GENERAL PROVISION FOR PHASING OF RENT INCREASES (Hansard, 22 July 1977)

§ Mr. Bruce Douglas-Mann (Mitcham and Morden)
On Second Reading I raised the question whether this clause involved a substantive change in the law and whether it was appropriate that such a change should be made in a consolidation measure. I submitted that the insertion of the words: or part of a statutory period in subsection (1)(a)involved a change in the law.
My hon. Friend the Minister will, I am sure, agree that this is certainly a change from the corresponding provisions of the Housing Rents and Subsidies Act 1975. I understand that the reason for the alteration is to enable the phasing provisions of that Act to operate in the middle of a rental period after the registration of the rent has taken effect and that it is no longer necessary, as would have been the 2131 case under the Housing Rents and Subsidies Act, to defer the implementation of the phasing provisions until the beginning of the next rental period.
I understand that as a consequence of the Avenue Properties case it has now been held that under the Rent Act 1968 it does not prevent a notice of increase coming into effect forthwith when it is subject to the time-lag period of four weeks, notwithstanding that the date that it comes into effect is not the beginning of a rental period.
The contention has been raised with me —I felt it proper to raise it in the Committee—that we are making the Bill accord with the Avenue Properties case and substantively changing the provisions of the Housing Rents and Subsidies Act 1975 so as to enable rent increases to come into effect at an earlier date than they otherwise would have been allowed to do.
The effect of the Avenue Properties case on the Rent Act 1968 is that a notice of increase can come into effect at any time whether it is at the beginning, the middle or the end of a rental period. I feel that that is an extremely unsatisfactory decision on the part of the Court of Appeal. It goes completely contrary to the whole trend of common law, and I submit that it is contrary to the requirements of the Rent Act itself.
It could well be that at a later date the House of Lords will reverse the decision in the Avenue Properties case and we shall be left with changes in substantive law which have been made to take account of a Court of Appeal decision that is exceedingly dubious.
I appreciate that if the change relates only to the phasing provisions it does not affect the provisions relating to the time of the original notice of increase. I would put on record that by making this change we are merely ensuring that the phasing provisions of the Act come into force at the same time as the notice of increase. By this change we are not facilitating earlier increases in rent; on the contrary, we are ensuring, as I now believe to be the case, that there will be a considerable degree of difficulty if we are simply facilitating the earlier implementations of rent increase.

§ The Parliamentary Secrtetary to the Law Officer's Department (Mr. Arthur Davidson)
Mr. Deputy Chairman, Sir Myer—

The First Deputy Chairman
"Deputy Chairman" is good enough.

§ Mr. Davidson
Mr. Deputy Chairman, Sir Myer, and all the rest, my hon. Friend raised this matter on Second Reading. He has done a useful service in doing so. I do not want to encourage my hon. Friend in case he finds other obscure and erudite points to raise. But this is a matter which the Law Commission, the Joint Consolidation Committee and the Legal Departments of both the Department of the Environment and the Lord Chancellor's Office considered carefully.
My hon. Friend's interpretation is correct. Perhaps I can briefly say that when the phasing was drafted the view was taken that the notice of increase served under Section 22 of the Rent Act could not take effect from a date in the middle of a rental period. It was assumed that the phasing provisions were drafted to bite only on rental periods beginning during the period of delay. Nothing was said about what would happen should a notice of increase be served to take effect during a rental period which had begun before that date.
The Avenue Properties case, however, has put a rather different complexion on this. Those administering the system thought that the rental period could not be split, but that was wrong. It was considered that the validity of a rent increase subject to phasing was concerned with a notice of increase generally—one served under Section 22(2)(b)of the Rent Act 1968. Since then it has been unclear how phasing rules operate in relation to a period beginning with the period of delay and whether a landlord is entitled to serve notice of such a period subject to the phasing provisions.
As my hon. Friend will realise, if the Law Commission recommendation had not been put into effect in the Bill a landlord, for the period before the period of delay—it might be lengthy or short—might have raised the rent to the maximum before the phasing period operated. We would therefore have one period where the rent would be the maximum 2133 before the phasing started. That would clearly be an anomaly and an absurdity, and could possibly lead to unnecessary litigation.
I can tell my hon. Friend that there are comparable phasing rules in Schedule 5 of the Rent (Agriculture) Act 1976. That Act applies to tied cottages. Parliament there took into account the Avenue Properties case. The phasing rules under that Act are made to bite on any period of the tenancy that falls within the period of delay. To have that Act saying one thing and the general Rent Act saying another would also be an anomaly
I hope that my hon. Friend is satisfied that on balance it is correct that the Law Commission recommendation should be carried into effect in the Bill.