Mr. Speaker, I move without notice—

Agreed to.

Mr. Speaker, when the debate was adjourned last night I was trying to indicate that greater efficiency could be achieved in the rural areas, in particular, by organizing abattoir facilities on a regional basis. As I pointed out, this means that where one achieves greater efficiency in respect of facilities as well as management, one will inevitably achieve better hygienic control at regional abattoirs as well. Since hygiene at abattoirs is of a veterinary nature, a very important facet at abattoirs is the control and spreading of stock diseases. For example, stock has to be kept in pens for certain periods before being slaughtered. One can only diagnose infection properly once the animals have been slaughtered, unless, of course, an abattoir has all the necessary laboratory facilities to enable it to carry out all these bacteriological tests. The fact remains that if there is any infection, this measure grants the necessary authority for the removal and destruction of certain things such as straw, crates, etc., with which the animals were in contact, and also for the control of these things so that the further spreading of diseases may be prevented. Where abattoir facilities are diversified and spread out over the rural areas, this means that there are so many more points which have to be controlled. In the rural areas veterinary services are not always readily available. Consequently control is less efficient to some extent.

Another problem at one’s smaller abattoir is the fact that adequate laboratory facilities are not available to combat infection or to carry out certain bacteriological tests. At one’s larger abattoir, where the costs are justified, these facilities can indeed be made available. This measure introduces the important provision that where these facilities are inadequate, certain specimens may be sent to the Government laboratory where the tests may be carried out at the expense of the abattoir. The hon. member for Newton Park has a problem in this regard. He said these costs should not be borne by the abattoir but by the State. This creates a problem. If I send cattle to an abattoir and these animals are infected and additional expenditure has to be incurred in order to prevent the spreading of infection or to determine the exact nature of the infection, surely I am responsible for such expenditure as the animals are mine. I cannot expect the taxpayer to bear those costs. Therefore, I think that that request of the hon. member for Newton Park is an unreasonable one to a large extent.

How does one know that the animals have been infected on one’s farm?

Sir, the fact is that these are my animals and that I have to accept responsibility for them. One cannot expect the taxpayer to be responsible for the costs.

Sir, I have said that health services and the application of hygiene measures at abattoirs are in fact supplementary to the Abattoir Commission Act; in other words, the larger the degree of centralization and the larger the specialization within regional abattoirs, the higher and better the standard of the measures of hygiene control one can apply there. Sir, I am pleading for this because I feel that these measures, which will enable the Minister to grant the necessary powers to health inspectors, will promote greater efficiency if one is able to apply them on a regional basis and in a more concentrated and more specialized manner.

Mr. Speaker, the hon. member for Bethal last night made three points regarding the control of abattoirs. He said that there were three requirements; firstly, that certain facilities had to be provided within these abattoirs; secondly, that a certain degree of management should be provided to maintain the abattoirs.

The Minister said so.

Well. I am afraid the hon. member for Bethal must have repeated the Minister’s words then; I was giving him credit for some original thought. Thirdly, he said that certain standards had to be maintained. Sir, this is fine. I want to say here and now that I associate myself entirely with the words of the hon. member for Newton Park. We are not going to oppose this Bill, because we believe that it is an advance; we believe that it is in the best interests of the meat industry in this country generally, whether it be red meat or white meat in the form of poultry. Sir, the hon. the Minister probably knows what I am going to say because I have had correspondence with him and his department on this subject before. I want to ask the hon. the Minister to set out quite clearly in his reply to the Second Reading debate what his intention is regarding the application of this measure to the farmers’ wives, to the small poultry producers who are not doing this as their main business. I am sure that the hon. the Minister and hon. members on the other side are aware of the fact that there are hundreds of farmers’ wives throughout the country who earn a bit of pin money, who earn their own pocket money and who contribute a certain amount to the household expenses by running a few chickens in the backyard or loose on the farm. The Minister is aware of the fact that hundreds of these wives slaughter five, 10 and sometimes as many as 50 chickens a week, and then take them to the local market in the smaller towns and villages throughout the Republic, where they are sold for pin money.

He is a “boervrouhater”.

Sir, when one looks at this Act and at the regulations, one finds that there are very stringent requirements with regard to this abattoir which the housewife is now compelled to erect or which she should in fact have erected since 1967 in order to slaughter half a dozen or more chickens. I know, Sir. that certain exemptions have been granted by the hon. the Minister in terms of the regulations; I have had a look at them. In 1970 he granted an exemption to persons who slaughter up to 800 chickens—I do not know why so many—“as long as the meat derived from such chickens shall be used solely for consumption by himself, his household or his non-paying guests, or for consumption by his employees who are engaged in bona fide farming activities, their households or non-paying guests,” or if that meat is given as donations for bona fide charity purposes. Sir, I can accept that the provisions of this Act are intended mainly to protect the health of the people, but if a person can slaughter 800 chickens in terms of Government Notice No. R.1926 of 25 October 1974, and give those to charity with no hygiene control whatever, then surely the Minister can relax the regulations in so far as they pertain to the wife of the farmer who wants to slaughter 20 or 30 or even 50 chickens a week and take them to the market. I know that there is provision in this particular Bill, and I welcome it, for different standards to be applied to different abattoirs. I wonder if the hon. the Minister can give us some assurance that he is going to instruct his inspectors not to do as they have done in the past in Natal. I am very sorry to see that the hon. member for Klip River is not here to participate in this debate, because he knows the problem that arose in his constituency where an overzealous inspector made enemies of many of the farmers’ wives in that area by the way in which he applied these regulations. I believe that the hon. the Minister has also had complaints from farmers and their wives in the Ixopo area about the manner in which the inspector in that area has applied these particular regulations. Sir, I believe that it is ridiculous to ask farmers to tile an outbuilding to a height of six feet, to provide at least 200 gallons of running hot water and to comply with all the other regulations, especial6ly as we have not had any evidence of any threat to the health of the people of the Republic from the slaughter of a small number of chickens—very often in the farm kitchen—which are then conveyed to the market for sale. I must draw the attention of the hon. the Minister to a report which appeared in the Agricultural News of 24 January 1975, where there was a statement as to the number of registered abattoirs in this country. I was surprised to find how few abattoirs are registered for poultry. According to this report, 1 155 abattoirs have been registered by the Division of Veterinary Services; of these 1 029 are red meat abattoirs, only 115 are poultry abattoirs and 11 are rabbit abattoirs. Sir, this means that there must be hundreds of farmers’ wives throughout the Republic who have not even bothered to notify the department. Has there really been any threat to the health of the people of the platteland because these housewives have not registered? I wonder if the hon. the Minister would not consider a blanket exemption to any person who slaughters up to a certain number of chickens. I believe, Sir, that they are not doing any harm.

What about diseased ones?

I think I have made it clear that there has been no evidence whatsoever of any disease having been transmitted to any person from a chicken which was slaughtered under these circumstances. If there is evidence to this effect and if the hon. the Minister knows that there is such evidence, would he please advise us, because as far as I know this is not so.

Then he should not allow it at all.

My hon. friend, the member for Newton Park, makes the point, too, that if there is such evidence, the hon. the Minister should not allow the slaughtering of any poultry at all except under the control of the Department of Health, or perhaps under the control of veterinarians from his own department.

Sir, in conclusion let me say that apart from this I welcome these new provisions. I sincerely hope that the hon. the Minister is going to see that the Abattoir Commission carries on with the task to which the hon. member for Bethal referred, and that is the establishment of regional abattoirs, particularly in Southern Natal and in Northern Natal. The hon. the Minister must be aware of the trouble that the local authorities have had there with their abattoirs. Admittedly, under the amendments which are now being effected, they will be able to be issued with certificates which will allow them to continue for a period with their present facilities, but I believe that the onus now, in terms of the Abattoir Commission Act, read together with the provisions of this measure, lies with the hon. the Minister and the Abattoir Commission to provide in those areas regional abattoirs to meet the needs of the public of South Africa.

Mr. Speaker, the hon. member for Newton Park inquired about the expenditure incurred when meat is sent to a laboratory. I think the hon. member has reason to ask the question because he does not know what the expenditure will be in terms of this legislation. In practice any health inspector can identify measles, for example. It is only in highly exceptional cases that they would like to have a disease identified by means of a laboratory test using a blood-smear. These are highly exceptional. When a meat inspector or the local veterinary surgeon feels that a laboratory test is necessary to help them with further analysis, the blood-smear is taken, or even one of the cuts which is under suspicion, and sent to a laboratory. An analysis costs from 50 cents to R1-50 at the outside. But we are looking into this matter. People may think that this will push up costs, but in reality it is minimal. I think the hon. member may rest assured that this is not going to cost the producers or the industry a great deal of money.

May I ask the Minister, when an abattoir has its own laboratory facilities and carries out such investigations, is the farmer expected to pay for them?

In practice, no. The Johannesburg Municipality will not, if there was a growth on a carcase and they analysed it, deduct the costs from my account. But there are abattoirs which have no facilities. Take a town such as Nylstroom. That abattoir has no facilities for laboratory tests. Then they send it to a Government laboratory. It happens perhaps once in three months. Very often the farmer says that he also wants to know what the problem is, why this growth was analysed, or why it was cut out. Then he can be told that it was to ascertain what type of infection it was. But I think that we can look into this and I can obtain the precise figure of what the costs amount to over a year. I can realize that the hon. member does not want such costs to be passed on to the producer. In some cases where there are facilities such costs are not passed on to him. But I shall look into that and then we can come back and perhaps I can give the hon. member particulars in the Committee Stage, because it seems to me we are not going to take the Third Reading today.

Both the hon. member for Bethal and the hon. member for Pietermaritzburg South asked us before to regard regional abattoirs as a solution. I cannot imagine it being practical, in the light of the building costs of today, that a town such as Caledon, for example, with its surrounding towns, should each establish their own abattoir. Nor can we take the towns by the throat and say that they must establish a central abattoir. Some of the surrounding towns already have facilities which they perhaps want to improve a little. The standpoint of the Abattoir Commission is that the soundest thing for us to do is to try to steer things in the direction of a regional abattoir. They are now looking in Natal to see whether a group of towns around Estcourt are not able to establish a joint abattoir. That will help us to save great expense. The hon. member for Bethal is perfectly correct when he says we must try to rationalize, that in the light of the high cost of an abattoir, we must not duplicate abattoirs by establishing another one, say, 50 miles from the first.

†The hon. member for Pietermaritzburg South spoke about the small poultry farmer and the housewife. We are all for it that the housewife should have the opportunity to slaughter her own chickens or turkeys, 10 or 20 a day, or even fewer or more, that she should have the opportunity to do this kind of work without going to the town leaving her children at home alone. We are all for home industries.

Hear, hear!

That is the Nationalist Party policy. But I think hon. members can ask the hon. member for Albany how I worked with him to convince a certain municipality of the necessity to enable housewives to sell their confectionaries, etc., in the town. One of the problems is that the officer of health of the local authority is not prepared to let these products come into his municipal area from the farms without his having the opportunity to inspect them on the farm. Now, according to the Act, at one or other stage we must be able to draw a line. I think the hon. medical doctor over there spoke about the hygienic part of it as it affects people’s health. I can show you certain farms where things are not so neatly done as they should be. There may not even be running water. The inspector or the veterinary surgeon requires at least a fly-proof door to the kitchen and at least running hot and cold water.

I do not think that is asking too much. It is not necessary to have tiles against the wall, but to have at least the basic essential things. I do not think the hon. member should be too upset about this.

*The hon. member said that he had never heard of someone who had become ill from a chicken which had been slaughtered on a farm. Years ago I ate chicken on a farm in his constituency and I was still sick two days later.

†I think the hon. member got the message. We do not want to enforce unreasonable things but that at least the basic health requirements be applied by housewives.

*If there are such people it is a question of the relation between the inspector and the producer. If he applies the Act unnecessarily strictly, people are quite welcome to come to me—as you have done— and we can try to rectify those things. But simply to throw it open and to say that there must be no inspection, that everyone can do as they like, would be stupid because there are places where they slaughter in extremely unhygienic conditions, even if these only constitute a small percentage of the total.

Motion agreed to.

Bill read a Second Time.

Mr. Speaker, I move—

In 1972 the Land Titles (Division of George) Adjustment Act was passed. The 18 properties or parts of properties to which that Act applies, are all situated in the Division of. George. A great number of people lay claim to the properties. Most of them do not have registered title deeds, nor are they able to obtain them through normal channels. The Act in question makes it possible, however, to divide the properties concerned by means of a Land Division Committee which was established in terms of the Act, and to allocate the land to the legitimate owners and transfer it to them. In certain circumstances the committee may sell portions and divide the net proceeds.

The present problems with the transfer of the land are attributable to the fact that most of the registered owners died many years ago and the heirs failed to take transfer or to pass deeds of divided title. In some cases the present heirs are already of the fourth generation while shares and portions have also been sold to and fro as well as to outsiders. It is for this reason that there are literally hundreds of heirs and claimants concerned in this group of farms today. Various attempts to render subdivisions and transfers possible by means of private negotiations have not succeeded. The only real solution is, therefore, action on the part of the authorities, as envisaged by the Land Titles (Division of George) Adjustment Act which was passed in 1972.

The aim of the amending Bill which is now before hon. members, is to add a further property to those to which the principal Act already applies. This property, which is situated in the district of Knysna, was bequeathed together with two other properties, to the same heirs in terms of a will which was made in 1888. The latter two properties are already included in the principal Act, but the third property only came to our attention after the passing of the principal Act. It was precisely as a result of research done by the Land Division Committee that this further property came to our attention.

Basically the three properties belong to one and the same group of persons and in order to deal with the division and allocation in a meaningful way, it is necessary that all three properties be brought under the jurisdiction of the committee, and not only the two which are already included in the principal Act. Provisional indications are, in any case, that there are almost 300 interested parties involved.

In view of the private rights which are involved here, the amending Bill had to be dealt with as a hybrid measure. Notice of the intention to introduce the Bill was therefore given in advance by means of the Government Gazette and local newspaper. Interested parties whose names and addresses were known, were informed of the intention by registered mail while the Bill was also available at the magistrate, Knysna, at the Divisional Council of Knysna and at the Cape Provincial Administration for inspection. However, no objections were received. On the contrary. The legislation is welcomed by the interested parties.

Mr. Speaker, as was the case with the earlier legislation, we shall not oppose the Second Reading of this Bill either. The hon. the Deputy Minister mentioned that there was another piece of land in respect of which all owners could not be traced. Since we recognized the principle three years ago that a Land Division Committee be appointed to see that the owners who could be traced, obtained transfer of their land, or failing that, to see that that land was sold and the proceeds divided among the people concerned, we shall not oppose this measure. It is strange to me that one still finds so many such pieces of land in South Africa which have to be divided in this way. Of course, it is not possible to prescribe to a Land Division Committee such as this what it must do, but I should like to refer the hon. the Deputy Minister to a similar instance in Oudtshoorn a year or two ago.

That is where you were sent home with a sock over your head.

I am not talking about the election, but about the interests of people in that division of land. In that instance, after this Parliament had authorized such a division, it came to light that there were still a number of these people who could be traced and who were the real owners of that land. Therefore I want to express the hope that the Land Division Committee will be very careful in its actions, specially in respect of Ruygte Vally, and that it must see to it that no one is affected detrimentally. If here is a possibility that there are more owners who may benefit from this subdivision, they must be sought to ensure that they will obtain this land.

We are not against the principle of this Bill, because it was accepted on a previous occasion, three years ago, and is now only being extended to another farm in the district of Knysna.

Mr. Speaker, I just want to say thank you to the hon. member for Newton Park for his support, which, of course, I accept in this case as obvious. I also want to say thank you for his warning, given in the interests of the country and the people who are involved in this matter, that we must be careful. I want to give the hon. member the assurance that we are doing everything in our power to trace people and that this committee is really doing very good work. It appeared from the research of the committee that there is another piece of land in which the same people are involved. As I said in my Second Reading speech, the committee did everything in its powers to trace these people. The people were even notified personally in cases where their addresses could be ascertained. It is a good rule of this House that the Committee Stages of this Bill be postponed for five days so as to create a further opportunity for interested parties to come forward. But to my knowledge and that of the committee, this matter has been investigated very well, it has been published widely and many of these people have been traced.

Motion agreed to.

Bill read a Second Time.

Mr. Speaker, I move—

As everyone knows, the Rents Act is an exceptionally difficult piece of legislation to administer, and rent control, in whatever form, is a contentious issue. It is extremely difficult to strike a proper and fair balance between the interests of the lessors on the one hand and the lessees on the other. For that reason this House has very frequently discussed and dealt with amending legislation on rents. Today is another such occasion. As you already know, Sir, a committee was appointed some time ago to report to the Minister of Community Development on various aspects of rent control. This committee was representative of all the relevant interests, and was under the competent chairmanship of Mr. H. J. S. Johannes. Mr. Johannes, as former magistrate, former senator and a person who had served for years as member and chairman of the Rent Control Board, was eminently well-chosen to lead the committee, and consequently I want to thank him and his committee for the very thorough and valuable report which they made available to me. The Bill before you today is in many respects a result of the findings and recommendations of this committee. The Bill deals with a large number of divergent aspects which could hardly be dealt with in a summarized speech, and although the clauses will of course be discussed separately during the Committee Stage, I nevertheless deem it desirable for the convenience of hon. members to deal briefly with each clause separately.

Clause 1:

Paragraphs (b), (c) and (h) of clause 1: Return rate:

The definition of “reasonable rent” contains the formula for the determination of a reasonable rent for controlled premises, one of the most important provisions of the Act. In terms of the present definition the Rent Board may determine a rent, inter alia, by allowing the lessor the following: (a) A return of 8% per annum on the value of the buildings; (b) a return of 6% per annum on the value of the land; (c) if the property is hypothecated, the mortgage burden may also be included in the calculation.

It is clear that the investor regards his investments as an entirety and that the buildings and land comprises one project, seen from a return point of view. The investor is only interested in the return on his total investment, and consequently I recommend, with the amendment of paragraphs (a) and (b) of “reasonable rent”, that only one return rate be allowed on the total value of the land and buildings.

Another aspect of the existing formula for the calculation of a reasonable rent which causes problems is the allowance of mortgage interest. This could encourage lessors to hypothecate their properties to the maximum with mortgage loans, and discriminates against the owners who do not finance their buildings with mortgages. I also receive representations to the effect that this allowance causes tenants to fear an increase in rents each time mortgage interest rates rise. I therefore became convinced that there should rather be a reasonable, uniform return rate on the property, and that lessors should then pay from that the interest burden on any mortgages against the properties, and therefore I am now proposing that the proviso which laid down that the interest costs on mortgages could be allowed, should be deleted.

It is therefore important now that a reasonable return rate be determined. What the existing formula amounts to is that a return of 7½% on the joint value is produced. This return was determined as long ago as 1964 and has never since been increased. Until recently the average interest rate in respect of overdrafts from commercial banks, the return on long-term Government stock and the interest rate on mortgage loans for dwelling houses was 8,6%. Therefore there is every justification for an increase in the return rate in respect of controlled residential units, and an increase of 1% on the existing 71% mentioned above is unfair neither to the lessor nor the lessee. At present these observations, after the recent increase in interest rates, are more valid than ever before. Consequently a combined return rate of 81% and the omission of the mortgage interest is now being proposed as a basis for the formula for the calculation of a reasonable rent.

In terms of the definition of “reasonable rent”, the Rent Board may, apart from the return rate which I have just dealt with, also allow certain other expenditure, as specified, when determining a reasonable rent.

The following amendments in respect of the allowable amounts are being proposed in the Bill;

Paragraph (d) of clause 1: Rates and Taxes:

At present the full rates and taxes which are paid may be recovered from the lessee, with the proviso however that when the site has a potential business value and the rates and taxes are levied in accordance with the potential value of the site, the Rent Board may allow an amount for rates and taxes which it deems reasonable.

As you know, no person may demolish a building or utilize it for other purposes without the necessary permission as provided in section 85 of the Housing Act, 1966. It sometimes happens that that necessary permission is refused. Consequently it is felt that when such permission is refused and the owner cannot therefore utilize the property to the full, it is no more than fair that the lessor ought not to be prevented from recovering the full amount that he has to pay in rates and taxes.

Paragraph (e): Insurance:

I do not think I need furnish any explanation here. All that is being envisaged with this amendment is that the Rent Board may, in addition to the premiums which are already allowable, allow premiums in respect of insurance against explosion, earthquake and theft of fittings and equipment.

Paragraph (f): Maintenance:

The Rent Board may allow an amount not exceeding 2% per annum on the value of buildings in respect of maintenance, repairs and depreciation. It is generally known that the costs of even the most minor maintenance and repair work have increased considerably. It may reasonably be accepted that there has recently been an increase of at least 25% in this respect. Consequently I am convinced that the prescribed maximum of 2% in this respect ought to be increased in order to effect an alleviation, and consequently an amount not exceeding 2f% per annum on the aforesaid value is being proposed.

Paragraph (g): ‘Ëlectrical current, etc.:

The Rent Board may allow any amount spent by the lessor on electrical current. However, there is a proviso to the effect that when the lessor supplies electrical current through a submeter which has been installed for a dwelling the lessee is responsible for the payment of the electrical current used by him in accordance with the readings of such submeter at the same rate at which the lessor pays for the electrical current. In other words, the lessor pays the municipality for electrical current in accordance with the readings of the main meter and then recovers the expenditure from the lessee in accordance with the readings of the submeter at the same rate at which he —that is, the lessor—paid the municipality for the current.

The amendment now envisages that in cases where the lessor obtained electrical current in bulk at a lower rate than that which is applicable to domestic consumers in private houses, the lessee is responsible for the payment for the electrical current consumed in accordance with the reading of the submeter at the rate applicable to domestic consumers in private houses. The difference in price is so negligible that the elimination of the uncertainty concerning the amount which the lessee has to pay, and the saving of work and time for the Jessee, more than justifies this amendment for both parties.

Next I want to dwell on the definition of “value”. I think you will agree with me that the determination of a reasonable rent, as prescribed in this definition, is an important factor, if not the most important, when a reasonable rent is determined in terms of the Act. A great deal of attention has been devoted to this basic requirement, and I have considered various bases for the determination of a rent value. However, I have become convinced that it is not possible to improve on the formula for the determination of a reasonable rent value as prescribed by the Rent Board in the existing Act. The definition of “value” is therefore being retained. However, I want to propose amendments in respect of two of the aspects to which regard shall be had in the determination of “value”, viz.:

Paragraph (i) of clause 1: Actual cost of erection:

In accordance with the definition of “value” the Rent Board may have regard to the actual cost of erection of such premises when determining the rent value.

Admittedly the actual cost of erection is a precise amount, but experience has shown that very few lessors are in a position or are even willing to furnish rent boards with particulars of the actual cost of erection. If the actual cost of erection had had to be calculated, various problems would arise, for example: The cost of erection has undergone considerable changes over the years as a result of increases in wages, building materials, etc. Buildings are frequently erected on an economizing basis. The costs of erection also differ from one place to another. Furthermore an expensive building may have been erected in a remote or undesirable residential area, or, in contrast with this, a cheap building in a sought after neighbourhood. In such cases the cost of erection will be of little or no help to a Rent Board in the determination of a reasonable rent value.

It is consequently deemed desirable that instead of the actual cost of erection, rent boards shall take into consideration the replacement value of the building, reduced by an appropriate amount for depreciation. The replacement value less depreciation, sometimes called the “intrinsic value” as well, can be determined by a quantity surveyor. The process in accordance with which the replacement value of an existing building is determined, is to calculate what the cost of a new, similar building would be on the basis of present cost of erection in accordance with the standards of the existing building.

After the replacement value has been calculated, the age of the building has to be taken into consideration, and this is done by reducing the replacement value by a depreciation factor for the age of the building. The depreciation factor usually varies by between 1% to 11%, and is determined by the quantity surveyor on the basis of the weathering and aging of the building and the deterioration of the vicinity.

Is it 1% to per annum?

Yes.

The advantage of this system is that uncertain estimates are restricted to a minimum, and greater uniformity is possible. Consequently I recommend that instead of the “actual cost of erection” rent boards should take into consideration the replacement value less depreciation, as computed by a quantity surveyor in determining the “value” of controlled premises.

Paragraph (j): Rent and Rent Value:

The discretion of rent boards in regard to the determination of “value” is at present limited to regard being had to the rent value of controlled premises of a similar class, nature or situation in the vicinity. It is felt that in order to give greater significance to the concept of reasonableness as far as both lessor and lessee are concerned, the discretion is being extended to having regard not only to the rent value of controlled premises, but to the rent and rent value of controlled and uncontrolled premises, as envisaged in the amendment.

Clauses 2 and 7:

Certain owners are now purchasing controlled premises and are, for example, changing two-roomed flats into bachelor flats, and then increasing the rent. It appears that prosecutors are not prepared to prosecute in terms of section 2(1) or 10(1) when a change has been effected, since the abovementioned sections do not make provision for change of identity. The amendments as proposed in clauses 2(a) and 7(b) are therefore considered essential.

You will observe, Sir, that as in those two clauses the fines which may be imposed upon conviction of an offence have been increased throughout. You will agree with me that the fines as prescribed at present are very low under the present circumstances. Such low fines do not serve as sufficient deterrent, and consequently it has been decided to effect increases as indicated in the various clauses.

Clauses 3 and 10:

Section 18 of the Act deals with the power of rent inspectors. It provides that an inspector may for any purposes connected with the carrying out of the provisions of the Rents Act in so far as they relate to dwellings, garages or packing spaces, or to the limitation of ejectment of lessees from business premises, require to be admitted to any premises, etc. It has recently become apparent that an inspector does not have the power to inspect business premises. However, the department is constantly receiving complaints concerning the exploitation of lessees in business premises. The department must therefore be in a position, for the effective application of rent control, to have business premises inspected by means of inspectors, and consequently the amendment of section 18(1) is being proposed.

As a result of the above the amendment of section 5(1)—clause 3(a)—is a consequential one.

Furthermore, in regard to clauses 3(b) and 3(c), it is deemed necessary that lessors and lessees should be afforded an opportunity of perusing an application for rent increase or complaint of unreasonable rent in order to make the necessary preparations for the hearing. The amendments therefore provide that the grounds for the complaints or application be made available to the interested parties.

Clause 8:

Rent which has already been determined by the Rent Board is in terms of section 11(1) reviewed by the Rent Board on application. For example, all applications for increased rents in oases where the Rent Board has already made a determination are dealt with in terms of section 11. It is therefore essential that a provision similar to clause 3(c) mentioned above be added to section 11(1) as well, as is consequently being done now by means of clause 8(a).

In regard to clause 8(b): Section 11(2) of the Act provides briefly that a Rent Board decision that has been reviewed by the Rent Control Board may never be amended by a Rent Board. This results in unnecessary delay since all applications for rent increase after such a review have to be referred to the control board. In accordance with the proposed amendment this provision will only apply for 12 months. If an application for increase of rent is therefore received after 12 months, the Rent Board may deal with the case without automatic reference to the control board.

Clause 9:

In terms of section 13 the Rent Control Board may consist of three members only. At present these three positions are filled. The number of cases which the board has to deal with has recently increased to such an extent, however, that the board with its present numerical strength is no longer able to cope with the wonk. A delay in this respect cannot be afforded since this could have far-reaching implications for both lessees and lessors.

I investigated the position and satisfied myself of the need for the board to be strengthened, and consequently authorization is being requested to appoint a fourth member. The strengthening of the Rent Control Board is essential for the effective administration of rent control.

Clause 12:

Section 21 which deals with the limitation on ejectment of lessees, relates only to dwellings. Lessors are not giving lessees notice to vacate garages or parking spaces. Conduct of this kind is causing the lessees a great deal of inconvenience and dissatisfaction, and consequently it is being proposed that the limitation shall relate to a garage or parking space as well.

One of the grounds on which a lessor may give a lessee notice to vacate is that the lessor may reasonably require the premises for his personal occupation or that of his parents or child—see section 21(l)(c). It happened recently that a lessor gave a lessee notice because he required the dwelling for his child. After the lessee had vacated the dwelling, it was found that the child occupied only one room, and that the rest of the dwelling had been rented to another person. To prevent similar cases it is now being provided that the entire premises shall be required by the lessor for his own use.

An amendment of section 21(l)(c)—now rearranged as paragraph (f)—is being proposed so that the grounds for notice in respect of a reconstruction or rebuilding scheme shall also include repairs, restoration or conversion which entails vacation.

I have received representations in regard to the termination of the tenancy because lessees had allegedly violated trivial clauses in the lease, such as the keeping of pets, the washing of minor articles of clothing, etc. In order to deal with this situation it is being proposed that a new provision—as subsection (2)—be inserted to prevent a court order being obtained against a lessee as long as he performs those conditions of the lease which in the opinion of the court are not trivial, etc.

The existing subsection (4) of section 21 deals with intimidation of a lessee by a lessor when the latter wants a lessee to vacate the dwelling. The article provides that a lessor shall be guilty of an offence when he threatens the lessee in any manner whatsoever, etc., with the object of depriving the lessee of the peaceful enjoyment of the occupation of the dwelling or of inducing him to vacate the dwelling. It has been found that it is almost impossible for the State to prove that it was the object of the lessor to deprive the lessee of the peaceful enjoyment of the occupation of the dwelling or of inducing him to vacate the dwelling, and consequently it is deemed necessary that the word “deprive” be substituted for the word “with the object of depriving” as indicated in the amended subsection (4)—rearranged as subsection (5)—which is being proposed in clause 12.

Clause 14:

Section 24 of the Act contains provisions in regard to notice to lessees to vacate. Inter alra it is provided that no order for the ejectment of a lessee shall be given unless, in a case where the premises are required for a reconstruction or rebuilding scheme which involves total demolition, the lessor has, within three months after notice by the Rent Board, filed full details of the proposed scheme accompanied by a plan thereof approved by the authority that is in terms of any law required to approve of such plan, as well as an undertaking that such a scheme shall be commenced within the prescribed period of three months.

The requirement that “full details of the proposed scheme accompanied by a plan thereof approved by the authority that is required to approve of such plan” have to be filed, is causing problems. It can take a long time before a local authority approves the plans and details of the development of the premises, which can cause tremendous delay. An approval in principle and a certificate, as contemplated with the amendment, will bring alleviation since no detail, which is at this stage not important either, need be considered.

Furthermore it is being deemed desirable to make it possible to extend the prescribed period of three months in which the scheme has to be commenced, and consequently it is being proposed that the words “or within such, period as the Rent Board may determine” be inserted.

Clause 15:

In terms of section 25 a lessor may not require or receive the payment of a bonus, premium or other similar amounts over and above the rent. It happens frequently that the Rent Board in determining the rent stipulates that the lessor is responsible for any repairs to the property. However it happens that despite this stipulation, the lessor nevertheless recovers the cost of repairs from the lessee.

Where such a violation of the Rent Board order occurs, the department is not in a position to take steps since the said section does not make provision for such a situation. The wording “other like sum” relates to a bonus or premium and cannot therefore be applied to an amount in respect of repairs for example.

The proposed amendment will supply this deficiency.

Clause 21:

The Minister may by notice in the Gazette declare that controlled premises are exempted from rent control (section 33(l)(g)). However, the said authorization makes no provision for the stating of any conditions in respect of such exemption. Cases do occur in which the department is of the opinion that the imposing of conditions are essential, such as a condition that exemption will only be valid as and when the flats are vacated by the existing occupants, etc. At present such conditions are enforceable. Under such circumstances the amendment is an obvious one.

I am convinced that the proposed amendments will contribute to an improvement in the operation of rent control, and consequently I feel myself at liberty to submit the Bill to you.

Mr. Speaker, the hon. the Minister had dealt with this legislation in three stages, namely two very cursory stages and then a very lengthy stage. In the first place he mentioned almost casually and in passing that rents legislation presents a difficult problem. He left it at that. He then went on, in passing, to compliment the Johannes Commission for the work it had done. But he alone can judge the value of the work done, because he has never published the commission’s report. Then, Sir, we had a lengthy explanation from the hon. the Minister as to the effects of the various clauses of this Bill before us. But there was no elaboration by him as to the difficulties which legislation of this type involves. There was no disclosure by him of the commission’s report. There has been no attempt by the hon. the Minister on behalf of the Government to justify the burden which is now to be placed upon tenants by the increased rates of return, and there has been no attempted explanation of any alternatives that have been investigated by the Government in order to meet the needs and just requirements of investors to a fair return on their investments, in so far as money invested to provide residential accommodation is concerned. Those were the “leemtes”; those are the matters which the hon. the Minister did not discuss. His speech dealt mainly with matters which we shall discuss in the Committee Stage. On the principle which is embodied in this Bill, namely to define more closely the concept of “reasonable rent”, he did nothing more than explain the words that are before us in this Bill. What is clear is that the defiinition can only lead to increased rentals for tenants of controlled premises. Those increased rentals will go beyond the limits which are now provided for in the Rents Act. I would have thought that the hon. the Minister, with all the time he has had to consider the Johannes Commission’s report, would today have said to us in this House: “These are the problems and this is how I believe I can reconcile the position of the tenant and the position of the landlord, the investor.”

I believe that in discussing this Bill today, there are four fundamental facts for which we in this House must have regard. The first is that rent control is merely one aspect of the problem of trying to deal with the enormous housing needs in this Country of ours. I do not need to repeat— it has been said by the hon. the Minister and by his predecessor—that in the three decades from 1970 to 2000 we must double the number of dwelling units that we had in 1970. In other words, in 30 years we have to provide as many residential units as were built in the previous 300 years of the existence of this country. The second point I would have thought the hon. the Minister would deal with in order to justify this legislation and the continuation of the Rents Act in some form or other is what he is doing to deal with the escalating costs which are involved in conventional building procedures today. I do not have to enlarge on the fact that those costs are escalating. It is one of the factors which has motivated the Minister to deal with an evaluation of reconstruction or replacement costs in the letting of buildings. The third is the fact that the hon. the Minister would, I thought, have indicated how this legislation would result in investments in letting propositions being more attractive economically, because if they are not made more economically attractive, investment in this sector will dry up. It has been reduced to a drop at the moment but it will then dry up completely. Fourthly, I believe the hon. the Minister has not dealt with the fact that there is a large percentage of tenants of controlled premises who have restricted incomes with no hope of increases sufficient to meet the inflationary cost burden. I refer particularly to the many thousands of pensioners and to lower and middle income groups. All these are matters relevant to the way in which we approach the question of rent control, its continuance or its discontinuance. The reason is that, as in other matters, there is this imbalance between supply and demand. Neither the consumer-user nor the supplier is ever satisfied when you have restrictions, be it price control or rent control.

The anxiety of tenants today is very real. They wonder how long they will be able to afford the repetitive increases in rentals which descend on them year after year. It is not only municipal and other rates going up; there are also other costs and charges which mean repetitive increases and there are many tenants who view the end of the year with some apprehension as to what notices they are going to receive on 1 January as to the application that is going to be made to increase their rental. They do not know where to go to avoid this ever-increasing rent burden. But here the Minister comes today and just loads it a little heavier. They do not know how they are going to maintain themselves and their families, but the Minister comes today and says that the load will become a bit heavier on the tenants of these premises.

He must remember that one of the greatest problems in the housing field and in rent control today is the position of the pensioner, and I do not mean the social pensioner at this stage. I am talking about the pensioner who over a lifetime contributed to a pension fund, anticipating a comfortable and unharassed retirement, but now finds that his pension is eroded by the decreasing purchasing power of the rand. These are not people who are looking for charity but for some effective Government action in order that they might have the benefit of the pensions to which they contributed and saved over their working years in this country. We must also at the same time—this is also a very valid aspect of this matter—remember that the investor who is seeking avenues for investment which will allow for capital growth and capital appreciation, wants to be sure that he will receive reasonable returns on his investments. It is true that in the field investment there are, when demand exceeds supply, those who adopt all manner of subterfuge in order to exploit the unfortunate consumer whose demands cannot be met under the normal balance of supply and demand. I can see that the hon. the Minister, in the Bill that is before us, has provided for further steps to be taken against this group to deal with them by means of protective and punitive provisions enlarging on what is already in the Rents Act. But we must look at those landlords who, I believe, are in the majority, who seek only a reasonable return on their investments. This is no new problem for us in this country. The people of this country are entitled to expect realism and a planned approach from the Government instead of what we have had since the time the Act first came before Parliament i.e. frustrating and futile amending legislation which in no event satisfied either the landlord or the tenant.

We had great expectations when Mr. Blaar Coetzee, then a Minister, announced the appointment of this commission. As the hon. Minister said this afternoon, the then hon. Minister Coetzee appointed the commission with a most efficient chairman —“’n bekwame voorsitter”—Mr. Johannes. I would like to remind you who was put onto this commission. Those who were appointed, according to the announcement the hon. the Minister made on 12 November 1971, were Mr. Johannes as chairman and Mr. E. G. Halse, the experienced chairman of the Rent Board in Durban, Dr. A. S. Jacobs, adviser to the S.A. Reserve Bank, Mr. J. S. Lombard, a rent consultant of Johannesburg, Mr. A. J. van Riet, a representative of the S.A. Property Owners Association, a man highly respected in the property world of South Africa as well as in the investment world in the Republic, Mr. G. J. van Zyl, president of the Association of Building Societies of South Africa, a man of considerable standing in the financial world of this country, Mr. L. van den Berg, the president of the Confederation of Labour. These gentlemen were asked to serve on a commission. To do what?—To find a suitable formula for the determination of a reasonable value for controlled premises for the purposes of the Rent Act, 1950. Secondly, they were to find a suitable formula for the determination of a return of that value—buildings and land separately—for application in the calculation of reasonable rent. Thirdly, they were to consider an annual relaxation in rent for controlled premises. Fourthly, they were to find out whether the occupation of dwellings which were subject to rent control should be limited to certain income groups. The latter is a very vital question, a matter which I have often raised in this House. Finally, there was the question of the lifting of rent control over luxurious dwellings with an indication of the criterion by which the luxury of a dwelling can be determined.

These are all very vital matters. But, for some unknown reason, the hon. the Minister keeps the report under lock and key in the safe in his office and we cannot find out what the recommendations of these people were. Sir, ways which have been suggested in this House but ignored were referred to the commission for investigation. This commission reported in 1972 and we are still without the report having been disclosed. The hon. the Minister said a few minutes age that this Bill is the result of the report. Surely there are many matters on which this commission reported but not touched upon in this Bill. The Minister is still holding it closely to his bosom and none of us can read it. Now he is telling me that I can read it privately in his office. But that is no use to me. The public wants to know what the hours and hours of work of these men resulted in. Why is it that this has to be such a secret document?

The question of the Rents Act and the need for its continuance as well as its variation has been discussed ad nauseam in this House. There have been surveys by the Press, by various organizations as well as by these commissioners and today we get an amendment Bill before us which has no evidence of realism. It meets neither the needs of the tenants, home seekers, nor does it in the form in which it appears here encourage investors, There is no evidence of planning or of new thinking. The attitude seems to be that this is a matter of “let us see what we can do just to keep the pot boiling for another year and to keep people from protesting too much”. I believe that this is not good enough and that the conflicting demands which are growing in this country—justifiably growing—between those who say the Act must go, that rent control must go and those who say that rent control must be extended, must be faced, and faced by this hon. Minister; it is his department. But neither is being satisfied at the moment.

I do not know to what extent the hon. the Minister is aware of the personal and the practical problems which arise with tenants of premises and with investors in premises.

I give him one instance. Last year this House agreed to an increase of certain pensions. I am not referring to the social old-age pensions, but to other pensions. One pensioner in my constituency received what he thought was an excellent increase. He received an increase of R12 per month. At the same time this House brought in the provision about bond interest being passed on to tenants. This aged pensioner who has worked for his pension and who has contributed to a fund received an increase of R12 per month, but a week later he received an advice from the Rent Board that his rent had been increased by R11 per month.

That left him with R1 of his increase.

He was very lucky; he was left with R1 to catch up with the cost of living and to provide for himself. That is what happens when one makes use of stop-start legislation in regard to matters where there is a disparity between supply and demand, instead of taking practical steps to deal with the matter. This afternoon I propose to deal with some of those and to make some suggestions which I hope the House will consider as possible fields for some activity.

I want to return to the owner who has not done a fiddle with this bond interest provision. There were lots of fiddles with people taking out bonds or with people stopping to pay off bonds in order to get the best benefit. The owner who was honest and who did not fiddle has had no encouragement whatsoever to continue investing in the building for residential letting business. He has, in fact, been discouraged even from properly maintaining his premises because of the inadequate return that he gets. One thing is patently clear and that is that the responsible Minister and his department have not produced any evidence of any new thinking or of any constructive ideas in dealing with the question of supply and demand in respect of residential accommodation. All this Bill does is to load an additional cost-of-living burden on to the present tenants and to increase as a consequence the demand for homes. We just have this sort of revolving attitude of the Government. The one year they give a bit to the tenants, the next year to the landlords, the next year a bit to the tenants again, but there is no question of finding a solution. It is for that reason that we on this side of the House cannot support the Second Reading of this Bill. I wish to move an amendment and afterwards I shall elaborate on the suggestions I am making. I move—

1. (a) it links rentals to the constantly escalating replacement cost of buildings;
2. (b) it will impose ever-increasing financial burdens upon tenants already unable to cope with the rising cost of living; and
3. (c) it fails to provide adequate incentives by fiscal and other methods to property developers to construct residential properties for letting”.

You cannot have …

The hon. member is upset. I want to deal with all three of these points.

You cannot have your bread buttered on both sides.

Some people only want a piece of bread; let us forget about the butter. I want to …

Just give us one solution.

I am going to.

Order! I shall give the hon. member for Langlaagte a turn to speak presently.

I am very glad that the hon. member for Langlaagte wants a solution. I propose to give him some suggestions and I would be very grateful if he could perhaps deal with them at a later stage.

The hon. the Minister has received memoranda from the S.A. Property Owners’ Association, Tucsa, the Institute of Estate Agents, the Residential Tenants’ Association and others. Obviously these are all directed from the particular point of view of the persons or organizations that have submitted them.

The hon. the Minister’s job is to reconcile these. His job is to find the answer in as far as it is humanly possible and, indeed, it is humanly possible to satisfy both tenant and investor far more than they are satisfied at present. The law as it stands now is a continuous economic and social irritant in South Africa. Rent control was introduced at the end of the last war to meet a disrupted economic situation in which the demand for residential accommodation greatly exceeded the supply. Yesterday we again heard much of the economic development of this country, but it cannot be denied that if there is one sphere in this country in respect of which no effective steps have been taken by this Government over 27 years to equate the supply and demand, that sphere is the question of housing in this country. This is an urgent need which should have been apparent to the Government a long time ago. The imbalance between supply and demand is still continuing and no real action is being taken by the Government.

I would say that the Bill we have before us now, is just another stone added to the monument of ineptitude and inefficiency on the part of the Government. If we are to have adequate residential properties built in this country, one thing is required and that is incentive. I am not asking for charity hand-outs, but for business-based incentives involving fiscal or tax adaptations. In this way we can provide incentives where they are required. The principle of incentives has already been accepted and applied in industry.

Who must pay for this?

The firms; the Central Government must allow it out of taxes.

Where must they get it from?

It is interesting that the hon. member asks that, because it is his party which introduced incentives so that we could have luxury hotels built in South Africa. They are the ones who allowed tax deductions and provided capital and depreciation incentives. The result is that today we have some excellent hotels. His Government has also introduced incentives for industrial undertakings to be established in economic development areas and also outside those areas. That incentive scheme was accepted in this country. Such incentives have been provided for obvious reasons and I have no quarrel with their being provided. They are provided for one main reason, namely that job opportunities must be created for the population of South Africa through industrial expansion. That is why incentives have been provided which will promote industrial expansion. We needed an infrastructure, we needed the development of proper high-class hotels to stimulate our tourist industry. It was a national need.

Consequently, the Government quite correctly decided to give incentives to those people who would build these high-class hotels in order to stimulate the tourist industry. Even outside economic areas—the hon. member should know this—there are incentives provided, even though they are less generous. Again they are given to meet an economic or industrial need or even a social need of the country. There are incentives provided for the in-service training of Bantu. Why is that done? It is a fiscal device, a tax device to encourage in-service training of Bantu. That was a legitimate and proper step to take. The need for housing, for residential accommodation in South Africa, is no less urgent than any of these other needs for which fiscal incentives have been applied. Why are there no incentives? Why are there no incentives for the individual to acquire his own home? Year after year we have asked for them from this side of the House. Why are there no fiscal incentives to the investor so that he will find it attractive to invest in building blocks of flats? Incentives outside of the economic development area are quite substantial. At present up to 15% on the cost of buildings can be written off for tax purposes. In respect of a company paying 42 cents in the rand this is equal to a cash tax saving of 6% on the total cost of the construction of that industrial undertaking. That is substantial. The depreciation in respect of wear and tear on buildings—I am not talking now about machinery—varies between 2% and 10% per annum. Again, on the basis of its being a company taxpayer, this means a saving of from 0,84% to 4,2% on the cost of the construction of the building.

I cannot understand why this principle is not applied and adopted in order to encourage investment in the building of residential accommodation. In the first instance it will create a cash flow. It will contain the inflationary burden which this Bill is passing on to the tenant. I believe that it will also overcome the resistance that is growing up to investment in this type of accommodation. What is more, it will ensure a reasonable return to the investor. With the increasing investments in this field we will have a more reasonable adjustment of the supply and demand situation. A simple and effective incentive to promote home ownership and one which is applied in many, many developed countries is a deduction from taxable income in respect of interest and redemption on housing loans, subject to certain safeguards. These include personal occupation by the owner and a ceiling on the bond. In the United Kingdom the interest element as regards the repayment of a building society bond is allowable against income tax. This means in effect that in relation to the mean rate of tax in the United Kingdom a person who is paying a standard rate of interest of 11% on a mortgage bond is actually paying an effective rate of 7,37% in view of the tax adjustment. This is a considerable saving. This Bill however merely imposes upon the tenant the obligation to give the owner a return on his investment plus the capital appreciation on the investment plus the replacement costs of the premises less a certain undefined form of depreciation.

Let me give the House an example of what will happen under this Bill. I have taken this from an actual rent determination. There is a small complex in my constituency of three letting units. No bond interest allowance has been claimed and there is no complication of that sort. The new scale of 81% and 21% will result in a 13% increase in the rentals of the tenants of that small complex. The municipal valuation in the Cape is based on replacement costs less depreciation and if the municipal valuation is now applied plus these increased percentages, because replacement costs are now being brought into it, the increases in rentals—I do not say that rent boards will necessarily see it in the same way as I do—can be anything, according to my calculations, from 12% or 13% to as much as 25% on the existing rental determinations. But, Sir, a 5% depreciation allowance to the existing landlord as a tax deduction would exceed the burden which is now going to be loaded on to the tenants. The rentals could stay as they are; the landlord himself would have this additional return on his investment and he would have a cash flow to encourage further investment in this type of construction. Sir, I concede that there are other ways of dealing with this problem; it can be dealt with, for example, by handing out subsidies and things of that nature, but I am opposed to that. I know that the hon. member for Sea Point, according to a Press statement, is in favour of subsidies for pensioners and things of that sort, but I do not believe that that is the way in which you can tackle a problem which is basically an economic problem. I believe that you should tackle it with economic methods and not with hand-outs; that you should adjust your tax incidence so as to give investors an incentive in this particular field. I know that these matters are referred to in various reports which have been placed before the hon. the Minister, including the SAPOA report, where reference is made to a United Kingdom White Paper of 1971, where it is suggested that—

Sir, this is what we have had in South Africa over these many years. We are satisfying nobody and we are frightening off investors. I cannot agree that the payment of subsidies is the right way to deal with this matter. What we have to do in this country is to try to close as fast as we can the imbalance between supply and demand when it comes to housing requirements.

With regard to the Bill, Sir, I have one or two remarks to make; other speakers on this side will deal with the clauses in more detail. The hon. the Minister has referred to this new factor in valuation, i.e. replacement costs less depreciation. Sir, I do not think it would be such an easy matter to determine either what the replacement cost is or what rate of depreciation should be allowed if the rate of depreciation is to be settled by the Rent Boards. Sir, how does one replace a block of flats built 30 or 40 years ago on the whole of the site? Its total coverage may not conform to present regulations, in terms of which the coverage is restricted to a third or a half of the site; and how does one set about establishing the replacement costs of the block of flats or that building. Do you build 24-inch walls all over the site? Or must the replacement costs be determined on the basis of the cost of erecting that building according to modern methods of building and according to modem town planning schemes, allowing for so much bulk and so much height according to the regulations of the municipality concerned? It is not easy to establish replacement costs. How does one establish the replacement costs of many of the older buildings with marble adornments in bathrooms, and so on? Must the new building be identical to the old? Must it be a modernized version of the old? Must the new building have the same site coverage or can it be a high-rise building conforming to present regulations? Must it provide the same accommodation in footage and in finish?

Then, Sir, I come to the question of depreciation. In determining depreciation, is unsuitability taken into account? In other words, is it identical replacement less an unsuitability factor, or is a rule of thumb to be applied? The hon. the Minister seems to have suggested this when he referred to a depreciation rate of 1% to l½% per annum according to the age of the building. Sir, these are the problems. In determining what is the value of the building for rent purposes, one now introduces a fourth factor in addition to what is already provided for in the Act. I do not believe that we can go on considering rents legislation in vacuo in this form, as we are doing now. I believe that we have to look at the provision of housing, both for home ownership and for letting, as a whole in this country, and ask ourselves what we are going to do about it. The inherent problems of the conflicting interests of the investor and the individual tenant have to be reconciled. Sir, there are many things that can be done. I was fortunate in having had the pleasure of attending a congress arranged by the Building Research Institute last year in Durban, where one was able to meet persons from other countries who are interested in the question of housing and where one found that there were innovations which had been introduced in other countries. I want to refer to some of these which I believe could easily be introduced at the present moment to meet this problem, instead of just fiddling with adjusting rates of return on the value of buildings. In the United Kingdom, for instance, the Government, to meet the problem of funds not being readily available at a reasonable rate for investment, towards the end of 1963 took certain steps. I quote from a letter I received from one of the gentlemen I met at this conference. He said—

I think the hon. members opposite will agree with me that it is always politically unpopular to increase mortgage rates. This gentleman continued—

The Government there, Sir, said that in order to stop this inflationary trend they would put at the disposal of the building societies a total of £500 million, to be paid in five £100 million annual grants to the building societies, on this condition: They lent it to the building societies at a percentage which was 1% below what the building societies in turn could charge when they lent out this money for housing. I do not think we in this country have thought of using the compulsory deposits with the State from banks and insurance companies and the amounts that stand in the various funds, the Unemployment Fund, the M.V.A. fund, etc., as a means of dealing with the question of housing and to make funds available for housing. Those are things we must look at.

I just want to sum up then and say this: We on this side of the House believe that the problems inherent in the provision of adequate housing will not be solved by periodical amendments and adjustments to the Rents Act. We believe that the Government should provide incentives to investors in residential letting complexes by capital and depreciation tax allowances, both in respect of existing buildings and in respect of new block of flats or cluster developments to be erected in the future. We believe, Sir, that the Government has an obligation to deal with the old age pensioner, the person who is living on a civil pension, and the disability pensioners, to provide adequate housing for those people. We believe that tax allowances in respect of interest payments on bonds by home owner-occupiers should be permitted as is done in other countries. I might mention in passing that in the U.K. that is allowed on residences to the value of £25 000, or roughly R45 000. We believe that the Government should investigate ways and means of making funds available to building societies for home ownership loans at controlled rates of interest. The Government is already paying out a certain sum in subsidizing rates of interest. Why have this roundabout way of doing things when funds could be made available at a prearranged interest rate? I believe that the Government has to look at low-interest funds to local authorities to eliminate the cost of installation of services in new township areas, which capital costs are loaded on to the first buyers of plots. We believe that the Government must look at the income levels which they attach to housing schemes. I was appalled to see recently that because a Coloured man was earning more than R320 a month he was not eligible to acquire a house through a local authority, even on an economic basis, with funds provided by the Government. These things must be reviewed. I believe that there should be adequate tax allowances to employers who are providing residential accommodation for their employees. I believe finally that these proposals are matters deserving of the Government’s attention and, I hope, approval. We on this side of the House have raised them before. I make no excuse for raising many of them again today, because no adequate reasons have been forthcoming from the hon. the Minister or any of his colleagues as to why these proposals are not being implemented. Until they do receive adequate attention in depth, we on this side of the House are certainly not able to support the Bill which is before us this afternoon.

Mr. Speaker, what we heard from the hon. member for Green Point is typical of the United Party as we know them. They want to run with the hare and hunt with the hounds. Last week the hon. member for Durban Point kicked up a big fuss about the high cost of living, and then inter alia, he repeatedly spoke about higher house rentals, which people can no longer afford. Here we are now dealing with a Bill which is attempting to control the exorbitant rentals …

Have you read the Bill?

Yes, I read the Bill very carefully. I shall come to it in a moment, and then the hon. member will be able to tell me who has read the Bill, he or I. Sir, the United Party is now opposing legislation through which the Government is trying not only to let the lessee pay a reasonable rental, but also to let the lessor obtain a reasonable return on his investment. What does the amendment of the hon. member for Green Point consist of? He wants to run with the hare. On the one hand he is pleading for the lessees who are now going to be subject to higher rentals. At the same time he also wants to hunt with the hounds, for he is also pleading for the developers because they will supposedly not make enough out of these transactions. He also said it was not economic for investors to invest any further in properties, flats and dwellings, since they cannot obtain a proper return on these investments, and the provision of housing is suffering as a result of this.

Are you against it?

May I ask that this hon. member also be given a turn to speak so that he may also put his standpoint instead of keeping up a running commentary which I cannot hear in any case. This is typical of what we get from hon. members opposite. They are now coming forward with this grave accusation against the Government, i.e. that the Government is in fact responsible for the housing shortage. I think that if ever there was a Government which has performed its duty to the full in respect of the provision of housing, it is this National Party Government. Hon. members opposite know this, but they still want to put the blame on the Government. Surely there are also many local authorities that are responsible for the housing shortage which exists. The Government placed unlimited funds at their disposal and it is they who did not fulfil their obligations. But there is more to it. For more than 25 years this Government has been engaged in clearing slums and resettling people, a situation which we owe to the short sightedness of the United Party when they were in power. For that reason I say that this Government has done more than its duty in respect of housing.

The hon. member for Green Point lamented the lot of the pensioners here. There is no one who understands the problems of our pensioners better than this side of the House, since it is in fact this side of the House which has always cared for those pensioners in all respects. When we talk about pensioners, I think the United Party should hang their heads in shame. They keep on talking about the lot of the pensioners, which is supposedly so deplorable. We agree that the cost of living is high and that things are perhaps not very easy for them. But it is the United Party which gave our people a pension of R10 a month in 1948. Today pensioners receive almost six times as much. Hon. members opposite should mingle a little and see what is happening. I invite them to come and have a look at a block of flats consisting of more than 20 units in Boksburg, which was built especially for our seniors and pensioners. In that block they can acquire flats at the reasonable rental of between R9 and R14 per month. This is only in respect of Boksburg. However, the people there have a National Party representative who looks after the interest of the aged. How many old-age homes have not been established by the Government? And what is the Government not doing to care for and provide accomodation for our aged? The hon. member himself mentioned, the fact that the Government is subsidizing home-owners in respect of interest rates. What more would the hon. member like the Government to do for them? I have never before heard such a plea for a socialist state as the one which I heard the hon. member for Green Point make this afternoon. He wants the Government to provide every man, from Harry Oppenheimer down to the lowest paid worker, with a house at the lowers possible cost.

I want to concede that this is not very popular legislation, for we are dealing with two parties here. We are dealing with a lessee and a lessor. Neither of these parties is satisfied. As is the case with hon. members opposite, we too received representations from both those parties. The lessee wants to pay the lowest possible rental, while the lessor wants to recover as much as possible from the lessee so as to maximize the return on his investment. That is why this measure is not a popular one, but the Government nevertheless considers it to be necessary since we are dealing here with the question of housing, something which is of cardinal importance to every individual who would like a roof over his head. We are dealing here with legislation in respect of a situation where, when the demand exceeds the supply, we cannot simply solve the problem by importing the goods from countries which have an excess of this commodity. It is not a problem which can be solved simply by moving houses from one area to another where a shortage exists. The objectives of this legislation are aimed, in particular, at not only protecting people against exploitation but also at closing certain loopholes in the existing Act, as far as the lessee is concerned, so as to protect him as well.

As far as the lessor is concerned, one can understand that he will try to obtain the highest possible return on his investment. I do not believe that this will be the last amendment of the Rents Act, because we shall find more loopholes in the Act later on, loopholes which will have to be closed. It is precisely in these inflationistic and materialistic times that it is always difficult to satisfy two parties whose interests are directly opposed. I do not think this is easy; in fact, I want to say that it is virtually impossible to satisfy the two parties that are involved in this matter. One will always find someone who is satisfied, whether it is the lessee or the lessor. I want to concede that the Act is discriminatory, because we have here an Act which is instituting rent control over houses which were built prior to a certain date and not over houses which were built after that date. I could enlarge more fully on its discriminatory aspects, as I have observed them during the past few months; for example, certain people are protected by Rent Boards and others are not, since their houses do not fall under rent control.

No doubt the easiest solution would have been to do away with rent control, to abolish it completely, but then we would have had nothing but chaos and exploitation. Unfortunately it will so happen that it will be precisely the less well-to-do sector of our population which will be hit hardest and exploited to the largest degree. We must be realistic and practical as long as the demand for housing exceeds the supply. No doubt it is also necessary—make of this what you wil—for us to have the evil of rent control.

The most important amendment here is, as the hon. member for Green Point also pointed out, the clause which relates to the determination of rent value. Here we are dealing, firstly, with the lessee and what the lessee regards as a reasonable rental. These people who have to be protected by this Act against exploitation, against rentals which are too high, are so anxious that they even went so far as to establish an association called the Residential Tenants Association of S.A. to look after their interests and protect their rights. I think it is probably but a very small percentage of lessees who belong to that association and that the vast majority of lessees still depend on the protection they get from the Government. Over against that we have the lessor who are, no doubt, organized far more efficiently and have a country-wide organization to see to their interests. Generally speaking I think the lessor, irrespective of the organizations which have been established, is in a better position to look after his own interests than the lessee is. The lessor is always in the position that he can look after his own interests more efficiently.

Much can be said about and there are no doubt very considerable differences of opinion on what constitutes a reasonable return on an investment and on what sort of investment should be made. Here we are dealing, however, with a person who invests in dwellings and wants a high rate of interest on his money. I think that the return of 8½%, which the hon. the Minister proposed, is reasonable. It is reasonable even if it does not compare favourably with prevailing interest rates. There are also other factors which have to be taken into consideration. Even the increase to 8½% is an improvement on the 7½% which applies at present. I think that it is a reasonably stable rate. We should bear in mind that interest rates will not always remain at their present level. In fact, there is already a downward tendency in interest rates. If we had to adjust the rate of return to the prevailing interest rate, it would mean that the Rents Act would have to be amended every three months, every six months or every year in order to adjust to those rates. I do not believe the argument that the capital which is invested can be invested at higher interest rates, for we are dealing here with capital appreciation which can be utilized. We can argue as we like, but I do not believe that greater capital appreciation is shown than is to be seen in the appreciation of properties over the past 20 years. For practical purposes, hon. members can just think about houses which cost of proximately R6 000 25 years ago. Today the value of those houses would easily be between R25 000 and R30 000.

Another questions which arises is how the valuation of properties should be carried out. No doubt there are also widely divergent opinions on this matter for the change which the hon. the Minister proposes in clause l(i) amends paragraph (a) of the definition of “value” in the sense that “actual cost of erection” is being replaced by the following words—

I think I can agree with the hon. member for Green Point that “replacement value” could have many divergent interpretations. If we take a dwelling which was built 25 or 30 years ago and try to determine its replacement costs, we may ask whether its replacement means that it should be a dwelling of the same size, whether it should be a similar dwelling or whether it should be an identical dwelling. There are many opinions on this. I think that even a quantity surveyor will not always find it easy to determine the replacement costs owing to the kind of material which was used in such a dwelling and the degree of depreciation which has taken place. It is an accepted fact that there are houses that are 20 or 30 years old which are in a far better condition today than houses which are perhaps five or ten years old. I should like to add that the quantity surveyor will not only be there for the convenience of the lessor, but that the lessee too will be able to make use of his services. “Replacement value” is not the only criterion on which the Rent Boards should rely. There are other factors as well which have to be taken into consideration in determining the value. There are municipal and sworn valuations. However, I think that the most important factor is that, as the amendment reads, the rent values of controlled and uncontrolled premises of a similar class in the area should be taken into consideration. I think that this change will eliminate a considerable number of the complaints that are received.

Another important amendment is the provision that the interest paid by a lessor on a mortgage bond will no longer be included in the calculation when determining the rent. I think that this is a fair amendment and will eliminate many of the malpractices in which bonds which are not bona fide are registered in order to circumvent the Act. In practice it happens time and again that the owner of a block of flats forms a private company and then lends money to himself at exorbitant interest rates, interest rates which are recovered from the lessees in an indirect way. It also happens that in many cases no attempt is made by the lessor to pay off the bond, as a result of which the lessee is obliged for an indefinite period to pay the interest into the lessor’s pockets. Is it fair for a lessor to negotiate a loan on a property, without being under any restrictions, in order to solve his own financial problems, without the lessee profiting by this action in any way? Is it fair that a lessee has to provide capital to a lessor in an indirect way and then still pay such high rentals?

The hon. member for Green Point advanced the argument that these restrictions, this sword hanging over the heads of developers, may affect the provision of dwellings. When the freezing date was fixed at 31 May 1966, it was said that this would have an influence on the construction of dwellings. But I think that the opposite happened, and indeed to such an extent that there was a time when the supply exceeded the demand and many flats were vacant. I think the hon. member’s argument tends in this direction, i.e. that rent control should be abolished. This is something we cannot allow. As I have already said, this will lead to exploitation and chaos. It is also said that developers do not want to continue to build dwelling units because they fear that those units will be placed under rent control. I wonder how many dwellings built after 31 May 1966 have been placed under rent control. I do not believe there is one single dwelling where this has happened. As far as I could ascertain, there were no applications to have such flats placed under rent control. The moment the threat or the possibility arises that they may be placed under rent control, the lessor and the lessee come to an agreement. It is true that where exploitation takes place the flats or dwellings concerned can be placed under rent control. I also believe that that sword, that deterrent, is rightly hanging over the heads of those people who are seeking to exploit others. I think it is a good thing for this sword to be held over their heads. I believe it is important for a sound relationship to be preserved between lessee and lessor. Each one of those two parties, the lessee and lessor who are involved in this, should feel that he is being treated fairly and that no one is being wronged. That is why I want to appeal to the lessee and the lessor to give the amendments in this Bill a chance. The amendments as contained in this amendment Bill were drawn up after thorough consideration by people who have knowledge of this matter. I think it would be worthwhile to put it to the test.

Mr. Speaker, I have listened attentively to the hon. member for Boksburg, and I find his attitude in respect of the amendment extremely surprising. I am very disappointed because he always seems to be a very reasonable man. [Interjections.] The hon. member will now have to return to his constituency and the voters of South Africa and report to them that he has dealt the pensioners and other people who are not so well-off, a financial knock-out blow. He will have to tell them that he and the Government have taxed these people to such an extent that they are not allowed to ensure a decent family life for themselves and their families. The hon. member will also have to tell the owners of flats that he is not prepared to look after their interests. It seems to me as if the hon. member for Boksburg did not quite understand this Bill or the amendments moved by the hon. member for Green Point. I think an hon. member on that side —possibly the hon. member for Langlaagte, who usually knows a great deal about matters of this kind, should explain to the hon. member for Boksburg what it is all about.

†Mr. Speaker, the hon. member for Boksburg tried to blame the United Party for the housing shortage. He said that the Government was not to blame. I want to say that this is the most arrant nonsense that I have ever heard in my life and I am sure that it is the most arrant nonsense that anybody could ever have heard. The hon. member for Boksburg knows full well that the housing shortage must be laid squarely at the door of this Government. The hon. member for Boksburg knows that one of the main reasons for the housing shortage is the application of the Group Areas Act in South Africa. In terms of this Act hundreds of thousands of people have been moved out of perfectly good dwellings and have had to have other houses found for them. [Interjection.] Mr. Speaker, the hon. member asks what has happened to their dwellings.

Mr. Speaker, may I put a question to the hon. member?

I am prepared to answer a question.

I should like to know whether the hon. member would tell us whether the United Party would repeal the Group Areas Act should they come into power.

Mr. Speaker, the Group Areas Act will obviously be revised by the United Party. [Interjections.] We shall have to accept certain facts of life. Certain things have happened under the Group Areas Act. The Government has implemented it up to a certain stage. We will obviously have to revise it. One thing we will never do, however, is to move somebody out of a house that is properly constructed into another area. The only time we will move people is for slum clearance purposes or for the purposes of urban removal.

I asked you whether you would repeal it.

The hon. member for Boksburg mentioned that the Nationalist Party had increased pensions sixfold since they came into power. I want to tell the hon. member for Boksburg that under a United Party Government if the cost-of-living index had been applied—no pensioner in South Africa would be getting under R150 per month. That is two and a half times better than what the pensioners are getting today. I want to say that pensioners today are starving through the absolutely callous attitude of this Government. The hon. member for Turffontein looks at me in amazement; he should be in agreement with me on this point.

Mr. Speaker, I have listened carefully to the hon. member for Green Point and I would like to say that I fully support the amendment introduced by him. The hon. the Minister who introduced this Bill did not sound very enthusiastic about it. In fact, he would be well advised seriously to reconsider the matter in depth because he has obviously not done so. This Bill makes living in a flat an occupational hazard; it makes the life of the tenant financially precarious because he is faced with the prospect of rent increases every second month, and yet it does not solve the problem of the landlord. The Bill has definitely put the flat-building industry into a straitjacket. Sir, I want to ask the hon. the Minister this: Does the Bill assist to provide more finances for the building societies or for the trust companies to enable them to grant bonds to the flat-building industry? The answer is a categoric “No”. The flat-building industry is on the rocks, and this legislation is primitive in the extreme. It reflects a lack of foresight; it is ill conceived and it does not seek to provide any permanent solution to the problem. It is patchwork legislation; it only serves to paper over the cracks and seeks temporary solutions. This Bill will have the effect of driving the Rent Boards of South Africa round the bend as every owner of a rent-controlled flat will be on their doorsteps with an application for increased rent. Sir, I notice that the hon. the Minister is nodding. I take it that he is in agreement with me.

I was not nodding at you.

Sir, the Rent Boards have already had their hands completely full. The hon. the Minister knows that in 1972 the Rent Boards dealt with 40 738 cases; they had to check 7 630 notices to vacate. Mr. Speaker, has the time not arrived to dispense with all this bureaucracy and to try to streamline the procedure? This Government is killing our people with red tape. Why does the Government not commit itself to appointing a professional committee who will look once a year at the cost-of-living index and the devaluation of money and then decide, by amending the Act each year, to give the owners of flats a certain percentage increase? The owners would naturally be entitle automatically to rental increases when their municipal rates or their insurance rates are increased. Once this professional committee has recommended what formula should be used to determine the increase to be granted each year, the Government could decide who is to absorb the increases. For example, if the cost of living has gone up tremendously, pensioners cannot be expected to absorb the increases. The formula may have to differentiate between people of different income groups. In the case of pensioners and people with fixed incomes, the Government could absorb the entire increase by allowing the flat-owners a larger depreciation allowance or a reduction in their income tax. Either a greater depreciation allowance or a reduction of the tax rate would have the effect of giving the owner an increase without costing the tenant anything. If the Government follows this suggestion, then the Rent Boards of South Africa will to a large extent become redundant. In terms of this suggestion, flat-owners are given the incentive of a guaranteed automatic review and increase. What is also most important is that the tenant will have security of tenancy and will know that the Government will look after his or her welfare. That is something which this Government has been neglecting over all the years that it has been in office. The Bill in its present form, I think, should be referred to as the “Abortion Bill,” because this makes an abortion of any means of solving the rent problems either of the tenants or of the owners. I want to say that this Bill does not even seek to meet the challenges and to face up to the problems facing the building industry of South Africa in relation to flat building.

*Sir, the Johannes Commission of Inquiry was appointed to inquire into the Rents Act. What do we find? The inquiry was not quite what the Government wanted and for that reason the Johannes report is not Tabled. I think it is a shame that the tax-payer’s money should be used to pay for an inquiry, the report of which the Government refuses to Table or make available at this stage. What was the purpose of the inquiry? Why does the Government use the money of the tax-payers if it does not want to give them value for their money by Tabling this report today? I think one can accept that the Government has rejected the report and, therefore, this report will meet with the same fate as other reports the Government does not like. The Government is in the habit of simply not making a report public if it does not like it.

Which report?

The Wavecrest report. I knew that question would be asked. Sir, if we had that report today, we would have been able to discuss and analyse this Bill in greater depth and we would have been able to have had a far better discussion.

†Sir, this Bill affects the interests of a multitude of people. You find that the building industry and all the professions associated therewith are seriously affected. Investors, such as the insurance industry, the pension funds, private individuals and companies are affected. But most important, every lessee of controlled premises is vitally affected. We are told that in the next 25 years this Government has assessed the position to be that we will need more houses and homes and flats than we have had over the past 300 years. The State, of course, has a vested interest in that it is a partner in every rent increase granted, as the additional profits made by the owners are taxable. So the Government cannot say today that they adopt an impartial attitude, because they receive part of every increase granted by way of company or private and individual taxation. In view of the fact that the State is a partner in the profits of every rent increase, it has a duty to strike a happy medium between the owner and the occupier. We believe that every owner is entitled to a reasonable return on his investment. We also believe that all tenants, but more especially those in certain income brackets, are entitled to protection. We believe that in the interests of South Africa the building of flats should be encouraged and the investment in blocks should be stimulated. Under the present Act and under the Bill before us, the encouragement towards flat development is virtually nil. The amendments contained in this Bill improve the rate of return for the owners of controlled premises slightly by increasing the rate on the building and land to 81%. But, sir, you must take into account that to buy or to build a block of flats you get 81% while you pay interest at rates of 12% to 14%. You do not have to be a genius to see that there will be a severe reverse cash flow when you take into account capital repayment as well.

It is worse than farming.

Sir, you will not allow me to reply to that. If this Bill goes through in its present form, the Government will have let slip a golden opportunity of using this Bill as a means of stimulating the flat building industry in South Africa and encouraging investment in flats, and as such averting a housing crisis which must come over the next number of years. This Bill is hopelessly inadequate and as far as the owner is concerned, the benefits that will accrue to him will accrue to him at the expense of the taxpayer and to a slight extent, to the extent of the depreciation allowance, at the expense of the State. Why does the Government not use this opportunity to lay down in this Bill a charter or a blueprint for which flat-owners, occupiers, the building industry and the professions would be grateful? If the Government could double the present tempo of flat building, the additional profits made by the building industry, the professions and the owners would allow the Government so much extra tax that it would be in the position to afford to give the incentives for which we have pleaded. The Government could do the same as it does in the case of houses, where it grants a subsidy of 2% to the owner of a house which is under a certain valuation. Why can it not grant the same 2% subsidy to a tenant or why can it not grant the same subsidy to the owner of a block of flats as it grants to the owner of a house with a certain valuation?

Mr. Speaker, you have heard that over the years we have pleaded that the rental which the tenant pays should be deducted from his taxable income. That would be another form of alleviation. We are giving the hon. the Minister plenty of alternatives. The Government has no reason to refuse a depreciation allowance on flats commensurate with that on luxury hotels. In order to ensure that sufficient flats are built, the Government could even reduce the company tax by, say, 43% to 20%, and they will still not lose out on it because they will stimulate the flat-building industry to such an extent that they will be collecting tax from far more flats than they are at the moment. The result will be a building boom in flats and the Government’s revenue will not decrease in view of the additional units even though less tax will be received on each unit.

If the Bill is passed, the owner of every rent controlled block in South Africa will have an application before the Rent Board at the earliest opportunity. The Rent Board will be absolutely swamped with applications. The Bill also provides that a quantity surveyor must compute values by using the definition of replacement value less depreciation. What a wastage of manpower! I do not believe that we have sufficient quantity surveyors in South Africa to handle this particular problem.

We have Colin.

Yes, but that will only be after the next election. However, in the meantime this paper work will have to be done. This provision will be another step towards burying our people in paper work. The owner of the block may be able to afford the expense of a quantity surveyor and if the tenant does not agree with the figures produced by the quantity surveyor of the owner, what does the tenant have to do? The tenant will then also have to engage a quantity surveyor and this will become very expensive. Instead of having one firm of quantity surveyors messing around and wasting their time, you will have two firms of quantity surveyors messing around and wasting their time. You place the poor tenant in the most invidious position where he has to bear this enormous extra expense.

As the entire quantity surveyors’ profession is to be involved, I should like to hear from the hon. the Minister how he proposes defining in detail this “replacement value less depreciation”. I listened to his explanation very carefully, but the hon. the Minister will concede that building costs are rising daily. Are we going to have revaluations every month, every second month or every second year? How is this whole scheme going to operate? Building costs are never static and the increases continue all the time. Are all the quantity surveyors in South Africa going to be engaged permanently and on a full-time basis on valuing blocks of flats? We have also heard that building methods, materials and land usage have changed. I think it is an impossible situation and a very difficult task to expect quantity surveyors to assess replacement value less depreciation under all these various circumstances.

To be candid, some of these provisions are absolute nonsense and the result of muddled thinking. The Government shouts from every roof top for productivity and development, but the essence of this Bill is to stultify productivity with paper work and to act as a spoke in the wheel of development. The proposed increase to 8½% on the value represents some improvement, but is totally unrealistic and unfair in today’s conditions of high interest rates and a shortage of liquidity. Any investor is entitled to expect that the return on rented residential property should be higher than that on fixed interest loans; instead, the returns are lower and are fixed in a most archaic manner. This Bill provides for the decontrolling of premises and I think we are entitled to ask the hon. the Minister to give us a policy statement in relation to the guidelines for decontrolling blocks of flats. During 1972 I believe that 15 blocks of flats and five dwellings were decontrolled. In order to decontrol those 15 flats and five dwellings there must have been certain guidelines laid down by the hon. the Minister and I wonder if he could tell us today in detail what those guidelines are, so that the owners of other blocks of flats could know how to set about it and what chances of success they have. The department and the hon. the Minister must have decided upon guidelines for the decontrolling of premises.

This Bill will increase the rentals to tenants, which means that there will have to be another round of increased wages. This will of course result in another severe bout of inflation. For people like pensioners and those on a fixed income, it will be the final knock-out blow. The Government’s liquidity position is very favourable at the moment. We know that the gold price is going up all the time. I think that for every $10 increase in the price of gold the Government gets another R180 million for the country. The Government can, therefore, well afford to make the concessions we are pleading for. The present Act allows for a return of 6% on the value of land and 8% on the value of buildings. It should be remembered that when those percentages were fixed, the normal interest rate was in the vicinity of 5% per annum. In 1972, at the time that the Johannes Commission investigated the matter, the rate of interest was about 9½% to 10% per annum. Today funds are scarce and interest rates as high as 12% and 14% per annum. From the above it can be seen that the increase to 8½% is hopelessly inadequate to induce people to invest in flats. This Bill should seek to encourage investors to build blocks of flats in South Africa, but is now putting us into the position where we are actually falling further and further behind at a time when South Africa is in the grip of a flat shortage. The hon. the Minister of Defence is looking very surprised, but I do not think he has any problem in relation to flats. According to the Financial Mail, flats in Johannesburg with two or more bedrooms were difficult to find in the middle of the great flat surplus approximately 18 months ago. I believe they are now virtually impossible to find within a reasonable distance from the centre of the city. The same trend is evident in Pretoria, Cape Town, Durban and Port Elizabeth. The viability studies done show that the cost structures are such that if flats are built they are not marketable.

In other words, there is no market for the new flats which are to be built, because the rentals have to be so high from the outset that there are no tenants that can afford to pay these rentals. Many of the prospective developers have held back their developments because of the present position. This is dramatically illustrated by the building statistics from the Port Elizabeth Institute of Planning Research. The institute found that whereas virtually the same number of houses and flats were built annually in Port Elizabeth during the mid- 1960s the completion of new flats dwindled to a mere 333 in 1970 and eventually decreased to 140 in 1973. In contrast the construction of houses increased to 1 000 in 1973. This is a serious situation and this Bill does not provide the incentive required to stimulate the flat-building industry in South Africa.

There is another matter developers are worried about and I wonder if the hon. the Minister can give us an assurance in this regard. I am talking about the question of whether rent control will or will not be extended to incorporate flats built after 31 May 1966. I wonder if the hon. the Minister would set their minds at ease in that regard. The amendment of the hon. member for Green Point is one well worth supporting and I for one cannot see why the Government should not allow a free vote on this matter. Surely this is not a political issue. There is no reason why the hon. members of this House should not have a free vote. I know that if they should allow a free vote, the hon. member for Port Elizabeth North and the hon. member for Algoa, who have plenty of flats in their areas, would like to vote for this amendment and I believe that they should be given the opportunity to vote for this amendment. I would like to appeal to the Whips and to the hon. the Minister to allow their people a free vote. The hon. member for Port Elizabeth North has many difficulties and can be placed in an embarrassing position if he is not allowed a free vote in this matter.

In conclusion I would like to say that the Trade Union Council of South Africa is most unhappy about many aspects of this Bill. The Trade Union Council feels that this matter is so important that it must be referred to a parliamentary Select Committee which must hear opinions from all sides and of all shades before the Rent Act is in fact amended. The protection of hundreds of thousands of people demands that the most careful consideration be given to this matter. For those reasons this Bill should be withdrawn at this stage. If we had had the report of the Johannes Commission, we would not have had to consider referring this matter to a parliamentary Select Committee. But because we do not have that report we will not be able to deal with this matter in such depth as we would have liked to do. Therefore the Minister has no alternative but to take us into his confidence by placing the report before us or, otherwise, withdrawing this Bill at this stage.

Mr. Speaker, if the hon. the Minister has to reply to all the points and statements which the hon. member for Walmer made this afternoon …

He is clever, isn’t he?

… then I do not know what will happen. These statements had no connection with one another. That hon. member asked the hon. member for Boksburg whether he had read the amendments being effected by the Bill. But he had not read them himself, because he alleged that the 8½% which was being allowed would result in no flats being built in the future. That is what he said, is it not? Of course it cannot be true, because only and exclusively buildings built before 31 May 1966 are controlled buildings. The buildings built after that are not controlled, they are not under rent control. On what grounds can the hon. member now say that the building of flats will be crippled by this and that people will no longer be interested in building? If I am not mistaken—and I do not want to offend the hon. member for Green Point—he, the hon. member for Green Point, also said that this could influence the building of flats to such an extent that no flats would be built and that this would cause a larger shortage of housing.

It seems to me as if the Opposition sneakers up to now have tried to make political capital from this amending Bill. I want to tell them that this is not a matter for party politics but that this is a socio-economic measure. The amendments contained in this Bill are the responsibility of everybody in this House. I know that we shall all be agreed that there is not a single hon. member who will say that we must scrap this legislation. I believe that we are all agreed on this point. I believe that the hon. member for Green Point also agrees that we must retain restrictive measures.

The hon. member for Walmer even said that the hon. Minister was disrupting the family lives of people by introducing these amendments. The hon. member for Green Point and the hon. member for Walmer said that we must lay this housing shortage “fairly ánd squarely”—I use the words of the hon. member for Walmer—at the door of this Government and of the National Party. Do they not know that these restrictive measures were introduced as far back as 1920? These measures are therefore five decades old. Reproaches are cast in the teeth of the Government and it is said that absolutely nothing is being done. From 1 August 1920 to 30 September 1974 the following number of houses were built through the agency of the Department of Community Development from Government funds: For Whites, 106 528 dwelling units at a cost of R535 million; for Coloureds, 152 537 dwelling units at a cost of R242 million; for Indians, 45 583 dwelling units at a cost of R127 million; and for Bantu, 355 117 dwelling units at a cost of R209 million. That is what was done by the different Governments. Now people might say to me that this was done in the past. Hon. members will remember that the measure relating to rent control was referred to a Select Committee yet again in 1949. The Select Committee brought out a report and the legislation which followed it, was Act No. 43 of 1950 which was piloted through this Parliament in 1950. We must remember that there are various factors which aggravated or gave rise to the housing shortage. One of the contributory factors was the last world war as a result of which everything came to a halt. There was absolutely nothing which could be done on behalf of housing. The hon. member for Sandton is frowning at me, but I shall give him the information. In 1949 the housing shortage for Whites was 56 145. The Rent Controller of that time said the following, inter alia, in his report (translation)—

That is what was said as far back as 1949.

This restrictive measure is not the most pleasant thing with which one can deal. When one is dealing with restrictive measures, someone is going to be dissatisfied. Here we have to do with two clearly separate groups or parties whose interests are diametrically opposed to each other. Let us not say that they are enemies, but interests remain interests and the fact remains that the man who wants to invest his money, wants to make the best investment that he possibly can. Nobody can dispute this. I want to refer hon. members to the Wainer case in Johannesburg. This Mr. Wainer was charged with exploitation. He said publicly—nobody can take it amiss of him—that he invested money to make the best investment and to gain the best possible profit from it.

Do you back Wainer?

If we are going to allow that people are exploited in this way in this shortage of housing without there being legislation against it, I do not know where we are going to end. We therefore have no choice but to have these measures. Now we want to endeavour —and it ought to be the ideal of each of us in this House—to have fairness and justice prevail, as far as humanly possible. That is what is at stake. On the one hand we must try to protect the lessee and on the other hand we must give the lessor the opportunity to make his investment worthwhile.

Then why are you botching the job?

For those of us who believe in a free economy and in the principle that one may do with one’s property as one likes, these things are not so easy. I believe and accept that the Minister and everyone who had a hand in this amendment, did their best to make the best of a bad affair. I want to accept—in fact, I have no reason to doubt it—that they made an in depth study of this matter, having regard to all the various factors. It will not help to say, as the hon. members for Walmer and Green Point did, that these people must get a subsidy of 2%. When we give a subsidy to people who concluded loans with a building society, we do it to encourage people to acquire their own houses rather than to rent houses. The ideal is, after all, that each person will own his own dwelling.

Even the Africans in the urban areas?

I do not know whether hon. members of the Opposition realize what the problems are and what their causes are. I think that the hon. member for Houghton realizes these even less than other members on that side of the House do. We all know that, besides the fact that the shortage of housing has deteriorated as a result of the last world war, there was also a tremendous increase in industrialization. It brought about urbanization. People from the rural areas migrated to the cities and housing had to be there for them. As well as that, housing had to be provided for the Indian, the Coloured and the Bantu. Now the Opposition pleads for more and more money for housing. Every time a matter is discussed, regardless of what the matter is, or which department or which Minister is involved, they want the maximum amount of money, but when taxation is discussed, they want to pay the minimum. They are the wonder party. One wonders sometimes what they are going to do next. Besides the factors which I have mentioned, there is also the increase in the population through natural growth and through immigration. We hear the United Party telling us daily that we must import more people to obtain the necessary “know how”. It might be easy to talk about these things, it might be easy to criticize, it might be easy to tell the hon. the Minister what he should have done, but to take the responsibility upon oneself is another matter.

I want to return to the question of the 8½%. I think that we have now come much closer to reality, to what is practical, because, as the Act stands at the moment, provision is made for a return of 6% on the land and 8% on the buildings. Now the land and the buildings are regarded as one, and 8½% is calculated on it. I know that the lessors do not feel very happy. I know that they want 12%, that they ask for 12%. They say that if they cannot get 12%, housing cannot be provided as desired, because they cannot take the initiative to provide more houses. The current rate of inflation is 15,2%. In other words, if the argument were to be that 12% would cover in full the shortfall or the loss supposedly being suffered, they would still be 3,2% in the red. What we must take into consideration is the depreciation of money, the drop in the value of money which is continuing while property continues to increase in value. If I may venture to give an example, I should like to say that if one looks at Marks Building, one will possibly say that its market value is R100 000. However, when one calculates its replacement value, the picture will be entirely different. I want to go so far as to say that the amount will be approximately R400 000. The depreciation on this will probably not be more than R2 000. I do not think my estimate is too far fetched. Therefore I think that things are not going so badly with the lessor. I think that a good balance has been found as regards calculating the rental value.

There is one other amendment to which I want to refer. I refer here to the increase of maintenance costs and depreciation. If the Opposition were perhaps to advocate that the maintenance allowances be increased, that we should have increased them by 1% instead of ½%, I should have agreed with them. It is the old buildings —and it is those which are experiencing difficulties—which fall under this measure. The maintenance costs in respect of these old buildings are very high as it is. One finds that the owners of these buildings do some patchwork so that these places may at least remain habitable. Not much later, however, cheap and second-hand material has to be used to do further maintenance work. I do not think that it is impossible to give consideration to increasing maintenance allowances. Possibly it will promote the matter of maintenance as a result of which these people will possibly be motivated to do the repair work properly and to use materials of a better quality.

I welcome these amendments. I welcome this measure in the circumstances in which we are at the moment in respect of housing. I just want to ask the hon. the Minister whether it will be possible to consolidate the Act itself once this measure has been enacted? At the moment it is very cumbersome. One must refer to various amending Acts before one discovers what the true position is. I should like to request that the Act be consolidated.

Mr. Speaker, it will no doubt astonish the hon. member for Hercules to hear that I agree with one or two of the things that he has said here this afternoon. I agree with his last request, and that is that there should be a consolidation of this law because it is a very complicated law to which there have been many amendments, and it would certainly be of great help to anybody studying the rent laws to have a consolidated Act. I agree with him also where he said that the object of a Rents Bill obviously, should be to try to reconcile the interests of both the tenant and the landlord.

The same point was made by the hon. member for Green Point. Quite obviously one has to try to see, if possible, that the landlord gets a reasonable return on his investment and one has to see that the tenant is not exploited in any way. These two particular aspects are not always easy to reconcile. I do not agree with the hon. member, however, where he says that the Government is making the best of a bad job; I think I am quoting him fairly accurately in English. We do not really know; we are not in a position to tell because we have not had the advantage of seeing the report of the Johannes Committee, as other hon. members have pointed out. The Johannes Committee was a high-level committee; it had expert people on it, and it sat for a couple of years, but we have not been able to see what recommendations it made. There has been no explanation by the hon. the Minister as to why he has not in fact tabled this report.

He explained it last year already.

Well, I want to hear it again; I have forgotten. I am getting old and my memory is bad.

Not only your memory is bad.

Well, perhaps the hon. member and I will have a little chat about that, but not at the moment. I want to say that I would like to hear again from the hon. the Minister why he has not tabled the report of the Johannes Committee, because I would like to know whether this Bill follows the recommendations of that committee. I do not know whether the Johannes Committee makes the sort of recommendations that we on these benches would necessarily accept, but I think we should have had the benefit of the advice given by that high-level committee. I do not agree with the hon. member for Walmer when he says that just tabling the report of the committee would at least have meant that the spending of the taxpayers’ money on the appointment of this committee would have been justified. Sir, we have the reports of many commissions tabled in this House, and as far as I am concerned my money is still being wasted as a taxpayer. I can think of one example, and that is the Schlebusch Commission, which tabled five reports. I still feel that as a taxpayer my money has been wasted.

I want to say to the hon. the Minister that we are not prepared to accept this Bill at Second Reading either, and I want on behalf of the Progressive Party to move the following amendment—

1. (a) the Government has refused to make known the findings of the Johannes Committee;
2. (b) it fails to create conditions in which sufficient accommodation at reasonable rentals will be available for persons of the lower and middle income groups living in the cities; and
3. (c) it does not provide adequate protection for tenants against unfair harassment from landlords”.

I have mentioned the Johannes Committee, Sir, and I am leaving it at that. I do not propose to deal with the second leg of this amendment because my colleagues, the hon. members for Johannesburg North and Sea Point, are going to deal at some length with that aspect. Inter alia, they are going to deal with other aspects as well. I want to come to the third leg of the amendment, which is that the Bill does not provide adequate protection for tenants against unfair harassment from landlords. My colleagues will be dealing with that as well because they, like me, have had a number' of complaints from tenants living in their constituencies, that is, in Johannesburg North and Sea Point, while I have certainly had many complaints from tenants living in the fiat area of Houghton, which is mainly the Killarney area.

Sir, I want to say rightaway, in order to dispel an illusion, that there are people living in Houghton who do not belong to the affluent class. There are middle-class people; there are people of fixed incomes which are not very high; there are people living in rent-controlled flats; there are elderly people and widows who, as I say, have fixed incomes and who are very vulnerable in this present time of inflation, and who are unable to withstand the assaults—and I use that word deliberately— which are being made on them, more particularly by a property company, the managing director of which is a gentleman called Mr. Mouton. I raised this matter in the House last year under the Community Development Vote, and the hon. the Minister will remember the points that I made then. I want, however, to make some of those points again because at that time I asked for an inquiry into the machinations of Mr. Mouton and his company. I asked that the Rent Board carry out an in-depth inquiry into the manner in which this company had been harassing tenants in rent-controlled flats. The hon. the Minister stated, not under his Vote but afterwards in a Press interview, I think it was, that he was not prepared to accede to my request because he thought that sufficient protection would be provided in the amending Bill which he intended to introduce.

That is not the point. I said that complaints should be lodged.

Yes complaints should be lodged and the Minister said that he hoped to tighten up the law so that further protection would be given.

Wherever it is needed.

Yes, I accept that correction. The Minister said that complaints should be lodged. Well, complaints have been lodged; I myself have lodged complaints. I have submitted signed affidavits to the hon. the Minister.

Did you submit them to the Rent Board?

They have, also been submitted to the Rent Board. I want to say, first of all, that many elderly tenants do not know their rights and, secondly, that it is very difficult indeed to get any protection when you go to the police station and lay a charge that you are being harassed under section 22, or whatever section it is, of the Rents Act. I am now not talking about Killarney, for exactly the same applies to the area of Hillbrow where Mr. Wainer has been carrying out his activities, also harassing tenants in the most unbelievable fashion—I will come back to the details of that in a moment. I happen to know that something like 200 complaints have been lodged with the police station at Hillbrow, but the police there cannot cope, they do not know how to deal with it. They do not have the necessary staff; or the investigation machinery, and the tenants so far have got very little comfort.

[Inaudible.]

Well, I can only say that it does not work, or else there is something wrong with the law which allows the situation to obtain where, even if charges are laid, nothing comes of those charges. The harassment is going on and there is no doubt that these people are not inventing their complaints.

I have explained some of the defects today …

Right, but the point is that the tenants are not inventing these horror stories. These things are happening. I just want to give the hon. the Minister one example. I think the name “Seven Oaks” in Killarney will be familiar to him. It is the name of a block of flats. [Interjections.] Obviously I do not expect the hon. the Minister to have the answer at his finger-tips, because I know he has to deal with millions of complaints, but I wonder whether the Minister can at some time during this debate find out whether in fact he is on the verge of decontrolling the block of flats called “Seven Oaks”, because I want him to know that for months on end now the tenants in that block of flats, which I should say are semi-luxury flats—the block of flats is rent-controlled and it has many elderly tenants who have been living there for many years—have been in a state of complete panic. They are in that state because, for months on end now, they have been told by the agents of Mr. Mouton, the property-owning company, that they are on the verge of getting “Seven Oaks” decontrolled. Indeed, only yesterday I received a letter from a tenant in which he said he has now been told that it is a fait accompli and that his own flat has already been sold, although in fact he is still in it. He has not been given a month’s notice and he does not know whether what he has been told is true or not. This puts people in a most terrible situation. They have to start looking for other flats which are very difficult to find. They have put in improvements and spent a lot of money on their flats and they are not likely to be compensated for the improvements they have made.

I think certain things should have been put into this Bill that are not there. Firstly, I do not think that the penalty clause is nearly fierce enough. As you know, Sir, I generally come to this House and plead for lower penalties, but in this case, where you are dealing with a rapacious landlord who has at his mercy a lot of elderly people who are unable to fend for themselves, I think the penalty should be higher. These tenants are not really very poor, but many of them are also not very rich. They have fixed incomes, and it is the lack of security which is now worrying them so much. The position is that, as soon as this man buys a block of flats at Killarney or anywhere else, he immediately proceeds to tell the tenants that he is applying to have that block of flats decontrolled and that he knows that he has enough influence to have it done. This, insidentally, reflects very badly on the hon. the Minister’s department, although I am not making any accusations here. I am telling him that the methods which are used …

Are you making insinuations?

No, I am not. I am telling him what they do.

Of course you are.

Oh, go away! [Interjections.]. The hon. member should not interfere in a serious argument. They then go along to the tenant and they say to him: “Of course you can buy your flat.” They mention the amount and add that the actual price will be 5% less if the flat is paid for in cash. If the tenant does not want to pay cash, they say that the flat can be paid off. By the time the tenant has sat down with a pencil and paper, he finds that a flat which is costing him RI92 per month, including garage and servant’s quarters, works out at R628 per month, because he is charged 14% on the balance. It is true that at the end of a certain period the tenant owns the flat because that is a share-block scheme and if anything ever comes of it—I would not know—it can be converted into a sectional title scheme; but I believe that that would be violating the spirit of the Sectional Titles Act. It was never intended to be used as an instrument to harass tenants. They own it in the end, but these are elderly people. They do not want to own a property. They do not want to own an asset at this stage of their lives. They do not want to have to pay 14% for the rest of their days. They are perfectly happy to stay in these flats and, if necessary, pay a higher rent because in some instances, I think it is agreed, the rents of these flats are too low. In fact, it was because of this and because there was a negative cash flow on this particular block, that the original owners sold it to Mouton. They could not get a decent return on this block of flats. As I say, we all are in agreement that the landlord is entitled to a reasonable return on his money. However, now it is in the hands of these people who do not want a reasonable return; they want to make a huge capital profit out of this. This is the sort of harassment that has been going on. The tenant gets a letter in which he is told that it is a fait accompli and by next month he is going to be on a monthly basis. They are going to give him one month’s notice and out he goes. Panic then sets in at once. I want the hon. the Minister to tell me whether Seven Oaks is in fact being decontrolled or not.

I come back to my point about the penalties clause. The Bill is raisin? the penalty for harassment of tenants from R1 000 to R2 000—an increase of 100% and I say it is very good. However, it is chicken-feed, absolute chicken-feed to Mr. Mouton, Mr. Wainer and these other gentlemen. Mr. Mouton has boasted that he has made a profit of R22 million in a period of eight years which I think is pretty good going for anyone. To pay a fine of R2 000 for harassing tenants when you are able to get that tenant out of his flat and sell it at a huge profit, does not mean a thing. There is only one way, I am afraid, to have a deterrent and it was suggested by my colleague, the MPC for Houghton, Dr. Selma Brodie. Some months ago she suggested that there should be a penalty clause which includes a sentence in gaol. I think that a possible 12 months as a guest of the State President at the Pretoria local might just deter Mr. Mouton from some of his machinations. I am therefore going to move an amendment in the Committee Stage to make the sentence “either a fine or imprisonment of up to one year or both”. I hope that the hon. the Minister will think about it.

But you are being tough!

Yes, it is very necessary when you try to protect elderly and helpless people in this situation to be a little “tough” and I am quite sure the hon. the Minister will not find much difficulty in carrying that out.

While we are on the subject of decontrolling. I should like to point out that I agree with the hon. member for Walmer and that I too should like to hear from the hon. the Minister the criteria which he uses. I asked him this last year and I think the answer that he gave me was that different criteria applied to different areas. I think that is reasonable to some extent. What is considered a luxury block in, say, Hillbrow, is not a luxury block in Illovo. In Illovo they expect a swimming pool and so on while in Hillbrow they are satisfied with less. This is just the way it goes. However, I still think there could be criteria for the middle-income group, the lower-income group and for luxury flats so that one has some idea of what motivates the hon. the Minister, because he is Pooh-Bah in this respect. He makes all the decisions and what he says goes. There is no public inquiry and the tenants are not even allowed to make representations nor are they given a warning. All this happen in the case of an application for an increase in rent. When there is an application for an increase in rent the tenant must be informed and he is given an opportunity of making representations before the Rent Board. But nothing like this happens where the hon. the Minister, with a snap of his fingers, can decontrol a block of flats. I think some warning ought to be given to tenants so that they do not go through this excruciating period of anxiety, of not knowing whether what Mr. Mouton’s agents are telling them is true or is not true.

How will they know even if I do give them notice.

If the hon. the Minister simply notifies them or lays down that notices have to be put up in the foyer of a block of flats to the effect that an application has been made to decontrol the flats, these people will know that something is genuinely on the go. At the moment this applies in respect of rent controlled premises.

It will not save them the agony.

At least they will know whether they should go on looking for another place to live or not. At the same time I want the hon. the Minister to make it possible for these people to make representations to him.

They are making it.

They are making it, but they are making it in the blue. They do not know whether they need to or not. This is not a difficult thing to do. Why is the hon. the Minister so secretive? He will not show us the Johannes Commission’s report, he will not tell tenants when applications have been made to decontrol rent controlled flats and he will not give tenants any notification. I cannot understand the hon. the Minister’s rationale. At least I am going to ask him in the Committee Stage—and I hope he will give it very serious consideration—to provide for some extra protection for tenants when he does decontrol flats. In other words, he should provide—this should come under section 21 of the Act—that the rights of occupation by the existing lessee will be protected for a minimum period of say 12 months. There is protection given throughout the Rents Act in other circumstances; provision is made for a period of six months in some cases and three months in others. It is surely not too much to ask that when tenants have been living in a flat for years and years—after all these are rent controlled flats and must have been built before 1966 and some of them were built many years before that—they be given a period of time in which to find themselves another home if they cannot afford the money to be charged if they have to buy that flat. The position is now that they will be given the option to buy the flat at a very high price. As I have said it works out that somebody who has been paying about R192 per month ends up paying over R628 per month. They cannot do it and I do not think it is unreasonable to ask the hon. the Minister to think about this very seriously.

I want to make a final appeal to the hon. the Minister to really do something about this Rachmanite operation that is going on in South Africa right throughout the country. It is not only in Houghton, but also in Sea Point. I am sure it is also taking place in Green Point and I know it is happening in Johannesburg North …

What kind of operation?

Rachmanite. In England there was a man called Rachman who used to go around harassing tenants and getting enormous profits as a result. I want the hon. the Minister to have this matter thoroughly investigated, but not by the Rent Board. That was a silly suggestion I made and I withdraw it. It was a silly suggestion for one reason only. viz. that the Rent Board is too busy. It is so overworked and so behind with its work that it could not possibly take on another job like this. I want the hon. the Minister to appoint an independent commission of inquiry to go into the goings on of Messrs. Mouton and Wainer …

And Jacobs.

I am sure we can all contribute in making suggestions as to the people who ought to be investigating. Let us have it headed by a judge, with perhaps two assessors or two other people. It does not have to be a large committee. It can take evidence from people who have been evicted from flats which were controlled and which are no longer rent controlled. This is a very easy thing to do and I am quite sure the hon. the Minister’s remaining hair will stand on end when he reads the results of this inquiry.

I have, I think, said nearly all I wanted to say on this. I shall have an opportunity in the Committee Stage to enlarge on the points that I have made. I just want to give the House some idea of what happens to the tenants of blocks of flats like Seven Oaks. A notice is served on them that they will in future be regarded as statutory tenants, that the block of flats has been bought by the S.A. Property Co., I think it is called and although they are statutory tenants, efforts are going to be made to decontrol the block of flats and when that happens, they will be given a month’s notice. A short while afterwards someone will call on the tenants and put the proposition which I have already outlined and if they turn down that proposition, then it starts—the phone calls at all hours of the day and night, the knocking on the door of the flat at all hours of the day and night demanding that prospective buyers be allowed to view the flat, even though the tenant is still there and the fiat has not yet been decontrolled. A buying table is set up in the lobby of the block of flats and all day long as the tenants come in and out they are confronted by this table, and they know perfectly well that something is under way. It is all intimidation of course. If that does not work, there are other what I shall call less subtle ways. Mr. Wainers ways are even more crude. In any event, lifts suddenly do not work anymore and delivery men who come to deliver large parcels perhaps to the fifth floor of the building are told that they are not allowed to use the lift at all. Of course the shops then stop delivering, because their delivery men are not going to walk up five flights of stairs with heavy parcels. In some cases the tenants are deprived of garages and servant’s rooms. I see that an additional protection has now been added that they may not be deprived of garages, and I am glad about that. But I am going to ask the hon. the Minister whether he will consider an amendment to that in the Committee Stage to provide that the landlord may not deprive the tenant of servant’s quarters either. They do this in order to get people out of their flats. These are old people who need the constant attention of servants and if they cannot have a servant on the premises, they have to move out. All these are methods used by these people. I ask the hon. the Minister to give this matter rather more sympathetic consideration than he did last year when I also raised this matter. Mr. Speaker, I shall raise further points on this basis during the Committee Stage.

Mr. Speaker, the hon. member who has just resumed her seat based her speech to a large extent on the third leg of her amendment, namely that the Bill does not provide adequate protection for tenants and is also unfair towards them. I just want to say that a number of additional protective measures are incorporated in this Bill, in terms of which additional protection is in fact furnished. I think that it is as well that the House should take note of the fact that clause 2 of this amendment bill extends the circumstances under which a change of identity provides the lessor with a loophole to attempt to victimize the lessee. Clause 7 of the Bill deals with a reduction in the size of the leased premises and, in addition obliges the lessor to reduce his rent pro rata. Clause 12 incorporates various aspects by means of which the lessee is protected against exploitation by the lessor. Loopholes that had existed previously, are closed. In the course of my speech I shall come back to various of these aspects. At this stage I just want to refer specifically to clause 12 of the amendment bill in so far as it amends section 21 (5) of the principal Act of 1950 which deals with the lessor depriving the lessee of the peaceful enjoyment of occupation and, inter alia, prescribes a fine of R1 000. I believe that there may still be cases that are not covered by the additional protective measures contained in this Bill, cases where the lessors will attempt to victimize the lessees. But the necessary channels through which to combat this do exist, and the duty of the hon. member and any member of the public is to bring those irregularities and anomalies to the attention of the hon. the Minister and his department so that they may be granted the necessary attention.

In this debate, the hon. speakers of the Opposition confined themselves, for the most part, to the second leg of this amendment, namely that the Bill fails to bring about conditions in which sufficient accommodation at reasonable rentals will be available for persons of the lower and middle income groups. In the process the accusation was levelled at the Government that there is a housing shortage, and because there is a housing shortage in these categories we must now, according to them, introduce an amendment bill in this House to amend the Rents Act. Surely this is an entirely unreasonable argument. The accusation that there is an imbalance between demand and supply is levelled at the Government. Surely there is no imbalance between demand and supply as regards accommodation in South Africa today. If one must use the word “imbalance”, there is in fact an imbalance between demand and supply as far as cheap housing is concerned. Surely that will always be the case. What about the rich man who makes use of cheap housing? After all, he does not want to leave it. Surely it is not only the poor and the lesser privileged people who seek cheap housing. Unfortunately it is a fact of life that the more well-off people who want to save more often occupy the cheaper housing. The lesser privileged person is then excluded. I fear that the Opposition has shamefully neglected to make reference to the constructive steps that have been and are still being taken by the Government to deal with the housing problem among the middle and lower income groups. In the last Budget, four or five months ago, R58 million was voted for housing. Over the past 25 years a quarter of a million units have been constructed. Surely it is not the fault of this Government that we in this country have such a flourishing economy, such a growing population, such a natural increase and immigration that there is necessarily a greater demand for housing, particularly in the cheaper category. In the course of his speech the hon. member for Green Point gave some useful hints and mentioned certain incentives that could possibly be investigated. I believe that some of those ideas of his could be investigated with profit. However, I just want to point out that relief measures are constantly being provided by the Government. Five months ago the hon. the Minister announced exceptional relief measures in the House, and then I am only referring to the past six months. There was the case of the initial deloading factor according to which the lessee of a dwelling unit which had been constructed with National Housing funds would only pay about half of the interest on his mortgage during the initial ten years. During the second ten year period that amount was reincluded. In other words, in the midst of inflationary problems and tendencies it was made easy for him to afford that housing. This makes a difference of between R10 and R12 on his monthly payments. On the same occasion—I recall that it was only about five months ago—we were provided with a further exceptional relief measure. This was the rationalization and equalization of rents for new dwelling units in the lower rent category. In terms of this measure there is a new rent determination formula in terms of which the amount to be paid on a new house is deloaded to a small extent while the amount to be paid in respect of the older house is loaded to a small extent. This Bill, with which this whole debate is, in fact, concerned, affords further relief for the lessee in that mortgage interest is eliminated. In cases where there are large mortgages—the very aspect which is so much abused—this would in fact mean that the lessor will receive a lower rental than he would normally receive if he has a large mortgage on which he has to pay 12% and 14% today.

We have before us here a Bill that that demands careful study. The hon. the Minister’s task is to find a fair, reasonable and equitable formula. It is an extremely difficult task to come to this House with a Bill which attempts to strike an equitable balance between two opposite poles, namely the lessor on the one hand and the lessee on the other. He must try to strike a reasonable and equitable balance, a balance that can be ascertained and kept to so that it will be fair in effect. Unfortunately it is a fact that everyone affected by rent control—and that comprises a very large section of our population—only wants to crucify the Minister and the department when it is a question of any measure concerning rent control. The Minister’s task is really extremely unpleasant. He has to come to this House with a Bill and perform the unpleasant task of telling the landlord: “Look, old fellow, that is enough rent, you cannot expect more.” On the other hand he has the unpleasant task of telling the lessee: “Look, you really cannot reasonably expect to pay less.” The hon. the Minister must do the virtually impossible by striking a sound balance with regard to rent that can be equitable towards both lessee and lessor. In this process he must perform the virtually impossible task of continually constructing thousands upon thousands of new dwelling units, costing millions of rand, in order that the growing need and demand resulting from the population increase may be met, in order that a solution may be offered by attempting to prevent a housing shortage, in order to prevent the development of a situation which will result in a climate of large-scale and unjustified rent exploitation.

The hon. member for Walmer referred to the remarks made by Tucsa. The hon. member associated himself with their remarks. I just want to dwell on this matter for a moment. It is as well that at this stage we should just take cognizance of the fact that during the past few weeks, hon. members of this House have received memoranda from various associations and bodies with some interest in rent control. Let us just consider from which bodies we have received memoranda. To begin with there is SARTA, the so-called South African Residential Tenants Association. They have an interest in the protection of the lessee. Therefore, in their memorandum they must stress the interests of the lessee. In fact, for the same reason they advocate in their memorandum the abolition of interest on mortgage as a factor to be taken into account in the determination of rent, as is in fact going to be the case under this legislation. The second association from which we have received a memorandum stands on the other side of the fence. I refer to SAPOA, the South African Property Owners’ Association. That association does not protect the interests of the lessee. It protects the interests of the lessor. Its interests, therefore, are precisely the opposite. This association, again, advocates the retention of interest on mortgage in this formula. Then, too, there is a third body from whom we have received a memorandum, namely the Institute of Estate Agents. One would expect this body to take up a stance between the lessor and the lessee. In the nature of the matter, it is probably logical to accept that since it receives both its commission and its fees from the lessor, it should emphasize the interests of the lessor. This body, therefore, goes further and says 8½% is too little and that it should become 10%. For the same reason this body goes further and states that audit fees, accountant’s fees and secretarial fees should also be taken into account. In fact, this body goes even further and even states that the interest should be calculated on the shareholders’ loan accounts in the company. Just imagine what chaos this could cause. Then, finally, it goes yet a little further and states that the minimum collection fees should be statutorily laid down by statute so as not to be less than the fees laid down by the Institute. We know that they are today considering an increase of 5% to 10%, if this has not already come into operation. In other words, here again this association has stressed the interests of ihe lessor. The hon. member also referred to Tucsa. This is, of course, a body that must see to the interests of the workers.

Their standpoint must be stated.

This is a body that must consider the position of the lessee and for that reason it also stresses the position of the lessee. Although we have been able to gather extremely illuminating, informative and constructive data and facts from all these memoranda, we have to consider them all objectively because each must necessarily, owing to its particular nature, position and aims stress one aspect of the matter in a one-sided way.

Now this brings me to the following aspect and that is that in the nature of the matter, one can only come to one logical conclusion. This is that when we seek a formula for a reasonable determination of rent, there can be no other criterion. Regardless of the exclusive interests of the lessee and regardless of the exclusive interests of the lessor, one arrives time and again at one question and one question only, namely: What is a reasonable objective rent value for specific premises? With that question in mind we must try to accommodate the interests of both lessee and lessor. The aim of rent control is not, therefore, to solve a housing shortage, but to alleviate it by means of rent control and for this purpose a reasonable formula and a balance between lessee and lessor is required. It is therefore important for us to acquire an absolutely objective and unprejudiced image of this Bill in order to arrive at something that is reasonable and fair to all parties.

In both amendments before the House, reference has been made to the Johannes Commission. I have now quoted a few examples of how, in these specific circumstances, each person looks to his own interests. I have mentioned Sapoa. Sarta, Tucsa and the Institute of Estate Agents. Each has a different point of view and each stresses a different aspect. This is probably one of the major reasons why a report of this nature must necessarily contain a large variety of views. One cannot simply select a view or an opinion that suits one. It is, therefore, necessary that the contents of this report be approached from an objective point of view if we are to derive anything of value from it, as is in fact being done by means of this Bill. One could also visualize that there are persons with a thorough knowledge of property development. One could also visualize that there could be large bodies such as the Old Mutual or Sanlam that invest very widely. If such a body were to want to give evidence and in its evidence stress the interests of the lessor, this would place it in an almost impossible position. There are thousands of policy holders who are lessees, and all of these could rebel against a body which gave evidence in all honesty and which must necessarily stress the side of the picture where its interests lie. The Opposition is trying to ride this Johannes report into the ground. The contents of a report is not what is at issue here. What is at issue here is an amendment bill that must find us a reasonably acceptable formula with regard to the determination of value and rent for both the lessee and the lessor.

But it is based on the Johannes report.

Sir, the Minister has the right to deal with this report just as he has the right to deal with any other matter; he has the right to consider all the evidence and all the recommendations and to accept certain recommendations and reject others where he believes that this would be in the best interests of those for whose protection this Bill is placed on the Statute Book, Sir, I believe that our point of departure, as far as the lessor is concerned, must be to ensure for him a reasonable return. If the return is tco high, then the lessor is guilty of exploitation, but if the rent is too low, then one must expect the maintenance of the rented building to be neglected, too. The only acceptable criterion is a reasonable average return that will have two advantages; the first is that the lessee will not be paying through his neck, and the second is that the lessor will not be enjoying excessive profits, either. From the point of view of a knowledgeable investor, he will perhaps not receive the maximum interest return, but if he can get a good average return, plus the existence, in the background, of another very important facet, viz. gradual capital appreciation, then I believe that his interests, too, are being considered without encumbering the financial position of the lessee. That is why this Bill achieves a specific objective with the fixing of a return formula of 8½% on the value of both the buildings and the premises. It is illuminating that not a single one of all these bodies who have submitted memoranda have said that this 8½% is too high. In other words, they all acknowledge, whether they consider the interests of the lessee or those of the lessor, that we are dealing here with a reasonable rent return and that the lessee is not being discriminated against. This formula reflects a good average percentagte return which, as it happens, is equal to the average interest rate paid on fixed term investments by banking institutions during the easy and difficult times of the past five years. I think that over the past three years it has varied from 7% to 10%, which, incidentally also averages out at 8½%. The proposed formula, therefore, maintains a good average. Furthermore, Sir, there are additional factors that were taken account of in determining this 8½%. Here I refer in the first place to the inflationary factors that have increased in the past year and that are going to increase still more, but in the second place, this formula also partially compensates the lessor for the privilege, which he must now give up, of recovering mortgage interest from the lessee. The lessor—this is very important—must not always be seen as an exploiter; he must not always be viewed with a hypocritical eye. He undoubtedly performs an extremely important task; he fulfils a major need; he provides housing in this country. This image of a rich or well-to-do lessor on the one hand and a less well-to-do lessee, who must try to enrich the lessor, on the other, is an incorrect image, and the sooner we get rid of this image, as long as we can do so on a reasonable and equitable basis—and my submission is that this is, in fact, being done in terms of this Bill—the better, in the interests of both parties. I believe that through this measure we are engaged in serving the interests of both parties properly and well. The low return the lessors have received up to now has contributed in large measure to the fact that the situation has developed where investment in flats have become unprofitable and that there have been certain detrimental consequences. Sir, I have before me a number of balance sheets, and I want to admit at once that balance sheets do not always afford an exact image of the true situation. I have before me the balance sheets of a company that only possesses flats. In 1971 the net profit of this company was R154, and directors’ fees are included. In 1972 the net profit was R130. Then I have a further balance sheet here. The net profit of this company, including directors’ fees, varied between 1972 and 1974 from R694 to R964—less than R1 000 on a block of flats comprising eight units, the capital investment in which was about R70 000. Sir, matters cannot go on in this way. After all, lessors cannot be discriminated against. One surely cannot begrudge him receiving a reasonable interest return on his capital investment. The poor lessor is the person who must continually bear the burden of rising service fees, property taxation and mortgage interest that forces him to make regular applications to the Rent Board. If this Bill becomes law, the Rent Board will no longer be so snowed under, although this could still occur initially. But the Rent Board is being snowed under at present—and this occurs annually—because as soon as there are tax increases or an increase in the interest rate on mortgages, the lessor must necessarily apply to the Rent Board if he is not to suffer a total loss on his investment. As the position is at present, the Rent Board is, to its detriment, being snowed under with work in the process, because the Rent Board must be applied to unnecessarily and too often. This causes embarrassment to the lessor, but it is also a troublesome position for the lessee, because the lessee believes that the lessor wants to force every last cent out of him.

The value placed on properties by Rent Boards under the existing provisions of the Act of 1950 must necessarily be linked to construction costs with the position as it is at present. Here we are dealing with a factor that makes it an impossible task for the Rent Board, because the Rent Board must now attempt to determine the cost of construction of that building 30 years ago. It must therefore come to a conclusion under which only the lessor will suffer. I have examples of two cases. In the one case the building society valuation is R67 000, but the sworn valuation is R70 000. According to the Rent Board’s evaluation, however, the value is only R33 000. It is therefore substantially less than the true market value of that building. In this process, too, the lessor suffers. He can recover a maximum maintenance cost of 2%, but on what is the 2% based? On this value of the building that is set too low. If this Bill becomes law, we shall have a more realistic value. The lessor has to effect repairs at prevailing costs. The Bill provides that the existing valuation of the building be taken as a basis and consequently the lessor can recover maintenance costs from the lessees at 21% of the existing value of the building.

This brings me to the aspect of value. I believe that we can lend our fullest support to the amendment contained in clause l(i). What this involves is that the value of the building will be the replacement value thereof less depreciation as computed by a quantity surveyor. Sir, here we are dealing with a professional man. Here we are dealing with a man who deals with building costs every day of his life. Here we are dealing with a man who receives the building tariffs every day, a man who receives the price bulletins, a man who receives a price index of building costs from the Department of Public Works every three months. A start was made with this index about five years ago and it indicates prices in the various regions of the provinces. He is a man who is constantly in touch with the information in respect of, inter alia, the building industry, provided by the Bureau for Economic Research at Stellenbosch. These figures are put at the disposal of the Bureau for processing. Here, Sir, we are dealing with a professional man who makes an inspection in loco, who can consider the quality of the building and test it and make a valuation on that basis. Here we are dealing with a depreciation factor that can also be calculated by that quantity surveyor should he deem this necessary. He can motivate it and this can be taken into account. In this regard he considers the age and the quality of the property.

Sir, the other side of the House has created the impression today that this value, as determined by the quantity surveyor, is the alpha and the omega, but surely that is not the case. Surely it is not a law of the Medes and the Persians that that figure alone should necessarily be taken into account. After all the Act provides very clearly that in the process the Rent Board must take one or more or all of the mentioned factors into account, and there are five or six of them. There is the value as determined by the quantity surveyor, there is the building society valuation, there is the sworn valuation, there is the municipal and divisional council valuation, there is the use to which the building is put and there is a comparison of the value of that building with the value of buildings constructed on controlled and uncontrolled premises in the vicinity. I believe that we are here dealing with a concept which, read with all the other conditions and provisions in the legislation, enables the Rent Board to work, not with an unrealistic evaluation of impossible-to-determine building costs of 30 years ago, but with figures at hand on which the information may be based. In this way the lessor’s position will be improved. It will not be necessary for him to neglect the maintenance of his building. It will no longer be necessary for him to think up clever plans. The big concerns, such as pension funds or insurance companies, can now freely invest in buildings, because they need no longer fear that if rent control is extended it will be linked to out of date construction costs concepts of 6% or 8% in future years. It can therefore serve as an incentive and at the same time it will eliminate another bogey in that the sale value of a property will now be measured against the true criterion, namely the market value. It will no longer be necessary, as at present, to stipulate goodwill as a yardstick, because if it were to happen that the rent income of a block of flats were to be equal to that of an investment of R50 000, then that would be the purchase price of the building, irrespective of whether the value were R30 000 or R80 000. After all, the old concept is an impossible concent to work with.

However, not only the lessor, but the lessee, too, benefits by this Bill. We must bear in mind that the lessor has suffered substantially in the financial sphere in recent times, but now the lessee, too, benefits. The lessee must really concede that he will have to pay more rent in many instances, but surely he cannot always expect to be subsidized by the State or the private sector. He enjoys the exceptional privilege that mortgage interest may now no longer be taken into account. I have before me an example, of one block of flats on which the mortgage interest was 10% on 1 September 1973. Six months later it was 10,5%, another six months later it was 12%, and two months later it was 14%. The mortgagee simply increased the interest rate, perhaps owing to the scarcity of money, but knowing full well that the lessor could go to the Rent Board because the Rent Board would allow the increase in the interest rate to be carried by the tenants of the flats. Here we are dealing with a lessor who has an investment that is not a major investment, but within a matter of 14 months the mortgage interest was increased by 4%. It is no wonder that the poor man had constantly to be running to the Rent Board to seek relief.

There are other irregularities, too. Last Monday I dealt with a case before the Rent Board where the building society placed a valuation of R67 000 on a building, but the lessor was obliged to pay an insurance premium equal to that of a property with a value of R87 000. There was therefore a difference of R20 000, but the difference in premiums could of course be recovered from the lessees, and possibly that was the reason for the increased premium. Perhaps it is not to the point now, but if this kind of thing gets out of hand, I think it will be necessary that it receive the further attention of the bodies concerned.

I believe that the Bill also aids the lessee since higher fines are laid down. The lessor will have to watch his step in future. In addition, loopholes are closed. There is now a period of 12 months within which the lessor may no longer come back to the Rent Board if his case has been referred there previously on review. [Time expired.]

Mr. Speaker, the hon. member for Durbanville has just told us in great detail about the difficulties experienced by the lessor. It seems to me as if he has advanced a plea for the lessor and does not care very much about the position of the lessee. We on this side of the House feel that we should give more attention to the lessee. We think it is the lessee who suffers most, far more than the lessor. While the hon. member was speaking, I gained the impression that he was greatly concerned about the investment made by the lessor. There are numerous lessors who make investments knowing full well what the letting position is in regard to the property they want to invest in. They know beforehand what the position is; this is one of the aspects they investigate quite thoroughly before buying a property. Knowing full well what the rent, the rates and all the other obligations are going to be, they nevertheless buy that property, but after they have bought the property they tell the Rent Board how much they have paid for that block of flats or dwelling and that they are earning a miserable 1% or 2% interest on their investment and that this is not an equitable rent. The Rent Board is then asked to increase the rent of the premises or block of flats. To my mind this is unjust. I think the majority of lessors to whom the hon. member referred, were investors. They are not the people who have built flats and houses for the purpose of letting them to lessees. They are people who make an investment. The hon. member made it quite clear when he said this was one of the reasons why the Johannes report could not be laid upon the Table. The reason is that there are large undertakings who gave evidence, i.e. people who are investors and do not care a rap for the lessee. They are obsessed solely with the idea of investment and it makes no difference to them whether a lessee is able to afford it. This is the object of the hon. member for Durbanville, and I say it is the wrong object. I concede he had a good argument, but his arguments were concerned with the wrong things. He should argue about the poor lessee and not the poor lessor. I do not think there are any poor lessors. I am convinced that any person making an investment in the times in which we are living does not do so on his own hook. There are many people such a person is able to consult and who could help him in his choice as to which property to buy. He is in a position to consult various people and is, therefore, in a position to know what the position is before he buys the property. However, the hon. member for Durbanville says we should regard that lessor as an investor and that we should protect him. He says we should protect him otherwise he is no longer going to invest. There are very few lessors today who themselves had flats or houses built prior to 1966. I think the people who built before 1966 and are still the owner of the block of flats or house today, are not the people who charge exorbitant rentals. Exorbitant rentals are the result of the fact that the property is sold repeatedly. Every time a property is sold a profit has to be made. Every time a profit is made, the investor is in a more unfavourable position and every time he approaches the Rent Board and asks for an increase in the rental.

This Bill we have before us now, does not afford the lessee any further protection. On the contrary; It seems far more likely to me that it is the interests of the lessor that are being furthered. In this regard I want to refer to one or two matters. In the first place, I want to refer to the new definition of “value”.

†At present “value” is defined as value alone. Now it is being defined as “value and rent value”. In addition, two new provisions are being inserted, relating to the replacement cost as determined by the quantity surveyor, and the fact that the rent value of controlled premises and uncontrolled premises can be taken into account. The hon. member for Durbanville said that this was only one of the factors; the fact that we are going to have a quantity surveyor giving his findings to the Rent Board is only one of the factors they have to take into account. This is perfectly correct; it is only one of the factors. But what he failed to mention was that the fifth factor is at present “the rent value of controlled premises”. That is also being amended in this Bill. It is being amended to read “the rent value of controlled and uncontrolled premises”. What he is doing is, in fact, to give the Rent Board the green light. He is saying: “We are giving you two new factors that you have not had before. Now, gentlemen, you make the best of this. We know that all the landlords are dissatisfied and here we are giving you, the green light and we are telling you to increase all the rents that come before you because you have to take replacement value as well as the rent value of uncontrolled premises into account.” These are premises which-were completed after 1966 and in respect of which the rent is not controlled. If all the owners in the vicinity of this particular block of flats or building have looked after themselves and have had proper advice,, and they are getting a 12%, 15% or 20% return on their investment, and the Rent Board sees that there are two new factors which are to be taken into account, we will find that the two factors out of the five factors which will be taken into account will be the two which are now being-‘amended. The others will not be taken much into account because they have been there ever since the Rents Act was first put-on the Statute Book. I refer to the municipal or divisional council valuation, which we know is completely out of date tóday, a sworn valuation or building society Valuation and the purpose for which those premises are used.

I believe that this is the most pernicious part of these amendments. I think, that the hon. the Minister must have another look at them. If he allows this Bill to be put onto the Statute Book as he now suggests, we are not only going to have a continuous spate of Rent Board applications throughout the country which the Rent Board will be unable to handle unless there are many more Rent Boards appointed, which will lead to more red tape and bureaucracy, but we will find that there will be enormous leaps in the rents of controlled premises. I know that this is going to happen. In my own constituency there are cases where there are controlled blocks of flats completed in the early part of 1966 as well as uncontrolled blocks of flats completed in the latter part of 1966. The rents of those flats which are based on the present provisions of the Rents Act quite significantly are in the neighbourhood of R80 to R85 per month. Exactly the same accommodation as the accommodation which is controlled at R80 to R85 per month is let at R100 to R105 per month when uncontrolled. You can go right through my constituency and you will find this gap in respect of the rents for accommodation which is practically the same in all respects. What is going to happen when this legislation is put on the Statute Book? We shall find that there will be no difference at all between the rents of controlled and uncontrolled accommodation. What is the earthly use then of having a Rents Act to control the rents, because there will in fact be no control? The majority of the rents in an area, which are uncontrolled, will then govern the rents of the controlled flats. This must happen particularly if replacement cost is going to be used. The hon. member for Durbanville went into the question of how the quantity surveyor would make his determination in respect of a building about which he would have to give evidence before the Rent Board, but he did so rather superficially. Take the case of a building which was completed in, let us say, the year 1965 and which was built with the most durable materials which are in these days the most luxurious materials. The hon. member for Green Point raised this matter when he addressed this House earlier today, but this matter has not been dealt with by the hon. member for Durbarville. I say that if the quantity surveyor is faced with a building like that where there are materials which are irreplaceable …

Order! The hon. member for Stilfontein should be somewhat more quiet.

Thank you, Mr. Speaker. The quantity surveyor who is faced with a building constructed of building materials which are completely unobtainable today is going to say that the replacement costs of the materials in that building will be enormous because they will have to be specially imported; the importation costs will be very much more than anyone could ever dream of. How is that quantity surveyor going to apply depreciation to good materials that are still in an excellent condition especially where the property has been properly maintained from 1965 to date, which is a mere 10 years? What is he going to do when the first owner has maintained that property well and the man who bought from him has maintained it well with the result that that material is in exactly the same condition, for all practical purposes, as it was 10 years ago? How much depreciation is going to be allowed by the quantity surveyor? I make bold to say that no depreciation will be allowed because, normally, when one values a property like that, one does not really allow depreciation for the first 10 years. One only starts allowing depreciation after 10 years and if the property is well maintained and its condition is almost the same as it was when it was built, there will be no depreciation at all. This property will then have a value which for rental purposes will be out of all proportion to the rents which are charged at present in that area. That is then going to be the criterion.

Talking about criteria, I should also like to say that I believe that there are two criteria which we should have before us today. The one is, what is the criterion in respect of this Rents Amendment Bill? Is it the Johannes report? The hon. member for Durbanville said that we must have an unprejudiced view of this matter and that because we must have an unprejudiced view we must not have the Johannes Commission’s report before us. I have never heard such arrant nonsense. Is the Johannes report then so prejudiced that we dare not see it? I have never heard such nonsense! There is absolutely no sense in that argument at all. We are legislators and, as such, we have to apply our minds individually to the question before us. Surely it is for each one of us to decide whether there is anything in that report or not. We can apply a critical eye to that report and decide which of the recommendations we can dispose of and which we can accept, but surely we must be given the chance to do so. Let us say, for instance, that the general tenor of the recommendations is out of touch with Government thinking and with Nationalist Party policy. There would be nothing wrong with that. Let the Government table it and let them table a White paper and say what it is that they do not agree with, but why can we not have the benefit of, firstly, the recommendations of the Johannes report and, secondly, the Minister’s view as to what Government policy is in this regard? Then at least we can make up our minds on this question. Now we are asked to amend the Rents Act without any reason being given for this proposed amendment, excepting what the hon. the Minister said when he introduced the Second Reading of the Bill. I do not believe that there was good and sufficient reason for this amendment in the remarks he made. I think we want a great deal more information than he gave us. I would like to see a properly substantiated reasoning for introducing this amendment to the Rents Act.

The other criterion I would like to refer to is the one that has already been mentioned by the hon. member for Houghton. I would like to know what the criterion is for decontrol. I think that this is a very important matter. I do not believe that my constituency is the only one in which there are buildings which are at present controlled but are capable of being decontrolled in terms of the present Rents Act and of this amendment to it.

I think everybody is going to be very unhappy not knowing what tenure their lease is. They are going to be very unhappy to know that they cannot say with any certainty how long they are going to be able to stay there because, once the property is decontrolled, the sky is the limit as far as rent is concerned. If the hon. the Minister can tell us in his reply to the Second Reading debate what criteria will be used, we shall appreciate it a great deal because it will give us some idea of what we can tell our constituents about the conditions that may lead to a building being decontrolled.

I believe that the other arguments used by the hon. member for Houghton were also very sound. If there is going to be decontrol, surely the tenants should be given an opportunity of being heard; surely they should know, at least, that application has been made. They should be told that an application has been made and on what day it is to be dealt with so that they can go to the regional representative and make their representations to him, so that they can be heard. When the Minister then makes up his mind about the application, he can state the reasons for his decision. He can give the tenants those reasons too. There may quite conceivably be many tenants who will be unhappy at his decision. They may say that the Minister has not applied his mind to the matter properly. In that case they should be able to take him on review.

At present they have no right of appeal or of review because they do not know what is going on in the Minister’s mind. Finally, after the Minister has taken his decision to declare a building decontrolled, surely some reasonable period of time should be set for the tenant to be given notice. What happens in the situation as it is at present? The tenant is given notice, usually by the landlord or his agent; the tenant is told: These premises are now decontrolled and from next week, or next Monday, the rent will be R500 per month. Let us say that the tenant has been living there for many years and has put in his own curtains, wall-to-wall carpeting and many other fittings. Now he works it all out as to how much it is going to cost to move all these things. He has to throw away the curtains and the carpets because they will not fit. In the end he says to himself that because this move is going to cost him so much, the move alone apart from what he has to pay the removal people with the pantechnicon, he will just have to grin and bear it. Although he cannot afford to stay where he is in those decontrolled premises, he has to stay. So he decides to stay and he ekes out an existence there, paying an enormous rent.

I think that one of the matters to which the hon. the Minister should have given his attention is the methods employed by the hon. the Minister as to how much a tenant should pay by way of rental for certain types of housing which the hon. the Minister himself supplies through the medium of his department. He works it out in this way. He says that no rent paid by anyone shall exceed 25% of his income. I believe that that is a principle which the hon. the Minister should have introduced here as well. Hon. members on the other side of the House asked us who is going to pay for all this. They want to know how we are going to encourage investors to invest money in housing. One can still encourage them to invest money provided there is a proper housing charter. This is something that is missing. I believe that we should have a proper housing charter that covers all these matters and provides for relief from taxation and other irksome fiscal dues. Such a charter could satisfy a landlord that he could embark upon housing for the middle income group at very little loss of income to himself. Such a housing project would be an attractive investment to the landlord but at the same time no tenant would pay more than 25 % of his income. I am referring here to the middle income group because I know that the lower income group is to a large extent provided for by the hon. the Minister himself through the medium of his department. He is not dealing with the lower income group very effectively but he is at least dealing with it. However, the middle income group which is suffering today. I believe that the principle which applies to the lower income group—that rentals should not exceed 25% of income—should also apply to the middle income group.

What about the pensioners?

I believe that a special case can be made for pensioners and other people with fixed incomes. I feel that they should be dealt with in the same way. I do not think that more than 25% of their pensions should be spent on rentals. Hon. members on this side of the House feel that these are all matters which the hon. the. Minister should have gone into in very great detail. He should have told us how he sees housing for the future. We know that this is an enormous problem but it is not going to be improved by this type of legislation. Why does the hon. the Minister not rather take the House into his confidence? He should say to us: “These are the difficulties I am being faced with. I know that I have to provide double the quantity of housing we have at present before the end of the century. I propose doing so in this way.” He should then tell us how' he is going to do it. I feel however, that it is quite ridiculous to try to deal with a subject like housing by means of a half-baked measure of this nature. I want to ask the hon. the Minister to reconsider this matter very carefully before deciding to proceed with the legislation in this form. If he does proceed with it he is going to make it quite impossible for a large number of people in my constituency, and I know in many other constituencies in South Africa, to be able to live even a reasonable life.

There are one or two further matters I want to deal with but I think I shall leave them for the Committee Stage.

Mr. Speaker, I have listened attentively to the speeches in this House this afternoon. If there is one matter that can never be spoken about lightly, then that matter is housing. If there is one matter concerning which no one may score political points, then that matter is housing. Sir, I believe that Members of Parliament are usually intelligent beings.

They ought to be.

Yes, they ought to be. Let us ask ourselves how many hon. members of this House are owners of blocks of flats that fall under the Rents Act. You will find, Sir, that they farm or that they invest their money in quoted shares. Not one of them will invest their money in blocks of flats because they know that this is in fact the only sector that is nationalized.

[Inaudible.]

I do.

The hon. member says, ’I do”. This is what I was waiting for.

I was replying to your earlier question.

You see, Sir, the fly sometimes rises to the trout, but very seldom the trout to the fly.

*Sir, the point I want to make is that the hon. member for Houghton came here today with the drastic proposal that anyone who harasses a tenant should go to gaol. She provided no definition of the word “harassment”. In other words, if one provides a person with accommodation and one goes to visit him and tells him: “Listen, I believe that you do not look after this place properly; you must at least see to it that the building is not so dirty,” then that lessee can lay a charge against one and, according to the hon. member’s motion, the lessor can then be given a gaol sentence. The hon. member is concerned about the elderly people. I, too, am cer- the hon. member who has come here with tainly concerned about them. But, Sir, is this motion not the same person who does not even want members of the A.N.C. and Poqo and other organizations which will murder old people and children, to be placed under house arrest?

Order! The hon. member must not digress too far from the Bill.

Sir, I just want to test the hon. member’s realism. The hon. member talks about the old ladies of Killarney. Hon. members opposite know Killarney. Most of the people who live in Killarney are stockbrokers, business people, the widows of stockbrokers and other very wealthy people. There are definitely not poor people there. I shall concede that there are those people who have perhaps used up their resources in the sense that today they only have, say, R50 000 left and are concerned because they do not know how long they are still going to live. R50 000 is not a large sum and one cannot invest it in a block of flats, because one’s return would be too low. Sir, that old lady is living today in a three-bedroomed flat

All on her own.

She stays there all on her own and anyone who asks her to take an adjoining one-bedroomed flat must now go to prison, according to the hon. member for Houghton.

Civil liberties.

Yes, “civil liberties”. That hon. member is coming right. You know what happens now. I am 100% in favour of assistance being granted to that old lady if she requires assistance, but I am 100% against the owners of flats having to subsidize rich people as they have to do today. For example, let us take the position today if someone enters a flat, as happens, to my knowledge, in many blocks of flats. One of the big stock-brokers in Johannesburg rents the flat and then he leaves. What happens to his flat then?

†“I am giving it to one of my best friends, maybe my secretary, for R98 per month.” For R98 a month she can live in luxury. She has been paying R150 for a second-hand flat in Braamfontein.

*But now she is moving into a controlled flat. I have nothing against the lady who moves in there. Nor do I have the slightest intention of going into other matters, but the people who need that flat, do not get it. Show me anyone who is able to get a flat in those luxury controlled blocks today.

I agree with you.

If you agree with me, I must check it up. I must look at my arguments again.

*Sir, we shall have to find a method of applying some kind of means test, when someone leaves a controlled block, to the person who moves in there, so as to check whether his position justifies his tenure of that flat, and if he is poor, help him, but if he is rich, let him pay; let him pay for the value of the flat. Then you will find that there are thousands of people who will be able to afford buying their own house or flat, but nevertheless they sit in a controlled unit, with arms folded, and other people have to go to gaol because they render him a service. Let us take the fine example of Community Development. When Community Development builds a house, an economic unit, to whom do they rent it? To anyone off the street? No, there is a means test. That man may not earn more than R225 to R300 per month. He, and not the person who earns R500 to R600 per month, moves in. What happens in a controlled unit? If one is a millionaire, one can move in there if one is fortunate enough to get one. It has nothing to do with one’s income, and the general public of South Africa who provide the service of renting, subsidize that millionaire.

†I wonder whether the hon. member for Johannesburg North, who is so talkative today, can tell me this. The flat in Sea Point where the Progressive Party offices are at the moment, is that not a controlled flat?

No. Your information is wrong. It is not a flat block.

It is not a flat if you have an office in it. Then you call it an office block? Sir, I may be wrong, but I was a builder and speculated in buildings some years ago, I have had a look at the flat. This office here is identical to the other flats. The hon. member will agree that it is on the first floor.

It is on the ground floor.

It is above the shops.

You are a super snooper.

Yes, that is true, but I am poking my nose into things that matter. I am looking into the problem of housing, and I will snoop if it is necessary to do so.

*Sir, the point remains that the controlled dwelling unit must be looked at; the person who goes to live there must be looked at. Members of the Progressive Party can live anywhere they like in Sea Point because many of those rich people only stay in their flats for one month of the year. [Interjections.] Yes, he only stayes in the flat for one month of the year and he keeps other people out of it. He comes up to the Transvaal to enjoy our fresh air and during December he comes to the Cape to live in the flat for just that one month.

With or without secretary?

I now come to the next point. If anyone moves out of an economic unit belonging to the Department of Community Development …

Barnie, what about a film star?

Your acting is good, but you are not in the same class at the moment. [Interjections.]

*The fact remains that when the Department of Community Development rents a house, and a family which requires a three-bedroomed house lives in it and the parents separate, so that only the father stays in the house, he will only be able to remain living there in certain circumstances. For example, there must be a possibility that the children will come and stay with him again. Thus there must be sound reasons for his being allowed to remain living in that house. If there are not sound reasons, he will be requested to move to a one or two-bedroomed house. Consequently there is maximum utilization of the dwelling units of the Department of Community Development. What happens in those controlled dwelling units? The hon. member for Houghton states: “The occupier spends a lot of money on luxury items in the flat.” That is so. What happens here? I have only mentioned an example, but it is a fact that anyone can move into them. If a family of, say, four or five people move out of a flat of this type, it may occur that only a single person will live in the flat from then on. This results in there not being maximum utilization. In my opinion this problem should be investigated further. The circumstances of the person who wants to move into a flat must be investigated. We must also see to the interests of the poorer person, for example the pensioner. An hon. member has already referred to the circumstances of pensioners. We must consider the needs of a person who wants to move into a flat. I know that the hon. the Minister will find this difficult. Over the years we have tried to protect everyone. The hon. the Minister and the Secretary of Community Development, Mr. Fouché, have meant a great deal to housing in South Africa over the past year. I do not want to draw comparisons, but I want to point out that they have performed absolute wonders. I have also been involved in housing and I know what I am talking about. Hon. members would do well to come and look at what is being done on the Rand with regard to housing for Coloureds, Whites and others. Hon. members must come and have a look at the results that are being achieved despite unfavourable circumstances. There should be gratitude for this.

I think the hon. member for Wynberg was absolutely unfair towards the hon. member for Durbanville.

Oh, no!

The hon. member for Wynberg imputed certain statements to the hon. member for Durbanville which he never made. The fact that he was unable to understand what the hon. member for Durbanville said, does not mean that there is anything wrong with the hon. member for Durbanville. [Interjections.] The hon. member for Durbanville touched on certain matters and it was the task of the hon. member for Wynberg to analyse these matters intelligently, and if he analysed them incorrectly, the fault is his. The hon. member for Durbanville submitted facts to the House. He never said that he was well disposed towards the poor man and the pensioner. What he did say was that if those people’s interests were to be properly seen to in the future, an increasing amount would have to be done in the sphere of housing.

The hon. member for Green Point advanced very good arguments today, but as usual, as occurred at the time of the Schlebusch Commission, for example, he again failed when he had to state the final point. He failed in the last few minutes of his speech. Let us take a look at what he did. Step by step he built up a good case and stated that he agreed with the Minister. Up to that point he was still right. Then, at the end of his speech, he asked for “incentives”. That was all well and good, but for whom was he requesting these “incentives”? For everyone! Is it right that the taxpayer should subsidize the wealthy in regard to housing? I am only asking. It is definitely not right; we must not subsidize them. I agree that they should be given the opportunity to purchase. If large enterprises such as Sanlam, Santam and others are told that if they have, say, 30 residential units in a building project, they will be allowed to construct higher buildings or more street frontage will be allocated to them, and so on, then these would be “incentives” that would not cost any money, but they would nevertheless induce and encourage those people to provide better housing, and more of it. We must, not calculate the means at our disposal in terms of money. In our planning, too, we must utilize these factors to the benefit of our people. We must not expect everyone just to give and continue to give.

That is a local Government matter.

Yes, but in this country we have a three-tier form of government and this House is at the top …

There should be many more tears!

I think there should be more tears about a party like yours. You bellow louder than bulls, but you are unable to pull the plough in a situation like this.

*The trouble with hon. members opposite is that they just want to make up stories. We do not want stories, because the time for stories about housing is past. We ask that there should be action and that the hon. Opposition should help us. In my opinion it is disgraceful to refer to people as gangsters when they provide accommodation for others. I want to suggest the opposite of what was said here about Houghton. However, I do not course live in Langlaagte and one cannot expect it to be like Houghton there. I know an old man who worked for the Railways for years. This old man bought two dwelling units that had to finance him in his old age. They were two semi-detached houses. Just across the road there is a block of flats that does not fall under rent control and where the rent for a two-bedroomed flat is R120 per month. This is quite in order, although perhaps the return is still a little poor. In terms of the Rents Act this old man, until recently, only received R45 rent per month for his three-roomed house. I agree that he could perhaps get a little more, but can hon. members understand the distress caused by something of this kind in an inverted situation such as this? This man did not ask the Government to help, he helped himself. Today he has to subsidize the wealthy by means of these two houses he bought for himself. He is doing this country a service, but at the moment he is going under because the increases in the tax, the cleaning of buildings and labour are in fact costing him more than he earns through his investment. Today, therefore, be has to Sell these houses; he has to get rid of them.

The Conservative Party in Britain has what is, in my opinion, a very good idea in this regard. They stipulate that the value of a dwelling unit or block of flats under normal circumstances must be ascertained and after careful calculations the rent for a specific flat is determined. Subsequently the tenant of that unit is considered with a view to ascertaining whether or not he requires assistance. It is also their policy that when a person moves out of a flat, the control on that flat lapses. Control is only resumed when another person moves in. In fact, it is the income of the person who moves in, that determines whether or not that unit is to be controlled again. I think that possibly this is a better situation; I think it has merit. Today in New York one finds the situation that people are no longer able to maintain the older buildings. The State has now come to their assistance and said that they can give the buildings to the State. They then give the buildings to the State and gain a rebate on their income tax. Thus you see, Sir, that control gives rise to slum areas. I am not against control; I am against unnecessary subsidies to persons who subsequently destroy other peoples’ ability to utilize their capital properly. For that reason I say that in my opinion the hon. the Minister has done an exceptionally good job with this Bill, which is a difficult one. I see, for example, that people like Veesa, or Sapoa, to use the English acronym, because the memorandum has been drawn up in English, writes as follows—

But they complain because they want not 8½%, but 12½.% They are now complaining because the Minister has put them in their place by laying down 8½%. [Interjections.] Does the hon. member not agree with that? No, he agrees. I cannot tell you whether I agree or not. Mr. Speaker, Sapoa states—

In other words, they provide a fine testimonial to the effect that statesmanship has been displayed here and that the matter has been properly considered. Sapoa does not agree with what is going on, but they say that the Minister has at least acted like a statesman and tried to see both sides of the matter. I therefore request the Opposition to help by ensuring that housing is utilized properly and not to moan in unison with the people who complain, when they go to their constituencies. We know that a funeral never takes longer than an hour, but life always goes on and hon. members must inspire the people and see whether they cannot help us to utilize our housing more effectively in this State.

Mr. Speaker, may I say immediately that I always thoroughly enjoy the speeches made by the hon. member for Langlaagte. I have been listening to him speaking since about 1962 in various councils in Johannesburg and in the Transvaal Provincial Council. I cannot remember an occasion where he has not put on an excellent circus for us and I think that we should congratulate him on the entertainment which he provides to this House.

The hon. member tried to create quite a lot of cloud around the arguments which were advanced by the Opposition. Obviously, when the hon. member talks about Killarney, he does not know very much about that suburb. If he knows Johannesburg, he will soon find out that there are many suburbs like Killarney.