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Clause 7—(Maxima For Rental Compensation)

Volume 446: debated on Tuesday 27 January 1948

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I beg to move, in page 6, line 12, to leave out from the second "property," to "of" in line 13.

If the Committee will look at Clause 7 (1), they will see that
"Where the requisitioned land consists only of rent-restricted land, the rental compensation shall not exceed the permissible rent."
This Amendment does not raise the question of whether the Government and the various Ministries who requisition land should really be protected by the Rent Restriction Acts, but I imagine that anyone who reads the Subsection will be under the impression that all that is covered by it is land and property now subject to the Rent Restriction Acts. When the definition is examined, it is found that it is not so under this Bill as it stands. In Subsection (4) of this Clause, it is stated that
"'rent-restricted land' means land consisting of one or more rent-restricted properties or parts thereof and of no other land."
When one gets as far as that one does not see anything wrong with it as a definition of rent-restricted land. I ask the Committee to look at the definition of rent-restricted property.
"'Rent-restricted property' means a property (whether or not the subject of a tenancy) of which the circumstances immediately before the time when possession was taken of the property or part thereof in question were such that if a tenancy thereof had been granted by the person entitled to possession thereof immediately before that time the amount of the rent recoverable under the tenancy would have been restricted by the Rent and Mortgage Interest Restrictions Acts, 1920 to 1939."
The effect of the definition is that it does not matter at all whether the particular property requisitioned is at that moment subject to the Rent Restriction Acts, or is at the time of the requisition subject to the Rent. Restriction Acts. If the property, if let, would be subject to these Acts, then, for the purposes of compensation, it is treated as rent-restricted property, and the amount of compensation is limited to the amount of permissible rent.

I see there is an Amendment in the Financial Secretary's name on the Order Paper, but that Amendment, as I understand it, does not deal with the point I am seeking to raise in my Amendment. This Amendment really has to be considered with two other Amendments on the next page—in page 6, line 16, to leave out from "that" to the first "the" in line 18; and in page 6, line 19, to leave out "would have been," and to insert "was." The effect of this Amendment is that when rent-restricted property and land are referred to, it means land subject to the Rent. Restriction Acts. The effect of the Amendment which I am now moving, coupled with the other Amendments, is to provide that rent-restricted land means property which, at the time of the requisitioning, is subject to tenancy under the Rent Restriction Acts.

I cannot see what objection there can be to that, or what logical argument can be put forward by the right hon. Gentleman for treating property which is, in fact, not subject to the Rent Restriction Acts at the time of requisitioning, as if it were. Furthermore, I do not see how this Clause is going to operate in this present form. I do not know—and I would like the right hon. Gentleman to deal with it—on what basis the permissible rent is to be determined with regard to premises which are notionally subject to the Rent Restriction Acts. The difficulty of ascertaining the standard rent, plus a legitimate increase, is great; but it is nothing compared with the difficulty of assessing what is the permissible rent for property which was not, at the time of requisitioning, subject to the Rent Restriction Acts and is only treated as notionally subject to those Acts by virtue of this Clause.

I do not know whether it is an oversight—I hope it is—but I suggest that this Clause is most misleading unless one studies this definition with some care. I hope the right hon. Gentleman will be able to say that, although it was the intention of the Government to limit the amount of rental compensation for pro perty subject to the Rent Restriction Acts to the permissible rent under those Acts —I am not arguing whether that is right or wrong—there is no case for treating every house in the country under a certain rateable value as if it were subject to the Rent Restriction Acts, so that there would not be the normal, proper, fair and adequate compensation payable for its requisitioning.

This definition is extraordinarily unfair. At first sight, it might appear that there were very few cases involved, but in fact there will be quite a number of cases, and they will be cases where probably there will be particular hardship. Three types occur to me. First, there is a house which has always been occupied by the owner until the time of requisition. Secondly, there is the case of a furnished tenancy, and thirdly, there is the case of free tenancies. In the normal way, the owner of each of those three types of property would be able to let at the ordinary unrestricted rent, yet the Government, under this definition, will give him very much less. That is an indefensible state of affairs. When we were discussing an Amendment to Clause 6, the Solicitor-General argued, as a reason for resisting our suggestion, that it was supposing a state of affairs which did not exist. That is exactly what is being done under this definition. It is supposing that a state of affairs exists when, in point of fact it does not. If the Government use that argument on Clause 6, surely they must apply it to Clause 7, and accept our Amendment.

10.30 p.m.

In reference to the speech of the hon. and learned Member for Daventry (Mr. Manningham-Buller). I should have thought that he was wrong both on merits and on law. On the merits, I should have thought it was quite simple when taking the ordinary typical cases, which will be nine-tenths of the cases concerned. If it is right to say that when rent-restricted property is requisitioned people are not to make a profit by getting more from the Government than they could from a tenant, it would be wrong to draw an artificial distinction if the premises happened not to be requisitioned because they were let. Very often premises are requisitioned because they are not subject to a tenancy and, therefore, it causes less inconvenience. In the case of houses in exactly the same position in law, being subject to rent restriction, it would be wrong that one of them should have its restricted compensation and the other should have the full compensation which the open market—whatever colour the open market might be—would bring. That, on the merits, is the answer.

If we look at the legal position, in all normal cases the position taken up by the courts is to regard a dwelling-house, almost as a matter of status, a rent-restricted dwelling-house. They would say they did not care whether they were let on a normal tenancy or not. The house has got that status and cannot lose it. Regarding the further point of the hon. and learned Member for Daventry on the difficulty of calculation, it is always difficult in cases before the courts. In many cases they calculate the standard rent plus the permissible increase. I cannot see why it should be more difficult to calculate in the case of a place that is not let at the normal rent. There comes a moment when they must make up their minds what is the permissible increase, and they must do it.

I wish to refer to one point mentioned by the hon. Member for West Dorset (Mr. Diggby). It was rather an odd point, and I think he was wrong. Anyone who is right on the Rent Restriction Acts is a very lucky person, whether he is a lawyer or not. The case given by the hon. Member is that of the house that had been always occupied by the owner. Is it fair, he asked, that such a house should suddenly be subject to the Rent Restriction Acts? It is rather a peculiar position. If the house had always been occupied by the owner, under this it is notionally rented—it is treated as if it were rent-restricted; so he has to give no more than the standard rent? It will be at the rent at which it will be notionally let at the time, whether today or tomorrow or the day after, so, in fact, it will get the full rent which it could actually get in the open market at that time. It may be that the Government may wish it to be so—I do not know.

I should like to take up the question of the proprietor who has been living in his house all the time since it has been built, and despite that fact it comes within the value level to be rent-restricted once it is let. If the rent is one that attracts rent-restriction, the Government come along and by requisitioning the house put the man in the position of having to accept the value at the time the Government requisitioned it. I should have thought it fair to say that in the course of requisitioning that man had suffered damage. The period of time during which he would have lived in the house would have been extended, and then at the later stage when the house was requisitioned under this Clause, the value would have increased.

I do not think the hon. Member quite follows the point. It is that while the man would get what would be theoretically a restricted-rent compensation, what he would get in fact would be the open market value, because the open market rent would be the restricted rent.

I appreciate that. The point I am making is that if the Government had not requisitioned the house at all, then the owner could, at a later stage, have let it at a higher rent. I think that is accepted. Therefore, he is damaged by the Government to the extent of the time lag for which it is restricted. I do not know whether I have made the point clear.

This particular Amendment and the two which come a little later on the Order Paper are designed, as the hon. and learned Gentleman said, to secure that the standard rent in the case of rent-restricted property applies only to the case where the property is at the moment subject to a standard rent at the time when requisitioning takes place. In the view of the Government, it would take this thing far too wide for us to acept this Amendment. We start, as the hon. and learned Member for North Hammersmith (Mr. Pritt) said, from what we think is a simple, straightforward, commonsense, and just position; and that is, that an owner should not receive from the Government a greater rent than he would have received from someone outside. Therefore, if when it comes to be let to an ordinary individual the Rent Restriction Acts apply, it would be unfair for the taxpayer, through the Government, to pay that owner more. It follows from that assumption that the suggestion made here does, as I say, take the matter far too wide.

If I may say so, there is some misunderstanding among hon. and right hon. Members on the other side of the Committee about the position of an owner-occupier. The position, again as the hon. and learned Member for North Hammersmith said, is that an owner-occupier who lives in a house which has never, up to then, been let, is not subject to the Rent Restriction Acts in that a standard rent is fixed for him; a standard rent, if he lets the property himself, is the rent obtainable on the first letting, whatever that may be. He is entitled to take whatever rent he can get in the open market when he lets the house. It may be that right hon. and hon. Members opposite have overlooked that point, and it is that type of case to which their minds have been directed.

This matter is, I quite agree, fraught with a good deal of difficulty when we come to phrase Clauses in a Bill dealing with it, and I am somewhat under limitations just now because, as has been said, we have, a little later on the Order Paper, an Amendment which seeks to clarify and expand what we are trying to do here in the way of fixing rental compensation. Therefore, I do not want to forestall what will be said by hon. Members on this side of the Committee, and the other side, when we reach that Amendment. But I must say that what is proposed in this Amendment goes far too wide in so far as the owner-occupier is concerned. He is already covered. This is partly the reply to the hon. Member for Ecclesall (Mr. P. Roberts). The only other type of case which I think he had in mind is where someone who had his house requisitioned might have put furniture into it and let it as a furnished letting. I think it will be agreed that we ought not to legislate for possibilities of that kind. There are two tests to be applied. One is where a house has been subject to the Rent Restriction Acts, whether a ceiling should apply, and the Government should not have to pay more than an ordinary tenant would have to pay; secondly, where a house is rated as residential, it should be treated as residential and empty, and not as furnished.

I would ask the Committee to reject this Amendment, particularly as we shall be returning to this point when we come to deal with a more reasoned Amendment on the Order Paper quite shortly.

Before the Committee leaves this point, may I deal with the position of the owner-occupier? There are many cases in my constituency where a Service Department has taken possession of a house which was owned, and occupied, by the same person early in the war. As I read this provision, and being guided by the speech of the hon. and learned Member for North Hammersmith (Mr. Pritt), compensation under this Clause will be limited to the rent which would have been prevailing at the time possession was taken of the property.

No, if a standard rent for that house at some previous time had not been established. If it had never been let, then the sky's the limit here.

Although it is true that we shall have an opportunity of returning to this later, I am still not at all convinced that the Government have got the right principle about this. The attitude seems to be that if a building falls within the general size, scope and value which makes it subject to the Rent Restriction Acts, then there can be nothing but the permitted rent, whether the house is subject to the Rent Restriction Acts or not. For instance, houses under the Housing Authorities Act are not subject to the Rent Restriction Acts. Is a different system of rental compensation to be adopted in respect of precisely similar dwellings irrespective of whether the Act was in operation or not? Take service tenancies, of which there are a great number. They are not subject to the Act. Are they to be deemed to be subject to the Act?

The other point which occurred to me is of more profound significance. I cannot but feel uncertain in my own mind whether we are approaching this question of rent-restricted houses from the right point of view. There seems to be a general impression abroad that the reason these Acts were passed was to deprive landlords of some of their gains. They had that effect, although that was not their purpose. The purpose was to protect the tenant. It is my *broad submission that where no tenant is protected by legislation, there is no relevance in applying the Rent Restriction Acts. It seems to me plain that if the Government requisition a house, it is not protecting a tenant. It follows that they are using it for their own premises, and doing the very reverse of protection. What is the justification for giving a landlord less than the value of the house?

I put these points to the right hon. Gentleman in the hope that he will look at this again. I do not want to ask for anything unreasonable, but let us consider the purpose for which we pass our legislation. The tenant was to benefit from the Rent Restriction Acts; if he is not to benefit by this Act in any way, the relevance of the Rent Restriction Acts fails. I hope the right hon. Gentleman will consider this as a matter worthy of serious consideration.

Amendment negatived.

To report Progress, and ask leave to sit again.—[ Mr. Popplewell.]

Committee report Progress; to sit again Tomorrow.