I move that the Bill be now read a Second Time.
The main object of this Bill is, as the explanatory memorandum states, to encourage the maintenance in proper repair of the present stock of controlled houses and to do this without causing any hardship to existing tenants.
Deputies will need no convincing on the vital importance of preserving as long as possible what stocks of housing we already have, and on how much more economic it is to spend money on repair and reconstruction than on replacement of such stocks by new buildings. This is particularly relevant when the demand for new housing continues to exist at such a high level. Moreover, this country has a high proportion of old housing. The percentage of our housing stock which was built before 1919 is, at 58 per cent, one of the highest in Western Europe. Only France, which has 62 per cent, exceeds it. We, therefore, particularly need to provide every encouragement possible to keep our old houses in good repair. The provision of repair and reconstruction grants on a considerable scale has done much in this direction. Some 153,000 houses have been repaired or reconstructed since 1948. These grants are for repairs of a more or less capital nature and not for ordinary running repairs. It is only common sense to advocate a "stitch in time" policy in the matter of housing maintenance to be followed by all owners of old houses, whether they be owneroccupiers, local authorities or private landlords.
We are concerned in this Bill only with premises owned by private landlords which remain under the control of the Rent Restrictions Act, 1960. A considerable number of rented dwellings are still controlled, though the proportion of controlled to uncontrolled dwellings is continuously declining. This is primarily due to obsolescence of existing dwellings and the construction of new, and, therefore, uncontrolled, dwellings. Figures relating to the subject are hard to come by but in 1961 the percentage of controlled dwellings was approximately 14 per cent.
There is no doubt that controlled rents are far below present open market levels, even when full allowance is made for the fact that many of the dwellings involved lack amenities which are now provided as a matter of course in new houses. And I think there will be no disputing the proposition that. having regard to the increase in the cost of repairs since 1960, when landlords who were liable for repairs were given their last increase of 12½ per cent, landlords who have to carry out such repairs can do so only at a considerable reduction in their net income and a corresponding disinclination to have the premises properly maintained. Perhaps I might, very briefly, sketch the background to the increase of 12½ per cent given in the 1960 Act. In 1960 most of the controlled property, that is, that built before 1919, was controlled at rents which were 25 per cent above actual 1914 rents and the only additions permitted to those rents were for rates, where the landlord paid them, and for any expenditure by the landlord on improvements, structural alterations, or certain exceptional repairs. By then repair costs were over seven times the 1914 level.
Since 1960 the cost of repairs to house property has increased substantially as a result of increases in building wages and the cost of materials. The increase in building costs is estimated officially at 29 per cent from 1960 to June, 1966, but, as the proportion of labour to materials in house repairs is higher than in building operations, the figure for the increase in repair costs would be substantially higher than this. Moreover, the increased incidence of income tax since 1963 on the income from unfurnished lettings has further reduced the net income from controlled property.
It is against this background that I am proposing in this Bill certain measures to encourage the maintenance of controlled property in proper repair and, not only this, but to strengthen the remedies of the tenant against the landlord who fails in his obligation in the matter of repair.
First of all, the Bill proposes to allow an increase of 15 per cent in present net rents, subject to a minimum of 2/6 weekly. This increase is no more than the maintenance of the status quo as in 1960, and it is subject to the important limitation that not only must the landlord be liable for repairs but he must have spent certain specified sums on the repairs in the six years before the 8th June, 1966, when the Bill was introduced. The form of notice of intention to increase the rent, which every landlord must serve to avail himself of this increase, must contain particulars of this expenditure. In other words, only landlords who have actually been carrying out the repairs are going to get the increase. I think it is a reasonable provision, and that tenants generally, who are equally interested as the landlord in the proper maintenance of their dwelling accommodation, will regard it as such.
The second provision relating to the maintenance of controlled houses is that which proposes to allow a lawful addition to landlords who have to spend more than one-fifth of the current rent in any year on any kind of maintenance. The addition is to be 10 per cent on the excess expenditure. This addition will replace the existing provision allowing the landlord a graduated percentage of his outlay on what might be called "once-andfor-all" expenditure on major repair and reconstruction work. It is at present 15 per cent on the first £100 of the excess expenditure over two-thirds of the basic rent, 8 per cent on the second £100 of the excess and 6 per cent on the remainder. As the law stands, there is no provision for the recoupment to the landlord of what might be heavy expenditure on other repairs, for instance, on the replacement of the water pipes leading from the mains. He has no incentive whatever to incur expenditure on regular outside painting, which is necessary to preserve the fabric of the building itself, quite apart from any considerations of decorative effect. The Bill will ensure that, where landlords comply with their obligations to keep the premises in repair, they can no longer say that they will not receive a reasonable return on the expenditure or that it is unfair to expect them to incur the expenditure while restricting rents below open market levels.
As a corollary, the Bill proposes, in section 11, to remove a great deal of the present uncertainties as to the incidence of liability for repairs in weekly or monthly lettings. The tenants of many of these lettings have no written agreements and there is very often a great deal of difficulty experienced in determining who is liable for particular repairs. From now on tenants will be able to pinpoint liability in this respect. The section implies a covenant in such lettings that the landlord will be liable for keeping in repair the structure, including floors, the exterior, including painting facilities for water, gas, sanitation, electricity, etc. and, in the case of flats, the ceilings. This provision, together with the increased powers which section 8 gives to the court to reduce the rent in cases where landlords neglect their repairing responsibilities as well as the increased powers in this regard conferred on tenants by the recent Housing Act, will ensure that tenants can insist on their dwellings being kept in good repair at all times. Tenants have, of course, a number of other remedies against a landlord who fails in his obligation to keep property in repair and the removal of uncertainties about liability to repair will give these remedies fresh significance.
I should like to draw special attention also to the provision in section 7 which enables a tenant to disallow a lawful addition obtained by the landlord for expenditure on maintenance if he satisfies the court that the expenditure was rendered necessary by breach of an obligation imposed on the landlord by contract or statute and that the landlord has not, during the three years immediately preceding the expenditure, spent a reasonable sum on the maintenance of the dwelling. However, in order that landlords may have an opportunity to put controlled property in good repair, it is proposed that this provision will not apply except to expenditure incurred on repairs done in 1970 or subsequently.
What I have said so far deals with the primary purpose of the Bill, that is the conservation of existing controlled property, but the provisions in section 2 for the decontrol of certain houses will also indirectly server to further that purpose. The proposed decontrol will take place in two ways, in each case with full protection for the interests of existing tenants. First of all, there will be an extension of decontrol on the landlord getting vacant possession. At present there is decontrol on getting vacant possession only in respect of houses exceeding £30 valuation, in Dublin, and £25, elsewhere. Under the Bill this will apply to all houses and also to self-contained flats. This provision naturally does not affect sitting tenants at all. The other decontrol provision in section 2 is that which provides for the decontrol of houses exceeding £40 valuation, in Dublin, and £30, elsewhere. The tenants who may be decontrolled under this provision are being given by section 12 automatic rights to a 21 years lease under Part III of the Landlord and Tenant Act, 1931. I should not imagine that there are many rented houses in these valuation categories which would be occupied by persons who could not reasonably be asked to pay an economic rent for them, but, in case there are, I have made special provision to ensure that no such tenant can be required to pay a rent under the new lease which would cause him or her hardship. The decontrol will not apply to existing lettings of rooms or flats in houses which are over the valuation limits. Moreover, future lettings of rooms and non-selfcontained flats in houses decontrolled under either of these provisions will still be subject to control, though section 5 of the Bill provides that the controlled rent will be determined on a basis which will not be quite so restrictive as at present.
The final provision to which I should like to draw attention is that which will enable what I might call the "small" landlord to have a fair rent fixed by the district court, a rent which will be reasonable and which will take into account all the circumstances of the case but, in the words of the Bill, in particular the necessity of avoiding financial hardship to the tenant and the landlord. I am satisfied that this is a fair and just provision to insert in the Bill and that it will help to remove what I consider to be an anomaly in the present code. I have had several instances brought to my notice—and I am sure every Deputy in the House will know of similar cases—where the landlord has only one house or a few houses and is in relatively bad circumstances whereas the tenant is very comfortably off. Where this is the case I see no reason why the tenant should not be asked to pay a fair rent for the house, a rent he can afford. It will be observed that this provision applies only to the review of the rents of controlled houses. It does not apply to any lettings of rooms or flats, which will continue to have the full protection of the Act as regards the restriction of rents.
In general, the Bill is being put forward by me as a reasonable attempt to deal with a matter which is of vital importance to tenants as well as to landlords. From the landlord's point of view it will put him in a position to maintain the premises properly by enabling him to recoup the costs of necessary repairs. From the tenant's point of view it should help to ensure, so far as the law can do it, that controlled tenants will have properly maintained houses to live in for as long as proper maintenance can keep these houses in existence. On this basis I believe that it will be regarded, by tenants as well as by landlords, as being a fair and reasonable approach to the problem, and I hope that in principle it will commend itself to the House.
The Bill itself is, in form, somewhat complex, and necessarily so, because it is mainly concerned with amendments of the provisions of the 1960 Act. For this reason I have had included in the Explanatory Memorandum, circulated with the Bill, an Appendix which shows the effect of these amendments on the 1960 Act and I hope that this will be of assistance to Deputies. I considered the possibility of repealing the 1960 Act entirely and its re-enactment in amended form but I think that, on balance, the course which has been adopted is the better alternative. When the Bill becomes law arrangements will be made to have the sections as amended printed in such a way that they can be incorporated in existing copies of the 1960 Act.
Although on this Stage we are concerned with matters of principle, I shall endeavour to clarify any particular provisions on which Deputies may require further information. As to the principles themselves, I feel sure that every Deputy will be interested in seeing that the existing housing stock is properly maintained and that tenants have full facilities to avail themselves of their remedies against landlords who neglect their repairing responsibilities. I want to say that I shall give very careful consideration to any suggestions which may be made in the course of the debate towards enabling these objects to be more effectively achieved. On this basis I commend the Bill to the House and ask that it be given a Second Reading.