Leasehold Reform, Housing and Urban Development Act 1993

• (a) no consent or concurrence other than that of the Church Commissioners under sub-paragraph (2) above shall be required to a disposition under this Part of the interest of the diocesan board of finance in property (including a grant of a new lease in pursuance of section 93(4));

• (b) any sum payable to the diocesan board of finance by way of—

• (i) the price payable for any interest in property on its acquisition in pursuance of Chapter I, or

• (ii) a premium on the grant of a new lease of property under Chapter II or section 93(4),

shall be paid to the Diocesan Board of Finance in which the land is vested to be applied for purposes for which the proceeds of any such disposition of property by agreement would be applicable under any enactment or Measure authorising such a disposition or disposing of the proceeds of such a disposition; and

• (c) any sum required for the payment of compensation as mentioned in paragraph 6 above may be paid by the Diocesan Board of Finance out of any money held by it.

• (5) In this paragraph—

• “diocesan board of finance” has the same meaning as “DBF” in the Church Property Measure 2018;

• “diocesan glebe land” has the same meaning as in that Measure.

SCHEDULE 3

Part I — RESTRICTIONS ON PARTICIPATION BY INDIVIDUAL TENANTS, EFFECT OF CLAIMS ON OTHER NOTICES, FORFEITURES ETC.

Prior notice by tenant terminating lease

1

A qualifying tenant of a flat shall not participate in the giving of a relevant notice of claim if the notice is given—

• (a) after the tenant has given notice terminating the lease of the flat (other than a notice that has been superseded by the grant, express or implied, of a new tenancy); or

• (b) during the subsistence of an agreement for the grant to the tenant of a future tenancy of the flat, where the agreement is one to which paragraph 17 of Schedule 10 to the Local Government and Housing Act 1989 applies.

Prior notice by landlord terminating lease

2

• (1) A qualifying tenant of a flat shall not participate in the giving of a relevant notice of claim if the notice is given more than four months after a landlord’s notice terminating the tenant’s lease of the flat has been given under section 4 of the Landlord and Tenant Act 1954 or served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 (whether or not the notice has effect to terminate the lease).

• (2) Where in the case of any qualifying tenant of a flat—

• (a) any such landlord’s notice is given or served as mentioned in sub-paragraph (1), but

• (b) that notice was not given or served more than four months before the date when a relevant notice of claim is given,

the landlord’s notice shall cease to have effect on that date.

• (3) If—

• (a) any such landlord’s notice ceases to have effect by virtue of sub-paragraph (2), but

• (b) the claim made in pursuance of the relevant notice of claim is not effective,

then sub-paragraph (4) shall apply to any landlord’s notice terminating the tenant’s lease of the flat which—

• (i) is given under section 4 of the Landlord and Tenant Act 1954 or served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989, and

• (ii) is so given or served within one month after the expiry of the period of currency of that claim.

• (4) Where this sub-paragraph applies to a landlord’s notice, the earliest date which may be specified in the notice as the date of termination shall be—

• (a) in the case of a notice given under section 4 of that Act of 1954—

• (i) the date of termination specified in the previous notice, or

• (ii) the date of expiry of the period of three months beginning with the date of the giving of the new notice,

whichever is the later; or

• (b) in the case of a notice served under paragraph 4(1) of Schedule 10 to that Act of 1989—

• (i) the date of termination specified in the previous notice, or

• (ii) the date of expiry of the period of four months beginning with the date of service of the new notice,

whichever is the later.

• (5) Where—

• (a) by virtue of sub-paragraph (4) a landlord’s notice specifies as the date of termination of a lease a date earlier than six months after the date of the giving of the notice, and

• (b) the notice proposes a statutory tenancy,

section 7(2) of the Landlord and Tenant Act 1954 shall apply in relation to the notice with the substitution, for references to the period of two months ending with the date of termination specified in the notice and the beginning of that period, of references to the period of three months beginning with the date of the giving of the notice and the end of that period.

Orders for possession and pending proceedings for forfeiture etc.

3

• (1) A qualifying tenant of a flat shall not participate in the giving of a relevant notice of claim if at the time when it is given he is obliged to give up possession of his flat in pursuance of an order of a court or will be so obliged at a date specified in such an order.

• (2) Except with the leave of the court, a qualifying tenant of a flat shall not participate in the giving of a relevant notice of claim at a time when any proceedings are pending to enforce a right of re-entry or forfeiture terminating his lease of the flat.

• (3) Leave shall only be granted under sub-paragraph (2) if the court is satisfied that the tenant does not wish to participate in the giving of such a notice of claim solely or mainly for the purpose of avoiding the consequences of the breach of the terms of his lease in respect of which proceedings are pending.

• (4) If—

• (a) leave is so granted, and

• (b) a relevant notice of claim is given,

the tenant’s lease shall be deemed for the purposes of the claim to be a subsisting lease despite the existence of those proceedings and any order made afterwards in those proceedings; and, if the claim is effective, the court in which those proceedings were brought may set aside or vary any such order to such extent and on such terms as appear to that court to be appropriate.

Institution of compulsory purchase procedures

4

• (1) A qualifying tenant of a flat shall not participate in the giving of a relevant notice of claim if on the date when the notice is given—

• (a) any person or body of persons who has or have been, or could be, authorised to acquire the whole or part of the flat compulsorily for any purpose has or have, with a view to its acquisition for that purpose—

• (i) served a notice to treat on that tenant, or

• (ii) entered into a contract for the purchase of his interest in the whole or part of the flat; and

• (b) the notice to treat or contract remains in force.

• (2) Where—

• (a) a relevant notice of claim is given, and

• (b) during the currency of the claim any such person or body of persons as is mentioned in sub-paragraph (1)(a) serves or serve, in relation to the flat held by a participating tenant, notice to treat as mentioned in that provision,

the tenant shall cease to be entitled to participate in the making of the claim by virtue of being a qualifying tenant of the flat, and shall accordingly cease to be a participating tenant in respect of the flat.

Notice terminating lease given by tenant or landlord during currency of claim

5

Where a relevant notice of claim is given, any notice terminating the lease of any flat held by a participating tenant, whether it is—

• (a) a notice given by the tenant, or

• (b) a landlord’s notice given under section 4 of the Landlord and Tenant Act 1954 or served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989,

shall be of no effect if it is given or served during the currency of the claim.

Initial notice operates to prevent termination of tenant’s lease by other means

6

• (1) Where a relevant notice of claim is given, then during the currency of the claim and for three months thereafter the lease of any flat held by a participating tenant shall not terminate—

• (a) by effluxion of time, or

• (b) in pursuance of a notice to quit given by the landlord, or

• (c) by the termination of a superior lease;

but if the claim is not effective, and but for this sub-paragraph the lease would have so terminated before the end of those three months, the lease shall so terminate at the end of those three months.

• (2) Sub-paragraph (1) shall not be taken to prevent an earlier termination of the lease in any manner not mentioned in that sub-paragraph, and shall not affect—

• (a) the power under section 146(4) of the Law of Property Act 1925 (relief against forfeiture of leases) to grant a tenant relief against the termination of a superior lease, or

• (b) any right of the tenant to relief under section 16(2) of the Landlord and Tenant Act 1954 (relief where landlord proceeding to enforce covenants) or under paragraph 9 of Schedule 5 to that Act (relief in proceedings brought by superior landlord).

• (3) The reference in sub-paragraph (2) to section 16(2) of, and paragraph 9 of Schedule 5 to, the Landlord and Tenant Act 1954 includes a reference to those provisions as they apply in relation to Schedule 10 to the Local Government and Housing Act 1989.

Restriction on proceedings against participating tenant to enforce right of re-entry or forfeiture

7

• (1) Where a relevant notice of claim is given, then during the currency of the claim—

• (a) no proceedings to enforce any right of re-entry or forfeiture terminating the lease of any flat held by a participating tenant shall be brought in any court without the leave of that court; and

• (b) leave shall only be granted if the court is satisfied that the tenant is participating in the making of the claim solely or mainly for the purpose of avoiding the consequences of the breach of the terms of his lease in respect of which proceedings are proposed to be brought.

• (2) If leave is granted under sub-paragraph (1), the tenant shall cease to be entitled to participate in the making of the claim by virtue of being a qualifying tenant of the flat referred to in that sub-paragraph, and shall accordingly cease to be a participating tenant in respect of the flat.

Restrictions for purposes of s. 14(3) on tenant electing to become participating tenant during currency of claim

8

• (1) Where a relevant notice of claim is given, a qualifying tenant of a flat may not subsequently make an election under section 14(3)—

• (a) if he was prohibited from participating in the giving of the notice by virtue of paragraph 1, 2(1), 3(1) or 4(1) above; or

• (b) at a time when he would be so prohibited from participating in the giving of a relevant notice of claim, if such a notice were to be given then.

• (2) Where a relevant notice of claim is given, then except with the leave of the court, a qualifying tenant of a flat may not subsequently make an election under section 14(3) at a time when any proceedings are pending to enforce a right of re-entry or forfeiture terminating his lease of the flat.

• (3) Leave shall only be granted under sub-paragraph (2) if the court is satisfied that the tenant does not wish to make such an election solely or mainly for the purpose of avoiding the consequences of the breach of the terms of his lease in respect of which proceedings are pending.

• (4) If—

• (a) leave is so granted, and

• (b) the tenant makes such an election,

the tenant’s lease shall be deemed for the purposes of the claim to be a subsisting lease despite the existence of those proceedings and any order made afterwards in those proceedings; and, if the claim is effective, the court in which those proceedings were brought may set aside or vary any such order to such extent and on such terms as appear to that court to be appropriate.

• (5) References in this paragraph and paragraph 9 below to making an election under section 14(3) are references to making such an election to participate in the making of the claim in respect of which the relevant notice of claim is given.

Effect of tenant’s election on certain notices given by landlord

9

• (1) This paragraph applies to a qualifying tenant of a flat who, following the giving of a relevant notice of claim, makes an election under section 14(3).

• (2) Where in the case of any such tenant—

• (a) a landlord’s notice terminating the tenant’s lease of the flat has been given or served as mentioned in paragraph 2(1) above (whether or not the notice has effect to terminate the lease), but

• (b) that notice was not given or served more than four months before the date when the tenant makes his election under section 14(3),

the landlord’s notice shall cease to have effect on that date.

• (3) If—

• (a) any such landlord’s notice ceases to have effect by virtue of sub-paragraph (2) above, but

• (b) the claim made in pursuance of the relevant notice of claim is not effective,

then paragraph 2(4) above shall apply to any landlord’s notice terminating the tenant’s lease of the flat which—

• (i) is given under section 4 of the Landlord and Tenant Act 1954 or served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989, and

• (ii) is so given or served within one month after the expiry of the period of currency of that claim;

and paragraph 2(5) above shall apply accordingly.

• (4) Paragraph 8(5) above applies for the purposes of this paragraph.

Interpretation

10

• (1) For the purposes of this Part of this Schedule—

• (a) “relevant notice of claim”, in relation to any flat, means a notice under section 13 in the case of which the specified premises contain that flat, and references to participating in the giving of such a notice are references to being one of the persons by whom the notice is given;

• (b) references to a notice under section 13 include, in so far as the context permits, references to a notice purporting to be given under that section (whether by persons who are qualifying tenants or not);

• (c) references to a claim being effective are references to a binding contract being entered into for the acquisition of the freehold and other interests falling to be acquired in pursuance of the claim or to the making of an order under section 24(4)(a) or (b) or 25(6)(a) or (b) which provides for the vesting of those interests; and

• (d) references to the currency of a claim are—

• (i) where the claim is made by a valid notice under section 13, references to the period during which the notice continues in force in accordance with subsection (11) of that section, or

• (ii) where the claim is made by a notice which is not a valid notice under section 13, references to the period beginning with the giving of the notice and ending with the time when the notice is set aside by the court or is withdrawn or when it would (if valid) cease to have effect or be deemed to have been withdrawn.

• (2) For the purposes of sub-paragraph (1)(d) the date when a notice is set aside, or would (if valid) cease to have effect, in consequence of an order of a court shall be taken to be the date when the order becomes final.

Part II — PROCEDURE FOR GIVING COPIES TO RELEVANT LANDLORDS

Application of Part II

11

This Part of this Schedule has effect where a notice under section 13 is given in a case to which section 9(2) or (2A) applies.

Qualifying tenants to give copies of initial notice

12

• (1) In a case to which section 9(2) applies,the qualifying tenants by whom the initial notice is given shall, in addition to giving the initial notice to the reversioner in respect of the specified premises, give a copy of the notice to every other person known or believed by them to be a relevant landlord of those premises.

• (2) The initial notice shall state whether copies are being given in accordance with sub-paragraph (1) to anyone other than the recipient and, if so, to whom.

Recipient of notice or copy to give further copies

13

• (1) Subject to sub-paragraph (2), a recipient of the initial notice or of a copy of it (including a person receiving a copy under this sub-paragraph) shall forthwith give a copy to any person who—

• (a) is known or believed by him to be a relevant landlord, and

• (b) is not stated in the recipient’s copy of the notice, or known by him, to have received a copy.

• (2) Sub-paragraph (1) does not apply where the recipient is neither the reversioner nor another relevant landlord.

• (3) Where a person gives any copies of the initial notice in accordance with sub-paragraph (1), he shall—

• (a) supplement the statement under paragraph 12(2) or, as the case may be, 12A(2) by adding any further persons to whom he is giving copies or who are known to him to have received one; and

• (b) notify the qualifying tenants by whom the initial notice is given of the persons added by him to that statement.

Consequences of failure to comply with paragraph 12 or 13

14

• (1) Where—

• (a) a relevant landlord of the specified premises does not receive a copy of the initial notice before the end of the period specified in it in pursuance of section 13(3)(g), but

• (b) he was given a notice under section 11 by any of the qualifying tenants by whom the initial notice was given and, in response to the notice under that section, notified the tenant in question of his interest in the specified premises,

the initial notice shall cease to have effect at the end of that period.

• (2) Where—

• (a) sub-paragraph (1) does not apply, but

• (b) any person fails without reasonable cause to comply with paragraph 12 , 12A or 13 above, or is guilty of any unreasonable delay in complying with any of those paragraphs,

he shall be liable for any loss thereby occasioned to the qualifying tenants by whom the initial notice was given or to the reversioner or any other relevant landlord.

Part III — OTHER PROVISIONS

Inaccuracies or misdescription in initial notice

15

• (1) The initial notice shall not be invalidated by any inaccuracy in any of the particulars required by section 13(3) or by any misdescription of any of the property to which the claim extends.

• (2) Where the initial notice—

• (a) specifies any property or interest which was not liable to acquisition under or by virtue of section 1 or 2, or

• (b) fails to specify any property or interest which is so liable to acquisition,

the notice may, with the leave of the court and on such terms as the court may think fit, be amended so as to exclude or include the property or interest in question.

• (3) Where the initial notice is so amended as to exclude any property or interest, references to the property or interests specified in the notice under any provision of section 13(3) shall be construed accordingly; and, where it is so amended as to include any property or interest, the property or interest shall be treated as if it had been specified under the provision of that section under which it would have fallen to be specified if its acquisition had been proposed at the relevant date.

Effect on initial notice of tenant’s lack of qualification to participate

16

• (1) It is hereby declared that, where at the relevant date any of the persons by whom the initial notice is given—

• (a) is not a qualifying tenant of a flat contained in the specified premises, or

• (b) is such a qualifying tenant but is prohibited from participating in the giving of the notice by virtue of Part I of this Schedule, or

• (c) (if it is claimed in the notice that he satisfies the residence condition) does not satisfy that condition,

the notice shall not be invalidated on that account, so long as the notice was in fact properly given by a sufficient number of qualifying tenants of flats contained in the premises as at the relevant date, and not less than one-half of the qualifying tenants by whom it was so given then satisfied the residence condition.

• (2) For the purposes of sub-paragraph (1) a sufficient number is a number which—

• (a) is not less than two-thirds of the total number of qualifying tenants of flats contained in the specified premises as at the relevant date, and

• (b) is not less than one-half of the total number of flats so contained.

SCHEDULE 4

Information to accompany counter-notice

1

• (1) This paragraph applies where before the date of the giving of a counter-notice under section 21 the reversioner or any other relevant landlord—

• (a) has received—

• (i) a notice given under section 42 with respect to any flat contained in the specified premises (being a notice to which section 54(1) or (2) applies on that date), or

• (ii) a copy of such a notice, or

• (b) has given any counter-notice under section 45 in response to any such notice.

• (2) A copy of every notice which, or a copy of which, has been received as mentioned in sub-paragraph (1)(a), and a copy of every counter-notice which has been given as mentioned in sub-paragraph (1)(b), shall either—

• (a) accompany any counter-notice given under section 21, or

• (b) be given to the nominee purchaser by the reversioner as soon as possible after the date of the giving of any such counter-notice.

Continuing duty to furnish information

2

• (1) Subject to sub-paragraph (3), this paragraph applies where on or after the date of the giving of a counter-notice under section 21 the reversioner or any other relevant landlord receives—

• (a) a notice given under section 42 with respect to any flat contained in the specified premises or a copy of such a notice, or

• (b) any notice of withdrawal given under section 52 and relating to any notice under section 42 of which a copy has already been furnished to the nominee purchaser under this Schedule.

• (2) A copy of every notice which, or a copy of which, is received as mentioned in sub-paragraph (1)(a) or (b) shall be given to the nominee purchaser by the reversioner as soon as possible after the time when the notice or copy is received by the reversioner or (as the case may be) the other relevant landlord.

• (3) This paragraph does not apply if the notice or copy is received by the reversioner or (as the case may be) the other relevant landlord otherwise than at a time when—

• (a) the initial notice continues in force, or

• (b) a binding contract entered into in pursuance of that notice remains in force, or

• (c) where an order has been made under section 24(4)(a) or (b) or 25(6)(a) or (b) with respect to the specified premises, any interests which by virtue of the order fall to be vested in the nominee purchaser have yet to be so vested.

Duty of other landlords to furnish copies to reversioner

3

• (1) Without prejudice to the generality of paragraph 8(1)(a) of Schedule 1, the duty imposed by that provision shall extend to requiring any relevant landlord (other than the reversioner) who—

• (a) receives a relevant notice or a copy of such a notice, or

• (b) gives a relevant counter-notice,

to furnish a copy of the notice or counter-notice to the reversioner as soon as possible after the time when the notice or copy is received or (as the case may be) the counter-notice is given by the relevant landlord.

• (2) In this paragraph “relevant notice” and “relevant counter-notice” mean respectively any notice of which a copy is required to be given to the nominee purchaser by the reversioner in accordance with this Schedule and any counter-notice of which a copy is required to be so given.

SCHEDULE 5

Interpretation

1

• (1) In this Schedule “a vesting order” means an order made by the court under section 24(4)(a) or (b) or section 25(6)(a) or (b).

• (2) In this Schedule “the relevant terms of acquisition”, in relation to any such order, means the terms of acquisition referred to in section 24(4)(a) or (b) or section 25(6)(a) or (b), as the case may be.

Execution of conveyance

2

• (1) Where any interests are to be vested in the nominee purchaser by virtue of a vesting order, then on his paying into court the appropriate sum in respect of each of those interests there shall be executed by such person as the court may designate a conveyance which—

• (a) is in a form approved by the appropriate tribunal, and

• (b) contains such provisions as may be so approved for the purpose of giving effect to the relevant terms of acquisition.

• (2) The conveyance shall be effective to vest in the nominee purchaser the interests expressed to be conveyed, subject to and in accordance with the terms of the conveyance.

The appropriate sum

3

• (1) In the case of any vesting order, the appropriate sum which in accordance with paragraph 2(1) is to be paid into court in respect of any interest is the aggregate of—

• (a) such amount as is fixed by the relevant terms of acquisition as the price which is payable in accordance with Schedule 6 in respect of that interest; and

• (b) any amounts or estimated amounts determined by the appropriate tribunal as being, at the time of execution of the conveyance, due to the transferor from any tenants of his of premises comprised in the premises in which that interest subsists (whether due under or in respect of their leases or under or in respect of agreements collateral thereto).

• (2) In this paragraph “the transferor”, in relation to any interest, means the person from whom the interest is to be acquired by the nominee purchaser.

Effect of payment of appropriate sum into court

4

Where any interest is vested in the nominee purchaser in accordance with this Schedule, the payment into court of the appropriate sum in respect of that interest shall be taken to have satisfied any claims against the nominee purchaser or the participating tenants, or the personal representatives or assigns of any of them, in respect of the price payable under this Chapter for the acquisition of that interest.

Supplemental

5

• (1) In the provisions specified in sub-paragraph (2) references to a binding contract being entered into in pursuance of the initial notice shall be read as including references to the making of a vesting order.

• (2) Those provisions are—

• (a) section 14(11);

• (b) section 15(12) (except so far as it provides for the interpretation of references to the nominee purchaser);

• (c) section 16(10);

• (d) section 19(5)(b);

• (e) section 28(1);

• (f) section 30(4); and

• (g) section 31(4).

• (3) Where, at any time after a vesting order is made but before the interests falling to be vested in the nominee purchaser by virtue of the order have been so vested, any acquiring authority (within the meaning of section 30) serves notice to treat as mentioned in subsection (1)(a) of that section, the vesting order shall cease to have effect.

• (4) Where sub-paragraph (3) applies to any vesting order, then on the occasion of the compulsory acquisition in question the compensation payable in respect of any interest in the specified premises (whether or not the one to which the notice to treat relates) shall be determined on the basis of the value of the interest subject to and with the benefit of the rights and obligations arising from the initial notice and affecting the interest.

• (5) In section 38(2) (except so far as it provides for the interpretation of references to the proposed acquisition by the nominee purchaser) the reference to a contract entered into in pursuance of the initial notice shall be read as including a reference to a vesting order.

SCHEDULE 6

Part I — GENERAL

Interpretation and operation of Schedule

1

• (1) In this Schedule—

• . . .

• “intermediate leasehold interest” means the interest of the tenant under a lease which is superior to the lease held by a qualifying tenant of a flat contained in the specified premises, to the extent that—any such interest is to be acquired by the nominee purchaser by virtue of section 2(1)(a), andit is an interest in the specified premises;

• ...

• (2) Parts II to IV of this Schedule have effect subject to the provisions of Parts V and VI (which relate to interests with negative values).

Part II — FREEHOLD OF SPECIFIED PREMISES

Price payable for freehold of specified premises

2

• (1) Subject to the provisions of this paragraph, where the freehold of the whole of the specified premises is owned by the same person the price payable by the nominee purchaser for the freehold of those premises shall be the aggregate of—

• (a) the value of the freeholder’s interest in the premises as determined in accordance with paragraph 3,

• (b) the freeholder’s share of the marriage value as determined in accordance with paragraph 4, and

• (c) any amount of compensation payable to the freeholder under paragraph 5.

• (2) Where the amount arrived at in accordance with sub-paragraph (1) is a negative amount, the price payable by the nominee purchaser for the freehold shall be nil.

Value of freeholder’s interest

3

• (1) Subject to the provisions of this paragraph, the value of the freeholder’s interest in the specified premises is the amount which at the relevant date that interest might be expected to realise if sold on the open market by a willing seller (with no person who falls within sub-paragraph (1A) buying or seeking to buy) on the following assumptions—

• (a) on the assumption that the vendor is selling for an estate in fee simple—

• (i) subject to any leases subject to which the freeholder’s interest in the premises is to be acquired by the nominee purchaser, but

• (ii) subject also to any intermediate or other leasehold interests in the premises which are to be acquired by the nominee purchaser;

• (b) on the assumption that this Chapter and Chapter II confer no right to acquire any interest in the specified premises or to acquire any new lease (except that this shall not preclude the taking into account of a notice given under section 42 with respect to a flat contained in the specified premises where it is given by a person other than a participating tenant);

• (c) on the assumption that any increase in the value of any flat held by a participating tenant which is attributable to an improvement carried out at his own expense by the tenant or by any predecessor in title is to be disregarded; and

• (d) on the assumption that (subject to paragraphs (a) and (b)) the vendor is selling with and subject to the rights and burdens with and subject to which the conveyance to the nominee purchaser of the freeholder’s interest is to be made, and in particular with and subject to such permanent or extended rights and burdens as are to be created in order to give effect to Schedule 7.

• (1A) A person falls within this sub-paragraph if he is—

• (a) the nominee purchaser, or

• (b) a tenant of premises contained in the specified premises, or

• (ba) an owner of an interest which the nominee purchaser is to acquire in pursuance of section 1(2)(a), or

• (c) an owner of an interest which the nominee purchaser is to acquire in pursuance of section 2(1)(b).

• (2) It is hereby declared that the fact that sub-paragraph (1) requires assumptions to be made as to the matters specified in paragraphs (a) to (d) of that sub-paragraph does not preclude the making of assumptions as to other matters where those assumptions are appropriate for determining the amount which at the relevant date the freeholder’s interest in the specified premises might be expected to realise if sold as mentioned in that sub-paragraph.

• (3) In determining that amount there shall be made such deduction (if any) in respect of any defect in title as on a sale of the interest on the open market might be expected to be allowed between a willing seller and a willing buyer.

• (4) Where a lease of any flat or other unit contained in the specified premises is to be granted to the freeholder in accordance with section 36 and Schedule 9, the value of his interest in those premises at the relevant date so far as relating to that flat or other unit shall be taken to be the difference as at that date between—

• (a) the value of his freehold interest in it, and

• (b) the value of his interest in it under that lease, assuming it to have been granted to him at that date;

and each of those values shall, so far as is appropriate, be determined in like manner as the value of the freeholder’s interest in the whole of the specified premises is determined for the purposes of paragraph 2(1)(a).

• (5) The value of the freeholder’s interest in the specified premises shall not be increased by reason of—

• (a) any transaction which—

• (i) is entered into on or after the date of the passing of this Act (otherwise than in pursuance of a contract entered into before that date), and

• (ii) involves the creation or transfer of an interest superior to (whether or not preceding) any interest held by a qualifying tenant of a flat contained in the specified premises; or

• (b) any alteration on or after that date of the terms on which any such superior interest is held.

• (6) Sub-paragraph (5) shall not have the effect of preventing an increase in value of the freeholder’s interest in the specified premises in a case where the increase is attributable to any such leasehold interest with a negative value as is mentioned in paragraph 14(2).

Freeholder’s share of marriage value

4

• (1) The marriage value is the amount referred to in sub-paragraph (2), and the freeholder’s share of the marriage value is 50 per cent. of that amount.

• (2) Subject to sub-paragraph (2A), the marriage value is any increase in the aggregate value of the freehold and every intermediate leasehold interest in the specified premises, when regarded as being (in consequence of their being acquired by the nominee purchaser) interests under the control of the participating tenants, as compared with the aggregate value of those interests when held by the persons from whom they are to be so acquired, being an increase in value—

• (a) which is attributable to the potential ability of the participating tenants, once those interests have been so acquired, to have new leases granted to them without payment of any premium and without restriction as to length of term, and

• (b) which, if those interests were being sold to the nominee purchaser on the open market by willing sellers, the nominee purchaser would have to agree to share with the sellers in order to reach agreement as to price.

• (2A) Where at the relevant date the unexpired term of the lease held by any of those participating members exceeds eighty years, any increase in the value of the freehold or any intermediate leasehold interest in the specified premises which is attributable to his potential ability to have a new lease granted to him as mentioned in sub-paragraph (2)(a) is to be ignored.

• (3) For the purposes of sub-paragraph (2) the value of the freehold or any intermediate leasehold interest in the specified premises when held by the person from whom it is to be acquired by the nominee purchaser and its value when acquired by the nominee purchaser—

• (a) shall be determined on the same basis as the value of the interest is determined for the purposes of paragraph 2(1)(a) or (as the case may be) paragraph 6(1)(b)(i); and

• (b) shall be so determined as at the relevant date.

• (4) Accordingly, in so determining the value of an interest when acquired by the nominee purchaser—

• (a) the same assumptions shall be made under paragraph 3(1) (or, as the case may be, under paragraph 3(1) as applied by paragraph 7(1)) as are to be made under that provision in determining the value of the interest when held by the person from whom it is to be acquired by the nominee purchaser; and

• (b) any merger or other circumstances affecting the interest on its acquisition by the nominee purchaser shall be disregarded.

Compensation for loss resulting from enfranchisement

5

• (1) Where the freeholder will suffer any loss or damage to which this paragraph applies, there shall be payable to him such amount as is reasonable to compensate him for that loss or damage.

• (2) This paragraph applies to—

• (a) any diminution in value of any interest of the freeholder in other property resulting from the acquisition of his interest in the specified premises; and

• (b) any other loss or damage which results therefrom to the extent that it is referable to his ownership of any interest in other property.

• (3) Without prejudice to the generality of paragraph (b) of sub-paragraph (2), the kinds of loss falling within that paragraph include loss of development value in relation to the specified premises to the extent that it is referable as mentioned in that paragraph.

• (4) In sub-paragraph (3) “development value”, in relation to the specified premises, means any increase in the value of the freeholder’s interest in the premises which is attributable to the possibility of demolishing, reconstructing, or carrying out substantial works of construction on, the whole or a substantial part of the premises.

• (5) Where the freeholder will suffer loss or damage to which this paragraph applies, then in determining the amount of compensation payable to him under this paragraph, it shall not be material that—

• (a) the loss or damage could to any extent be avoided or reduced by the grant to him, in accordance with section 36 and Schedule 9, of a lease granted in pursuance of Part III of that Schedule, and

• (b) he is not requiring the nominee purchaser to grant any such lease.

Part III — INTERMEDIATE LEASEHOLD INTERESTS

Price payable for intermediate leasehold interests

6

• (1) Where the nominee purchaser is to acquire one or more intermediate leasehold interests—

• (a) a separate price shall be payable for each of those interests, and

• (b) (subject to the provisions of this paragraph) that price shall be the aggregate of—

• (i) the value of the interest as determined in accordance with paragraph 7, and

• (ii) any amount of compensation payable to the owner of that interest in accordance with paragraph 8.

• (2) Where in the case of any intermediate leasehold interest the amount arrived at in accordance with sub-paragraph (1)(b) is a negative amount, the price payable by the nominee purchaser for the interest shall be nil.

Value of intermediate leasehold interests

7

• (1) Subject to sub-paragraph (2), paragraph 3 shall apply for determining the value of any intermediate leasehold interest for the purposes of paragraph 6(1)(b)(i) with such modifications as are appropriate to relate that paragraph to a sale of the interest in question subject (where applicable) to any leases intermediate between that interest and any lease held by a qualifying tenant of a flat contained in the specified premises.

• (1A) In its application in accordance with sub-paragraph (1), paragraph 3(1A) shall have effect with the addition after paragraph (a) of—

• (“) an owner of a freehold interest in the specified premises, or”

• (2) The value of an intermediate leasehold interest which is the interest of the tenant under a minor intermediate lease is to be calculated in accordance with regulations made by the appropriate national authority instead of in accordance with sub-paragraph (1).

• (3) “A minor intermediate lease” means a lease complying with the following requirements, namely—

• (a) it must have an expectation of possession of not more than one month, and

• (b) the profit rent in respect of the lease must be not more than £5 per year;

and, in the case of a lease which is in immediate reversion on two or more leases, those requirements must be complied with in connection with each of the sub-leases.

• (4) Where a minor intermediate lease is in immediate reversion on two or more leases—

• (a) the calculation method mentioned in sub-paragraph (2) shall be applied in relation to each of those sub-leases (and sub-paragraphs (5) and (6) shall also so apply); and

• (b) the value of the interest of the tenant under the minor intermediate lease shall accordingly be the aggregate of the amounts calculated in accordance with that method.

• (5) “Profit rent” means an amount equal to that of the rent payable under the lease on which the minor intermediate lease is in immediate reversion, less that of the rent payable under the minor intermediate lease.

• (6) Where the minor intermediate lease or that on which it is in immediate reversion comprises property other than a flat held by a qualifying tenant, then in sub-paragraph (5) the reference to the rent payable under it means so much of that rent as is apportioned to any such flat.

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) For the purposes of this paragraph the expectation of possession carried by a lease in relation to a lease (“the sub-lease”) on which it is in immediate reversion is the expectation of possession which it carries at the relevant date after the sub-lease, on the basis that—

• (a) (subject to sub-paragraph (10)) where the sub-lease is a lease held by a qualifying tenant of a flat contained in the specified premises, it terminates at the relevant date if its term date fell before then, or else it terminates on its term date; and

• (b) in any other case, the sub-lease terminates on its term date.

• (10) In a case where before the relevant date for the purposes of this Chapter the landlord of any such qualifying tenant as is mentioned in sub-paragraph (9)(a) had given notice to quit terminating the tenant’s sub-lease on a date earlier than that date, the date specified in the notice to quit shall be substituted for the date specified in that provision.

• (11) In sub-paragraph (2) “appropriate national authority” means—

• (a) in relation to a leasehold interest of land in England, the Secretary of State;

• (b) in relation to a leasehold interest of land in Wales, the Welsh Ministers.

Compensation for loss on acquisition of interest

8

• (1) Where the owner of the intermediate leasehold interest will suffer any loss or damage to which this paragraph applies, there shall be payable to him such amount as is reasonable to compensate him for that loss or damage.

• (2) This paragraph applies to—

• (a) any diminution in value of any interest of the owner of the intermediate leasehold interest in other property resulting from the acquisition of his interest in the specified premises; and

• (b) any other loss or damage which results therefrom to the extent that it is referable to his ownership of any interest in other property.

• (3) Without prejudice to the generality of paragraph (b) of sub-paragraph (2), the kinds of loss falling within that paragraph include loss of development value in relation to the specified premises to the extent that it is referable as mentioned in that paragraph.

• (4) In sub-paragraph (3) “development value”, in relation to the specified premises, means any increase in the value of the interest in the premises of the owner of the intermediate leasehold interest which is attributable to the possibility of demolishing, reconstructing or carrying out substantial works of construction on, the whole or a substantial part of the premises.

Owners of intermediate interests entitled to part of marriage value

9

• (1) This paragraph applies where paragraph 2 applies and—

• (a) the price payable for the freehold of the specified premises includes an amount in respect of the freeholder’s share of the marriage value, and

• (b) the nominee purchaser is to acquire any intermediate leasehold interests.

• (2) The amount payable to the freeholder in respect of his share of the marriage value shall be divided between the freeholder and the owners of the intermediate leasehold interests in proportion to the value of their respective interests in the specified premises (as determined for the purposes of paragraph 2(1)(a) or paragraph 6(1)(b)(i), as the case may be).

• (3) Where the owner of an intermediate leasehold interest is entitled in accordance with sub-paragraph (2) to any part of the amount payable to the freeholder in respect of the freeholder’s share of the marriage value, the amount to which he is so entitled shall be payable to him by the freeholder.

Part IV — OTHER INTERESTS TO BE ACQUIRED

Price payable for other interests

10

• (1) Where the nominee purchaser is to acquire any freehold interest in pursuance of section 1(2)(a) or (4) or section 21(4), then (subject to sub-paragraph (3) below) the price payable for that interest shall be the aggregate of—

• (a) the value of the interest as determined in accordance with paragraph 11,

• (b) any share of the marriage value to which the owner of the interest is entitled under paragraph 12, and

• (c) any amount of compensation payable to the owner of the interest in accordance with paragraph 13.

• (2) Where the nominee purchaser is to acquire any leasehold interest by virtue of section 2(1) other than an intermediate leasehold interest, or he is to acquire any leasehold interest in pursuance of section 21(4), then (subject to sub-paragraph (3) below) the price payable for that interest shall be the aggregate of—

• (a) the value of the interest as determined in accordance with paragraph 11, and

• (b) any amount of compensation payable to the owner of the interest in accordance with paragraph 13.

• (3) Where in the case of any interest the amount arrived at in accordance with sub-paragraph (1) or (2) is a negative amount, the price payable by the nominee purchaser for the interest shall be nil.

Value of other interests

11

• (1) In the case of any such freehold interest as is mentioned in paragraph 10(1), paragraph 3 shall apply for determining the value of the interest with such modifications as are appropriate to relate it to a sale of the interest subject (where applicable) to any leases intermediate between that interest and any lease held by a qualifying tenant of a flat contained in the specified premises.

• (2) In the case of any such leasehold interest as is mentioned in paragraph 10(2), then—

• (a) (unless paragraph (b) below applies) paragraph 3 shall apply as mentioned in sub-paragraph (1) above;

• (b) if it is the interest of the tenant under a minor intermediate lease within the meaning of paragraph 7, sub-paragraphs (2) to (10) of that paragraph shall apply with such modifications as are appropriate for determining the value of the interest.

• (3) In its application in accordance with sub-paragraph (1) or (2) above, paragraph 3(6) shall have effect as if the reference to paragraph 14(2) were a reference to paragraph 18(2).

• (4) In its application in accordance with sub-paragraph (2) above, paragraph 3(1A) shall have effect with the addition after paragraph (a) of—

• (“) an owner of a freehold interest in the specified premises, or”

Marriage value

12

• (1) Where any such freehold interest as is mentioned in paragraph 10(1) is an interest in any such property as is mentioned in section 1(3)(a)—

• (a) sub-paragraphs (2) to (4) of paragraph 4 shall apply with such modifications as are appropriate for determining the marriage value in connection with the acquisition by the nominee purchaser of that interest; and

• (b) sub-paragraph (1) of that paragraph shall apply with such modifications as are appropriate for determining the share of the marriage value to which the owner of that interest is entitled.

• (2) Where—

• (a) the owner of any such freehold interest is entitled to any share of the marriage value in respect of any such property, and

• (b) the nominee purchaser is to acquire any leasehold interests in that property superior to any lease held by a participating tenant,

the amount payable to the owner of the freehold interest in respect of his share of the marriage value in respect of that property shall be divided between the owner of that interest and the owners of the leasehold interests in proportion to the value of their respective interests in that property (as determined for the purposes of paragraph 10(1) or (2), as the case may be).

• (3) Where the owner of any such leasehold interest (“the intermediate landlord”) is entitled in accordance with sub-paragraph (2) to any part of the amount payable to the owner of any freehold interest in respect of his share of the marriage value in respect of any property, the amount to which the intermediate landlord is so entitled shall be payable to him by the owner of that freehold interest.

Compensation for loss on acquisition of interest

13

• (1) Where the owner of any such freehold or leasehold interest as is mentioned in paragraph 10(1) or (2) (“relevant interest”) will suffer any loss or damage to which this paragraph applies, there shall be payable to him such amount as is reasonable to compensate him for that loss or damage.

• (2) This paragraph applies to—

• (a) any diminution in value of any interest in other property belonging to the owner of a relevant interest, being diminution resulting from the acquisition of the property in which the relevant interest subsists; and

• (b) any other loss or damage which results therefrom to the extent that it is referable to his ownership of any interest in other property.

• (3) Without prejudice to the generality of paragraph (b) of sub-paragraph (2), the kinds of loss falling within that paragraph include loss of development value in relation to the property in which the relevant interest subsists to the extent that it is referable to his ownership of any interest in other property.

• (4) In sub-paragraph (3) “development value”, in relation to the property in which the relevant interest subsists, means any increase in the value of the relevant interest which is attributable to the possibility of demolishing, reconstructing or carrying out substantial works of construction on, the whole or a substantial part of the property.

Part V — VALUATION ETC. OF INTERESTS IN SPECIFIED PREMISES WITH NEGATIVE VALUES

Valuation of freehold and intermediate leasehold interests

14

• (1) Where—

• (a) the value of a freeholder’s interest in the specified premises (as determined for the relevant purposes), or

• (b) the value of any intermediate leasehold interest (as determined for the relevant purposes),

is a negative amount, the value of the interest for those purposes shall be nil.

• (2) Where sub-paragraph (1) applies to any intermediate leasehold ainterest whose value is a negative amount (“the negative interest”), then for the relevant purposes any interests in the specified premises superior to the negative interest and having a positive value shall be reduced in value—

• (a) beginning with the interest which is immediately superior to the negative interest and continuing (if necessary) with any such other superior interests in order of proximity to the negative interest;

• (b) until the aggregate amount of the reduction is equal to the negative amount in question; and

• (c) without reducing the value of any interest to less than nil.

• (3) In a case where sub-paragraph (1) applies to two or more intermediate leasehold interests whose values are negative amounts, sub-paragraph (2) shall apply separately in relation to each of those interests—

• (a) beginning with the interest which is inferior to every other of those interests and then in order of proximity to that interest; and

• (b) with any reduction in the value of any interest for the relevant purposes by virtue of any prior application of sub-paragraph (2) being taken into account.

• (3A) Where sub-paragraph (2) applies—

• (a) for the purposes of paragraph 5A(2)(a), and

• (b) in relation to an intermediate leasehold interest in relation to which there is more than one immediately superior interest,

any reduction in value made under that sub-paragraph shall be apportioned between the immediately superior interests.

• (4) For the purposes of sub-paragraph (2) an interest has a positive value if (apart from that sub-paragraph) its value for the relevant purposes is a positive amount.

• (5) In this Part of this Schedule “the relevant purposes”—

• (a) as respects a freeholder’s interest in the specified premises, means the purposes of paragraph 2(1)(a) or, as the case may be, 5A(2)(a); and

• (b) as respects any intermediate leasehold interest, means the purposes of paragraph 6(1)(b)(i).

Calculation of marriage value

15

• (1) Where (as determined in accordance with paragraph 4(3) and (4)) the value of any interest—

• (a) when held by the person from whom it is to be acquired by the nominee purchaser, or

• (b) when acquired by the nominee purchaser,

is a negative amount, then for the purposes of paragraph 4(2) the value of the interest when so held or acquired shall be nil.

• (2) Where sub-paragraph (1) above applies to any intermediate leasehold interest whose value when held or acquired as mentioned in paragraph (a) or (b) of that sub-paragraph is a negative amount, paragraph 14(2) to (4) shall apply for determining for the purposes of paragraph 4(2) the value when so held or acquired of other interests in the specified premises, as if—

• (a) any reference to paragraph 14(1) were a reference to sub-paragraph (1) above; and

• (b) any reference to the relevant purposes were, as respects any interest, a reference to the purposes of paragraph 4(2) as it applies to the interest when so held or acquired.

• (3) References in paragraph 16 or 17 to paragraph 14(2) or (3) do not extend to that provision as it applies in accordance with sub-paragraph (2) above.

• (4) References in this paragraph to paragraph 4(2), (3) or (4) extend to that provision as it applies in accordance with paragraph 5A(2)(b).

Apportionment of marriage value

16

• (1) Where paragraph 14(1) applies to an interest, the value of the interest for the purposes of paragraph 9(2) shall be nil, unless sub-paragraph (2) below applies.

• (2) In a case where paragraph 14(1) applies to a freeholder’s interest in the specified premises and to every intermediate leasehold interest—

• (a) sub-paragraph (1) above shall not apply for the purposes of paragraph 9(2); and

• (b) any division falling to be made on the proportional basis referred to in paragraph 9(2) shall be so made in such a way as to secure that the greater the negativity of an interest’s value the smaller the share in respect of the interest.

• (3) In a case where—

• (a) paragraph 14(2) operates to reduce the value of any such superior interest as is there mentioned (“the superior interest”), and

• (b) after the operation of that provision there remains any interest whose value for the relevant purposes is a positive amount,

the value of the superior interest for the purposes of paragraph 9(2) shall be the value which (in accordance with paragraph 14(2)) it has for the relevant purposes.

• (4) In a case where—

• (a) paragraph 14(2) operates to reduce the value of any such superior interest as is there mentioned (“the superior interest”), but

• (b) after the operation of that provision there remains no such interest as is mentioned in sub-paragraph (3)(b) above,

the value of the superior interest for the purposes of paragraph 9(2) shall be the value which it has for the relevant purposes apart from paragraph 14(2).

Adjustment of compensation

17

• (1) Where—

• (a) paragraph 14(2) operates to reduce the value of any such superior interest as is there mentioned (“the superior interest”), and

• (b) apart from this paragraph any amount of compensation is payable under paragraph 8 to the owner of any relevant inferior interest in respect of that interest,

there shall be payable to the owner of the superior interest so much of the amount of compensation as is equal to the amount of the reduction or, if less than that amount, the whole of the amount of compensation.

• (2) Where—

• (a) paragraph 14(2) operates to reduce the value of two or more such superior interests as are there mentioned (“the superior interests”), and

• (b) apart from this paragraph any amount of compensation is payable under paragraph 8 to the owner of any relevant inferior interest in respect of that interest,

sub-paragraph (1) shall apply in the first instance as if the reference to the owner of the superior interest were to the owner of such of the superior interests as is furthest from the negative interest, and then, as respects any remaining amount of compensation, as if that reference were to the owner of such of the superior interests as is next furthest from the negative interest, and so on.

• (3) In sub-paragraph (1) or (2) “relevant inferior interest”, in relation to any interest whose value is reduced as mentioned in that sub-paragraph (“the superior interest”), means—

• (a) the negative interest on account of which any such reduction is made, or

• (b) any other interest intermediate between that negative interest and the superior interest;

but sub-paragraph (1) shall apply in the first instance in relation to any amount of compensation payable to the owner of that negative interest, and then, for the purpose of offsetting (so far as possible) any reduction remaining to be offset in accordance with sub-paragraph (1) or (2), in relation to any amount of compensation payable to the owner of the interest immediately superior to that negative interest, and so on in order of proximity to it.

• (4) To the extent that an amount of compensation is payable to the owner of any interest by virtue of this paragraph—

• (a) paragraph 2(1)(c) , 5A(2)(c) or 6(1)(b)(ii) shall have effect as if it were an amount of compensation payable to him, as owner of that interest, in accordance with paragraph 5 or 8, as the case may be; and

• (b) the person who would otherwise have been entitled to it in accordance with paragraph 8 shall accordingly not be so entitled.

• (5) In a case where paragraph 14(2) applies separately in relation to two or more negative interests in accordance with paragraph 14(3), the preceding provisions of this paragraph shall similarly apply separately in relation to the reductions made on account of each of those interests, and shall so apply—

• (a) according to the order determined by paragraph 14(3)(a); and

• (b) with there being taken into account any reduction in the amount of compensation payable to any person under paragraph 8 which results from the prior application of the preceding provisions of this paragraph.

• (6) Where any reduction in value under sub-paragraph (2) of paragraph 14 is apportioned in accordance with sub-paragraph (3A) of that paragraph, any amount of compensation payable by virtue of this paragraph shall be similarly apportioned.

Part VI — VALUATION ETC. OF OTHER INTERESTS WITH NEGATIVE VALUES

Valuation of freehold and leasehold interests

18

• (1) Where—

• (a) the value of any freehold interest (as determined in accordance with paragraph 11(1)), or

• (b) the value of any leasehold interest (as determined in accordance with paragraph 11(2)),

is a negative amount, the value of the interest for the relevant purposes shall be nil.

• (2) Where, in the case of any property, sub-paragraph (1) applies to any leasehold interest in the property whose value is a negative amount (“the negative interest”), then for the relevant purposes any interests in the property superior to the negative interest and having a positive value shall, if they are interests which are to be acquired by the nominee purchaser, be reduced in value—

• (a) beginning with the interest which is nearest to the negative interest and continuing (if necessary) with any such other superior interests in order of proximity to the negative interest;

• (b) until the aggregate amount of the reduction is equal to the negative amount in question; and

• (c) without reducing the value of any interest to less than nil.

• (3) In a case where sub-paragraph (1) applies to two or more leasehold interests in any property whose values are negative amounts, sub-paragraph (2) shall apply separately in relation to each of those interests—

• (a) beginning with the interest which is inferior to every other of those interests and then in order of proximity to that interest; and

• (b) with any reduction in the value of any interest for the relevant purposes by virtue of any prior application of sub-paragraph (2) being taken into account.

• (4) For the purposes of sub-paragraph (2) an interest has a positive value if (apart from that sub-paragraph) its value for the relevant purposes is a positive amount.

• (5) In this Part of this Schedule “the relevant purposes”—

• (a) as respects any freehold interest, means the purposes of paragraph 10(1)(a); and

• (b) as respects any leasehold interest, means the purposes of paragraph 10(2)(a).

Calculation of marriage value

19

• (1) Where (as determined in accordance with paragraph 4(3) and (4)) the value of any interest—

• (a) when held by the person from whom it is to be acquired by the nominee purchaser, or

• (b) when acquired by the nominee purchaser,

is a negative amount, then for the purposes of paragraph 4(2) the value of the interest when so held or acquired shall be nil.

• (2) Where, in the case of any property, sub-paragraph (1) above applies to any leasehold interest in the property whose value when held or acquired as mentioned in paragraph (a) or (b) of that sub-paragraph is a negative amount, paragraph 18(2) to (4) shall apply for determining for the purposes of paragraph 4(2) the value when so held or acquired of other interests in the property, as if—

• (a) any reference to paragraph 18(1) were a reference to sub-paragraph (1) above; and

• (b) any reference to the relevant purposes were, as respects any interest, a reference to the purposes of paragraph 4(2) as it applies to the interest when so held or acquired.

• (3) In this paragraph any reference to any provision of paragraph 4 is a reference to that provision as it applies in accordance with paragraph 12(1).

• (4) References in paragraph 20 or 21 to paragraph 18(2) or (3) do not extend to that provision as it applies in accordance with sub-paragraph (2) above.

Apportionment of marriage value

20

• (1) Where paragraph 18(1) applies to any interest in any property to which paragraph 12(1) applies, the value of the interest for the purposes of paragraph 12(2) shall be nil, unless sub-paragraph (2) below applies.

• (2) Where, in the case of any property, paragraph 18(1) applies to every interest which is to be acquired by the nominee purchaser—

• (a) sub-paragraph (1) above shall not apply for the purposes of paragraph 12(2); and

• (b) any division falling to be made on the proportional basis referred to in paragraph 12(2) shall be so made in such a way as to secure that the greater the negativity of an interest’s value the smaller the share in respect of the interest.

• (3) Where in the case of any property—

• (a) paragraph 18(2) operates to reduce the value of any such superior interest as is there mentioned (“the superior interest”), and

• (b) after the operation of that provision there remains any interest which is to be acquired by the nominee purchaser and whose value for the relevant purposes is a positive amount,

the value of the superior interest for the purposes of paragraph 12(2) shall be the value which (in accordance with paragraph 18(2)) it has for the relevant purposes.

• (4) Where in the case of any property—

• (a) paragraph 18(2) operates to reduce the value of any such superior interest as is there mentioned (“the superior interest”), but

• (b) after the operation of that provision there remains no such interest as is mentioned in sub-paragraph (3)(b) above,

the value of the superior interest for the purposes of paragraph 12(2) shall be the value which it has for the relevant purposes apart from paragraph 18(2).

Adjustment of compensation

21

• (1) Where in the case of any property—

• (a) paragraph 18(2) operates to reduce the value of any such superior interest as is there mentioned (“the superior interest”), and

• (b) apart from this paragraph any amount of compensation is payable by virtue of paragraph 13 to the owner of any relevant inferior interest in respect of that interest,

there shall be payable to the owner of the superior interest so much of the amount of compensation as is equal to the amount of the reduction or, if less than that amount, the whole of the amount of compensation.

• (2) Where in the case of any property—

• (a) paragraph 18(2) operates to reduce the value of two or more such superior interests as are there mentioned (“the superior interests”), and

• (b) apart from this paragraph any amount of compensation is payable by virtue of paragraph 13 to the owner of any relevant inferior interest in respect of that interest,

sub-paragraph (1) shall apply in the first instance as if the reference to the owner of the superior interest were to the owner of such of the superior interests as is furthest from the negative interest, and then, as respects any remaining amount of compensation, as if that reference were to the owner of such of the superior interests as is next furthest from the negative interest, and so on.

• (3) In sub-paragraph (1) or (2) “relevant inferior interest”, in relation to any interest whose value is reduced as mentioned in that sub-paragraph (“the superior interest”), means—

• (a) the negative interest on account of which any such reduction is made, or

• (b) any other interest in the property in question which is to be acquired by the nominee purchaser and is intermediate between that negative interest and the superior interest;

but sub-paragraph (1) shall apply in the first instance in relation to any amount of compensation payable to the owner of that negative interest, and then, for the purpose of offsetting (so far as possible) any reduction remaining to be offset in accordance with sub-paragraph (1) or (2), in relation to any amount of compensation payable to the owner of such interest falling within paragraph (b) above as is nearest to that negative interest, and so on in order of proximity to it.

• (4) To the extent that an amount of compensation is payable to the owner of any interest by virtue of this paragraph—

• (a) paragraph 10(1)(c) or (as the case may be) paragraph 10(2)(b) shall have effect as if it were an amount of compensation payable to him, as owner of that interest, in accordance with paragraph 13; and

• (b) the person who would otherwise have been entitled to it in accordance with paragraph 13 shall accordingly not be so entitled.

• (5) In a case where paragraph 18(2) applies separately in relation to two or more negative interests in accordance with paragraph 18(3), the preceding provisions of this paragraph shall similarly apply separately in relation to the reductions made on account of each of those interests, and shall so apply—

• (a) according to the order determined by paragraph 18(3)(a); and

• (b) with there being taken into account any reduction in the amount of compensation payable to any person by virtue of paragraph 13 which results from the prior application of the preceding provisions of this paragraph.

SCHEDULE 7

Interpretation

1

In this Schedule—

• (a) “the relevant premises” means, in relation to the conveyance of any interest, the premises in which the interest subsists;

• (b) “the freeholder” means, in relation to the conveyance of a freehold interest, the person whose interest is to be conveyed;

• (c) “other property” means property of which the freehold is not to be acquired by the nominee purchaser under this Chapter; and

• (d) “the appropriate time” means, in relation to the conveyance of a freehold interest, the time when the interest is to be conveyed to the nominee purchaser.

General

2

• (1) The conveyance shall not exclude or restrict the general words implied in conveyances under section 62 of the Law of Property Act 1925, or the all-estate clause implied under section 63 of that Act, unless—

• (a) the exclusion or restriction is made for the purpose of preserving or recognising any existing interest of the freeholder in tenant’s incumbrances or any existing right or interest of any other person, or

• (b) the nominee purchaser consents to the exclusion or restriction.

• (2) The freeholder shall not be bound—

• (a) to convey to the nominee purchaser any better title than that which he has or could require to be vested in him, or

• (b) to enter into any covenant for title beyond those implied under Part I of the Law of Property (Miscellaneous Provisions) Act 1994 in a case where a disposition is expressed to be made with limited title guarantee;

and in the absence of agreement to the contrary the freeholder shall be entitled to be indemnified by the nominee purchaser in respect of any costs incurred by him in complying with the covenant implied by virtue of section 2(1)(b) of that Act (covenant for further assurance).

• (3) In this paragraph “tenant’s incumbrances” includes any interest directly or indirectly derived out of a lease, and any incumbrance on a lease or any such interest (whether or not the same matter is an incumbrance also on any interest reversionary on the lease); and “incumbrances” has the same meaning as it has for the purposes of section 34 of this Act.

Rights of support, passage of water etc.

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• (1) This paragraph applies to rights of any of the following descriptions, namely—

• (a) rights of support for a building or part of a building;

• (b) rights to the access of light and air to a building or part of a building;

• (c) rights to the passage of water or of gas or other piped fuel, or to the drainage or disposal of water, sewage, smoke or fumes, or to the use or maintenance of pipes or other installations for such passage, drainage or disposal;

• (d) rights to the use or maintenance of cables or other installations for the supply of electricity, for the telephone or for the receipt directly or by landline of visual or other wireless transmissions;

and the provisions required to be included in the conveyance by virtue of sub-paragraph (2) are accordingly provisions relating to any such rights.

• (2) The conveyance shall include provisions having the effect of—

• (a) granting with the relevant premises (so far as the freeholder is capable of granting them)—