Summary

Properly construed, a rent review clause in an assured tenancy agreement which provided that the rent would be increased annually with effect from the first Monday of June each year entitled the landlord to increase the rent on any date from and including the first Monday in June, subject to giving the tenant the required notice.

Facts

The appellant housing association (R) appealed against a decision of the Court of Appeal ((2005) EWCA Civ 1385, (2006) HLR 15) that the tenancy agreement which it had entered into with the respondent tenants (W) required a rent review to take place on the first Monday of June each year. R had granted W an assured tenancy. Clause 2(6) of the tenancy agreement provided that R "may increase the rent by giving four...weeks notice in writing". Clause 2(7) stipulated that the "rent payable will be increased annually with effect from the first Monday of June each year". For the first few years of the tenancy, the rent was increased with effect from the first Monday in June, 28 days' prior notice having been given. However, on February 12, 2001, R wrote to W giving notice that their rent would change from April 2, 2001. Subsequent notices of rent increases were served by R on February 1, 2002, January 31, 2003 and February 11, 2004. R began possession proceedings against W on the ground of rent arrears. In their defence, W asserted that the four notices served by R since February 2001 were ineffective because they had been served long after the rent variation date. The judge held that the notices were valid. However, his decision was reversed by the Court of Appeal.

Held

There were three very important features of the instant case which distinguished it from the type of rent review clause with which the courts had become very familiar in the last quarter of the 20th century. First, the instant was not a rent review clause which had been entered into in the normal commercial context. R was a charity and a registered social landlord. Its tenants would be relatively poorly off individuals, no doubt normally with limited, if any, experience of interpreting legal documents. Secondly, the level of reviewed rent was unaffected by the date from which it took effect. Third, the drafting of the rent review provisions in the instant case was wholly different from that contained in any rent review clause which had, so far as the court was aware, come before the court. The combined effect of the centrally relevant clauses in the agreement was as follows. R was entitled to increase the rent once a year on 28 days' notice, which notice could take effect any time on or after the first Monday in June. In that connection, clause 2(6) imposed one condition, namely that R had to give the tenant four weeks' notice before the reviewed rent became payable. Clause 2(7) imposed another condition, in that it provided that the reviewed rent could not become payable earlier than the first Monday in June. The contention that a late notice would not deprive R of the right to a rent review was also supported by the statement that the rent "will be increased" in clause 2(7). The notion that the date on which a rent increase took effect did not have to be the first Monday in June was further reinforced by the fact that there was nothing in clause 2(6) to indicate that the four weeks' notice referred to had to expire by any particular date. In the circumstances, the four challenged notices were valid.

Appeal allowed.