With this it will be convenient to discuss the following amendments: No. 132, in clause 71, page 48, line 5, at end insert
(c) any service charges defined under the lease.’.
No. 133, in clause 71, page 48, line 6, leave out ‘services,’.
No. 134, in clause 71, page 48, line 11, leave out ‘and use’ and insert ‘, use and service charge’.
Again, it is a pleasure to be serving under your chairmanship, Mrs. Humble.
These are probing amendments and they are very simple, so I shall not detain the Committee. I wish to ask the Minister to clarify some points. Amendment No. 132 is probably the critical one in the group. Clause 71(1)(b) refers to
“any value added tax chargeable on that amount or interest”,
under which amendment No. 132 would add proposed paragraph (c), referring to
“any service charge defined under the lease.’.
The rent payable under the lease would then include any interest payable, plus value added tax, plus service charges. In some circumstances, it is fair for a landlord to be able to charge for arrears of service charge in addition to other items. Sometimes, the service charge may be dealt with on a totally different basis, but ifit is outstanding because there has been a deliberate attempt not to pay and it has been disregarded completely by the tenant, the rent should include any service charge defined under the lease.
Amendment No. 131 is a paving amendment as it would leave out “and”, while amendment No. 132 is the key amendment and Nos. 133 and 134 are basically consequential and probing amendments. I should like to hear what the Minister has to say about them because they are important issues that have beenraised with us by a number of organisations seeking clarification.
Good morning, Mrs. Humble. The Committee will note that I supported the investigation of such issues. At the moment, this part of the Bill deals with commercial rent arrears, not domestic premises, as we discussed on Tuesday. For many people, rent is a substantial issue, but service charges will be linked in many cases. It therefore seems that we should provide a procedure that looks at the ability of rent and service charges to be included. At present, clause 71(2) expressly says that rent
“does not include any sum in respect of rates, council tax, services, repairs, maintenance, insurance or other ancillary matters (whether or not called ‘rent’ in the lease).”
It is obviously right that rates and council tax should not be included. They are a liability to someone else. Insurance does not follow necessarily. People have to take out insurance, but tenants have some discretion over that. Repairs and maintenance obligations are not fixed in the same way as service charges are usually fixed; they are normally a fixed amount. The charge comes with the building and is part of the initial obligation. I should be interested to hear whether the Minister and her colleagues have considered including service charges and, if they have, why they still want to exclude them. If they have not considered such a proposal, are they willing to do so?
Good morning, Mrs. Humble. In this part of the Bill, rent is defined as the amount payable under the lease for possession and use of the premises, including any interest payable or VAT chargeable. We are content with that definition. It follows the Law Commission’s recommendation in its report on distress for rent in 1991, which relied on a ruling in T and E Homes Ltd. v. Robinson in 1979. We think that rent should be sums that are attributable directly to the tenant’s enjoyment of the land. Items such as service charges, repair costs, insurance premiums and so forth, which are directly attributable to something else—not enjoyment of the land—do not fall within the definition of rent and should be excluded.
There are, of course, other ways in which to recover such money, but it is not appropriate that distraining for rent, albeit that it is now abolished for domestic premises by the Government and applicable only to commercial premises, should have application to anything beyond rent. The issue of certainty is important because it is a non-court remedy and rent is certain, while service charges will not be. That is our reasoning, and I hope that it has reassured the Opposition.