Service charge or rent?

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    I am dealing with a case where the landlord is charging ‘rent’ to his mother which he says he needs in order to pay for insurances on the property and also for maintenance and general upkeep of the property.

    I have been reading the 2005/06 version of Zebedee (page 175) para 10.105 and he questions whether such charges should be classed as rent or service charges.

    My question is, where it is only the above items that are being charged for, and there is no element of actual rent, can HB be awarded?



    Not sure if I agree with John Zebedee here about these being service charges – if this is heresey I may burn for a long time :11: – , (I would class them as landlord’s expenses and therefore able to be “rent”), but I’m not sure that it matters.
    JZ says that they are eligible charges either way, and if they are eligible under the scheme, then pay them. 8)

    Julian Hobson

    I think this is one of those occasions where reading 10.105 of zebedee in isolation creates a potential problem.

    Section 10.105 is certainly in the section on service charges and that section talks about all those things that do or could count as service charges.

    Interestingly the rent section doesn’t talk about what counts as rent. Without any dialogue about what does or might constitute rent it is very difficult to look at the maintenance, insurance and repair costs issue in the round.

    I’m inclined to disagree with Mr Z and say that there is no arguable point. Maintaining, repairing and insuring the property is a management charge and can never be described as a service to me. It is something that I’m either entitled to expect (in the case of maintenance and repair) or not particularly interested in, in the case of insurance.

    I don’t think there is any doubt that ongoing loan/mortgage repayments might reasonably be financed by payments of rent received, I suggest that insurances are of the same ilk. Whether a Landlord actually uses the money to do that is of no interest to me and it is not a “service”.

    The definition of services has to be that I pay a sum of money and expect something other than the bricks and morter in return. I must have to pay the service charge as condition of my continued occupation in order for it to be eligible for HB, if I can opt out then it ceases to be eligible. The fact that the payment of rent has the same conditions attached don’t then mean that they are services. Hope this helps.

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