I move amendment No. 7:—
In sub-section (2), page 6, to delete paragraph (c).
The object of this amendment is to bring back, within the scope of the Bill, flats which, after the 7th day of May, 1941, have been created from the bona fide reconstruction of houses. There is a later amendment of mine which seeks to suggest to the Seanad the way in which the rent for those flats may be fixed. I am bringing this matter before the Seanad in the form of two amendments, more with the desire to submit it to Senators for their consideration than in any effort to press any view of my own.
The object of this Bill is not to prevent people making a reasonable economic profit or of getting reasonable rents, but rather to prevent extortionate rents in cases where there is an element of monopoly value arising through no effort or foresight of the landlord, but through circumstances outside his control. At this stage I think it is necessary to make a slight digression from the immediate amendment before the House, because it was quite clear yesterday that several members of the House were not aware of the origin of these Acts or of economic conditions which gave them birth, or, indeed, of the political justification for their existence. They were not aimed at fair rents. They were aimed at preventing extortionate rents. From time to time a state of affairs arises when one class of men, or one man, is in such a position that he can hold, or that the class can hold, the public up to ransom. It has always been the policy of the law to prevent a person taking an unconscionable advantage of such a position. May I give a very simple example which will explain the difference between a monopoly charge and a reasonable increased charge? Suppose a man is drowning near a pier and that there is another man on the pier who has a life belt which is his private property and that there is no other life belt there. Leaving humanity out of it for the moment, if these two men were free to bargain, the drowning man would be prepared to offer every penny that he had in the world to get the life belt, irrespective of the price, to the one man who had a monopoly of the only commodity which could save his life. That is the kind of thing that the law sets its face against. But suppose he is given the life belt, there is no reason in the world why, if the life belt is destroyed in saving him, the fair market price of the life belt should not be paid. Or take the case of a man in a yacht which is drifting on a lee shore. There is only one tug there. Again, if that position is left to ordinary bargaining, because the position is such that the person wants the tug and that there is only one person who can save the man in the yacht, the latter will pay hundreds of thousands of pounds, in fact everything that he has, for the tug. The law will not allow that, but if he does get the tug he has to pay a salvage charge. He has to pay for the risk and for any increase in the price of coal or cordage. In other words, he has to pay a fair charge.
Up to the year 1914, the ordinary law of supply and demand in regard to both houses and flats worked pretty well. If landlords were charging too much, that is to say, charging what would be an unfair return upon their outlay, having regard to the risks and wasting nature of their capital, then people would build houses or flats and the landlords would be forced to bring down their rents. Similarly, if tenants were not willing to give enough, the ordinary law of economics would apply, and people would not build houses. But in 1914 you suddenly had a situation created by the Great War in which the ordinary laws could not apply. There could be no building because there were no materials. Neither had you the men because they were all engaged in the war. By reason of that you got an artificial scarcity of houses in which the landlords for the time being were possessed of an article which had a quasi-monopoly value. They were in a position to hold the public, who must be housed, up to ransom, and to demand sums which were quite out of proportion to their expenditure. The law stepped in and said: "We are not going to allow people to be victimised in that way; we will take the 1914 rent; we will allow additions to it because we realise there has been a rise in the cost of everything; we will protect the people in the possession of their own houses because if they could be turned out according to the ordinary law of contract and the landlord could make a new bargain, then a mere limitation on the rent would be ineffectual, and we will pass an Act which will give the landlord what we think is a fair return but will prevent him from profiteering by reason of the monopoly."
That is the origin of these Acts, and to suggest, as was suggested in the Seanad yesterday, that their object was to transfer portion of property from the landlord to the tenant is an entirely erroneous conclusion. In the earlier Acts flats and newly-built houses were excluded. Flats which were built between 1919 and 1940 are now brought under the operation of the Bill which is at present before the House and houses up to a valuation of £60 are brought into the Bill which is before the House. Looking casually through Thom's Directory at the houses with a valuation of £40-£60 in a certain street, I found that they were occupied by some of the best-known and richest medical specialists in Ireland, people earning £4,000 and £5,000 a year, probably, at the very least, consultant surgeons to the great hospitals. These are the houses that you are protecting and these are the men you are protecting from having one penny put on to their rent. In many cases the landlords are poorer. But you are leaving out of the protection the unfortunate person, the civil servant or the clerk, who has to have a flat near his work, who has to come to the Government office or to the ordinary office, who will be content with perhaps two rooms or three rooms provided they have amenities in the form of a kitchen and a water closet. It is open to a person, a rich person earning thousands of pounds, in a house for which he may be paying £80, to turn that into five flats and to recover for those five flats a sum of £600, or £700, or perhaps £800, and that is being done all over the city. Sums of well over £100 are being asked for what are practically two-roomed flats, according to such information as is at my disposal. If you were to take the Bill as drafted at present, you are protecting the prosperous and sometimes very prosperous businessman and professional man and you are leaving a poor class of flat dweller to the mercy of such landlords—I do not know that there are many, but I think there are a few—as are willing to take every penny they can get.
That is one side of the picture. I told you I was not producing this amendment as an advocate and now I am going to give you the other side because all I am anxious to do is to put it clearly before the House. The reason why the Bill was drafted like this is quite obvious. It is in the interests of the country as a whole to have more flats made and to have them made quickly. Dublin is full of large houses, three, four and more storeys, and with large gardens, which were built for conditions in life when servants were plentiful and wages were low and when the life of a relatively crowded servants' hall, where the food was good, had an attraction for a considerable number of people. That has passed for ever and undoubtedly, in the interests of the community as a whole, it is desirable that many of these big houses in Dublin, which cannot be run except with a staff of servants, should be turned into four or five flats. It is desirable to give an inducement to people to do that because it will be a step towards solving the housing problem, and I think it is desirable that people who take that step should be given a good and a generous return upon their money. That is why, although I ask that flats which have been constructed after 1940 should be within the scope of the Bill, at a later stage I am suggesting a method of fixing rents for them which should prove an inducement to people to continue with the work of creating such flats.
I do not know that I am in order in referring to a later amendment but I think that the view of the House as to whether this amendment should be accepted or not might perhaps be influenced by the later one. I do not want to transgress the rules in any way. I wish just to indicate what the later amendment is. From 1919 to 1940 houses from £40 to £60 and all flats were uncontrolled. The houses and flats are now being brought under control, but by 1940 the amount of building that had been done on the outskirts of Dublin and the amount of flats which had been built had for the time being created a situation in which demand and supply were reasonably equal and in which the rent for flats, though I would consider it on the whole very much higher than the rent of equivalent houses, was not of an extortionate nature. The ordinary economic forces had begun to have play. So that, if you take as your standard the rent paid for a flat in 1940 you are taking as your standard a rent which, while a little bit on the high side, is on the whole probably not unfair to either landlord or tenant. Therefore I seek by a later amendment, having brought flats back into the picture, to make the basis of the rent which is to be charged for them the rent which they could have been expected to fetch on short term letting if they had been erected before 1940. That is to say, I ask the court to fix the same standard which is suggested in an earlier part of the Bill for houses for these flats but I recognise that if you fix as the rent of the flat the sum which it ought to have fetched for rent if it had been built before 1940 that the landlord may say, "Yes. As far as accommodation goes, that is reasonable but I have done my reconstruction at a period after 1940 and since 1940 the cost of materials has gone up and the cost of work has gone up and therefore my expenditure is greater than it would have been if I had created the flat before 1940 and the 1940 rent would not be adequate." Therefore I seek to provide that in addition to the basic figure of what would have been the 1940 rent if the flat had then been constructed the court may add a further sum to the rent in order to recoup the landlord for any extra expenditure that may have been involved in building at a time when building was in fact more expensive.
Those are the matters that I should like the House to consider merely as having been put before it by me, not as if I was advocating them, but I will, I think, say this, that it was not until a good deal of thought had been given and a good deal of consultation had taken place with other people that I put down the amendments in the form in which they now are, and that they will at least form a basis for discussion because I do believe very strongly that the greatest extortion at the present moment is occurring in the case of flats. Flats are fetching about three times as much as a house of relevant accommodation or rather I would say this: you can get a house with three times the accommodation of a flat for the price you would have to pay for a flat. But, of course, that does not suit everybody. That is a medium-sized house and there are people who must have flats. On all hands I hear complaints as to, I will say, the very high charges for flats and I think they should be brought under control. But you must be careful not to control them in such a way as to prevent any inducement to landlords to go on helping to solve the housing question by building more flats.
