Our recommendations are based on the view that a transitional period is necessary before we can get back to a complete freedom from restrictions. During this period it is hoped that a sufficient number of working-class houses will have been provided, by private enterprise, or by the State or by the Municipalities, or by any or all of these, to have reduced the shortage to a point at which the house-owners would no longer be in a position to demand and obtain excessive rents, and our suggestions have been framed with a view to assisting the achievement of this object. Increases of Rent. 8. The increase of rent permitted by the present Act is composed of all, or some, of the following: (a) For structural alterations (other than decoration or repairs), 6 per cent. on the outlay if incurred between 4th August, 1914, and 2nd July, 1920, and 8 per cent. on the outlay if incurred after 2nd July, 1920. †(b) In so far as the landlord pays rates, an increase equal to the increase in rates over the rates paid in the rate period including 3rd August, 1914, or the rate period including the date when rates were first paid. (c) An increase of 15 per cent. of the net rent. (d) Where the landlord is responsible for the whole of the repairs, an increase of 25 per cent. of the net rent. If the landlord and tenant share responsibility for repairs, the 25 per cent. is split up in proportion to their responsibility. 66 The actual rent legally chargeable, therefore, is the "standard rent" plus the increase. Standard rent" means the rent in August, 1914, or where the house was not let in August, 1914, the rent when it was last let previously, or in the case of a house first let after August, 1914, the rent at which it was first let. In any case where the rent is less than the rateable value, the rateable value at the appropriate date is the standard rent, except that in the case of a tenancy where the rent is less than two-thirds of the rateable value, that tenancy is ignored for the purpose of calculating the standard rent. "Net rent " is the standard rent less the amount of the rates paid by the landlord. The increase of 40 per cent. of the net rent which is allowed by the present Act is explained by the Report of Lord Salisbury's Committee as being arrived at as follows: 25 per cent. of the net rent to cover the increased cost of repairs. 10 per cent. of the net rent to enable the owner to pay the in creased rate of interest of 1 per cent. allowed to the mortgagee under the Act (two-thirds of the value of the house was assumed to be mortgaged). per cent. of the net rent to give the landlord an increased rate of interest of 1 per cent. on his own capital. Provision was also made whereby if the landlord did not carry out his responsibility for repairs, the whole 40 per cent. increase was suspended (see paragraph 13 of this Report). † Subject to modification in the case of Scotland (see page 11). (B 32/14)Q A 3 Considerable difference of opinion existed among the witnesses as to whether these permitted increases should or should not be altered in any amending Act. On the one hand, we have been urged that it is necessary to allow a greater increase to the house-owner in order to put him in as good a position as before the war, and on the other hand, it has been suggested that inasmuch as the cost of repairs, and the cost of living generally have decreased, the increase permitted should now be reduced. It seems clear to us from the evidence submitted that in the case of some houses in some parts of the country an increase would be justified, while in the case of other houses in other parts of the country the present increases are amply sufficient, and in fact in many cases have not been fully imposed. We have considered this question very carefully. It is clearly in the interests of all parties that no action should be taken which would discourage the provision of new houses. A decrease in net rent would certainly have this effect by widening the gap between rents of old houses and rents of new houses. A uniform increase of the present rents, while helping to bridge this gap, is hardly possible with the present widespread unemployment and falling wages. Possibly some tenants should pay an increased rent, but such tenants are comparatively few in number, and they are certainly not the majority of tenants at the present time. There is the further consideration that it is undesirable to alter the present increases permitted, which are familiar to all persons, during the remainder of the comparatively short period during which we recommend that restrictions should continue. On these broad grounds, therefore, we have come to the conclusion, that except in the case of a tenant who sublets part of his house, the increases should not be altered. In making the foregoing proposal we wish to make it clear without possibility of misunderstanding that we do not suggest that the present maximum increase of 40 per cent. of the net rent is the increase of rent which should reasonably be charged in all cases, or that the increase of rent which is now permissible under the Act should be regarded as representing in any way our view of the basis upon which the rent should be fixed when the restrictions are withdrawn. The moment the restrictions are withdrawn the statutory rent increases will cease and the settlement of rent should become entirely a matter of free bargain without any reference to the statutory rents which were chargeable during the periods of restriction. As we have stated above, in a large number of cases the full legal increase of 40 per cent. has not been imposed by landlords. We do not wish to recommend anything which would affect this position. The Committee has had its attention drawn to the incidence of cost of repairs in the case of the tenants of colliery companies' houses. It is alleged that the system by which the colliery companies charge the cost of repairs against the industry as a condition precedent to the fixing of wages has had the effect of making the tenants pay a larger sum than 40 per cent. We think this matter should be inquired into and corrected, so that the tenant in no case shall directly or indirectly pay more than the statutory 40 per cent. increase. It has been strongly represented on behalf of the Scottish houseowners that in consequence of the different method of rating in Scotland they are placed at a serious disadvantage as compared with English owners in relation to the 40 per cent. increase of rent allowed. In England the local rates are payable wholly by the occupier, whereas in Scotland they are levied partly upon owners and partly upon occupiers. Thus in Glasgow in 1921-2, the rates were— 5s. 3d. per £ while in similar circumstances in England the requirements of the rating authorities would have been provided for by a rate of 13s. 10d. per £ falling wholly on occupiers. In normal conditions the Scottish owner would recoup himself by charging a rent sufficient to cover his part of the rate as well as the other outgoings incidental to the upkeep of the property, but he is prevented from doing so at present except in so far as allowed by the Rent Restriction Act. The Bill-which afterwards became the Act of 1920-contained a clause to remedy this, as recommended by the Report of Lord Hunter's Committee dated the 31st December, 1918 (para. 43), and as previously inserted in the Act of 1919, which the 1920Act superseded. But this clause was so modified in the passage of the 1920 Bill through Parliament as seriously to reduce the equalising concession proposed to be made to the Scottish owner. The Committee recommend that this matter should receive attention in connection with any new Act. The houses to which a new Act should apply. 9. The present Act applies to any dwelling houses where either the standard rent or rateable value is not more than £105 in the Metropolitan Police district, £90 in Scotland, and £78 elsewhere. The restrictions apply to any portions of a house let separately, and to a house part of which is used as a shop or office, &c. The restrictions do not apply (1) To any letting where the rent includes payment for board, attendance or use of furniture (except that profiteering is punishable by a fine); (2) To a house let together with other land or buildings, unless the rateable value of the extra land or buildings is less than a quarter of the rateable value of the house; or (3) To any house built after the 2nd April, 1919, or to any house bona-fide converted since that date into two or more selfcontained tenements or flats. The rental limits in the present Act were reached by three stages. The Act of 1915 made the limits £35 (London), £30 (Scotland), and £26. (elsewhere); the Act of 1919 doubled these limits, and the present Act trebled them. A large number of witnesses have urged that if it is not considered feasible to remove all restrictions in 1923, it may at least be found possible to make a beginning in this direction. It is contended that the tenants of the larger houses are those in the best position to purchase (B 32/14)Q A 4 their own houses, or to rent new houses at an economic rent; and that the effect of removing restrictions from them will create a demand which will speed up considerably the building which is taking place at present, and which is mainly of this type of house. The building of the better class of house in any considerable numbers will allow of a moving up process which will help to relieve the pressure on the smaller houses. We agree generally with these contentions, and consider that as control was imposed by definite stages, the natural method of decontrol is by the same stages. We therefore suggest that houses in England and Wales first included under the 1920 Act should not be included in any new Act; that at Midsummer, 1924, the restrictions should be withdrawn from houses in England and Wales first included in the 1919 Act, and that at Midsummer, 1925, all restrictions should lapse. In effect this means that an existing tenant of a house first protected by the 1919 Act will have over 15 months in which to make arrangements, either in the form of a new agreement with his landlord under the provision which we propose below, or by purchasing or renting another house. Tenants of the lower rented houses would have over two and a quarter years in which to make their arrangements. In the case of Scotland the corresponding withdrawal dates would be Whitsunday (28th May), 1924, and Whitsunday (28th May), 1925. Our next proposals under this head are also designed gradually to reduce the scope of protection. They are- (1) That when any house to which the Act applies is or becomes wholly vacant after the publication of this Report, it shall be withdrawn from the scope of the Act. (2) That at any time during the period of operation of the new Act the tenant of a house to which the Act applies shall have an exerciseable option to enter into an agreement with his landlord enforceable by both parties, for a lease of the house, the term of such lease (which may begin to run from any date to which the parties may agree) to extend beyond the date at which the new Act ceases to apply to the house, on any terms as to rent, &c., which may be agreed upon; provided, however, that in the case of such a lease or agreement in respect of a house which would remain under the protection of the new Act until 1925 the lease or agreement shall not be valid until the landlord has obtained the approval of the Court. With regard to the first proposal, we are of opinion that it will immediately lead to an increased use of the present available housing accommodation without inflicting hardship on any person. At present, when a house becomes vacant, the owner usually keeps it vacant until he can obtain a purchaser. He does this, not only because the rent which he can obtain from a new tenant is restricted, but because if he accepts a new tenant he cannot afterwards sell with vacant possession. Under this proposal, the owner who desires to sell will in the absence of an immediate purchaser be able to let the house on a tenancy terminable at short notice, while he is awaiting a purchaser. If he does not desire to sell, he can let the house at whatever rent it will command, just as if it were a house erected since April, 1919. We confine our recommendation to the case of a whole house which is or becomes wholly vacant; we do not think that it could be applied to the case where a part only of a house becomes vacant. With regard to the second proposal, it will be seen that none of the existing rights of the tenant are taken away. He may still, if he chooses, stay on as a statutory tenant under the protection of the Act, at the restricted rental, until the Act lapses as regards his house. The proposal will, however, allow him, if he chooses, but only if he chooses, to obtain security of tenure for a period extending beyond the period of his protection as a statutory tenant. At present he cannot do this, inasmuch as such an agreement would be invalid in so far as the agreed rent exceeded the maximum legally authorised by the Act. Having regard to the fact that the tenant has the definite option of staying on as statutory tenant, or becoming a tenant under an agreement, it is clear that he is in a position to protect himself from any exorbitant increase of rent demanded as the price of the agreement. This second proposal, if adopted, will probably be mainly applied in the case of houses not of the working class. In so far as it is a step towards restoring freedom of contract between landlord and tenant, and so bringing rents nearer to the economic level, it will stimulate. the supply of houses of this character; and it must be borne in mind that the increase in the supply of this class of house will automatically reduce the pressure on working-class accommodation. The proviso requiring the approval of the Court in the case of agreements in respect of the lowest rented houses will confer a protection upon tenants of such houses who are not accustomed to tenancy agreements and might possibly be victimised under this proposal. We have carefully considered whether any alteration should be made in the provisions respecting business premises attached to dwelling-houses. In view of the proposed short duration of all the restrictions, the difficulty of discrimination, and the number of such premises which will automatically come out of the Act in 1923 and 1924, we do not recommend any general alteration in the present provisions. We have, however, received communications from the Brewers' Society and certain licensing justices suggesting that licensed houses should be withdrawn from the Act; and we have obtained the views of the Licensed Victuallers' Defence League, who suggest that, in the case of a tenant proved to be an undesirable tenant by reason of a conviction for such a breach of the licensing laws as would imperil the continuance of the licence, the landlord shall have power to apply to the justices at petty sessions or transfer sessions for an order for possession of the premises in question, the onus of proof to be on the landlord. It will be remembered that the jurisdiction of the justices over licensed premises is extensive, and no transfer of a licence is valid without their consent; and, in consequence, we think that there is small chance of hardship by eviction being inflicted on a tenant, as the whole circumstances must come before the justices before the (B 32/14)Q A 5 |
