RLA : RPI : Prescott heads for spat with Spath

News from the Residential Property Investor, the bi-monthly magazine for RLA members

other artilces from the August / September 2000 issue

Prescott heads for spat with Spath - August / September 2000

A claim that Deputy Prime Minister John Prescott acted in his own interests when placing a cap on 'fair rents' is likely to rack up the political stakes to new heights when the issue comes before the House of Lords in early October.

It is then that the Department for the Environment, Transport and the Regions, which Prescott heads, will mount its appeal against the Spath Holme ruling that it had acted illegally when it introduced the cap.

Leave to appeal was granted the Government in July despite objections from Manchester solicitor and Spath Holme principal Paul Willan.

The Court of Appeal decided the cap on registered rent increases to bring them more into line with open market rents - of inflation plus 7.5 per cent in the first instance and inflation plus 5 per cent on subsequent registrations - should be squashed because it had been introduced by means of a statutory instrument, rather than primary legislation. In taking this course the Government had gone beyond the powers given it by section 31 of the Landlord and Tenant Act 1985. Rather than introducing measures to counter the effects of inflation, as empowered to do by the section, it had made changes for another purpose not envisaged in the legislation. That purpose was to alleviate perceived hardship to regulated tenants, especially elderly tenants and those on a fixed income, who, said the Government, would otherwise be caused by rapid increase in their rents to a 'fair' level.

The Government is continuing to make clear that this was its intention. In welcoming leave to appeal, Housing Minister Nick Raynsford said the statutory instrument had been greeted with relief 'by thousands of tenants who had been facing exorbitant rent increases'. Many fair rent tenants are retired and live on fixed incomes, he said. 'We want to protect them from the stress and anxiety of not knowing whether they will be able to afford their next rent increase'.

Willan, however, has found a new line of attack on defending the right to charge market-driven rents. He is seeking to amend his pleadings to include a claim of ministerial bias on the part of John Prescott. This follows the revelation that he maintains a flat in Clapham owned by the union that previously sponsored him, the Rail, Maritime and Transport Union, and which has a controlled rent (last fixed in 1992). The flat is occupied by Mr Prescott's son, with the Minister paying the rent. It has been suggested that he has therefore benefitted personally and substantially from a cap on inreases in registered rents.

Although the Parliamentary Commissioner for Standards has cleared Mr Prescott of 'a conflict of interest within the meaning of the Code of Conduct for Members', Elizabeth Filkin concluded that 'the difference between the controlled rent paid by Mr Prescott (£220 a month) and the market rent payable for similar properties not subject to statutory arrangements would substantially exceed the 0.5 per cent threshold' (0.5 per cent of salary being the threshold for registerable benefits)

other artilces from the August / September 2000 issue