Housing associations, in particular Riverside Housing Association, will have been popping champagne corks recently, to celebrate the result of the recent House of Lords decision in the case of Riverside Housing Association v. White.
In this case Mr and Mrs White, who were being evicted by their landlords, Riverside, sought to claim that they were not really in rent arrears because Riverside had not complied properly with the rent review clause in their tenancy agreement for the past four years or so. Worryingly for the housing association, the Court of Appeal agreed with them. This had very serious implications for Riverside, as the Whites were not the only tenants whose tenancies contained this clause and whose rent had been increased in this way. They had no option but to appeal.
The House of Lords have now found in their favour, finding a slightly different way of interpreting the wording of the review clause. However there were some interesting points in this decision:
- Their Lordships made it clear that this case was being treated slightly differently because it was not like the normal run of rent review clauses which appear before them. The appellant is “a charity and a registered social landlord and it is publicly funded. Its tenants will be relatively poorly off individuals, no doubt normally with limited, if any, experience of interpreting legal documents.”
- They also commented that the whole structure and drafting of the rent review provisions (which was criticised in the decision) was quite different from that which one would expect to find in any commercial lease.
This seems to be signalling that slightly different considerations will apply in future when interpreting rent review clauses in residential leases (particularly for social tenancies) as opposed to commercial leases.
However this does not mean that landlords can now take a relaxed view of rent review clauses. Riverside had to wait several years and go all the way to the House of Lords to get this decision. Even though their opponent has been ordered to pay their legal costs (another drain on the legal aid fund), it is likely that they will have suffered financially as a result of this case.
It is far better to do your utmost to avoid the possibility of any dispute, to draft clear and unequivocal rent review clauses in the first place (which do not make the parties go through too many hoops – all of which can become points for dispute later), to and ensure that the clause is followed to the letter every time the rent is reviewed.