Commercial Rent (Coronavirus) Bill (First sitting)

Debate between Seema Malhotra and Mark Eastwood

Committee stage
Tuesday 7th December 2021 Public Bill Committees

[Seema Malhotra]

Q Could I ask one final question? Do you have any views about how the fee system structure should be put in place in order to make the arbitration affordable and accessible? Do you have any views about how that should implemented and whether there should be a cap on arbitration costs? Secondly, where one side might be making the process more difficult, do you think there should be the power to award adverse costs to either party?

Melanie Leech: We have worked quite a lot with various small property owners, although they are not in our membership, over the last 18 months. What I have heard from them is that unless there is a cap at a relatively modest level, the scheme will not be accessible to them. Clearly it is a different matter for larger companies. As for poor behaviour, yes, we absolutely think that if parties do not go into or act through this process in good faith, the arbitrators should be able to award costs against them as part of the outcome.

Astrid Cruickshank: I would agree with that. If the example that I gave you—three tenants just refusing to acknowledge any attempt to communicate with them—ended up in arbitration, it would seem entirely unfair that I should be picking up the costs, when I was prepared to make them an offer but they were not willing to even acknowledge that I had made it or respond in any way.

[Mark Eastwood]

Q Melanie, you mentioned in your introduction that you represent commercial agents, who as you know offer property management services and rent collections. Have you had any feedback from commercial agents or property management sector, or any consultation with them? Are they fairly agreeable to the Bill?

Melanie Leech: We have a lot of the larger ones as part of our membership, so yes, I think so. They act for both property owners and tenants, so I have been able to draw on their advice about what is happening in the market—what the relationships are—as well as some of the data that is published. The remit data in particular is drawn from the evidence that they collect. The one thing that they would say, and that I would say, is that we were disappointed that service charges were brought within the ringfence and the protection, because that is money that has already been spent by property owners and agents in maintaining buildings. The tenants might not be able to use them for their primary business purpose while they have been shut, but the buildings still need to be maintained and kept safe, and those costs have increased in some cases.

I know that some on the tenants’ side have suggested that those costs should be reduced because the buildings cannot be occupied. Where we can see that service charges have been reduced, that reduction absolutely should be passed on to tenants—I am not for a minute arguing against that—but where those costs have been incurred, we think that they should be paid and that they should not have been able to benefit from the protection of the ringfencing in the Bill, because that is money that has already been spent by property owners. That is debt that has already been incurred, so we were disappointed by that, and I think the agents would echo that point of view. Beyond that, I think they are supportive of this Bill, as we are.