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The Lord Chancellor: I would have thought that rent would cover any sum payable by the tenant to the landlord as a recurring charge in respect of occupation of the premises. The insurance cover may be of that type and it will be in the interests of the tenant to regard the word "rent" as widely as possible. It is a provision for giving notice. I would say, therefore, that it covers any payment of a recurring nature given in consideration of the occupation of the premises demised by the tenant. If the insurance is payable to the landlord, although it is in the name of the insurers, it would be covered by the definition of "rent" under that explanation.

Baroness Gardner of Parkes: Can the noble and learned Lord clarify for me whether service charges are included? In housing benefit cases there is a regulation that if the lease demands that a service charge is paid it can be treated as equal to rent. Would a service charge be the type of charge to which the noble and learned Lord is referring?

The Lord Chancellor: In sub-paragraph (b) of Amendment No. 54 it expressly refers to,

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    "any service charge as defined by section 18 of the Landlord and Tenant Act 1985 (the words 'of a dwelling' being disregarded for this purpose)".
Service charges are therefore expressly covered.

On Question, amendment agreed to.

9.45 p.m.

The Lord Chancellor moved Amendments Nos. 40 and 41:


Page 7, line 16, leave out ("other").
Page 7, line 19, leave out ("rent or service") and insert ("fixed").

The noble and learned Lord said: I spoke to Amendments Nos. 40 and 41 with Amendments Nos. 29 and 39 respectively. I beg to move.

On Question, amendments agreed to.

The Earl of Courtown moved Amendment No. 42:


Page 7, line 21, leave out ("nine") and insert ("six").

The noble Earl said: This very short and simple amendment will give effect to an element of the property industry agreement on the basis of which the Bill has succeeded in progressing to this advanced stage. As has been explained by my noble and learned friend the Lord Chancellor, Clause 13 gives protection to former tenants by requiring a landlord who wishes to pursue a former tenant for arrears run up by a subsequent tenant to serve notice of the arrears on the former tenant within a specified period of their becoming due. This amendment increases that protection by reducing the period from nine months to six months, which is still a sufficient period for the landlord to ascertain whether payment might be made by the defaulting tenant, trace the former tenant or his last known address if necessary, and serve a notice if appropriate. I beg to move.

The Lord Chancellor: I am sure the Committee will appreciate that this is a substantial change in favour of the tenant which was consequent on the agreement to which my noble friend referred. I certainly support it.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 43 to 46:


Page 7, line 21, leave out ("rent or service").
Page 7, line 24, leave out ("rent or service").
Page 7, line 25, leave out ("rent or service").
Page 7, line 27, at end insert ("and (where payable) interest calculated on such basis as is so specified").

The noble and learned Lord said: I spoke to Amendments Nos. 43, 44, 45 and 46 with Amendment No. 39. With your Lordships' leave, I shall move them en bloc.

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No. 47:


Page 7, line 27, at end insert:
("(2A) Where a person ("the guarantor") has agreed to guarantee the performance by the former tenant of such a covenant as is mentioned in subsection (1), the guarantor shall not be liable under the agreement to pay any amount in respect of any fixed charge payable under the covenant unless, within the period of six months beginning with the date when the charge becomes due, the landlord serves on the guarantor a notice informing him—
(a) that the charge is now due; and

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(b) that in respect of the charge the landlord intends to recover from the guarantor such amount as is specified in the notice and (where payable) interest calculated on such basis as is so specified.").

The noble and learned Lord said: It is a necessary part of the rule for which Clause 13 makes provision that its protection should be extended not only to former tenants, but also to their guarantors, and I understand that this was also accepted as part of the agreement reached between the property industry organisations to which the amendments moved by my noble friend Lord Courtown give effect. The guarantor of a former tenant is just as exposed and likely to suffer from a sudden and unexpected demand for payment covering a very long period of arrears as the former tenant, and it would also be unfair if guarantors were to be open to being sued for payments which the landlord could not recover from the tenant, not because the tenant could not meet the payment but because the landlord simply found it easier to sue the guarantor because no notice was required.

Amendment No. 47 deals with this by inserting a new subsection (2A) into Clause 13, which makes the same provision for guarantors as subsection (2) makes for former tenants. There are three further amendments which are consequential or build on this change. Amendments Nos. 49 and 51 simply ensure that references in subsection (3) to subsection (2) are amended so that they refer also to the new subsection (2A).

Amendment No. 48 expressly applies to guarantors as well as former tenants. It makes provision for the possibility that the landlord may in good faith have served on a former tenant under Clause 13 a notice specifying a particular sum, but that, for example, a rent review which was outstanding at the time he served the notice determines the rent to be higher on a backdated basis but this does not occur until more than six months after the rent payment became due.

It would not be fair for a landlord in such a position, who had not made a mistake through carelessness in specifying the sum, to be unable to recover the difference between the sum in the notice and the higher sum which the determination entitled him to. Therefore, this amendment introduces a new subsection, which enables the landlord to preserve his right to recover the difference by serving a supplementary notice within three months of the final determination. It would equally not be fair on the tenant, who might have made provision on the basis of the lower sum, to be suddenly and unexpectedly presented with a revised notice for the difference; and so the new subsection also provides that the landlord will only be able to recover the difference in the circumstances which I have outlined if he gives warning in the original notice that the liability is subject to the possibility of upward determination. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 48 to 52:


Page 7, line 27, at end insert:
("(2B) Where the landlord has duly served a notice under subsection (2) or (2A), the amount (exclusive of interest) which the former tenant or (as the case may be) the guarantor is liable to pay in respect of the fixed charge in question shall not exceed the amount specified in the notice unless—

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(a) his liability in respect of the charge is subsequently determined to be for a greater amount,
(b) the notice informed him of the possibility that that liability would be so determined, and
(c) within the period of three months beginning with the date of the determination, the landlord serves on him a further notice informing him that the landlord intends to recover that greater amount from him (plus interest, where payable).").
Page 7, line 28, after ("(2)") insert ("or (2A)").
Page 7, line 28, leave out ("rent or service") and insert ("fixed").
Page 7, line 30, leave out ("that subsection does not apply") and insert ("neither of those subsections applies").
Page 7, line 31, leave out ("rent or service").

The noble and learned Lord said: I spoke to Amendments Nos. 48 and 49 with Amendment No. 47. I spoke to Amendment No. 50 with Amendment No. 39 and to Amendment No. 51 with Amendment No. 47. I spoke to Amendment No. 52 with Amendment No. 39. I beg to move.

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No. 53:


Page 7, leave out lines 35 and 36.

The noble and learned Lord said: Because of other changes to the Bill which include references to authorised guarantee agreements and new tenancies, it will be necessary for "authorised guarantee agreement" and "new tenancy" which are presently only defined for the purposes of Clause 13, to be defined for the whole Bill. Amendments Nos. 53 and 56 make the necessary provision together with Amendments Nos. 76 and 80. Amendment No. 53 removes the definition of "authorised guarantee agreement" in subsection (4) and Amendment No. 76 reproduces it as a general definition for the whole Bill in Clause 19. Amendments Nos. 56 and 80 do the same for the definition of "new tenancy". I beg to move.

On Question, amendment agreed to.


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