RENT REDUCTION ANOMALIES

Evening Post, Volume CXIII, Issue 91, 18 April 1932, Page 6

RENT REDUCTION ANOMALIES

The rent reduction clauses of «the National Expenditure Adjustment Bill are to apply to weekly and monthly tenancies even where 'there is no written contract. This has been stated t>y the Prime Minister. But it is one thing to say the clauses shall apply, and - quite > another to1 make the application equitable.'. As now drafted, the Bill must lead to numerous anomalies. The greatest of these arises from fixing the date at which the rent shall be reckoned for the purposes of reduction. The Ist January, 1930, is probably as well chosen as any date could be, for the beginning of the slump-can-not be dated exactly., Therefore 'the generous landlord who reduced his rent, at the end of 1929' must suffer for his generosity. Qreater hardship, however, will be entailed on landlords who have let at reduced rentals to new tenants Bince Ist 'January, 1930. They"1 must reckon from the beginning of the existing tenancy and reduce the rent by 20 per cent, even though it is lower than they were charging to a previous tenant. As many reductions are made in this way—the landlord having to lower the rent to secure a new tenant —this clause should certainly i|e amended. As it stands, now -a tenancy begun last week at a rent fixed under the shadow of this impending reduction would have to tie reduced still fur-ther-as soon as the Bill passed. A further troublesome provision in the Bill is that which leaves the capital value to be determined by the Court. It may; be submitted that the Government valuation cannot be taken because some valuations are too high and some are too low. But surely it is better'to have .some standard rather thin to leave the whole question at :jarge;; .The Court cannot fix values.: without taking evidence, arid this provision may make the business most expensive. There are other difficult questions, raised by the Bill. ,How,-for example^ does it apply to flatsi furnished v houses, and business, premises; which are. subdivided and occupied by; numerous tenants? Is there to be a-special allowance ftnr furniture, or is the furnished house excluded? Ii tie landlord of the .subdivided building (\yhether business or residential) to be allowed a margin for that part which is untenanted, or is his 7 per cent, on capital value to be reckoned as if the whole building were let? It is most necessary that these questions should be answered, and answered satisfactorily. Even the most perfect legislation of this kind is damaging because the principle is wrong. It may be doubly harmful if .its operation is unequal, TJie land-

lords will suffer first—and Parliament may not be troubled by the thought, for the landlord, like the mortgagee, seems to be regarded as fair game. ißut ultimately the injury will rebound on the tenants. We have seen that in the effect of rent restriction legislation. Though the scope of such legislation has been narrowed from time to time, there can be no question that restrictions and the fear of restrictions ' have frightened capital away from the legitimate and desirable business of house-letting. In consequence, many people have been compelled to build, and there has been a demand for State Advances loans 'which has jiow brought difficulty to the Government and the borrowers. If a further scare is given to house-owners, rents may be lower for a while, but people will rid themselves of house property as soon as.they can do so without incurring heavy losses. This legislation, too, has wider scope.' It applies to business properties of all kinds. One cannot foresee how disastrous its effects may be. Though it may delay the passage of the Bill, we;-think that Parliament should not put : the-measure throughwithout inviting' arid hearing evidence as to its probable .operation. . \ ,:' ,