H.
( T H I S D O C U M E N T IS T H E P R O P E R T Y O F H E R
BRITANNIC MAJESTY'S
C . ( 6 0 ) 177
COPY
29th N o v e m b e r ,
GOVERNMENT)
NO.
I960
CABINET
HOUSING
Memorandum
HOUSING
TO
POLICY
by t h e M i n i s t e r of H o u s i n g and L o c a l
and M i n i s t e r for Welsh Affairs
Government
LET
In C. (60) 96 ( p a r a g r a p h s 3 6 - 4 7 ) I d r e w a t t e n t i o n t o t h e u r g e n t n e e d to
r e s u s c i t a t e t h e b u i l d i n g of h o u s e s f o r l e t t i n g a t e c o n o m i c r e n t s .
I pointed
out t h a t t h e r e w a s no e a r l y p r o s p e c t of p r i v a t e b u i l d e r s c o m i n g b a c k into t h e
l e t t i n g field, a n d s u g g e s t e d t h a t t h e o n l y w a y of m a k i n g p r o g r e s s w o u l d be
for t h e G o v e r n m e n t to b e p r e p a r e d t o l e n d m o n e y , a t c u r r e n t r a t e s of
i n t e r e s t , to a p p r o v e d h o u s i n g t r u s t s o r a s s o c i a t i o n s willing to build to let
without subsidy and on a non-profit m a k i n g b a s i s .
2.
Since then I have put f o r w a r d a limited s c h e m e which would enable
u s to m a k e a s t a r t in t h e n e a r future o n b u i l d i n g to l e t by s u c h a s s o c i a t i o n s .
A n o u t l i n e of t h e s c h e m e i s given in t h e a n n e x to t h i s p a p e r .
3.
B r i e f l y , it e n v i s a g e s t h a t t h e T r e a s u r y s h o u l d be p r e p a r e d to l e n d u p
to £ 2 5 m i l l i o n s , at the r a t e of i n t e r e s t c u r r e n t l y a p p l i c a b l e to l o a n s to l o c a l
a u t h o r i t i e s , t o f i n a n c e s c h e m e s b y h o u s i n g a s s o c i a t i o n s f o r t h e b u i l d i n g of
h o u s e s to be let at cost r e n t s .
Any b o r r o w i n g s would be subject to m y
a p p r o v a l , a n d I would h a v e to be s a t i s f i e d that both t h e s c h e m e and the
association were sound.
I should not n o r m a l l y be p r e p a r e d to a u t h o r i s e
lending for h o u s e s c o s t i n g m o r e than £ 3 , 500 a l l - i n , a n d i n g e n e r a l I would
look for a lower cost.
R e n t s of s u c h h o u s e s w o u l d , a t t h e c u r r e n t r a t e of
i n t e r e s t , r a n g e f r o m a b o u t £ 2 15s. a w e e k for a t w o - b e d r o o m e d flat to
£ 4 15s. a w e e k for a f a m i l y h o u s e w i t h g a r a g e ; and t h e s e s h o u l d be w i t h i n
t h e c a p a c i t y of f a m i l i e s i n t h e i n c o m e r a n g e of £14 a w e e k u p w a r d s .
4.
T h e s c h e m e i s e s s e n t i a l l y a p u m p - p r i m i n g o p e r a t i o n to d e m o n s t r a t e ,
f i r s t , t h a t t h e r e i s a n e f f e c t i v e d e m a n d f o r t h e r e n t i n g of m e d i u m p r i c e d
n e w h o u s e s o r f l a t s ; s e c o n d , that p e o p l e a r e p r e p a r e d to p a y c o s t r e n t s in
o r d e r t o secvire s u c h a h o u s e o r flat; and t h i r d , that t h e G o v e r n m e n t h a v p a
policy o t h e r t h a n m u n i c i p a l i s a t i o n for the p r o v i s i o n a n d m a n a g e m e n t of
rented houses.
5.
M y p r o p o s a l s h a v e b e e n c o n s i d e r e d by t h e H o u s i n g P o l i c y C o m m i t t e e ,
and discussion showed g e n e r a l a g r e e m e n t that they would m a k e a valuable,
though m o d e s t , contribution towards securing m o r e rented accommodation,
and that t h e y h a d c o n s i d e r a b l e political a t t r a c t i o n a s a n a l t e r n a t i v e to t h e
O p p o s i t i o n ^ p o l i c y of m u n i c i p a l i s a t i o n .
T h e C h a n c e l l o r of the E x c h e q u e r ,
h o w e v e r , h a s r e s e r v a t i o n s ; a n d it w a s a g r e e d t h a t m y p r o p o s a l s s h o u l d be
s u b m i t t e d to the Cabinet with the s u p p o r t of the C o m m i t t e e g e n e r a l l y , but
r e s e r v i n g the position of t h e C h a n c e l l o r .
-1-
SECRET
6.
I n o r d e r t o m e e t s o m e of t h e C h a n c e l l o r ' s d i f f i c u l t i e s , I h a v e
deliberately m a d e m y s c h e m e a v e r y limited one, covering not m o r e than
1 2 , 0 0 0 - 1 5 , 0 0 0 h o u s e s , a n d I e n v i s a g e t h a t it w o u l d be s p r e a d o v e r a p e r i o d
o f f i v e y e a r s , at t h e e n d of w h i c h t i m e i t w o u l d b e r e v i e w e d .
I also
p r o p o s e that h o u s e s built under the s c h e m e should rank against the housing
p r o g r a m m e i n the p u b l i c s e c t o r , so that it would not m e a n a n y a d d i t i o n
to the p r o g r a m m e .
7.
I u n d e r s t a n d that the C h a n c e l l o r ' s m a i n o b j e c t i o n to m y
scheme is
associations
at the s a m e r a t e a s they c h a r g e to local authorities would entail " c o n c e a l e d
subsidy".
But h o u s e s to let built by housing a s s o c i a t i o n s will u n d e r m y
p r o p o s a l s b e i n s u b s t i t u t i o n f o r h o u s e s built b y l o c a l a u t h o r i t i e s - s o m e of
whose present tenants could afford cost rents.
P u r c h a s e for owner
o c c u p a t i o n d o e s n o t m e e t t h e n e e d of e v e r y o n e w h o c a n a f f o r d w h a t a h o u s e
costs.
If t h e a u t h o r i t i e s a r e left to b u i l d a l l t h e r e n t e d h o u s e s t h a t a r e
n e e d e d , t h e y g e t t h e s a m e m o n e y ( e x c e p t t h a t t h e y b o r r o w i n t h e m a r k e t if
they can) at t h e s a m e r a t e - and t h e y would be paid E x c h e q u e r s u b s i d y a s '
well.
It i s p a r t o f t h e a p p r o v e d s u b s i d y p r o p o s a l s t h a t a u t h o r i t i e s w i l l g e t
s u b s i d y for a l l t h e h o u s e s t h e y build; it i s t h e i r function to build for t h o s e
w h o c a n n o t a f f o r d t h e f u l l c o s t of a h o u s e .
S u r e l y we do not w a n t to
encourage m o r e directly subsidised housing than is n e c e s s a r y ?
F o r in
this l i e s the r e a l i s s u e - u n l e s s w e a r e p r e p a r e d to do s o m e t h i n g now to
b r e a k o u t of t h e s u b s i d y n e t i n w h i c h v i r t u a l l y a l l n e w b u i l d i n g t o l e t h a s
f o r so l o n g b e e n e n m e s h e d , w e s h a l l h a v e no c h o i c e b u t to a c q u i e s c e in a
position in which housing supply is increasingly divided between owner­
occupation and municipal subsidised housing.
that f o r t h e P u b l i c W o r k s L o a n s E o a r d to l e n d m o n e y to h o u s i n g
8.
I b e l i e v e w e s h o u l d do s o m e t h i n g n o w , and t h a t m y s c h e m e , m o d e s t
t h o u g h it i s , w i l l a t l e a s t m a k e a s t a r t i n t h e w a y w e o u g h t t o g o .
A c c o r d i n g l y I a s k the C a b i n e t to a p p r o v e m y p r o p o s a l s , and for a u t h o r i t y
to be given for n e c e s s a r y p r o v i s i o n s to be included in the f o r t h c o m i n g
Housing Bill dealing with s u b s i d i e s .
IMPROVEMENT
AND CONVERSION OF OLDER
HOUSES
9.
I h a v e put f o r w a r d two p r o p o s a l s to t h e H o u s i n g P o l i c y C o m m i t t e e
t o e n c o u r a g e t h e i m p r o v e m e n t a n d c o n v e r s i o n of o l d e r h o u s e s w i t h t h e a i d
of g r a n t by m a k i n g the r e t u r n to o w n e r s on t h e i r e x p e n d i t u r e m o r e
attractive.
They are:­
( i )
( i i )
To i n c r e a s e the p e r m i t t e d addition to the rent that m a y be
c h a r g e d a f t e r i m p r o v e m e n t f r o m 8 p e r c e n t t o I2jr p e r c e n t
of the o w n e r ' s s h a r e of t h e c o s t of i m p r o v e m e n t .
To r e l a x the r e n t conditions attaching to
so a s to p e r m i t t h e o w n e r , in the c a s e
a n i m p r o v e d decontrolled house, to let
f r e e r e n t a f t e r 3 y e a r s i n s t e a d o f 10 a s
the t a k i n g of g r a n t
of a c o n v e r s i o n o r
the p r o p e r t y at a
at p r e s e n t .
10.
T h e C o m m i t t e e have a p p r o v e d p r o p o s a l (i), but doubts w e r e r a i s e d
a b o u t (ii) o n t h e g r o u n d t h a t to r e d u c e t h e p e r i o d of t h e r e n t c o n d i t i o n s
c o u l d b e r e p r e s e n t e d a s a n e x t e n s i o n of d e c o n t r o l and m i g h t r e s u l t i n t h e
i m p r e s s i o n that the G o v e r n m e n t w e r e going back on their Election pledge
t h a t t h e r e w o u l d b e n o f u r t h e r d e c o n t r o l of r e n t s i n t h e p r e s e n t P a r l i a m e n t .
11.
M y p r o p o s a l d o e s n o t i n f a c t i n v o l v e a n y e x t e n s i o n of d e c o n t r o l w h a t ­
soever.
It w o u l d a p p l y o n l y t o e x i s t i n g h o u s e s a n d f l a t s w h i c h h a v e b e e n
d e c o n t r o l l e d b y r a t e a b l e v a l u e u n d e r S e c t i o n 11(1) o f t h e R e n t A c t , 19 5 7 , o r
h a v e o r w i l l b e c o m e d e c o n t r o l l e d o n v a c a n t p o s s e s s i o n u n d e r S e c t i o n 11(2);
a n d to c o n v e r s i o n s p r o v i d i n g n e w u n i t s of a c c o m m o d a t i o n w h i c h h a v e b e e n
f r e e f r o m c o n t r o l s i n c e 1954.
These decontrolled properties become
s u b j e c t to a r e n t l i m i t a t i o n for a p e r i o d b e c a u s e u p to h a l f t h e c o s t of
i m p r o v e m e n t o r c o n v e r s i o n h a s b e e n p a i d for a t p u b l i c e x p e n s e , a n d it i s
felt to be w r o n g t h a t t h e o w n e r s s h o u l d b e a b l e to a p p r o p r i a t e f o r t h w i t h the
added value paid for by the public.
S h o r t e n i n g of t h e p e r i o d for the r e n t
l i m i t a t i o n i n v o l v e s t h e r e f o r e no m o r e t h a n a n a l t e r a t i o n of the g r a n t
c o n d i t i o n s , and d o e s not affect t h e s t a t u s of the p r o p e r t y u n d e r t h e R e n t
A c t at all.
12.
Under existing law the r e q u i r e m e n t that the r e n t limitation should
r u n f o r 10 y e a r s i s q u a l i f i e d b y a r i g h t t o t h e o w n e r t o s e l l , t h o u g h f o r
o w n e r - o c c u p a t i o n o n l y , a t the e n d of 3 y e a r s w i t h o u t b e i n g r e q u i r e d to
r e p a y the i m p r o v e m e n t grant.
A s things a r e , t h e r e f o r e , the tenant in such
c a s e s c a n n o t c o u n t o n a n y g r e a t e r s e c u r i t y t h a n 3 y e a r s ( s u b j e c t of c o u r s e
t o t h e t e r m s of h i s l e a s e ) .
To allow the owner to c h a r g e a free rent at the
e n d of 3 y e a r s w o u l d i n p r i n c i p l e b e a l o g i c a l e x t e n s i o n o f t h e r i g h t t o s e l l ,
and would not t h r e a t e n the tenant with any l e s s s e c u r i t y than he p o s s e s s e s
at present.
On the contrary, his position might well be improved, as the
o w n e r w o u l d h a v e a n i n c e n t i v e to c o n t i n u e l e t t i n g , i n s t e a d of t r y i n g e i t h e r
t o f o r c e the sitting t e n a n t to b u y a f t e r 3 y e a r s o r to e v i c t h i m in o r d e r to
s e l l with v a c a n t p o s s e s s i o n to a n o w n e r - o c c u p i e r .
13.
F o r t h e s e r e a s o n s , m y p r o p o s a l can be defended against any
s u g g e s t i o n t h a t it i n v o l v e s a n e x t e n s i o n of d e c o n t r o l o r a n y n e c e s s a r y
w o r s e n i n g of t h e p o s i t i o n of s i t t i n g t e n a n t s .
But I c a n s e e that it could be
r e p r e s e n t e d a s a m e a s u r e t h a t w o u l d o p e r a t e t o t h e d i s a d v a n t a g e of
d e c o n t r o l l e d t e n a n t s on t h e g r o u n d t h a t the o w n e r would h a v e two s t r i n g s to
h i s bow - letting a s well a s sale (for o w n e r - o c c u p a t i o n ) after 3 y e a r s a s a
m e a n s of putting p r e s s u r e on t h e sitting t e n a n t to pay a h i g h e r r e n t a s t h e
p r i c e of a v o i d i n g e v i c t i o n .
14.
T h i s a r g u m e n t c o u l d n o t b e b r o u g h t t o b e a r i n t h e c a s e of
c o n v e r s i o n s , for h e r e ( s a v e v e r y exceptionally) t h e r e is no sitting tenant.
N e w dwellings a r e being c r e a t e d , and n e w lettings m a d e for the first t i m e .
P r o s p e c t i v e t e n a n t s would be u n d e r no c o m p u l s i o n to a c c e p t the t e r m s
offered for 3 y e a r s without knowing w h a t r e n t t h e y would h a v e to p a y
t h e r e a f t e r , and could bargain accordingly.
15.
C o n v e r s i o n s a r e i m p o r t a n t , a s t h e y m e a n t h e p r o v i s i o n of m o r e
s m a l l e r units, and t h e s e a r e badly n e e d e d in the c u r r e n t Rent A c t
situation.
T h e y a r e in g e n e r a l a good deal m o r e costly than o r d i n a r y
improvements;
and a l s o l e s s e a s y to sell t h a n t h e single h o u s e .
Owners
a r e t h e r e f o r e r e l u c t a n t to incur substantial expenditure on this account
s o l o n g a s t h e y a r e h e l d d o w n t o a l i m i t e d r e n t f o r a s m u c h a s 10 y e a r s .
16.
I have c o n s i d e r e d w h e t h e r m y p r o p o s a l could be limited to conversions only.
T h e r e are however two difficulties about this.
It
w o u l d m e a n t r e a t i n g o n e f o r m of d e c o n t r o l l e d p r o p e r t y d i f f e r e n t l y f r o m
-3SECRET
another, and for this t h e r e i s no c a s e in p r i n c i p l e .
Secondly, though
c o n v e r s i o n s a r e m o r e i m p o r t a n t t h a n o r d i n a r y i m p r o v e m e n t s in the s e n s e
that they provide additional accommodation, no distinction has hitherto
b e e n m a d e b e t w e e n t h e m in the p o l i c y s t e a d i l y p u r s u e d s i n c e 1954 to s e c u r e
a w i d e r v s e of g r a n t s ; a n d I t h i n k w e s h o u l d b e o n d i f f i c u l t g r o u n d if w e
now sought to p r o v i d e a g r e a t e r incentive to one t h a n the o t h e r .
Accordingly,
I a m convinced that we m u s t treat both alike.
17.
I s t i l l t h i n k t h a t it w o u l d b e s e n s e to a l l o w a f r e e r e n t a f t e r 3 y e a r s
a s a n a l t e r n a t i v e t o s a l e ; a n d I b e l i e v e it w o u l d h e l p t h e h o u s i n g s i t u a t i o n .
N e v e r t h e l e s s , I r e c o g n i s e that p e o p l e would s e i z e on it to t r y to s t i r u p n e w
storms about free rents.
I should like to include this provision in the
B i l l , but if m y c o l l e a g u e s think it w o u l d b e t o o p r o v o c a t i v e I a m r e a d y to
d r o p it.
I would welcome the Cabinefs views.
H. B.
M i n i s t r y of H o u s i n g a n d
Government, S.W.1.
28th N o v e m b e r ,
Local
I960.
-4­
O u t l i n e of a s c h e m e for G o v e r n m e n t l o a n s to h o u s i n g
a s s o c i a t i o n s for t h e b u i l d i n g of m o r e h o u s e s to l e t
U n d e r the s c h e m e t h e T r e a s u r y would m a k e a v a i l a b l e a m a x i m u m of
£ 2 5 m i l l i o n s to be lent to a p p r o v e d housing a s s o c i a t i o n s by the P u b l i c W o r k s
L o a n s B o a r d a t t h e s a m e r a t e s of i n t e r e s t a s t h e y c h a r g e f r o m t i m e t o t i m e
to l o c a l a u t h o r i t i e s and for the s a m e p e r i o d s .
This m o n e y would finance
t h e b u i l d i n g of h o u s e s t o l e t a t c o s t r e n t s to f a m i l i e s i n t h e i n c o m e r a n g e of
£14 a w e e k a n d u p w a r d s .
2.
H o u s e s to b e b u i l t w i t h t h e b e n e f i t of l o a n m u s t b e of a c o s t n o r m a l l y
not e x c e e d i n g £ 3 , 500 a l l - i n .
They would rank against the housing p r o g r a m m
in the public s e c t o r .
3.
T h e s c h e m e w o u l d b e s u b j e c t to r e v i e w a t t h e e n d of f i v e
years.
4.
A p p r o v e d s o c i e t i e s f o r t h e p u r p o s e of t h e s c h e m e w o u l d b e h o u s i n g
associations registered under the Industrial and Provident Societies Acts,
Such a s s o c i a t i o n s a l r e a d y h a v e an e s t a b l i s h e d place in the housing field a s
responsible non-profit-making bodies; and their m e m b e r s h i p , organisation,
a c c o u n t s , r e p o r t s a n d m e t h o d s of b o r r o w i n g m o n e y , e t c . , a r e r e g u l a t e d b y
m o d e l r u l e s a p p r o v e d b y t h e R e g i s t r a r of F r i e n d l y S o c i e t i e s .
5
E v e r y s c h e m e ranking for loan would first be a p p r o v e d by the
M i n i s t e r of H o u s i n g a n d - L o c a l G o v e r n m e n t . .
The Minister would require
to b e s a t i s f i e d b o t h t h a t . a g e n u i n e d e m a n d for t h e h o u s e s e x i s t e d a n d . t h a t
the s c h e m e w a s likely to be e c o n o m i c a l l y sound.
6.
L o a n s w o u l d be u p to 100 p e r c e n t of c o s t ( i n c l u d i n g l a n d , s i t e w o r k s
a n d p r o f e s s i o n a l f e e s ) a n d w o u l d be r e p a y a b l e o v e r a p e r i o d of 60 y e a r s .
S u b s i d y w o u l d not b e p a y a b l e f o r h o u s e s b u i l t w i t h t h e b e n e f i t of l o a n , e x c e p t
for p u r p o s e - b u i l t a c c o m m o d a t i o n for old p e o p l e which would continue a s at
p r e s e n t to r a n k for t h e a p p r o p r i a t e s u b s i d y .
7.
E x c l u s i v e of s u b s i d y for old p e o p l e , r e n t s w o u l d r a n g e b r o a d l y f r o m
a b o u t £ 2 1 5 s . a w e e k f o r a t w o - b e d r o o m e d flat b u i l t a t a n a l l - i n c o s t of
£ 1 , 800 t o a b o u t £ 4 15s. a w e e k f o r a f a m i l y h o u s e w i t h g a r a g e c o s t i n g
£ 3 , 500.
T h e t a b l e of s p e c i m e n r e n t s a p p e n d e d i n c l u d e s f o r p u r p o s e s of
c o m p a r i s o n t h e w e e k l y c o s t of p u r c h a s i n g c o m p a r a b l e p r o p e r t y for o w n e r ­
o c c u p a t i o n o v e r 20 a n d 2 5 y e a r l o a n p e r i o d s .
8.
T h e f i g u r e s of t h e t a b l e a r e c o n f i n e d s t r i c t l y to t h e l i a b i l i t i e s a r i s i n g
out of t h e c o s t of t h e h o u s e a n d t h e m o r t g a g e .
Over and above these a r e
tax and r a t e liabilities, b r o a d l y c o m p a r a b l e but differing in c e r t a i n r e s p e c t s .
Above all, the owner-occupier is acquiring an important asset.
But
n e v e r t h e l e s s t h e r e a r e s o m e who prefer to be t e n a n t s , and o t h e r s who by
r e a s o n of a g e , s e x , e t c . , a r e n o t a b l e to s e c u r e t h e r i g h t s of o w n e r s h i p
e v e n if t h e y w i s h t o d o s o .
November,
I960
- 5 ­
SECRET
APPENDIX
It is p r o p o s e d that loans should be limited to h o u s e s and flats with
an all-in cost (including land, site w o r k s , professional fees, etc.) not
exceeding £3,500.
T a b l e 'A' shows the weekly rent p a y m e n t s for a
r e p r e s e n t a t i v e r a n g e of d w e l l i n g s , s t a r t i n g w i t h a t w o - b e d r o o m e d flat a t
a n a l l - i n c o s t of £ 1 , 8 0 0 .
I n t e r e s t i s p a y a b l e a t 6 p e r c e n t a n d t h e 60 y e a r
l o a n c o v e r s 100 p e r c e n t o f c o s t .
T a b l e ' B ' s h o w s , f o r p u r p o s e of
c o m p a r i s o n , the weekly outgoings for c o m p a r a b l e h o u s e s being bought for
o w n e r - o c c u p a t i o n with 20 and 25 y e a r m o r t g a g e s , in the p r i c e r a n g e f r o m
£2,000 - £3,500.
T h e m o r t g a g e g i v e s 100 p e r c e n t of v a l u e , a n d i n t e r e s t
is taken at 6 per cent.
TABLE
£ 2 , 000
£1, 800
"A"
£ 2 , 500
£
s.
d.
£
s.
d.
Annual loan
charges
I l l
7
6
123
15
Repairs,
Manage­
ment, voids
26
0
0
26
1
£3,000
d.
£
£ 3 , 500
£
s.
6
216
11
3
0
0
26
0
0
£
s.
s.
0
154
13
9
185
12
0
0
26
0
0
26
d.
d.
Annual
rent
137
7
6
149
15
0
180
13
9
211
12
6
242
11
Weekly
rent
2
12
10
2
17
7
3
9
6
4
1
5
4
13
3
11
1
305
2
11
TABLE
20-year
1
*B"
mortgage
Annual loan
charges
174
7
5
217
19
3
261
Repairs,
Manage­
ment, voids
26
0
0
26
0
0
26
0
0
26
0
0
200
7
5
243
19
3
287
11
1
331
.2
11
17
1
13
10
10
7
Annual
mortgage
repayment
Weekly
mortgage
repayment
3
4
-6­
5
6
7
o
TABLE
£1, 800
£2,000
£
j
s.
d.
156
9
26
Annual
mortgage
repayment
Weekly
mortgage
repayment
25-year
'B' ­
I
Contd.
£ 2 , 500
£
s.
1
195
11
0
0
26
0
182
9
1
221
11
3
10
2
£3,000
d.
£
s.
4
234
13
0
26
260
£ 3 , 500
d.
£
s.
d.
8
273
15
0
0
26
0
0
13
8
299
15
11
0
3
5
15
4
mortgage
Annual loan
charges
Repairs,
Manage­
ment,
voids
November,
5
I960
-7­
11