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BUSINESS OF THE HOUSE
Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, the Rating (Valuation) Bill may be proceeded with, though opposed, until any hour.--[Mr. Kevin Hughes.]
Question agreed to.
Rating (Valuation) Bill
Not amended (in the Standing Committee), considered.
10.12 pm
Mr. Simon Burns (West Chelmsford): I beg to move amendment No. 4, in page 1, line 9, leave out from 'substituted' to end of line 20 and insert
'"if the landlord undertook to execute prior to the start of the tenancy such repairs, if any, as the tenant might reasonably expect to be carried out to put the hereditament in a state to command that rent and the tenant undertook thereafter to bear the costs of repairs and insurance and to pay all usual rates and taxes".'.
Throughout the Bill's passage, both on Second Reading and in Committee, there has been serious concern that it does not do what the Government seek to do. There is a widespread fear that the legislation is too complex and convoluted. [Interruption.]
Mr. Deputy Speaker (Mr. Michael J. Martin):
Order. I must call the House to order. The hon. Gentleman is moving an amendment.
Mr. Burns:
By making the Bill too complex and convoluted, the Government may achieve the exact opposite of their aim. Far from stemming the threat of further litigation, the Bill may open the floodgates to more.
To be fair to the Minister for Local Government and Housing, I should note that she genuinely sought to allay those fears in Committee, saying that she thought that our fears would not come to pass. However, one problem with the Bill is that it is so technical that no one on either side of the House knows exactly what might happen. It is the clear duty of both the Government and the Opposition parties to try to minimise the problems that might, or might not, emerge from the Bill.
The amendment's purpose is to try to clarify the situation and to prevent litigation and confusion. I shall try to explain this highly complex subject briefly. Before the 1990 revaluation, everyone tended to agree that there was an obligation on a hypothetical landlord to take some responsibility for putting a property into repair. The relevant definition was contained in section 19(6)--[Interruption.]
Mr. Deputy Speaker:
Order. There is still far too much noise in the Chamber, and that is unfair to the hon. Gentleman who is trying to speak to his amendment.
Mr. Burns:
Thank you, Mr. Deputy Speaker. [Interruption.]
Mr. Burns:
I am indebted to you, Mr. Deputy Speaker. The relevant definition is contained in section 19(6) of the General Rate Act 1967. Everybody understood that: there was an obligation upon landlords to put property into repair if it was not in repair. Whether or not it was reasonable for the hypothetical tenant to expect the repair
The Inland Revenue developed what is now known as the "economic test", which it adopted as a golden rule. It took the line that, if the cost of doing the work required to put the property into a full state of repair did not exceed the annual rent of the property in a full state of repair, the hypothetical landlord was to be deemed to have carried out the work concerned. The proposals in this legislation seem incredibly complicated and they go a great deal further than any intention declared by the Government hitherto.
The Local Government Finance Act 1988 shifted the assumed burden of repair in order to make the hypothetical tenancy closer to the standard full repairing and insuring lease found in the market. The burden of repair was shifted to the tenant, and it would seem that nobody thought to include in the provisions any obligation upon anyone to put the property into any particular state of repair. Hence the difficulties that have led to this Bill.
If the agenda is simply to try to end the problems caused by the Anston case and impose an obligation to put into repair upon a hypothetical landlord, I believe the formula in this amendment is the best one. Such an approach would have the effect that the Government have declared they are seeking in this legislation. Most importantly, it would go no further.
For those reasons, I hope that the Government will consider sympathetically if not the amendment--because it is wrongly or badly drafted or whatever--then at least the aims of our amendment.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Alan Meale):
The Bill, as drafted, requires an assumption to be made for valuation purposes. The assumption is that, on the relevant date, the property is in a state of reasonable repair, subject to the test that repairs are assumed to have been carried out only when a reasonable landlord would consider it economic to do so.
The amendment would substitute for this assumption a slightly different one: that, before the tenancy begins, the landlord would have carried out any repairs that a tenant might reasonably expect in order to put the property in a state to command an annual rent. The tenant would then--as the Bill already stipulates--be assumed to maintain the property during the tenancy.
As the hon. Member for West Chelmsford (Mr. Burns) pointed out correctly, this is a very technical Bill and my Department has examined it carefully. This amendment appears to be an attempt to achieve the main purpose of the Bill by using slightly different words. Even if that is the case, it may not do so exactly. The amendment puts the emphasis on the repairs that a tenant might reasonably expect to be carried out. That is not the same as the test applied before 1990 under the gross value basis of valuation, which was directed at what repairs a reasonable landlord would consider it economic to carry out himself.
In response to the queries of the hon. Member for West Chelmsford, it is our intention, as he rightly noted, to return the law to what it was understood to be before 1990. The Bill therefore adopts the test that existed before 1990 and not that set out in his amendment.
Perhaps more importantly, the amendment does not expressly address uneconomic repairs, which, under the Bill would be reflected in valuations in their actual state. It could be argued that it must be assumed as inherent in the concept of reasonableness that no one could reasonably expect repairs to be carried out at all if it is not economic to do so. However, that point has been argued as far as the Court of Appeal. In that light, we should not return to the matter being left open to argument. The hon. Member for West Chelmsford pointed out that that is one of the reasons why we have had to come here tonight. To leave it open could create cases under which uneconomic repairs are assumed, for rating purposes, to be repaired. I cannot accept an amendment that runs a risk of getting us into a similar dilemma to that which caused the need for the Bill. I ask the hon. Gentleman to withdraw the amendment.
Mr. Paul Burstow (Sutton and Cheam):
I shall be brief. Hon. Members who saw me shuffling papers will note that only three sheets remain from the seven or eight that I had a little while ago.
This debate is appropriate for this time of night because it will assist hon. Members in getting off to sleep quickly. It is a dry, technical subject, but, for, some people, it is of great concern. The Bill introduces some uncertainty, which is why I support the amendment of the hon. Member for West Chelmsford (Mr. Burns).
The problem that this provision attempts to address is not real, but perceived. It arises out of a misreading of the Anston case in the Lands Tribunal last year. For some reason, the Government are holding to advice that is unsound and that leads them to believe that the judgment is about disrepair in the most general of forms rather than exceptional disrepair, which is what full reading of the case shows it to be about. In Committee, I asked for evidence of the Government's concern that the judgment would unleash a flood of appeals. We found from written answers that there was none. The Minister told us:
"the valuer cannot assume anything other than a reasonable state of repair. However, what is reasonable will depend on the real-world situation on the day by reference to which he makes his valuation."--[Official Report, Standing Committee A, 19 January 1999; c. 25.]
Would that the Bill said that, but, unfortunately, it does not do what the Minister for Local Government and Housing said in Committee. I had hoped that by the time that we got to Report she would have tabled an amendment that put into law what she said in Committee. Sadly, that has not happened, and this amendment has been tabled to try to do what the Government should have done.
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