[column 576]

New Clause 3

Agreements authorised by court not to give rise to protected tenancies

‘The Court may—

(a) on the joint application of the persons who propose to be the landlord and the tenant of a dwelling-house in relation to a tenancy proposed to be granted for a term of years certain which would except for this section be a protected tenancy for the purposes of the Rent Act, authorise an agreement preventing the tenancy from being such a protected tenancy; and

(b) on the joint application of the persons who are the landlord and the tenant of a dwellinghouse in relation to a tenancy which is a protected tenancy for the purposes of the Rent Act, authorise an agreement for the surrender of the tenancy and of the protection afforded to it by the Rent Act on such date or in such circumstances as may be specified in the agreement and on such terms (if any) as may be so specified’.—[Mr. Graham Page.]

Brought up, and read the First time.

Mr. Graham Page (Crosby)

I beg to move, That the clause be read a Second time.

In Committee a fundamental issue emerged between the two sides. We believed that to place restrictions on the letting of property did reduce the availability of that class of property for letting. The Minister said that that was not proven, despite the figures, which related particularly to the difference between availability of furnished and unfurnished lettings.

Our efforts were directed to the proposition that if restrictions are necessary, as we admit in some cases they are, they should be designed so as not to force landlords to abandon the business of landlordism. In new Clause 3, we have taken a leaf out of the Law of Property Act 1969 where, as between the prospective landlord of business premises and the [column 577]prospective tenant of those premises, there is provision that they can go before the court and opt out of the restrictions so far as they relate to business premises, and upon the approval of the court to an agreement to contract out in that way.

One must realise that it is wrong to assume that every tenant who is going to take a dwelling house on tenancy is acting under duress and should be allowed to escape from his contractual obligations because of the assumption that he took them on under some form of duress obliging him to do so. Normally, tenants are sophisticated people who know well enough whether they want to take advantage of the security of the Rent Act, or Whether they are prepared to take on a property for a fixed period of years and vacate it at the end of that period.

Even if one assumes that some of them are acting not under duress necessarily, in the legal definition, but under pressure, complete powers against that would be resort to the court. So, in new Clause 3, by copying the provision in the Law of Property Act 1969 as it relates to business premises, I wish to provide that if the two parties, in a joint application to the court, say, “Here is a willing landlord letting a dwelling house for a period, and a willing tenant to take it for that period.” the court can itself approve the agreement and remove it from the restrictions of the Rent Act.

The Second part of a new Clause would give similar freedom to the parties, on a joint application to the court, to surrender a tenancy which otherwise has the protection of the Rent Act. This provision, I am informed, has worked very satisfactorily in the case of business premises.

Originally, where business premises were protected in somewhat the same way as dwelling houses under the Rent Act, there was no possibility of opting out of the Act. If the tenancy included a provision that the protection of business tenancies should not apply, that was invalid. In 1969, the situation was altered. Since then, the courts have found no difficulty in deciding whether, when the two parties come before them, it is a case in which there would be no hardship on the tenant to remove that agreement between the parties from the restrictions applying to business premises. [column 578]

I asked in the new clause that the same sort of principle should apply as between consenting parties to a tenancy of a dwelling house. I am sure that this draws much closer together the two sides of what I describe as the fundamental issue between us. We recognise here in the clause that the protection of certain classes of tenant is very necessary. We say that it is not needed for every tenant. At the same time, we give a freedom to the landlord to seek the approval of the court, with the consent of the prospective tenant, for removal of the restrictions. I am convinced that by this means we shall make available more property for letting, and that will benefit the tenants in the end more than placing an absolute irremovable restriction on these agreements.

Sir Marcus Worsley (Chelsea)

I support my right hon. Friend the Member for Crosby (Mr. Page). I declare an interest as an owner of some rented property. The case I want to adduce in his support is the situation in my constituency to which a lot of people come who, for one reason or another, need to come to London to do a job for a short time—say, two or three years—and then move away. As a result of the Bill, such people will find accommodation in London profoundly difficult to find.

They will not be able to get local authority accommodation. Sometimes I have been led to think that they will have to move from one holiday letting to another. These may be people who have perfectly adequate incomes and are doing an important job. Why on earth should they not be able to go to a landlord, come to an agreement with him mutually convenient to both sides, go to the court and have it registered? The case for doing this is very important.

When my hon. Friend the Member for Kensington (Sir B. Rhys Williams) put similar proposals in Committee, the Under-Secretary of State said that this was all going to be done by the local authorities. He said that he wanted to see the whole of the private rented sector disappear and all this provision made by local authorities.

The sort of people I am talking about will never be cared for by the local authorities. I suspect that the effect of this Bill, like so much done by the present Government, will be once more to make [column 579]conditions more difficult for the middle class. It is for the middle class, who can afford a good rend and whom a landlord would like as tenants, that this sort of exception would be very useful indeed.

Mr. W.R. Rees-Davies (Thanet, West)

I shall be brief, even though the new clause is tremendously important. The Bill may be a charter for the furnished tenant, but it is also a charter for homelessness among many other tenants. The purpose of the Bill can be stated in a sentence—it is to protect the furnished tenant in the stress areas because the furnished tenancy in his home. There should not be included provisions for furnished accommodation for the transient population who have an equally dire need for accommodation. My hon. Friend the Member for Chelsea (Sir M. Worsley) has several thousands of people in his constituency who need transient accommodation. They comprise newlyweds, typists, overseas visitors and businessmen who have to stay for a period in London or many other major cities.

Such people require genuine furnished accommodation, often of the executive type, but it is unnecessary to provide protection for them if they do not seek it in the first place. An advantage of the new clause—which is new from anything we discussed over many protracted hours upstairs—is that it provides that if a landlord and tenant of the type of accommodation I have envisaged agree together that they do not want to be protected by the Rent Act they should be allowed to file an application in a court agreeing that for the period of the tenancy, which should be a fixed term, they will opt out of the general provisions of the Bill.

This type of clause does not imperil the purposes which the Labour Government have in mind in protecting the furnished tenant in the stress areas, but at the same time it excludes, by consent, persons who do not want to come under the terms of that protection. I hope that the Government will show good will and agree to such an exclusion. We have tried other methods in the past, but what is now proposed is an admirable way of achieving the objective of retaining executive accommodation in the main cities. Such accommodation is badly needed. [column 580]The need in the Metropolis and other major cities is as desperate as for other types of accommodation.

A provision of the sort proposed will act as a brake and ensure that there is a pool of accommodation, outside the type which Shelter and other organisations have been talking about, in respect of which there will be security of tenure for the type of tenant who makes a permanent home of his tenancy.

Mr. Timothy Sainsbury (Hove)

I declare an interest as a tenant of rented accommodation and as a director of companies which own property for residential purposes incidental to their main operation. I am also an associate of the Royal Institute of Chartered Surveyors. I support the new clause. It could, in a small though relatively worthwhile way, help to make available accommodation which might not otherwise be available to tenants. I particularly support paragraph (a) because it cannot affect any existing tenant, and for a future tenant it provides the security of being able to go before a court so that the matter can be inquired into before it is decided not to grant protection to the tenancy concerned.

The clause could encourage the available of two types of property which would not otherwise be available, namely, those which, were they agricultural tenancies would come under Schedule 2, Part III, Case 12, but might be tenancies of property required for business purposes at a future date, of which the owner wishes to retain availability in case he should require it for a tenant in connection with his business. He would not be prepared to let unless he could be assured that he could get possession when required.

The second type of property which was discussed at some length in Committee and which is referred to in a number of other amendments is that which is subject to possible redevelopment and might be held empty pending the determination of an outstanding planning application or an appeal—which may take a long time—and again not be available to residential tenants unless the owners could be certain of obtaining repossession.

Under the proposals prospective tenants, like prospective landlords, would have [column 581]the benefit of being able to appear before a court and the court would be able to inquire into the matter to ensure that it was genuine. I hope hat the new clause will commend itself to the Government.

Mr. Tyler

At first sight this is an attractive new clause, but the protection is superficial when it is put in the context of the considerable housing stresses and strains existing at present. I have some sympathy with the aim of the clause, but I am concerned about the timing in bringing it forward now. It is unfortunate that the main Opposition did not introduce it in Committee, because we could then have had a useful extended debate on its principle—

Mr. Rossi

I thought that one of the criticisms made of us in Committee was that we had too many extended debates. We have reserved some matters for this stage because it was not possible to carry on with them in Committee.

Mr. Tyler

That demonstrates the fact that giving way to interventions is not always helpful. The clause represents a major departure, unlike many of the amendments considered at considerable length upstairs. It is important that we discuss it this evening, and to that extent I am glad that it is now being brought forward.

We are considering the Bill in an imperfect world. If it were a perfect world, detailed rent legislation would not be necessary for landlords and tenants. It would be totally unnecessary to introduce this sort of legislation.

However, I can imagine circumstances in my constituency, just as much as in major urban constituencies involving the sort of pressures that could be put on a tenant if such a provision was in the Bill. The right hon. Member for Crosby (Mr. Page) referred to duress, but it would probably be persuasion that would be involved. I can imagine how persuasive that persuasion could be. A landlord could tell a prospective tenant, “We do not want to go through all the procedure of rent appeals. Let us get together and see if we can come to an amicable arrangement and save ourselves a lot of bother as well as legal fees” . The landlord might even suggest that he would not ask for quite so much rent if he and the tenant decided to make a joint [column 582]application to the court with a view to avoiding the restrictions of the Rent Act. That would be an extremely attractive prospect for tenants in areas of considerable housing shortage.

My doubt is that by making such provision we shall be giving an opportunity for the landlord—perhaps an unscrupulous landlord, or a lazy landlord, or merely a landlord with an eye to the main chance—to put the prospective tenant in an invidious position. Persuasive powers, along with the lack of accommodation in a particular area, and ever-rising costs, could provide a way cut of rent legislation which we in the House feel is genuinely necessary.

The right hon. Member for Crosby who introduced the clause referred to the precedent of business rents. I acknowledge that it is a perfectly good precedent to use in debating terms. It is as well that we should pause and contrast the different circumstances. The business tenant is not, as a rule, put in the extraordinarily invidious position of the prospective tenant in an area of considerable housing need. It is for that reason that the law, in 1969, was able to grant that sort of provision to the business tenant.

At the same time, if the pressures are different, certainly the parties are different. We can imagine the circumstance when a tenant who might not know the law—and, goodness knows, this sort of law is not easy to understand—and who might not be aware of the full significance of going to the court with a joint application, would do so and sign away his rights. This clause is attractive, but the attraction is superficial. I suspect that the Minister will feel the same.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I rise to make a brief “maiden” speech about this Bill. I was not a member of the Committee, and I was not in the country at the time of Second Reading.

I urge this clause upon the House. I heard what the hon. Gentleman for Bodmin (Mr. Tyler) said. He stressed the shortage of accommodation. He must be aware that this Bill will drastically reduce the amount of rented accommodation, and anything that can be done to ameliorate the debilitating effects of this Bill in relation to the provision of further furnished accommodation needs the support of this House. [column 583]

It is regrettable that the Bill is before us at all. It is a Bill which will drastically increase homelessness in this country. Since the Minister is well known for his humanitarian and progressive views, I would have thought that he would have felt it would be right to allow at least one small sector of the housing market to operate by agreement. Without agreement there will be no more rented accommodation. If landlords are to let under duress, which is the consequence of this Bill, landlords will find any means they can to cease letting and come out of the market.

As the Minister knows perfectly well, the housing authorities can never possibly cope with the consequences. It is a very good clause and it will enable the landlord and tenant who are able to do business together to enter into a contract with obviously beneficial effects on confidence.

It is confidence which is sorely lacking as a result of the Government's activities. At a time of accelerating inflation, the temptation in the minds of small men to do damage to those who provide, to mitigate the apparent effects of inflation by confiscating their emoluments is extremely damaging to the supply. If we have shortages in the future, major shortages, particularly of housing, it is perhaps the most cruel possible consequence of inflation. We must try to get above the sentiments whereby we think it is necessary on all occasions to “do in” all those who provide.

One of the historical and inevitable consequences of hyper-inflation is that provision ceases and the shortages which develop cause severe hardship to those seeking accommodation.

Mr. Robin F. Cook (Edinburgh, Central)

I am following the hon. Gentleman's argument. I was wondering whether to help me follow it wholly, he can explain how he reconciles with this thesis the fact that after the 1957 Act, which removed security of tenure, there was a sharp reduction in the number of properties available for letting?

Mr. Ridley

I must confess that the Labour Party has always been with us. So long as it insists on remaining with us and talking nonsense we are liable to get a debilitating effect on the housing [column 584]market. I do not know whether I should wander in response to the hon. Gentleman's invention, but he will know that rent restriction has been with us since the first world war. My father carried out a report into the debilitating effects of rent restriction in about the year the hon. Member mentioned, 1955 I think it was. In that report he rightly recommended the total abolition of rent restriction—advice which has not yet been heeded. One of the things I am pleading for, and apparently the hon. Gentleman is deaf, is that he should put away his blind prejudice. He should cease to believe that landlords have horns and that tenants are, on all occasions, angels. He should realise that what benefits would-be tenants is a continuing provision of housing accommodation.

If the clause were only to stop 100 units from going out of existence I feel the Minister would agree with me that it would have done something to meet the difficulties of those poor people who are seeking rented accommodation and may not be able to get it.

Mr. Freeson

I take it, if the views of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) represent the views of the Opposition, that we must assume that it is Conservative Party policy not only to repeal this measure when it is enacted—if they Conservatives get back into power in due time—but also to seek to repeal the Rent Act 1968, which covers a much wider area of housing accommodation than this Bill. I see the hon. Members opposite nodding. I am interested to have to confirmed that there is at least a reasonable proportion of Conservative Members who support those views and would apply them to the 1968 Act, which, of course, the last administration had every opportunity to repeal while they were in office for three-and-a-half years.

Since it was introduced to try to cancel out the effect of the then Conservative Government's Rent Act of 1957, which decontrolled the market pretty rapidly and produced the biggest slump in the provision of rented accommodation that the country has seen, the country will find this interesting.

Before I deal with the clause I must express my continued astonishment at the way in which Tory Members, in arguing [column 585]this kind of clause—and we have had several arguments on this issue in Committee—present the argument as if the introduction of this measure will compel people who wish to be on the move to stay where they are now. There is no such proposition in the Bill any more than there was such a proposition in the 1968 Act, which gave statutory security of tenure to the majority of unfurnished tenants throughout the country.

We must distinguish between different kinds of transient tenants. Broadly speaking they fall into two kinds—those who move voluntarily because their jobs or their desires take them somewhere else, to other accommodation, other towns or other parts of the city, and who then just voluntarily cease their tenancies and move on, and those many others who are compulsory transients, who have no security and are required to leave their tenancies. This Bill gives the opportunity to those who would be required to move on to stay, subject to the ruling of the court. Surely there is nothing better than that to create a proper balance in law between the rights of the landlord and the rights of the tenant—as we have done in the 1968 Act.

I am astonished that we should get this kind of argument each time this type of amendment is presented. Hon. Members suggest that the BIll will compel people to stay where they are and that their amendments will enable them to move around. No one is preventing them from moving. What we are trying to do is to introduce into legislation, as we did in the 1968 Act, the right to stay in certain circumstances when tenants wish to stay and when they would otherwise—and this is often the case at present—be compelled to move.

That leads me to the label given to the Bill by the hon. and learned Member for Thanet, West (Mr. Rees-Davies). He said that we had virtually described the Bill as a charter for furnished tenants. The hon. and learned Gentleman described it additionally as a charter for homelessness. It is clear that he has not been in touch with the large number of housing experts, directors of housing and social welfare departments in our big cities, particularly in the London area, who have been saying for a long time that the biggest single cause of [column 586]homelessness which they have to tackle is insecurity for the vast majority of furnished tenants in most of the stress areas. That is what is said by people who have to deal with the human and physical problems connected with the eviction of families.

The Bill is not a charter for homeless-ness; it is the very reverse. If one had to give it a label, I would say that it was a charter for better landlord-tenant relationships.

Mr. A. P. Costain (Folkestone and Hythe)

Does the Minister seriously think that the Bill will make one more furnished house available? What should I say to a constituent who says “I want to let my house for a short time. How can I regain possession?” .

Mr. Freeson

If the hon. Gentleman will read the Bill, he may be in a better position—[Interruption.] We now have the hon. Member for Southampton, Test (Mr. Hill), our housing expert on the benches opposite, interrupting from a sedentary position, as is his usual practice.

The hon. and learned Member for Thanet, West will find set out in the Bill the situations in which people may seek to let on short lettings, which I gather is the matter about which he is concerned. There are powers to go to the court and obtain possession in such short letting situations. It is referred to as Case 10B.

Mr. Rees-Davies

I agree with part of what the Minister says, but the important factor is this. The hon. Gentleman said that it was in the stress areas where there was difficulty about homelessness in which the Bill would give security of tenure. We are not here dealing with stress areas. We seek to exclude this class of tenancy all over the country because it does not fall within the matter about which there is cause for complaint.

Mr. Freeson

We are concerned to establish rights to stay within the law for all tenants in circumstances of this kind. We are not trying to establish geographical divisions between one part of the country and another in relation to tenancy rights, any more than was done under the Rent Act 1968.

The right hon. Member for Crosby (Mr. Page) referred to the Law of Property Act 1969 as being the basis for his proposal. [column 587]The situation of residential tenants cannot cannot be regarded as analogous to that of business tenants. It never has been right, in my view, to put them in the same class. For business tenants, rented accommodation is neither generally in short supply, as it is for residential tenants, nor is it—and this is the most important point—the necessity of life for families which residential accommodation is in any town or city. It is not right to compare the two in dealing with this issue.

Mr. Graham Page

It is the necessity of life when dealing with business premises where the goodwill is concerned and the tenant may have taken from him the living for which he has worked for years and for which he has saved. It is just as important, and the point is almost exactly the same in parallel.

Mr. Freeson

The right hon. Gentleman has rather reversed his position. He has quoted, quite rightly, the position of a small business which constitutes the livelihood of the people concerned who could, in certain circumstances, have it taken from them at the end of the tenancy. What the right hon. Gentleman is putting forward in his proposal is not that situation but a procedure whereby people may jointly contract out—in this case contract out of the Rent Bill.

The clause would empower the court, which is unspecified, to authorise the exclusion of the tenancy concerned from Rent Act protection. The power would arise, first, where the grant of a fixed term tenancy was proposed and the intending landlord and tenant jointly applied for its exclusion; and, secondly, where the landlord and the tenant have agreed that the tenancy and the protection afforded to it by the Rent Act are to be surrendered on a date or in circumstances or on terms specified in the agreement and apply for authorisation of the surrender of the tenancy and the protection.

This is clearly an attempt to provide for contracting out of the legislation subject to the authority of the court. It could be acceptable to those who reject the concept of legislation of this kind—a view with which I disagree but which I can respect, and, even if it was not specifically stated, it is a view which I know the hon. Member for Cirencester and [column 588]Tewkesbury takes on all aspects of the economy. Although I disagree with it, I know where the hon. Gentleman stands and I can respect his argument.

But I do not accept that contracting out is acceptable if it leads to the court taking into account in exercising its discretionary power a joint agreement between tenants which would lead to the exclusion from the Bill of certain premises, particularly bearing in mind that there is nothing in the Bill to compel people to stay if they wish to move on, which is one of the main arguments put forward in support of the clause. There is merely a right in the Bill to stay subject to the legal process if the tenant has no desire to move and is complying with the terms of the agreement.

There is and should be no contracting out of the Rent Acts. There is not under the Rent Act 1968, and I do not believe that it would be right under the Bill. The protection of the legislation should be available at all times to those who need it or who may need it unless a ground for possession is shown to exist and, in the exercise of its discretion, the county court holds it to be reasonable that the tenancy should end. The argument for paragraph (a) in the clause presumably is that it would encourage the supply of dwellings to let by private landlords. We have been over this ground time and again in Committee. The two sides of the House do not agree about it. I merely restate, without argument, the position I have taken in the past. It is a fairly moderate view which I do not argue strongly one way or the other. At the very least, there is no evidence to show that there has been a rise or fall in the number of rented dwellings available on the market according to whether there has been restrictive or decontrol legislation. There has been a steady loss for many years, and whatever legislation there has been on this score has not made much difference.

It is much more difficult to see what justification may be advanced for paragraph (b), the objective of which is hard to understand. It seems to be entirely without clarity. There is nothing in the Rent Acts to prevent a tenant from surrendering his tenancy or from surrendering it on conditions which the landlord is willing to meet. If the tenant wishes to move on, there is nothing to compel [column 589]him to stay. Therefore, the general grounds upon which the case is argued are invalid in practice. The principle that a property should be contracted out in a particular case from a general protection under the Rent Acts which should be available to all, subject to the legal processes laid down in the Bill, is unacceptable.

Mrs. Thatcher

I address my comments briefly to the clause which is before us. R. FreesonThe Minister has achieved his main objective of ensuring that existing tenants have protection. He has taken no steps whatsoever to ensure that a future supply of accommodation is available. This we regard as extremely serious. In spite of what he says, under the Bill the supply of accommodation will dry up. The effect of controlling accommodation over the years has been to reduce the amount available for renting.

The clause is an attempt to ensure that accommodation which would otherwise not be let will be let. The accommodation covered by the clause will not come on the market unless there is some possibility of contracting out of the Bill, for the simple and human reason, which I would expect the Minister to understand, that people are afraid that they will not be able to get possession of their own property when they need it.

Several relevant cases were brought to my notice last week. One family had had a house left to them by their parents who had died. They wished to retain the house so that they or their children could eventually live in it. They could not afford to retain it unless they let it furnished because they were unable to afford the outgoings. They wrote to say that unless they could be sure of getting possession—and they cannot under the Bill—they [column 590]would not let the house but would have to sell it.

I know of other property being bought up for redevelopment. Nothing is more irritating than to see houses being bought, boarded up and taken out of use. The clause would enable those properties to be let. Unless we take action, this accommodation will not be available, and the hon. Gentleman knows it. That is why he will not face the clause and tries to deal with it by unsubstantiated assertions.

The clause follows a precedent. The Minister said that earning a living was not like wanting a house. Unless a person earns a living he cannot afford a house. The drafting of the clause follows in almost every particular the drafting of the previous clause in the Socialist Law of Property Act 1969. I was going to say that the clause has a respectable ancestor, but I will refrain from doing so and any instead that it has a pale pink ancestor, but the pale pink of the past is the scarlet of today.

The landlord and tenant could apply to the court and it is not mandatory upon the court to approve an agreement. The court has a discretion. What it is that makes the Minister think that the courts could not spot agreements arrived at under duress, when the courts have far more experience than we have, is a mystery.

The Minister has taken no steps to ensure a supply of furnished accommodation, and we believe that we should vote upon this modest clause in the Division Lobby.

Question put, That the clause be read a Second time:—

The House divided: Ayes, 235, Noes 262.