RENTS AND RENT RESTRICTION

As the war continues, the supply of available housing falls increasinglyshort of demand. New building for civilian needs came, more or less, toa stop at the beginning of the war and bombing has destroyed manydwellings. On the other hand the increase in marriages and the natw-alincrease in population, have produced an increased demand for housingaccommodation which is only partly offset by the withdrawal of meninto the forces. This demand varies greatly in local intensity becauseof the regional shifts of population. But even without these specialfactors on the demand side, the general rise of incomes would have pro-duced symptoms of acute shortage. In the commodity sector of theeconomy such a situation might have been brought under control byrationing and price stops. An equitable distribution of housing accom-modation, however, presents special problems, since both rents andallocation are more difficult to regulate than the prices and quantitiesof other commodities. The present situation is made even more com-plicated by the pre-war attempts to deal with this question for therehas been a continuous shortage of houses since the last war. A reviewof previous regulations and their effects will be made before the legisla-tion at present in force is examined.

The first Rent Restriction Act was passed in 1915, to operate for theduration of the war and six months afterwards, and as with each of itssuccessors' the aim was two-fold: to protect the tenant against hislandlord and the landlord against his mortgagee at a time when eachwas at a disadvantage. To achieve these ends, it is taken to be suffi-cient to provide rent control and freedom from eviction for the one andcontrol of mortgage interest and freedom from foreclosure for the other,so long as rent and interest respectively continue to be paid.

The limits of application of this series of enactments has been definedby a rateable value classification of housing and has varied as shown inthe following table:-

TABLE I.

Act Houses of Annual Rateable Value in Permitted Increase % ot Totalof Housing

* Adapted from Marley Committee Report, 1931, Cmd. 3911, p. 11.t Net Rent= standard rent (less tenants rates where these are paid by the land-

lord). If not let at that date, the rent at which last let prior to that date, or if firstlet after that date the rent at which first let.

1 See Table I.

248

London Scotland Elsewhere Net Rent f MortgageInterest

Controlled.Gt. Britain

1915 Up to ¡35 £30 £26 Nil Nil 85%1919 ,, ,, £70 £60 ¡52 10% 4% (Max

5%)1920 ,, ,, ¿105 ¡90 ¿78 30% 1%(Max.

after 2/7/21 64%)98%

40%1923193319331939

,, ,,,, ,,,, ,,

.,

¡105¡45¡35

¡100

¡90¡45¡35¡90

¡78¡35¡20¡75 98%

The 1939 Act enforced the restriction of all rents to the figure obtain-ing on September ist of that year, but owing to the introduction ofgradual decontrol in the preceding period the situation, crystallised bythis measure, was totally different from that in 1915. Rents, by the1915 Act, had been controlled at the figure obtaining on August 3rd,1914 (Standard Rent) and this tended to be much the same for similartypes of housing. Since rents tended to be uniform, other things beingequal, there was a certain definite relationship between rent and rateablevalue.1 Since 1923, however, both these simplifying factors have dis-appeared. Decontrol has not occurred simultaneously for all the housesin any class or district, but has depended upon the dwellingcoming intovacant possession by the landlord. Under the 1923 Act, houses of anyclass2 became decontrolled on vacant possession, but from 1933, thefurther decontrol of working-class housing was suspended, while that ofclass A housing was completed. Decontrol of class B housing con-tinud to depend upon individual circumstances. Further, many newhouses have been built since 1919 and these have not been subject tocontrol till 1939. By 1937, the following estimate of the situation wasgiven by the Ridley Committee.

Type of DwellingClass C. Total No. (000)% controlledClass B. Totale No. (000)% controlledClass A, B and C. Total* No. (000)% controlled

* includes houses built since 1919.

TABLE II.England & Wales Scotland.

1931 1937 1931 19375,600 6,300 792 819

78 57 77 602,250 2.950 260 293

60 32 74 509,050 10,500 1,123 1,185

69 43 76 54

The rent of a house, on becoming decontrolled, almost invariably roseconsiderably, this has introduced particular complications into thesituation. The average differences are shown in Table III below.

TABLE 111.1

Approximate Ranges of Average Net Rents t of Worhing-clasand Inder Numbers of Rents, 1937 (1914= 100).

(Class C)Greater County Boroughs Other UrbanLondon Excluding Greater Districts ex-

London Greater Londons. d. s. d. s. d.86100 510100 56100to 90 to6 2 to5lO

12 6 147 7 6 127 7 0 127tol3 O to7 9 to7 4

10 6 123.5 7 2 121 6 11 125* Adapted from the Ridley Committee Report Cmd. 5621, p. 17.t Exclusive of rates, watercharges, etc.

As regards privately owned new housing, the Committee stated that'information was incomplete but sufficient to show that, in general,

'Rateable value used to be roughly 5!6 of rent, 1914.t Class defined by rateable value: A--Over 45 in London and Scotland; over 135

elsewhere; B-20-45 in London; £26 5s.-45 in Scotland; ¿13-135 elsewhere;CUnder £20 in London; ¿26 5s. in Scotland; 113 elsewhere.

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Type of House

Controlled

Decontrolled

Local Authority

s Flouses

Rural Districtsexcluding Greater

Londons. d.4 6 100

to 4 105 9 128

to 6 06 0 133

the rents charged are considerably higher than the rents of small de-controlled houses.'

The early adoption in this war of extended rent control has prevented,in part, the same alarming increase in rents that occurred in 1914-1915.But rent restriction operates differently with respect to unfurnished andto furnished property, and the workings of the Act will be consideredunder these two headings.UNFURNISHED HOUSING

The wide scope of the regulations in respect of this class of dwelling(see Table I), would lead to the expectation that the level of rents, wouldbe little, if at ail, higher than in 1939. Yet reports of increases in rentsare numerous in the Press and elsewhere and are difficult to reconcilewith the rent item in the Ministry of Labour's Cost of Living Index,where a rise of only i% over September ist, 1939, is recorded.

Owing to its method of obtaining information regarding rents, theMinistry of Labour's figure appears liable to two sources of error. Therent estimate is based upon enquiries made through the post by theMinistry, of Town' Clerks and other officials of local authorities, and ofProperty Owners Associations.' It is unlikely that rents, or rent in-creases, illegal under the Act, will be included in the estimates returned.Again the rents of houses being let for the first time since 1939 wouldtend to be higher than controlled rents and yet it is probable that theireffect, too, is left out of account2 in the estimates. In view of the largemovements of population that have taken place this may well be anappreciable factor. Even of working class housing an appreciableproportion3 is owner-occupied nowadays.4 A further complication isthat the index has reference only to unfurnished property which may besufficient in peace-time but in war-time the renting of furnished dwell-ings becomes an important factor.

The only way of detecting the influence of these factors would beby direct enquiries of the sample survey type. This could only be doneon an adequate scale through official channels. An unofficial trialsample was, however, undertaken in Birmingham, in one of the wardsof the city outstanding even before the war for its degree of over-crowding. House to house visits were conducted by a person, wellknown in the district and trusted, and enquiries made as to the rentspaid'in 1939 and 1943. The results obtained are tabulated below :-

TABLE IV.Sa,n pie Survey of Rents of Unfurnished Houses.

in a Birmingham Street, 1943.%lncrease of 1943 ,'ent % of total number

ove? 1939 figure of houses visitedo

1-2 193-4 2.74--5 32 Remaining 37% war-dam-- aged or business premises.

10-12 2.520-45 4

* Size of sample: 75 houses (nos. 1-75).

'See the Ministry of Labour pamphlet on the Compilation of the Cost of LivingIndex, 1937.

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The sample is too small and too unrepresentative for any extendedconclusions yet the cases of suspected evasionthe 4% showing a 20-45% increasehave a certain interest, since they demonstrate thedifficulties of the tenant. Of the houses visited only 7% had had changesof tenancies since the outbreak of war; this 7% included the 4% havingrents well above those of houses of an identical pattern on either sideof them. Yet the new tenants could not be certain that their rentswere unduly high, for it appeared to them possible that the rise hadoccurred between 1923 and 1933, a period in which the decontrol ofindividual class C houses was occurring.

Rent Books are now compulsory for all rent collected weekly and it isobligatory upon the landlord or his agent both to record in it the StandardRent and to keep the book up-to-date. But it is not an adequateprotection, for the tenant has no means of checking whether the Stand-ard Rent declared is correct. Local authorities have become increasing-ly willing to advise tenants upon their situation, but their knowledge ofthe true Standard Rent is not much greater. Even if they reach theconclusion that evasion is occurring in any particular case, the omis ofinstituting proceedings is still that of the tenant, and he is still liable tobear the costs of the action if he fails to prove his case. This is aconsiderable deterrent to taking action. For the landlord, the soledeterrent is a fine of ten pounds (and costs) if convicted, and the returnof excess rent, retrospectively for two years.

The situation would be improved if the Standard Rent for eachdwelling were to be certified by the local authorities. In the case ofhousing continuously controlled since 1915, the approximate value ofthe Standard Rent can be calculated from the '914 Rateable Value.Where the house became decontrolled between 1923 and 1933 the solu-tion is more difficult, but at least a register df these dwellings has beenmade, and was finally brought up-to-date in 1938. In cases of doubt,the fixing of the Standard Rent might be performed in accordance withthe recommendations of the 1937 Committee on this point : ' to fix thestandard rent by reference to the standard rents of similar neighbouringhouses.' Since the housing shortage is likely to persist for some yearsafter the war, a register5 of Standard Rents for class C housing will con-tinue to be useful. The deterrents to evasion would be increased if aheavier penalty were to be imposed on conviction and if local authoritieswere more willing to institute proceedings themselves.

Yet even the introduction of such changes would leave a proportionof houses subject to no control. The chief categories unaffected by theActs are houses not rented on a weekly basis and those let for the firsttime since September 1939. For the first, the declaration of the Stand-ard Rent might be made compulsory in the lease, and this figure certi-fied in the same way. For the second group, no terms of reference existarid, as with furnished housing, the landlord can charge what the marketwill bear, providing the figure is not 'extortionate.'

'Because owner-occupiers would not usually be members of Property OwnersAssociations which are really organs of landlords proper.

'67% of middle-class houses are owner-occupied: Massey: Royal StatisticalSociety, 16/6/1942.

'Ministry of Labour Cost of Living Inquiries showed that 18% of industrial and 4%of agricultural class C houses were owner-occupied in July 1937.

This might be open to public inspection.

251

An impression of the present situation can be obtained from Table IVbelow. This has been compiled upon, estimates provided by a re-putable firm of estate agents in a Midland town which has grown cou-siderably in war-time. It shows the effects of control upon the differentcategories, both upon those falling within the scope of the Acts (ColumnsIlib & Vb) and the others.

TABLE V.

Index Numbers of Pnces (or Rents) with the co?vesjoisdingIndex Nu,sbers of Transactions for 7943

(l939 100)

HOUSES FLATS

SALES LETTINGS LETTINGS

I II III iV VFurnished Unfurnished Furnished IJnfurnished

RateableValue Price No. Rent No. Rent No. Rent No. Rent No.

It can be seen that housing, of which the rent is controlled, hasdisappeared off the market, and its exchange no longer occurs throughthe usual channels. The present factors determining the choice of thenew tenant val-y with the type of housing, from the taking of premiumsor key money,' said to be frequent even with class C housing, to the useof 'influence.' This lead' to a scale of preferences in which moneyplays its usual part but in which also old age or the having of youngchildren are orten a complete disqualification. In 'the present state ofacute local shortage it is difficult to see how legislation can prevent thishaphazard distribution of housing space, for both the prospectivetenant (often quite desperate) and the unscrupulous landlord areinterested in striking these bargains.2 To introduce some form ofrationing according to need by the more rigorous use of the extensivebilleting powers, already possessed by local authorities under theEmergency Powers Acts would solve the problem ou paper but wouldmeet with administrative and practical difficulties, especially as localauthorities, being elected by ratepayers are not in a strong position. Itmight be sufficient at present to make it compulsory for all housingaccommodation falling vacant3 to be notified to the Billeting Officer,or some other representative of central authority, to whom also appli-cants for accommodation should all have to apply. This would at leastensure that need was given some priority.

The prices of houses sold (chiefly for owner-occupation) havè risenconsiderably, much more than the cost of living index and roughly in

'This is illegal under the Act and is liab'e to a fine not exceeding £100.'Premiums may very easily be concealed e.g. by making both the out-going tenant

and the one coming in pay for the same repairs.'Changes of tenancy occur without notifying the authorities whose requisitioning

s confined at present to empty ho,ises.

252

a .Over 175 160-170 50 150 300 150-160 25 150 200 200 200b. Under75 175-180 25 160-170 300 Con-

trolled10 200 300 Con-

trofledO

proportion to the change in building costs.' But the number of trans-actions is only a fraction of the pre-war turnover. Rents of uncontrolledcategories have moved up proportionately but in the case of furnishedlettings, the increase in price has been accompanied by some increase ofsupply. Yet reports suggest that the rents in individual cases haverisen very much more than recorded here. This brings us to the workingof the Act in the second main category.Fua,nsugn HOUSING

The charging of extortionate rents for this type of accommodationhas been prohibited by each of the Acts since i9x5, but no attempt hasbeen made to fix maximum rents or otherwise to define extortion.2 Thedifficulty is partly to decide the value added by furnishings, and partlyto find some fair way of giving the tenant reasonable security of tenure.

The exploitation of need has assumed considerable proportions;many instances of this are given daily in the Press, and legislation hasat last been introduced for Scotland (Control of Housing (Scotland) Bill(Money), October 27th, 1943) where the situation is even more acutethan in England. In the successive debates the difficulties of controlwere again reviewed and finally it has only been enacted that RentTribunals are to be set up, where necessary, to arbitrate upon chargesof extortion, and a register of decisions, open to public inspection, isto be kept. This advance cannot be regarded as adequate, partlybecause the setting up of these courts by local authorities is permissiveand not compulsory, except upon a further injunction by the Secretaryof State; and further because the act does not attempt to deal with themuch more fundamental problem of distribution, in its two aspects ofallocation and security of tenure. This is likely to require more thanone line of attack.

The Rent Court System might be txtended not only to cover the wholecountry but also to cover all classes of housing, both as regards rentsand allocation. For furnished housing some rule of thumb' might beoffered to enable tenants to decide, before raising the issue, whetheror not they were being fairly charged. Even for unfurnished housingsome revision of rents might be possible. Arbitration, by reducing thedisparity between rents in the same neighbourhood, would make thedetection of illegalities more easy. It might also succeed in reducingthe hardship at present inflicted in some cases upon the tenant and inothers upon the landlord.

Yet this alone will not solve the problem of allocation, for which morerigid application of billeting and requisitioning seems necessary, sincecomplete security of tenure seems inapplicable. But the worse forms ofdiscrimination could be prevented if the householder knew that unlesshardship could be shown, the sole alternative to the present tenantswould be another family of the same type (e.g. with young children).Sufficient elasticity might be provided if the Rent Courts acted as courts

'Cf. G. D. N. Waiswick - Prices and Retail Consumption in 1943, Buii.ETIN Vol.5,No. 4, S. Moos: BULLETIN Vol. 5. Nos. 14 and 15: two articles on Building Labourand Building Materials.

'Cf Reports of 1921 and 1931 Committees on Rent Restriction; also House ofCommons debates on Scottish Bill.

'On the lines of ExtOrtiOUnte Rent Enquiries undertaken under the Evaesation

253

of appeal against consequent hardships. A change of tenants, genuinelydue to personal friction, might then be permitted, providing alternativeaccommodation could be found.

Some increase in supply has recently been foreshadowed by theMinister of Health1 but the overall shortage in ig4 has recently beenestimated2 at a minimum of twelve hundred thousand houses (more thanio%.) This basic shortage cannot be made up in war-time,. even assum-ing a great deal of ' first aid' repair, especially if the. local variations ofdemand are remembered. More direct control seems unavoidable.More extensive billeting and requisitoning, coupled with rent controland made flexible by Rent Tribunal arbitration8 would seem to be themost workable solution.

P. ADY.