Tuesday, February 28, 2006

Rent review clauses - be careful, be very careful ...

Landlords, be very careful when increasing rent using a rent review clause in your tenancy agreement. Registered Social Landlord Riverside came a cropper a while back when tenants challenged the validity of four sucessive rent increases they had made under a rent review clause, because they had not used the rent review date given in the tenancy agreement.

The Court of Appeal agreed with the tenants, reluctantly, that the 'rent increases' were invalid and Riverside lost the claim they were bringing for possession based on rent arrears. Because most of the arrears were attributable to the invalid increases and therefore not payable.

It looks as if this decision is set for review by the House of Lords. But I suspect that their Lordships will still expect landlords to follow the wording of their rent review clauses to the letter, and if the Riverside decision is set aside it will be on the basis of some other special reason (such as that full consultation was carried out with tenants groups, they otherwise followed proper procedure and acted in good faith, it is going to cost them £7 million odd if the decision is not overturned ...) Which will not apply to private landlords.

Plus of course the Court of Appeal decision has not as yet been overruled.

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