This is a measure to consolidate and amend the whole of the existing law relating to rent restriction which is at present contained, partly, in the series of Increase of Rent and Mortgage Interest (Restrictions) Acts commencing with the 1923 Act and, partly, in Emergency Powers (No. 313) Order, 1944, as modified by the amending Order made this year. It may, therefore, be of assistance to Senators if at the outset I review briefly, as I did on the corresponding stage in the Dáil, the history of rent restriction as embodied in these various enactments.
The increase of Rent and Mortgage Interest (Restrictions) Act, 1923, was, like the Act it replaced—the British Act of 1920—expressed to be a temporary measure with a limit of three years on its period of operation. It continued the application of control to pre-1919 built premises with a poor law valuation not exceeding, in Dublin, £60, and, elsewhere, £40. Houses built after the 2nd April, 1919, and flats newly constructed after that date were exempt from control. The Act passed in 1926 had as its purpose the prolongation of control for a further period of three years during which decontrol would be gradually effected by a reduction year by year of the poor law valuation limits of control until complete decontrol was achieved in 1929. The expectation that control would be completely dispensed with by the year 1929 was not realised, and, in fact, the process of decontrol which the 1926 Act had introduced was arrested by a further Act passed in 1928, by which time the poor law valuation limits of control had been reduced to £30 in Dublin and £25 elsewhere. This continued to be the position until early in 1944 when the stress of emergency conditions made it necessary to consider the question of extending rent control to a wider range of premises. This was done by Emergency Powers (No. 313) Order, 1944, under which premises with a poor law valuation not exceeding £60 in Dublin and Dun Laoghaire and £40 elsewhere were brought under control Thus rent restrictions were applied for the first time to houses built after 1919. Under an amending Order which was made this year, premises erected after or in course of erection on the 8th February, 1944, and premises reconstructed into flats since that date were exempted from the scope of the original Order. Broadly speaking, the present position is that rent control applies to all existing premises of a poor law valuation not exceeding £60 in Dublin and £40 elsewhere.
Except for the fact that different standards are provided for the determination of the lawful rent, there is no essential difference between the control imposed by the Acts and that imposed by the Emergency Powers Orders. Under the 1923 Act rents are restricted by reference to the 1914 level of rents while under the Order the 1941 level provides the basis.
Before I go on to deal with the Bill itself, I should, perhaps, refer to the Reports of the Town Tenants (Occupation Tenancies) Tribunal. This tribunal was set up under the chairmanship of Mr. Justice Black in 1936 following the passing of resolutions by the Dáil and Seanad. The tribunal, after a long and painstaking examination of the problem, presented separate and conflicting reports early in 1941. Even though the reports revealed wide differences of views on fundamentals, the tribunal's careful and detailed examination of the existing Rent Acts and the suggestions made for their improvement have been of considerable assistance to us in the preparation of the measure that is now before the House.
Senators will probably recall that when this Bill was first circulated, there was circulated with it an explanatory memorandum. During its passage through the Dáil the Bill has been fairly extensively amended—especially Part III, which contains the new and special provisions for the relief of poorer classes of tenants. Accordingly, in some respects the explanatory memorandum no longer correctly represents the provisions of the Bill. If for no other reason but this, it is probably desirable that I should endeavour to explain, as briefly as I can, the Bill's more important and complex features.
The Bill proposes to repeal in their entirety all the existing Rent Acts and to re-enact, with certain amendments and improvements in form and drafting, almost all the provisions of these Acts. The Bill also incorporates the Emergency Powers Orders which will be revoked as soon as the Bill becomes law. Thus the whole rent restriction code will be contained in a single Act which will obviously be of considerable advantage to everybody concerned.
In so far as the Bill proposes to continue the control of pre-1919 houses that are at present controlled by the 1923 Act, one important change proposed is that embodied in the attempt which Chapter 1 of Part II makes to dispense with the need for the production of evidence of actual 1914 rents or of estimated 1914 letting values. The need for some amendment of the law in this regard must be self-evident. It is hardly necessary for me to stress the difficulty of producing reliable evidence, after the lapse of more than 30 years, of the rent that was paid in 1914. It is clearly desirable, therefore, that we should endeavour to frame provisions which will make it unnecessary to go back to 1914 in order to get the evidence essential for the determination of the lawful rent. It is important, however, to remember that there are many cases in which the lawful rents have been settled on the basis of the existing law, either as the result of court proceedings or by agreement between the parties where the 1914 rent was known. Senators will, I am sure, agree that it would be most undesirable that any such settled cases should be disturbed. To do so would serve only to create uncertainty and to open up possibilities of quite unnecessary disputes and litigation.
The only feasible way by which the objects we had in view could be achieved was by preserving the 1914 standard as the fundamental basis for determining the lawful rents in these cases while, at the same time, so framing our provisions that it would be unnecessary to produce evidence of actual 1914 lettings. This we did by dividing all 1923 Act controlled premises into two categories. First, we took those premises the standard rents of which have been determined by the court under the 1923 Act and the amounts of which are known. In these cases, Section 8 of the Bill provides that the basic rent shall be the sum of the standard rent and the increase thereon of 20 or 25 per cent. permitted under the 1923 Act according as the premises are a dwelling or a business premises. Section 8 embraces all those cases in which the standard rent, having been determined by the court, is now a matter of official record and, therefore, easily and readily ascertainable.
In the Dáil, the scope of Section 8 was widened so as to embrace cases in which the standard rent had been the subject of arbitration proceedings. This was done primarily in order to cover the case of one large Dublin company which has, for many years, played a prominent part in the housing of the working-class section of the people at very reasonable rents. I should, perhaps, avail myself of this opportunity to make it clear that no special privilege is being accorded to this company. Their houses remain subject to control as they always have been under the 1923 Act, but, instead of having the basic rents determined by the court under Section 9, the basic rents will be settled under Section 8, without recourse to the courts, by reference to the actual 1914 rents of which there are complete records available. The rents of the company's houses were the subject of an arbitration award by an arbitrator appointed by the Minister for Home Affairs of Dáil Eireann—I think it was in 1920—and, in a sense, therefore, the case is on a par with those cases in which standard rents were settled by the courts in proceedings under the 1923 Act.
The second category of 1923 Act cases comprises all cases in which the standard rent has not been determined by the court or as the result of arbitration proceedings. In these cases, under Section 9 of the Bill, the basic rent must be determined by the court as the amount which the court considers to be reasonable having regard to the basic rents of other 1923 Act controlled premises. At the outset basic rents for comparison purposes will have to be found entirely from within the category of Section 8 cases. In that connection I might mention that the intention is to have prepared registers of standard rents already determined by the courts. To these registers will be added, from time to time, particulars of basic rents determined under the new Act and, in this way, a record of standard and basic rents will become available which should be of considerable assistance to landlords and tenants and also to the courts.
It may be said, in criticism of the scheme embodied in Chapter I of Part II of the Bill that, since there will probably be many cases coming within Section 9, in which the parties have been able, on the basis of the known 1914 rent, to settle the lawful rents between themselves without recourse to the courts, the effect of the new provisions will be to render such cases liable to be made the subject of litigation under Section 9. It is true that theoretically these cases would be liable to be reopened under Section 9. In practice this is most unlikely to happen. The basic rents of the premises by reference to which the rent of a house in such a case would have to be determined under Section 9 are themselves determined by reference to 1914 rents. It would, therefore, be a foolhardy tenant or landlord who would resort to court proceedings in order to try to upset a rent arrived at on the basis of the known 1914 rent, and agreed upon as the rent lawfully permitted under the 1923 Act.
Chapter 2 of Part II re-enacts the provisions of Emergency Powers (No. 313) Order, as amended by the recent Order, governing the fixing of lawful rents for premises to which Chapter 2 applies, these being the premises at present controlled under the Emergency Powers Order. The basis for the determination of the lawful rent in these cases is the rent passing on the 7th May, 1941, or, if the premises were not let on that date, the rent at which they were last let during the previous five years. This follows the scheme for the 1923 Act, but with 1941 rents furnishing the standard, it is free from the objections that can be urged against the continued application of the 1923 Act provisions to premises controlled under that Act.
The provision of two different standards for the determination of the lawful rent, each applicable to distinct categories of premises, made it necessary to consider the position of premises that might, by reason of a change in the rateable valuation, slip from one category into another. For example, a pre-1919 built house of £29 poor law valuation would be subject to control under Chapter 1 of Part II. If, on a revaluation, the poor law valuation were raised to £31, it would come within Chapter 2 control. The converse case of a reduction in the poor law valuation bringing a house from Chapter 2 control into Chapter 1 control might occur, although perhaps more rarely. The point is of importance to both landlords and tenants since, in one case, the change might mean a substantial increase of rent for the tenant and, in the other, a substantial reduction for the landlord. I feel that a change in rateable valuation should not, in itself, operate to effect either an increase or reduction in the rent. Variations of the basic rent, if permitted during the period of control, could only lead to uncertainty and doubt, and might well operate harshly and unjustly against genuine buyers for value of controlled premises. Accordingly, the Bill provides—the relevant provisions are Section 7 (2) (b) and Section 10—that Chapter 1 controlled premises will remain subject to Chapter 1 control even though an increase in the rateable valuation may have taken place which would otherwise have taken the premises into Chapter 2, and, in the converse case, premises will remain subject to Chapter 2 control despite a decrease in the rateable valuation. I think that this is the best solution.
Part III of the Bill provides the one really novel feature of the measure as compared with the existing legislation and, possibly for this reason, has excited more interest and discussion than any of the other provisions of the Bill. Part III puts at the disposal of poorer classes of tenants a cheap, simple and expeditious means of having their rents reviewed by the courts and, where they are too high, having them reduced to the lawfully permitted limit.
Views may differ as to the need for special provisions on the lines of Part III of this Bill. For my own part, I believe that such provisions are necessary, although I am not prepared to go so far as to agree with the statements that have been made that we shall have mile-long queues of tenants waiting at the Dublin District Court to apply for provisional orders. The problem of how the Rent Act code could be made a really effective instrument of relief for the class of tenants who needed protection most was discussed at some length in the Agreed Report of the Town Tenants' Tribunal. There we find it stated, as the considered and unanimous view of the tribunal, that, by reason of the usually tedious, troublesome and complex nature of Rent Act cases, "so far as many of the poorer tenants are concerned, that is to say those who need the Rent Acts most, this great remedial code is a dead letter." There can, I think, be little doubt that, through poverty or ignorance of the law, or because of a reluctance or inability to institute legal proceedings with their attendant formalities, many tenants fail to secure for themselves the relief which the law provides for them. The conclusions of the tribunal in this regard are, I believe, borne out by the experience of social workers who move among the poorer sections of the people.
The tribunal's proposal for the appointment of special officers with specified functions as a solution of the problem was carefully examined and it was only after the fullest consideration that it was decided not to act on it. It was felt that to interpose between the tenant and the court an officer with powers to conduct a kind of preliminary investigation of the case would only make for more protracted proceedings and would, in the long run, defeat its own purpose. This would certainly be so in the case where the landlord proved "difficult"—the very kind of case in which the tenant would be most in need of relief. It seemed to us after a careful examination of the whole question that the best and most practical solution would be to secure for the tenant a cheap and informal means of access to the court and prompt adjudication there upon his claim for relief. Under such a scheme it might be hoped that tenants would not be deterred by the cost and formalities that court proceedings normally involve.
The provisions of Part III of the Bill have been designed to achieve this object. It is hardly necessary for me to discuss these provisions in detail at this stage. Senators have, I am sure, by now become acquainted with their general scope and purpose. I would like merely to mention at this stage that, while the framework of the scheme as originally embodied in the Bill has been retained, it has been extensively amended in its details during the passage of the Bill through the Dáil. There was general agreement in the Dáil—and when we come to consider the Bill in Committee, this House will, I am sure, also agree—that Part III has been considerably improved as the result of the amendments made in the Dáil.
I feel that I should not take up the time of the House in explaining the remaining provisions of the Bill as these can, I suggest, be more usefully and conveniently discussed on Committee Stage. If there are any particular provisions as regards which Senators may desire information at this stage, I shall try to deal with them when I come to reply to the debate.
Before I conclude, I would like to say a few words on the subject of rent restriction generally and the effect which it is likely to have on the building of houses for letting. I can hardly conceive that at this juncture anybody could be found seriously to suggest that rent control could be dispensed with now or in the near future. For 30 years a large number of tenants have enjoyed protection under the existing Rent Acts against arbitrary increases of rent and the threat of ejectment if such increases were not paid. If such control were to be removed or even modified to any appreciable extent, I have no doubt that the result would be demands for increased rents and ejectments with all the hardships and dislocation that this would entail for many people.
So far from it being possible to remove or modify the control under the 1923 Act, it was found necessary, as Senators are aware, less than two years ago, to extend control to a large range of houses not previously controlled, including houses built since 1919. I may say, in this connection, that the Government took that very serious step only after they had fully satisfied themselves that the circumstances warranted it. Numerous cases, not merely in Dublin but in other parts of the country, were brought to notice in which landlords were endeavouring to take advantage of the exceptional scarcity conditions in the matter of housing accommodation to exact increased rents from their tenants. In some cases tenants were ejected or threatened with ejection merely in order that the landlord might be in a position to re-let at a much increased rent. It was in these circumstances that the Government made Emergency Powers (No. 313) Order, 1944. The Bill, as I have already explained, proposes to continue for a period of five years the control at present imposed by the Emergency Powers Order and, of course, the control under the 1923 Act also.
Since the 1944 Order was made, it has been amended by an Order made this year so as to exclude from control houses erected after, or in course of erection, on the 8th February, 1944, and houses reconstructed into separate, self-contained flats after that date. This exemption was incorporated in the Bill as originally introduced and, during the Bill's passage through the Dáil, the position was made even more favourable from the point of view of the builder of new houses by the amendment which substituted the date, 7th May, 1941 for the date 8th February, 1944, in the exemption clause.
I have referred in detail to this exemption from control of newly-built houses and houses newly reconstructed into flats because I think that there is a tendency in some quarters to minimise or under-estimate the value and importance of the exemption from the point of view of the speculative builder. I have, on the other hand, no desire to exaggerate its significance, and I certainly would not try to argue that rent control, even with an exemption in favour of new building, does not exercise some adverse effect on the building by private enterprise of houses to let. I am afraid that that situation will just have to be accepted, because I see no prospect of our being able to dispense with control for a considerable time.
I would submit, however, that in providing for the complete exemption from control of all new building, we are holding out a valuable inducement to private enterprise to embark on the provision of those houses for letting for which there is such a real need at the present time. The point will, of course, be made—it is too obvious to be overlooked—that the 1923 Act contained a similar clause exempting from control post-1919-built houses and that, despite this, these houses have now been controlled. I do not think that this really affects the validity of my argument. It is true that houses built between 1919 and 1941 have been brought under control, but the fact must not be overlooked that the rents of these houses are controlled on the basis of 1941 levels of rent. Will anybody seriously suggest that the investor who put his money into the building of houses between 1919 and 1941 is being treated unfairly or unjustly in being restricted now to the rent which he was able to get in the open market in 1941?
I think that the immunity from control which the 1923 Act accorded to post-1919-built houses was, on any reasonable view, an immunity merely from control based on 1914 standards, which was the keynote of the 1923 Act. It could, in no sense, have been construed as a pledge of immunity for all time. To treat it as such would have been to fetter all future Governments and Legislatures in a way which, obviously, could never have been intended. Similarly, the exemption from control provided for in paragraphs (b) and (c) of Section 3 (2) of the present Bill cannot, and should not, be treated as a guarantee that houses built after 1941 may not at some future date be brought under control, if, unfortunately, the Government and Legislature of the day should find it necessary to do so. The value of the exemption for the investor or builder lies, I submit, in the fact that it provides a reasonable assurance that, if the houses in which they have invested their money are brought under control, the rents which may be charged will be determined by reference to an up-to-date standard which will take full account of the increased costs at which the houses have been erected. There is no reason to assume that the Government or Legislature of 20 or 25 years hence, if, as I have just said, the need should then unfortunately arise for an extension of rent control, will be any less concerned to see that landlords are treated equitably than was the present Government two years ago when they introduced Emergency Powers (No. 313) Order.
I am quite aware, of course, that restrictions on the rent do not constitute the sole burden of the landlord's or property owner's complaint against rent control. There are also other restrictions such, for example, as those on the landlord's right to recover possession. I would point out, however, that these further restrictions are an essential feature of any effective scheme of rent control and, provided that the landlord is allowed to charge a rent that is reasonable and fair to him, these restrictions do not, in my view, afford a very genuine ground of complaint.
Taking everything into consideration, I would suggest that any reasonable person thinking of investing money in the building of houses has no real grounds for fearing rent control. If, of course, he is the type of person who would not scruple to take advantage of serious emergency conditions to exact an exorbitant and profiteering rent, then he has something to fear from rent control, and I have little doubt that the House will agree that rent control would at any time amply justify itself if it curbed or prevented attempts by individuals of that kind at unscrupulous exploitation of the dire needs of the house-hunting public.
I have dwelt so much on that aspect of the matter, Sir, because I think an attempt has been made to misrepresent what has been done here. That, probably, will be dealt with during the course of the debate on the Bill, but that is my explanation for dealing so fully with the effect of rent restrictions on future building.
