effect in relation to a periodic assured tenancy

Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment—[Mr. Trippier]

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

With this it will be convenient to take Lords amendments Nos. 8 to 10 and 169.

Photo of John Battle John Battle , Leeds West

I know that Lords amendment No. 6 is a clarifying amendment, but it would mean that a landlord will need a court order to—[Interruption.]

Photo of Dawn Primarolo Dawn Primarolo , Bristol South

On a point of order, Mr. Deputy Speaker. Is it possible to have two debates in the Chamber at the same time? I cannot hear my hon. Friend.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

The hon. Lady is quite right. Will hon. Members who are not taking part please retire from the Chamber.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. Will hon. Members who are not taking part in the debate please either cease speaking or withdraw from the Chamber?

Photo of John Battle John Battle , Leeds West

If Lords amendment No. 6 is accepted, a landlord will need a court order to bring an assured periodic tenancy to an end and the notice to quit method will become irrelevant. I should like the Minister to confirm that, rather than merely to move the amendment formally, as there is an assumption that any applicant for a court order will need to have that action preceded by a notice of proceedings for possession. I assume that that principle will he underlined and not undermined. It is a small point, but what I have suggested should be confirmed so that people know where they stand.

A more serious issue is at stake in Lords amendment No. 8. As the Bill stands, clause 7 ties possession action to grounds for possession. The amendment would break that tie for mortgagees—building societies and banks. It appears that a mortgagee would have an arbitrary right to possession. If the tie is broken, institutional privilege will be built into the Bill, as the county court will be able only to suspend the order to give the occupier time to pay by instalments.

There is an important principle at stake. Should mortgagees have special treatment and not have to abide by the general rule? Why are mortgagees being exempted from the general rule? Possession should be linked to grounds for possession. We have had enough rows about grounds for possession and the changes in those grounds, but I hope that the Minister will be prepared to say that he will look into the matter because possession in these circumstances means eviction.

The Minister thought that I spoke about evicted mortgagors earlier, but I did not. He may have mistaken my constituency. I posed questions about the statutory responsibilities of local authorities. I hope that the Minister will consider this matter, as evicted mortgagors represent a high and increasing number of households accepted by local authorities as homeless.

7.15 pm

Will the Minister give us an undertaking that mortgage possession grounds cannot be used by business expansion scheme shareholders? We all know that the Budget enabled people to get up £500,000 by setting up a business expansion scheme in private rented property. Will BES shareholders be able to use the clause to get round grounds for possession? The Minister owes it to the House to make that absolutely plain. Will he confirm that BES shareholders will not be classed as mortgagees?

When speaking about Lords amendment No. 10, the Minister in another place said that the issue would be dealt with by regulation. I would like the Minister to repeat that pledge. As he cannot bring it upon himself to make such provision through a clause in the Bill, will he confirm that regulations will cover the point? If not, we are acting in the dark as we are being asked to support proposals whose impact we do not know.

Lords amendment No. 169 ensures that landlords cannot use ground 6 to evict a tenant when the tenant was not aware that development was a possibility when he or she took on the tenancy. Members of the Committee will remember that ground 6 changes a discretionary provision into a mandatory one. If a landlord intends to redevelop a property—it might be a flat or a room—the landlord can use the ground to get the tenant out.

We argued in Committee, it was argued in another place and we still argue, that ground 6 is crucial as it provides far wider scope for people to be evicted than does the Bill. It has been generally accepted in landlord and tenant legislation that if a landlord wishes to seek possession on mandatory grounds, the tenant must have been told that that was a possibility when he or she took on the tenancy. It is crucial that we do not break with that practice. We must ensure that tenants do not lose rights.

Grounds 1 to 5—the other non-fault grounds—require the landlord to ensure that the tenant knows about the possibility of eviction when he or she takes up a tenancy. Ground 6 is the exception. There is no justification for treating it as a special case. The Minister in another place said of landlords that they can use ground 6 only in respect of new tenants who knew that development was a possibility when they took on the tenancies:

A landlord who buys a property may not know what his long-term intentions are. It may be clear that there are development possibilities, or it may be an extremely remote prospect. A new tenant who takes on an assured tenancy takes it on against this background. It is one of the grounds for repossession which could be used in certain circumstances. A tenant will make his own assessment of the likelihood of its being used and he can be confident that it cannot be used if there is a possibility of doing the development work around him."—[Official Report, House of Lords, 3 November 1988; Vol. 501, c. 402–3.] As I cannot question the Earl of Caithness, I ask the Under-Secretary of State to explain how the tenant can have such knowledge in advance. The Earl argued that it is a factor that tenants should take into consideration when considering whether to accept a tenancy, but many take up a tenancy as a result of seeing an advertisement in a newspaper or corner shop window. There is no legal document or legal arrangement. The prospective tenant sees the advertisement and often finds himself knocking on a door during the evening to discuss with the landlord the terms and conditions. The prospective tenant does not arrange for a survey to be prepared and he will not be concerned with the development potential of the flat into which he wishes to move.

If landlords are able to go to court to obtain possession on development grounds, they will have a powerful instrument with which to evict tenants whom they want to get out of their property. These matters are important and the amendment should not be accepted on the nod. I hope that the Minister will take the opportunity to assure tenants that ground 6 will not be an instrument of eviction.

Mr. MacCartney:

In my constituency an elderly lady was almost persuaded to leave the house in which she had been living for over 20 years on the ground that the landlord wished to redevelop and improve the property. He began to threaten her when he called for the rent the following week. I found that a planning application had been submitted as the landlord wished to convert the property into a hairdressing shop, and I contacted the local authority's housing aid centre. The lady would have been removed from the property because of the landlord's wish to convert it into commercial premises and to create homelessness. It seems that unscrupulous landlords will be in an even stronger position when they come to deal with elderly ladies, for example. They will be able to winkle them out of their property for reasons other than providing homes for the homeless.

Photo of John Battle John Battle , Leeds West

I am grateful to my hon. Friend for making that intervention. He is saying that landlords could use ground 6 to drive a coach and horses through any justice for tenants. Landlords could gain access to property by the unjustifiable use of the redevelopment ground. I ask the Minister to accept that there should be inserted in the Bill the principle of natural justice. We should make it plain that the redevelopment clause cannot be brought into play after the tenancy has started. It is clear that ground 6 could be used by a landlord as an excuse to get someone out of his property.

The Earl of Caithness said: The problem lies in trying to draft a provision which is sufficiently comprehensive to cover all the options. I submit that the Minister has a responsibility to ensure that the Bill covers all the options. Tenants should not be left in a position of extreme vulnerability. Lord Caithness added:

It is in the nature of shady organisations that if you leave a loophole they will find it."—[Official Report, House of Lords, 3 November 1988; Vol. 501, c. 404.] I hope that the Minister will reassure us that ground 6 will not provide a giant loophole through which unscrupulous landlords—I do not mean all landlords—will drive a coach and horses. I concede that properties might be improved, but the improvements will be made at the expense of the tenants who are thrown out of their homes. Landlords will then bring in other tenants, who will be charged higher rents. In such circumstances, landlords will benefit and tenants will lose. In other instances I shall be interested to see whether the redevelopment takes place.

I invite the Minister to respond to the detailed issues which I have raised, instead of seeking to nod through the amendment formally.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education)

The hon. Member for Leeds, West (Mr. Battle) is right to be concerned, especially about Lords amendment No. 169, to which I shall direct my remarks. Ground 6 of schedule 2 is a mandatory ground for possession. It sets out the circumstances in which a landlord can gain possession. It refers to a landlord who intends to demolish or reconstruct … or to carry out substantial works within the property. One of the conditions is that it must be impossible to do that work with the tenant in occupation.

I am in the fortunate position of being one step ahead of the hon. Member for Leeds, West. Since 3 March, when the issue was raised by me in Committee—at that time the hon. Member for Bristol, West (Mr. Waldegrave) was the Minister for Housing and Planning—I have been pursuing an obvious constituency concern. The Minister gave what I consider to be an unsatisfactory reply. The House will be aware that I represent a constituency in which the opportunity for development at great profit is now enormous, especially along the river. I raised the horrendous prospect that new landlords who took over council property under the provisions in part IV might be able to evict tenants by the use of ground 6, which is mandatory.

The Minister was more than dismissive of my concern. He said: The hon. Member for Southwark and Bermondsey made my flesh creep by mentioning the terrifying prospect of developers redeveloping a flat and … using ground 7"— which is now ground 6— to turn people out. Fortunately, if we read schedule 2 we will see that that cannot happen when a person has paid a consideration for the reversion of tenancy. Therefore, that spectre need not be raised."—[Official Report, Standing Committee G; 3 March 1988, c. 1358.]

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I remind hon. Members that they should not pass between an hon. Member who is on his feet and the Chair.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education)

I am grateful, Mr. Deputy Speaker.

I pursued the matter by telephone with the Department over the summer. As I did not receive a reply, I wrote to the newly appointed Minister on 3 November. The Under-Secretary of State will be aware that I am grateful for the reply which I received from Lord Caithness yesterday. First, his reply confirms that I was right to be concerned. It seems that there is a possibility—I do not want to be more alarmist than that—that a legal interpretation could confirm that tenants could be evicted. I refer to the advice which has been given, as I understand it, to Ministers.

The advice continues: We have looked further at an argument which could affect the picture. This is whether it might in some cases be possible to argue that where, as a result of the consultation procedures, a contract existed between a landlord and tenant prior to transfer, providing for tenancy terms different in major respects from those of the preceding secure tenancy, a court might regard it as a new tenancy taking effect in equity immediately upon acquisition. Our legal advice is that the court would be likely to hold that the tenant was occupying by virtue of the old tenancy rather than a new tenancy in such circumstances. Should a court take the opposite view, however, ground 6 would in principle be available because, on that interpretation, the landlord's interest would have been acquired before the grant of the tenancy. To say the least, the legality of the relevant provisions is uncertain. It can be said with justification that the provision could be used by unprincipled or profiteering landlords to evict tenants in the interests of redevelopment. That would be the position of those who had moved in after the property had been taken over. The tenants who transferred to the new landlord might all move or might all be asked to move. They might be replaced by new tenants. On any interpretation, they will have been granted new tenancies since the landlord acquired his interest in the dwelling house.

There is every reason to raise a spectre of eviction for present council tenants. In an area such as my constituency, accommodation that is now owned by the council could be bought at low cost and redeveloped as luxury accommodation. That would fail entirely to meet the needs of tenants. The redeveloped property would be outside the price range of the people who live in the property now.

I hope that the Under-Secretary of State and the Secretary of State will accept that there is enormous anxiety in areas close to city centres, in areas that have been developed, particularly in London where house prices have shot through the roof and land prices have escalated enormously, that such housing would be of interest to landlords who wished to redevelop it for up-market renting or for sale at the earliest opportunity. I was grateful to hear that the Minister for Housing, Environment and Countryside accepted that anxiety and so was willing to give some undertakings through the Under-Secretary to the House.

7.30 pm

The Minister, in his reply to me dated 8 November, said: I am happy to give you an assurance that we shall discuss with the Housing Corporation ways of ensuring through their use of undertakings attached to Tenants' Choice applicants' approvals that applicants will be required not to use the Ground even should the Courts rule that it was in principle available. That is a clarification and a concession, and it is a substantial improvement.

First, will the Under-Secretary confirm that the Department of the Environment will ensure that the Housing Corporation makes that requirement in relation to tenants who are resident at the time of transfer and remain in properties and where all tenants are new since transfer? Secondly, will the Minister allay the substantial fears that exist which have in no way been inflamed by any comments that I have made? I have sought to explain that I was seeking clarification, that the Minister had assured me that there was no risk but that, since that did not appear certain to me as a matter of law, I would pursue the matter with the Department of the Environment.

Will the Minister allay the fears of many elderly and low-income tenants that any tenants'-choice-acquiring landlord will never be able to use that ground in any circumstances whatever? We need that assurance. It must be categorical. If it can be given, that will be a substantial improvement in an area about which tenants have been enormously worried.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I am sure that the hon. Member for Southwark and Bermondsey (Mr. Hughes) accepts entirely from me that that was the sole intention in framing the legislation. There was one part that the hon. Gentleman missed out—I know, not intentionally—of the letter sent to him by my noble Friend the Minister for Housing, Environment and Countryside that I must stress and put on the record. We were satisfied that if the matter were taken to the courts they would uphold the decision. The difficulty on which the hon. Gentleman has focused is that there is no absolute legal certainty in the matter. Therefore, we are attaching belt and braces to this matter and I can give him the latter assurance that he sought.

The hon. Member for Leeds, West (Mr. Battle) asked several detailed questions. The House will know that the amendments deal with the serving of notice to bring a tenancy to an end and the grounds on which possession may be sought.

Amendment No. 6 clarifies clause 5 and provides that a landlord may only bring an assured tenancy to an end by obtaining a court order. The amendment makes it clear that a separate notice to quit is not needed and that if it were served it would not bring the tenancy to an end.

Amendment No. 8, which is a technical amendment, provides that where an assured tenant has mortgaged his tenancy, as could happen with a shared ownership lease for example, and defaults on his mortgage, the provisions of part I will not affect the right of the mortgagee to repossession of the property.

Amendment No. 9 is a consequential amendment following the change made to the suitable alternative accommodation ground for possession. When the ground was switched from part I to part II of schedule 2 as a consequence of representations by Opposition Members, the court was inadvertently given power to order possession under that ground during the course of a fixed-term tenancy. That would be inequitable, and the amendment puts the position right.

Amendment No. 10 makes it a requirement that the particulars of the ground on which the landlord is seeking possession should be set out in the notice. It was always our intention that the particulars should be set out in full in the prescribed form, but, again following Opposition concern in another place, the amendment makes it plain that that will be the case. It responds to those overtures.

Photo of John Battle John Battle , Leeds West

Will the Minister make it plain, because it is not clear from his reply, whether business expansion scheme shareholders will be exempt from the grounds for possession? Will they have the mortgagee's privilege of bypassing the grounds for possession?

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I do not know whether the hon. Gentleman understands the business expansion scheme, but the shareholders in that scheme are far back from those who are proposed landlords. The hon. Gentleman may not understand how the BES works. I do not say that in any way discourteously.

I do not regard the point raised by the hon. Gentleman as a problem. The assurance that he seeks with regard to shareholders is not relevant. I thought that the hon. Gentleman was talking about a landlord. A landlord of a tenancy under the business expansion scheme will have to obtain possession in the normal way. The shareholders are far back. Many individuals will be investing money, as the hon. Gentleman probably understands. Therefore, the matter does not arise. We are talking about literally hundreds of people.

Amendment No. 169 relates to the development ground for possession—ground 6. The ground does not apply where the landlord has purchased the property with a sitting tenant. if that sitting tenant were a Rent Act tenant, there could be an assured tenancy by succession stemming from that tenancy.

Amendments Nos. 6, 8, 9 and 10 are useful clarificatory or technical amendments and, as I have said, amendment No. 169 is a helpful extension of the protection of tenants, for which Opposition Members have asked.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education)

With the leave of the House, I should like to say a few words.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

I take it that the hon. Gentleman has the leave of the House to speak again.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education)

As the Minister will have expected, I am grateful for his comments. However, he did not deal with one important matter, on which he may wish to take advice.

When a matter is dealt with by way of Government policy or undertaking, any court interpreting statute can look only at the face of the statute. Courts are not allowed, as a matter of law, to take into account debates in the House. That principle of legal interpretation is not used in this country, although it is used elsewhere. Will the Minister assure us that his assertion and assurance will apply as a matter of law as well as a matter of policy?

I am aware that the Minister can determine the rules and parameters within which the Housing Corporation works. I am also aware that it is the intention, as he has clarified, that the ground should not be used. The problem is, as he will realise, that in a legal context he and his colleagues and the Housing Corporation will not be parties. A landlord who had acquired the property would be taking a tenant who was in the property to court, using a ground in statute. That is the perfectly reasonable justification for a question that I hope the Minister will be able to answer. I hope that he will say that, as a matter of statute, if it is not certain now, the matter will be clarified in the early housing legislation expected after the Queen's Speech.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I think that I can give the hon. Gentleman the assurance that he seeks on the latter point. As I said earlier, this is not a matter of law, and therefore not a matter of statute. However, I am not a qualified lawyer, so I shall take advice. The hon. Gentleman may have raised the question because he suspects that it is not. The reply that he has received from my noble Friend the Minister for Housing, Environment and Countryside made that abundantly clear. Otherwise, the direction that we are seeking to give to the Housing Corporation would be unnecessary.

Question put and agreed to.

Lords amendments Nos. 7 to 10 agreed to.