You and The Rent Act (1957)

From the September 1957 issue of the Socialist Standard

October 6th is a significant date in landlord’s diaries, for on that day the first instalment of rent increases under the new Rent Act become payable. Even if the reader of this article has not the dubious advantage of living in a rent-controlled property, it is highly probable that he or she has already faced a substantial rise in the cost-of-living due to rate-increases or to the withdrawal of housing subsidies.

Rents

So much misleading and contradictory information and speculation has been provided about the provisions of the 1957 Rent Act that it may be advisable to outline its main effects. Firstly, dwelling-houses with a rateable value of over £40 in London or over £30 in the provinces are to be decontrolled which means that some 800,000 tenants and their families are to lose all security of tenure under the Rent Restriction Acts, although they have the doubtful benefit of a fifteen-months’ waiting period. The next main provision provides for a substantial increase in the rents of practically all rent-controlled property, permitting an increase to bring the annual rent up to twice the gross value of the dwelling- house; or, if the landlord elects to be responsible for interior repairs, up to seven-thirds of the gross value. Even slum property, in poor condition will be liable for such increases, unless the property happens to be scheduled for slum clearance, or unless the tenant can obtain a “Certificate of Disrepair” from the local authority.

With regard to the question of houses in a bad state of repair, the landlord is still in a strong position, for the tenant, in order to obtain a certificate, must prove to the satisfaction of the local authority that the property is in disrepair, “having regard to the age, character and locality of the dwelling.” In simple language all this means that a small house, built, say, in 1850, would suffer an increase from perhaps 22/6 per week to about £2 5s. per week, or even more if the landlord carried out internal repairs. The overall picture seems to be that the rents of rent-controlled property will rise by an average of fifty to sixty per cent. but with properties that are decontrolled by the Act of course, by law the sky’s the limit so far as rents are concerned (after the fifteen months' standstill period).

Other Provisions

The Act legalises the charging of premiums for tenancies (except that no premiums can be charged for a period of three years in respect of properties decontrolled by the Act), so landlords will shortly be back to the happy days of "key money.” Furnished tenancies, too, within the decontrolled categories of rateable values will be decontrolled, and the Rent Tribunals will no longer have jurisdiction over them. These are the main provisions of the Act, although there are a host of other minor provisions, re-enactments and repeals of sections of earlier Acts.

Rates

The substantial increases in the rates on living accommodation now being put into operation by practically all local authorities are mainly caused by the Government decision to de-rate business premises by a quarter. This is, in effect, a calculated swindle, for when the new valuation list was published last April, it was solemnly declared that the rate payable on dwelling-houses would increase little if at all. Now one finds that business premises which stood the greatest increase under the new valuation, have been relieved of this burden, which has been passed over to residential property.

Council Tenants

Council tenants, too, are affected by the increases in rates, but in addition to this, the withdrawal of housing subsidies and the increased interest on loans obtained by load authorities have resulted in a considerable rise in the rents payable by council and corporation tenants. The average increase in London is about 3/6 per week for a single-bedroom flat, 5/- for a double-bedroom flat, and proportionally more for larger fiats, but some London boroughs are increasing rents by as much as 10/- or 12/6 per week. This has brought about a certain amount of unrest, and demonstrations have been held in many boroughs, although with little result, and even less understanding on the part of the demonstrators.

While one uses the term “Council tenant,” this is really a misnomer in the meaning of the Acts, as in fact the provisions of the Rent Restrictions Acts do not apply to the occupants of Council flats, and they are not even "tenants” in the correct sense of the term. They are merely licensees who have no security of tenure, and their rents are fixed at any figure that the Council considers reasonable.

What are the motives?

What, then, is the reason behind the Government’s action, which on the face of it appears to guarantee their defeat in an election, and provides the likelihood of further industrial unrest?

The economics of the matter have been fully dealt with in these pages, so it is unnecessary to repeat the arguments. With regard to the loss of votes, the Tories, after the Suez debacle, were hardly at the height of their popularity, and their proposed measures over rents, although unpopular, are unlikely to make much difference one way or the other, especially in view of the fact that they can now expect some support over these measures from those people who will now be able to obtain accommodation, albeit at very high rents. In any case, the Tories know perfectly well that the election issues of today will not be the issues of two years' time, when their term of office runs out. One might also speculate as to whether the Tories are over-anxious to win the next election anyway, having regard to the precarious economic circumstances of Britain.

Then one must look at the post-war background of rent-restriction. Since 1945 we have been passing through a period of expansion and full employment, when, by all the rules, workers are in a favourable position to press for wage increases. Due to inflation, the wage freeze, the T.U.C-Labour Party alliance, and other factors, very few real gains were made by workers up to 1954. It seems likely, though, that if Rent Restriction had been abolished before then, wage claims would have come fast and furious, and employers, with full order books and an acute shortage of manpower would have been hard put to it to refuse them. Seemingly the present Government is now prepared to face this.

Lastly, economists have for years been telling the politicians that a disastrously excessive amount of capital investment has been taking place in housing, which formed the largest single item of British capital expenditure. The Tories tried curtailing this expenditure by withdrawing housing subsidies, squeezing the Building Societies and Banks, and raising interest rates. Apparently this did not go far enough, and so the Rent Act provides the answer.

The Opportunists

It can be seen, then, that this is the time, from the Tories' point of view, to start to dispose of Rent Restriction, which was designed as a wartime measure and has now outlived its usefulness. The new Act is, in effect, an attempt to return to pre-war "normalcy,” with few workers being able to buy houses, and the majority of workers forced to put up with overcrowded conditions in order to economise on rents. (One might remember that this “normalcy” included a million and a half unemployed.)

From all this, one hopes that workers will realise (in case they hadn’t realised it before) just how hollow was Mr. Butler’s assertion that the standard of living would be doubled in twenty-five years, and just how empty were the election promises to solve the housing problem. Of one thing workers can be sure—that this Act will not get more houses built, and will not in the slightest degree solve the problem of overcrowding and bad housing. One might add also that the Labour Party’s proposals to nationalise rent-controlled property and put up the rents will do just as little to solve them. The solution to the problem is fairly obvious—that is, for building workers to build decent homes for people to live in, without landlords, without investment, and without rent-control or rents. The trouble is that Capitalism does not permit of simple solutions of this kind, and so we go on, eternally arguing about what are no more than the effects of an irrational, crazy social system, instead of doing the obvious thing—to replace that system by a sane and reasonable one.

Albert Ivimey