Leasehold Reform, Housing and Urban Development Act 1993

• (i) all such easements and rights over other property as are necessary to secure as nearly as may be for the benefit of the relevant premises the same rights as exist for the benefit of those premises immediately before the appropriate time, and

• (ii) such further easements and rights (if any) as are necessary for the reasonable enjoyment of the relevant premises; and

• (b) making the relevant premises subject to the following easements and rights (so far as they are capable of existing in law), namely—

• (i) all easements and rights for the benefit of other property to which the relevant premises are subject immediately before the appropriate time, and

• (ii) such further easements and rights (if any) as are necessary for the reasonable enjoyment of other property, being property in which the freeholder has an interest at the relevant date.

Rights of way

4

Any such conveyance shall include—

• (a) such provisions (if any) as the nominee purchaser may require for the purpose of securing to him and the persons deriving title under him rights of way over other property, so far as the freeholder is capable of granting them, being rights of way that are necessary for the reasonable enjoyment of the relevant premises; and

• (b) such provisions (if any) as the freeholder may require for the purpose of making the relevant premises subject to rights of way necessary for the reasonable enjoyment of other property, being property in which he is to retain an interest after the acquisition of the relevant premises.

Restrictive covenants

5

• (1) As regards restrictive covenants, the conveyance shall include—

• (a) such provisions (if any) as the freeholder may require to secure that the nominee purchaser is bound by, or to indemnify the freeholder against breaches of, restrictive covenants which—

• (i) affect the relevant premises otherwise than by virtue of any lease subject to which the relevant premises are to be acquired or any agreement collateral to any such lease, and

• (ii) are immediately before the appropriate time enforceable for the benefit of other property; and

• (b) such provisions (if any) as the freeholder or the nominee purchaser may require to secure the continuance (with suitable adaptations) of restrictions arising by virtue of any such lease or collateral agreement as is mentioned in paragraph (a)(i), being either—

• (i) restrictions affecting the relevant premises which are capable of benefiting other property and (if enforceable only by the freeholder) are such as materially to enhance the value of the other property, or

• (ii) restrictions affecting other property which are such as materially to enhance the value of the relevant premises; and

• (c) such further restrictions as the freeholder may require to restrict the use of the relevant premises in a way which—

• (i) will not interfere with the reasonable enjoyment of those premises as they have been enjoyed during the currency of the leases subject to which they are to be acquired, but

• (ii) will materially enhance the value of other property in which the freeholder has an interest at the relevant date.

• (2) In this paragraph “restrictive covenant” means a covenant or agreement restrictive of the user of any land or building.

SCHEDULE 8

Construction

1

In this Schedule—

• “the consideration payable” means the consideration payable for the acquisition of the relevant interest;

• “the landlord” means the person from whom the relevant interest is being acquired;

• “the relevant interest” means any such interest as is mentioned in paragraph 2(1).

Duty of nominee purchaser to redeem mortgages

2

• (1) Where in accordance with section 35(1) a conveyance will operate to discharge any interest from a mortgage to secure the payment of money, it shall be the duty of the nominee purchaser to apply the consideration payable, in the first instance, in or towards the redemption of any such mortgage (and, if there are more than one, then according to their priorities).

• (2) If any amount payable in accordance with sub-paragraph (1) to the person entitled to the benefit of a mortgage is not so paid, nor paid into court in accordance with paragraph 4, the relevant interest shall remain subject to the mortgage as regards the amount in question, and to that extent section 35(1) shall not apply.

• (3) Subject to sub-paragraph (4), sub-paragraph (1) shall not apply to a debenture holders’ charge, that is to say, a charge (whether a floating charge or not) in favour of the holders of a series of debentures issued by a company or other body of persons, or in favour of trustees for such debenture holders; and any such charge shall be disregarded in determining priorities for the purposes of sub-paragraph (1).

• (4) Sub-paragraph (3) shall not have effect in relation to a charge in favour of trustees for debenture holders which, at the date of the conveyance by virtue of which the relevant interest is acquired by the nominee purchaser, is (as regards that interest) a specific and not a floating charge.

Determination of amounts due in respect of mortgages

3

• (1) For the purpose of determining the amount payable in respect of any mortgage under paragraph 2(1)—

• (a) a person entitled to the benefit of a mortgage to which that provision applies shall not be permitted to exercise any right to consolidate that mortgage with a separate mortgage on other property; and

• (b) if the landlord or any participating tenant is himself entitled to the benefit of a mortgage to which that provision applies, it shall rank for payment as it would if another person were entitled to it, and the nominee purchaser shall be entitled to retain the appropriate amount in respect of any such mortgage of a participating tenant.

• (2) For the purpose of discharging any interest from a mortgage to which paragraph 2(1) applies, a person may be required to accept three months or any longer notice of the intention to pay the whole or part of the principal secured by the mortgage, together with interest to the date of payment, notwithstanding that the terms of the security make other provision or no provision as to the time and manner of payment; but he shall be entitled, if he so requires, to receive such additional payment as is reasonable in the circumstances—

• (a) in respect of the costs of re-investment or other incidental costs and expenses; and

• (b) in respect of any reduction in the rate of interest obtainable on re-investment.

Payments into court

4

• (1) Where under section 35(1) any interest is to be discharged from a mortgage and, in accordance with paragraph 2(1), a person is or may be entitled in respect of the mortgage to receive the whole or part of the consideration payable, then if—

• (a) for any reason difficulty arises in ascertaining how much is payable in respect of the mortgage, or

• (b) for any reason mentioned in sub-paragraph (2) below difficulty arises in making a payment in respect of the mortgage,

the nominee purchaser may pay into court on account of the consideration payable the amount, if known, of the payment to be made in respect of the mortgage or, if that amount is not known, the whole of that consideration or such lesser amount as the nominee purchaser thinks right in order to provide for that payment.

• (2) Payment may be made into court in accordance with sub-paragraph (1)(b) where the difficulty arises for any of the following reasons, namely—

• (a) because a person who is or may be entitled to receive payment cannot be found or his identity cannot be ascertained;

• (b) because any such person refuses or fails to make out a title, or to accept payment and give a proper discharge, or to take any steps reasonably required of him to enable the sum payable to be ascertained and paid; or

• (c) because a tender of the sum payable cannot, by reason of complications in the title to it or the want of two or more trustees or for other reasons, be effected, or not without incurring or involving unreasonable cost or delay.

• (3) Without prejudice to sub-paragraph (1)(a), the whole or part of the consideration payable shall be paid into court by the nominee purchaser if, before execution of the conveyance referred to in paragraph 2(1), notice is given to him—

• (a) that the landlord, or a person entitled to the benefit of a mortgage on the relevant interest, requires him to do so for the purpose of protecting the rights of persons so entitled, or for reasons related to the bankruptcy or winding up of the landlord, or

• (b) that steps have been taken to enforce any mortgage on the relevant interest by the bringing of proceedings in any court, or by the appointment of a receiver, or otherwise;

and where payment into court is to be made by reason only of a notice under this sub-paragraph, and the notice is given with reference to proceedings in a court specified in the notice other than the county court, payment shall be made into the court so specified.

Savings

5

• (1) Where any interest is discharged by section 35(1) from a mortgage (without the obligations secured by the mortgage being satisfied by the receipt of the whole or part of the consideration payable), the discharge of that interest from the mortgage shall not prejudice any right or remedy for the enforcement of those obligations against other property comprised in the same or any other security, nor prejudice any personal liability as principal or otherwise of the landlord or any other person.

• (2) Nothing in this Schedule or section 35 shall be construed as preventing a person from joining in the conveyance referred to in paragraph 2(1) for the purpose of discharging the relevant interest from any mortgage without payment or for a lesser payment than that to which he would otherwise be entitled; and, if he does so, the persons to whom the consideration payable ought to be paid shall be determined accordingly.

SCHEDULE 9

Part I — GENERAL

1

• (1) In this Schedule—

• “the appropriate time”, in relation to a flat or other unit contained in the specified premises, means the time when the freehold of the flat or other unit is acquired by the nominee purchaser;

• “the demised premises”, in relation to a lease granted or to be granted in pursuance of Part II or III of this Schedule, means—the flat or other unit demised or to be demised under the lease, orin the case of such a lease under which two or more units are demised, both or all of those units or (if the context so permits) any of them;

• “the freeholder”, in relation to a flat or other unit contained in the specified premises, means the person who owns the freehold of the flat or other unit immediately before the appropriate time;

• “housing association” has the meaning given by section 1(1) of the Housing Associations Act 1985;

• “intermediate landlord”, in relation to a flat or other unit let to a tenant, means a person who holds a leasehold interest in the flat or other unit which is superior to that held by the tenant’s immediate landlord;

• “other property” means property other than the demised premises.

• (2) In this Schedule any reference to a flat or other unit, in the context of the grant of a lease of it, includes any yard, garden, garage, outhouses and appurtenances belonging to or usually enjoyed with it and let with it immediately before the appropriate time.

Part II — MANDATORY LEASEBACK

Flats etc. let under secure tenancies or secure contracts

2

• (1) This paragraph applies where immediately before the appropriate time any flat falling within sub-paragraph (1A) is let under a secure tenancy or an introductory tenancy or a secure contract (or an introductory standard contract) and either—

• (a) the freeholder is the tenant’s immediate landlord, or

• (b) the freeholder is a public sector landlord and every intermediate landlord of the flat (as well as the immediate landlord under the secure tenancy or the introductory tenancy or the secure contract (or the introductory standard contract)) is also a public sector landlord.

• (1A) A flat falls within this sub-paragraph if—

• (a) the freehold of the whole of it is owned by the same person, and

• (b) it is contained in the specified premises.

• (2) Sub-paragraph (1)(b) has effect whether any such intermediate landlord, or the immediate landlord under the secure tenancy or the introductory tenancy or the secure contract (or the introductory standard contract), is or is not a qualifying tenant of the flat.

• (3) Where this paragraph applies, the nominee purchaser shall grant to the freeholder a lease of the flat in accordance with section 36 and paragraph 4 below.

• (4) In this paragraph any reference to a flat includes a reference to a unit (other than a flat) which is used as a dwelling.

Flats etc. let by housing associations under tenancies other than secure tenancies or secure contracts

3

• (1) This paragraph applies where immediately before the appropriate time any flat falling within sub-paragraph (1A) is let by a housing association under a tenancy other than a secure tenancy or secure contract and—

• (a) the housing association is the freeholder, and

• (b) the tenant is not a qualifying tenant of the flat.

• (1A) A flat falls within this sub-paragraph if—

• (a) the freehold of the whole of it is owned by the same person, and

• (b) it is contained in the specified premises.

• (2) Where this paragraph applies, the nominee purchaser shall grant to the freeholder (that is to say, the housing association) a lease of the flat in accordance with section 36 and paragraph 4 below.

• (3) In this paragraph any reference to a flat includes a reference to a unit (other than a flat) which is used as a dwelling.

Provisions as to terms of lease

4

• (1) Any lease granted to the freeholder in pursuance of paragraph 2 or 3, and any agreement collateral to it, shall conform with the provisions of Part IV of this Schedule except to the extent that any departure from those provisions is agreed to by the nominee purchaser and the freeholder with the approval of the appropriate tribunal.

• (2) The appropriate tribunal shall not approve any such departure from those provisions unless it appears to the tribunal that it is reasonable in the circumstances.

• (3) In determining whether any such departure is reasonable in the circumstances, the tribunal shall have particular regard to the interests of the tenant under the secure tenancy or introductory tenancy or the secure contract (or introductory standard contract) referred to in paragraph 2(1) or (as the case may be) under the housing association tenancy referred to in paragraph 3(1).

• (4) Subject to the preceding provisions of this paragraph, any such lease or agreement as is mentioned in sub-paragraph (1) may include such terms as are reasonable in the circumstances.

Part III — RIGHT OF FREEHOLDER TO REQUIRE LEASEBACK OF CERTAIN UNITS

Flats without qualifying tenants and other units

5

• (1) Subject to sub-paragraph (3), this paragraph applies to any unit falling within sub-paragraph (1A) which is not immediately before the appropriate time a flat let to a person who is a qualifying tenant of it.

• (1A) A unit falls within this sub-paragraph if—

• (a) the freehold of the whole of it is owned by the same person, and

• (b) it is contained in the specified premises.

• (2) Where this paragraph applies, the nominee purchaser shall, if the freeholder by notice requires him to do so, grant to the freeholder a lease of the unit in accordance with section 36 and paragraph 7 below.

• (3) This paragraph does not apply to a flat or other unit to which paragraph 2 or 3 applies.

Flat etc. occupied by resident landlord

6

• (1) Sub-paragraph (2) applies where, immediately before the freehold of a flat or other unit contained in the specified premises is acquired by the nominee purchaser—

• (a) those premises are premises with a resident landlord by virtue of the occupation of the flat or other unit by the freeholder of it, and

• (b) the freeholder of the flat or other unit is a qualifying tenant of it.

• (2) If the freeholder of the flat or other unit (“the relevant unit”) by notice requires the nominee purchaser to do so, the nominee purchaser shall grant to the freeholder a lease of the relevant unit in accordance with section 36 and paragraph 7 below; and, on the grant of such a lease to the freeholder, he shall be deemed to have surrendered any lease of the relevant unit held by him immediately before the appropriate time.

• (3) Sections 5, 7 and 8 shall apply for the purpose of determining whether, for the purposes of sub-paragraph (1)(b)above, the freeholder is a qualifying tenant of a unit other than a flat as they apply for the purpose of determining whether a person is a qualifying tenant of a flat.

Provisions as to terms of lease

7

• (1) Any lease granted to the freeholder in pursuance of paragraph 5 or 6, and any agreement collateral to it, shall conform with the provisions of Part IV of this Schedule except to the extent that any departure from those provisions—

• (a) is agreed to by the nominee purchaser and the freeholder; or

• (b) is directed by the appropriate tribunal on an application made by either of those persons.

• (2) The appropriate tribunal shall not direct any such departure from those provisions unless it appears to the tribunal that it is reasonable in the circumstances.

• (3) In determining whether any such departure is reasonable in the circumstances, the tribunal shall have particular regard to the interests of any person who will be the tenant of the flat or other unit in question under a lease inferior to the lease to be granted to the freeholder.

• (4) Subject to the preceding provisions of this paragraph, any such lease or agreement as is mentioned in sub-paragraph (1) may include such terms as are reasonable in the circumstances.

Part IV — TERMS OF LEASE GRANTED TO FREEHOLDER

Duration of lease and rent

8

The lease shall be a lease granted for a term of 999 years at a peppercorn rent.

General rights to be granted

9

The lease shall not exclude or restrict the general words implied under section 62 of the Law of Property Act 1925, unless the exclusion or restriction is made for the purpose of preserving or recognising an existing right or interest of any person.

Rights of support, passage of water etc.

10

• (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; and

• (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 lease by virtue of sub-paragraph (2) are accordingly provisions relating to any such rights.

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

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

• (i) all such easements and rights over other property as are necessary to secure as nearly as may be for the benefit of the demised premises the same rights as exist for the benefit of those premises immediately before the appropriate time, and

• (ii) such further easements and rights (if any) as are necessary for the reasonable enjoyment of the demised premises; and

• (b) making the demised premises subject to the following easements and rights (so far as they are capable of existing in law), namely—

• (i) all easements and rights for the benefit of other property to which the demised premises are subject immediately before the appropriate time, and

• (ii) such further easements and rights (if any) as are necessary for the reasonable enjoyment of other property, being property in which the lessor acquires an interest at the appropriate time.

Rights of way

11

The lease shall include—

• (a) such provisions (if any) as the lessee may require for the purpose of securing to him, and persons deriving title under him, rights of way over other property (so far as the lessor is capable of granting them), being rights of way that are necessary for the reasonable enjoyment of the demised premises; and

• (b) such provisions (if any) as the lessor may require for the purpose of making the demised premises subject to rights of way necessary for the reasonable enjoyment of other property, being property in which the lessor acquires an interest at the appropriate time.

Common use of premises and facilities

12

The lease shall include, so far as the lessor is capable of granting them, the like rights to use in common with others any premises, facilities or services as are enjoyed immediately before the appropriate time by any tenant of the demised premises.

Covenants affecting demised premises

13

The lease shall include such provisions (if any) as the lessor may require to secure that the lessee is bound by, or to indemnify the lessor against breaches of, restrictive covenants (that is to say, covenants or agreements restrictive of the use of any land or premises) affecting the demised premises immediately before the appropriate time and enforceable for the benefit of other property.

Covenants by lessor

14

• (1) The lease shall include covenants by the lessor—

• (a) to keep in repair the structure and exterior of the demised premises and of the specified premises (including drains, gutters and external pipes) and to make good any defect affecting that structure;

• (b) to keep in repair any other property over or in respect of which the lessee has rights by virtue of this Schedule;

• (c) to ensure, so far as practicable, that the services which are to be provided by the lessor and to which the lessee is entitled (whether alone or in common with others) are maintained at a reasonable level, and to keep in repair any installation connected with the provision of any of those services.

• (2) The lease shall include a covenant requiring the lessor—

• (a) to insure the specified premises for their full reinstatement value against destruction or damage by fire, tempest, flood or any other cause against the risk of which it is the normal practice to insure;

• (b) to rebuild or reinstate the demised premises or the specified premises in the case of any such destruction or damage.

Covenants by lessee

15

The lease shall include a covenant by the lessee to ensure that the interior of the demised premises is kept in good repair (including decorative repair).

Contributions by lessee

16

• (1) The lease may require the lessee to bear a reasonable part of the costs incurred by the lessor in discharging or insuring against the obligations imposed by the covenants required by paragraph 14(1) or in discharging the obligation imposed by the covenant required by paragraph 14(2)(a).

• (2) Where a covenant required by paragraph 14(1) or (2)(a) has been modified to any extent in accordance with paragraph 4 or 7, the reference in sub-paragraph (1) above to the obligations or (as the case may be) the obligation imposed by that covenant shall be read as a reference to the obligations or obligation imposed by that covenant as so modified.

Assignment and sub-letting of premises

17

• (1) Except where the demised premises consist of or include any unit let or intended for letting on a business lease, the lease shall not include any provision prohibiting or restricting the assignment of the lease or the sub-letting of the whole or part of the demised premises.

• (2) Where the demised premises consist of or include any such unit as is mentioned in sub-paragraph (1), the lease shall contain a prohibition against—

• (a) assigning or sub-letting the whole or part of any such unit, or

• (b) altering the user of any such unit,

without the prior written consent of the lessor (such consent not to be unreasonably withheld).

Restriction on terminating lease

18

The lease shall not include any provision for the lease to be terminated otherwise than by forfeiture on breach of any term of the lease by the lessee.

SCHEDULE 10

Disapplication of provisions relating to disposals by local authorities etc.

1

• (1) It is hereby declared that nothing in any of the provisions specified in sub-paragraph (2) (which impose requirements as to consent or consultation or other restrictions in relation to disposals falling within those provisions) applies to any disposal of a freehold or leasehold interest in any premises which is made in pursuance of this Chapter.

• (2) The provisions referred to in sub-paragraph (1) are—

• (a) sections 32 and 43 of the Housing Act 1985 (disposals of land by local authorities) and section 133 of the Housing Act 1988 (certain subsequent disposals);

• (b) section 148 of the Housing and Regeneration Act 2008 (disposals by registered providers of social housing);

• (ba) section 42 of the Housing Act 1996 (disposals by registered social landlords);

• (bb) section 9 of the Housing Associations Act 1985 (disposals by unregistered housing associations);

• (c) section 79(1) and (2) of the Housing Act 1988 (disposals by housing action trusts) ...

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions relating to secure tenants following leaseback

2

• (1) This paragraph applies where a lease is granted to a public sector landlord in pursuance of paragraph 2 of Schedule 9.

• (2) Where—

• (a) immediately before the appropriate time the public sector landlord was the immediate landlord under a secure tenancy or an introductory tenancy of a flat contained in the demised premises, and

• (b) that tenancy continues in force after the grant of the lease referred to in sub-paragraph (1),

the tenant shall be deemed to have continued without interruption as tenant of the landlord under the secure tenancy or, as the case may be, the introductory tenancy, despite the disposal of the landlord’s interest which immediately preceded the grant of the lease referred to in that sub-paragraph.

• (3) Where—

• (a) immediately before the appropriate time a person was a successor in relation to a secure tenancy or an introductory tenancy of a flat contained in the demised premises, and

• (b) that person is, in connection with the grant of the lease referred to in sub-paragraph (1), granted a new secure tenancy of that flat which is a tenancy for a term certain,

then for the purposes of sections 87 to 90 of the Housing Act 1985 (succession on death of tenant) that person shall also be a successor in relation to the new tenancy.

• (4) Where—

• (a) immediately before the appropriate time a person was the tenant under a secure tenancy or an introductory tenancy of a flat contained in the demised premises, and

• (b) that person is, in connection with the grant of the lease referred to in sub-paragraph (1), granted a new secure tenancy or introductory tenancy of that flat,

then, for the purpose of determining whether either of the conditions referred to in sub-paragraph (5) is satisfied, the new tenancy shall not be regarded as a new letting of the flat but shall instead be regarded as a continuation of the secure tenancy or introductory tenancy referred to in paragraph (a) above.

• (5) Those conditions are—

• (a) the condition specified in sub-paragraph (1)(b) of paragraph 5 of Schedule 5 to the Housing Act 1985 (exception to the right to buy in case of letting in connection with employment); and

• (b) the condition specified in sub-paragraph (1)(b) of paragraph 11 of that Schedule (exception to the right to buy in case of letting for occupation by person of pensionable age etc.).

• (6) In this paragraph—

• (a) any reference to a secure tenancy or an introductory tenancy of a flat is a reference to a secure tenancy or an introductory tenancy of a flat whether with or without any yard, garden, garage, outhouses or appurtenances belonging to or usually enjoyed with it; and

• (b) any reference to a flat includes a reference to a unit (other than a flat) which is used as a dwelling.

• (7) In this paragraph—

• (a) “the appropriate time” and “the demised premises” have the same meaning as in Schedule 9; and

• (b) “successor” has the same meaning as in section 88 of the Housing Act 1985 in relation to a secure tenancy and as in section 132 of the Housing Act 1996 in relation to an introductory tenancy..

SCHEDULE 11

Part I — PROCEDURE IN RELATION TO TENANT’S NOTICE

Tenant’s notice may be given to any of the other landlords

1

The tenant’s notice under section 42 shall be regarded as given to the competent landlord for the purposes of subsection (2)(a) of that section if it is given to any of the other landlords instead; and references in this Chapter to the relevant date shall be construed accordingly.

Tenant to give copies of notice

2

• (1) Where the tenant’s notice is given to the competent landlord, the tenant shall give a copy of the notice to every person known or believed by him to be one of the other landlords.

• (2) Where the tenant’s notice is, in accordance with paragraph 1, given to one of the other landlords, the tenant shall give a copy of the notice to every person (apart from the recipient of the notice) known or believed by the tenant to be either the competent landlord or one of the other landlords.

• (3) The tenant’s notice shall state whether copies are being given in accordance with this paragraph to anyone other than the recipient and, if so, to whom.

Recipient of notice or copy to give further copies

3

• (1) Subject to sub-paragraph (2), a recipient of the tenant’s notice or of a copy of it (including a person receiving a copy under this sub-paragraph)—

• (a) shall forthwith give a copy to any person who—

• (i) is known or believed by him to be the competent landlord or one of the other landlords, and

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

• (b) if he knows who is, or he believes himself to be, the competent landlord, shall—

• (i) give a notice to the tenant stating who is the person thought by him to be the competent landlord, and

• (ii) give a copy of it to that person (if not himself) and to every person known or believed by him to be one of the other landlords.

• (2) Sub-paragraph (1) does not apply where the recipient is neither the competent landlord nor one of the other landlords.

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

• (a) supplement the statement under paragraph 2(3) by adding any further persons to whom he is giving copies or who are known by him to have received one; and

• (b) notify the tenant of the persons added by him to that statement.

Consequences of failure to comply with paragraph 2 or 3

4

• (1) Where—

• (a) the competent landlord or any of the other landlords does not receive a copy of the tenant’s notice before the end of the period specified in it in pursuance of section 42(3)(f), but

• (b) he was given a notice under section 41 by the tenant and, in response to the notice under that section, notified the tenant of his interest in the tenant’s flat,

the tenant’s 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 2 or 3 above, or is guilty of any unreasonable delay in complying with either of those paragraphs,

he shall be liable for any loss thereby occasioned to the tenant or to the competent landlord or any of the other landlords.

Part II — CONDUCT OF PROCEEDINGS BY COMPETENT LANDLORD ON BEHALF OF OTHER LANDLORDS

Counter-notice to specify other landlords

5

Any counter-notice given to the tenant by the competent landlord must specify the other landlords on whose behalf he is acting.

Acts of competent landlord binding on other landlords

6

• (1) Without prejudice to the generality of section 40(2)—

• (a) any notice given under this Chapter by the competent landlord to the tenant,

• (b) any agreement for the purposes of this Chapter between that landlord and the tenant, and

• (c) any determination of the court or the appropriate tribunal under this Chapter in proceedings between that landlord and the tenant,

shall be binding on the other landlords and on their interests in the property demised by the tenant’s lease or any other property; but in the event of dispute the competent landlord or any of the other landlords may apply to the court for directions as to the manner in which the competent landlord should act in the dispute.

• (2) Subject to paragraph 7(2), the authority given to the competent landlord by section 40(2) shall extend to receiving on behalf of any other landlord any amount payable to that person by virtue of Schedule 13.

• (3) If any of the other landlords cannot be found, or his identity cannot be ascertained, the competent landlord shall apply to the court for directions and the court may make such order as it thinks proper with a view to giving effect to the rights of the tenant and protecting the interests of other persons; but, subject to any such directions, the competent landlord shall proceed as in other cases.

• (4) The competent landlord, if he acts in good faith and with reasonable care and diligence, shall not be liable to any of the other landlords for any loss or damage caused by any act or omission in the exercise or intended exercise of the authority given to him by section 40(2).

Other landlords acting independently

7

• (1) Notwithstanding anything in section 40(2), any of the other landlords shall, at any time after the giving by the competent landlord of a counter-notice under section 45 and on giving notice to both the competent landlord and the tenant of his intention to be so represented, be entitled to be separately represented—

• (a) in any legal proceedings in which his title to any property comes in question, or

• (b) in any legal proceedings relating to the determination of any amount payable to him by virtue of Schedule 13.

• (2) Any of the other landlords may also, on giving notice to the competent landlord and the tenant, require that any amount payable to him by virtue of Schedule 13 shall be paid by the tenant to him, or to a person authorised by him to receive it, instead of to the competent landlord; but if, after being given proper notice of the time and method of completion with the tenant, either—

• (a) he fails to notify the competent landlord of the arrangements made with the tenant to receive payment, or

• (b) having notified the competent landlord of those arrangements, the arrangements are not duly implemented,

the competent landlord shall be authorised to receive the payment for him, and the competent landlord’s written receipt for the amount payable shall be a complete discharge to the tenant.

Obligations of other landlords to competent landlord

8

• (1) It shall be the duty of each of the other landlords (subject to paragraph 7) to give the competent landlord all such information and assistance as he may reasonably require; and, if any of the other landlords fails to comply with this sub-paragraph, that landlord shall indemnify the competent landlord against any liability incurred by him in consequence of the failure.

• (2) Each of the other landlords shall make such contribution as shall be just to costs and expenses which are properly incurred by the competent landlord in pursuance of section 40(2) but are not recoverable or not recovered from the tenant.

Applications made by other landlords under section 47(1)

9

• (1) The authority given to the competent landlord by section 40(2) shall not extend to the bringing of proceedings under section 47(1) on behalf of any of the other landlords, or preclude any of those landlords from bringing proceedings under that provision on his own behalf as if he were the competent landlord.

• (2) In section 45(2)(c) any reference to the competent landlord shall include a reference—

• (a) to any of the other landlords, or

• (b) to any two or more of the following, namely the competent landlord and the other landlords, acting together;

and in section 47(1) and (2) references to the landlord shall be construed accordingly; but if any of the other landlords intends to make such an application as is mentioned in section 45(2)(c), whether alone or together with any other person or persons, his name shall be stated in the counter-notice.

Deemed surrender and re-grant of leases of other landlords

10

• (1) Where a lease is executed under section 56 or 93(4) or in pursuance of any order made under this Chapter, then (subject to sub-paragraph (3)) that instrument shall have effect for the creation of the tenant’s new lease of his flat, and for the operation of the rights and obligations conferred and imposed by it, as if there had been a surrender and re-grant of any subsisting lease intermediate between the interest of the competent landlord and the existing lease; and the covenants and other provisions of that instrument shall be framed and take effect accordingly.

• (2) Section 57(2) shall apply to the new lease on the basis that account is to be taken of obligations imposed on any of the other landlords by virtue of that or any superior lease; and section 59(3) shall apply on the basis that the reference there to the tenant’s landlord includes the immediate landlord from whom the new lease will be held and all superior landlords, including any superior to the competent landlord.

• (3) Where a lease of the tenant’s flat superior to the existing lease is vested in the tenant or a trustee for him, the new lease shall include an actual surrender of that superior lease without a re-grant, and it shall accordingly be disregarded for the purposes of the preceding provisions of this paragraph.

Discharge of existing mortgages

11

Where by reason of section 58(2) it is necessary to make any payment to discharge the tenant’s flat from a mortgage affecting the interest of any landlord, then if the competent landlord is not the landlord liable or primarily liable in respect of the mortgage, he shall not be required to make that payment otherwise than out of money made available for the purpose by the landlord so liable, and it shall be the duty of that landlord to provide for the mortgage being discharged.

SCHEDULE 12

Part I — EFFECT OF TENANT’S NOTICE ON OTHER NOTICES, FORFEITURES ETC.

Prior notice by tenant terminating lease

1

A notice given by a qualifying tenant of a flat under section 42 shall be of no effect if it 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) Subject to sub-paragraph (2), a notice given by a qualifying tenant of a flat under section 42 shall be of no effect if it is given more than two 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) Sub-paragraph (1) does not apply where the landlord gives his written consent to a notice being given under section 42 after the end of those two months.

• (3) Where in the case of a qualifying tenant of a flat who gives a notice under section 42—

• (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 two months before the date on which the notice under section 42 is given to the landlord,

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

• (4) If—

• (a) any such landlord’s notice ceases to have effect by virtue of sub-paragraph (3), but

• (b) the claim made by the tenant by the giving of his notice under section 42 is not effective,

then sub-paragraph (5) 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.

• (5) 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.

• (6) Where—

• (a) by virtue of sub-paragraph (5) 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 notice given by a qualifying tenant of a flat under section 42 shall be of no effect 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 give a notice under section 42 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 give such a notice 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 by such a notice makes a claim to acquire a new lease of his flat,

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.

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

4

Where by a notice given under section 42 a tenant makes a claim to acquire a new lease of a flat, any notice terminating the tenant’s lease of the flat, 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.

Tenant’s notice operates to prevent termination of lease

5

• (1) Where by a notice under section 42 a tenant makes a claim to acquire a new lease of a flat, then during the currency of the claim and for three months thereafter the lease of the flat shall not terminate—

• (a) by effluxion of time, or

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

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

6

Where by a notice under section 42 a tenant makes a claim to acquire a new lease of a flat, then during the currency of the claim—

• (a) no proceedings to enforce any right of re-entry or forfeiture terminating the lease of the flat 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 notice was given solely or mainly for the purpose of avoiding the consequences of the breach of the terms of the tenant’s lease in respect of which proceedings are proposed to be brought;

but where leave is granted, the notice shall cease to have effect.

Effect of notice under section 16(2) of Landlord and Tenant Act 1954 on tenant’s notice

7

• (1) A tenant who, in proceedings to enforce a right of re-entry or forfeiture or a right to damages in respect of a failure to comply with any terms of his lease, applies for relief under section 16 of the Landlord and Tenant Act 1954 is not thereby precluded from making a claim to acquire a new lease under this Chapter; but if he gives notice under section 16(2) of that Act (under which the tenant is relieved from any order for recovery of possession or for payment of damages, but the tenancy is cut short), any notice given by him under section 42 with respect to property comprised in his lease shall be of no effect or, if already given, shall cease to have effect.

• (2) Sub-paragraph (1) shall apply in relation to proceedings relating to a superior tenancy with the substitution for the references to section 16 and to section 16(2) of the Landlord and Tenant Act 1954 of references to paragraph 9 and to paragraph 9(2) of Schedule 5 to that Act.

Interpretation

8

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

• (a) references to a notice under section 42 include, in so far as the context permits, references to a notice purporting to be given under that section (whether by a qualifying tenant or not), and references to the tenant by whom a notice is given shall be construed accordingly;

• (b) references to a claim being effective are references to a new lease being acquired in pursuance of the claim; and

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

• (i) where the claim is made by a valid notice under section 42, references to the period during which the notice continues in force in accordance with subsection (8) of that section, or

• (ii) where the claim is made by a notice which is not a valid notice under section 42, 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)(c) 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.

• (3) The references in this Schedule—

• (a) to section 16 of the Landlord and Tenant Act 1954 and subsection (2) of that section, and

• (b) to paragraph 9 of Schedule 5 to that Act and sub-paragraph (2) of that paragraph,

include references to those provisions as they apply in relation to Schedule 10 to the Local Government and Housing Act 1989 (security of tenure on ending of long residential tenancies).

Part II — OTHER PROVISIONS

9

• (1) The tenant’s notice shall not be invalidated by any inaccuracy in any of the particulars required by section 42(3) or by any misdescription of any of the property to which the claim extends.

• (2) Where the tenant’s notice—

• (a) specifies any property which he is not entitled to have demised to him under a new lease granted in pursuance of this Chapter, or

• (b) fails to specify any property which he is entitled to have so demised to him,

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 in question.

SCHEDULE 13

Part I — GENERAL

1

In this Schedule—

• “intermediate leasehold interest” means the interest of any person falling within section 40(4)(c), to the extent that it is an interest in the tenant’s flat subsisting immediately before the grant of the new lease;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II — PREMIUM PAYABLE IN RESPECT OF GRANT OF NEW LEASE

Premium payable by tenant

2

The premium payable by the tenant in respect of the grant of the new lease shall be the aggregate of—

• (a) the diminution in value of the landlord’s interest in the tenant’s flat as determined in accordance with paragraph 3,

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

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

Diminution in value of landlord’s interest

3

• (1) The diminution in value of the landlord’s interest is the difference between—

• (a) the value of the landlord’s interest in the tenant’s flat prior to the grant of the new lease; and

• (b) the value of his interest in the flat once the new lease is granted.

• (2) Subject to the provisions of this paragraph, the value of any such interest of the landlord as is mentioned in sub-paragraph (1)(a) or (b) 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 neither the tenant nor any owner of an intermediate leasehold interest buying or seeking to buy) on the following assumptions—

• (a) on the assumption that the vendor is selling for an estate in fee simple or (as the case may be) such other interest as is held by the landlord, subject to the relevant lease and any intermediate leasehold interests;

• (b) on the assumption that Chapter I and this Chapter confer no right to acquire any interest in any premises containing the tenant’s flat or to acquire any new lease;

• (c) on the assumption that any increase in the value of the flat 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 paragraph (b)) the vendor is selling with and subject to the rights and burdens with and subject to which the relevant lease has effect or (as the case may be) is to be granted.

• (3) In sub-paragraph (2) “the relevant lease” means either the tenant’s existing lease or the new lease, depending on whether the valuation is for the purposes of paragraph (a) or paragraph (b) of sub-paragraph (1).

• (4) It is hereby declared that the fact that sub-paragraph (2) 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 any such interest of the landlord as is mentioned in sub-paragraph (1)(a) or (b) might be expected to realise if sold as mentioned in sub-paragraph (2).

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

• (6) The value of any such interest of the landlord as is mentioned in sub-paragraph (1)(a) or (b) 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 the tenant; or

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

Landlord’s share of marriage value

4

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

• (2) Subject to sub-paragraph (2A), the marriage value is the difference between the following amounts, namely—

• (a) the aggregate of—

• (i) the value of the interest of the tenant under his existing lease,

• (ii) the value of the landlord’s interest in the tenant’s flat prior to the grant of the new lease, and

• (iii) the values prior to the grant of that lease of all intermediate leasehold interests (if any); and

• (b) the aggregate of—

• (i) the value of the interest to be held by the tenant under the new lease,

• (ii) the value of the landlord’s interest in the tenant’s flat once the new lease is granted, and

• (iii) the values of all intermediate leasehold interests (if any) once that lease is granted.

• (2A) Where at the relevant date the unexpired term of the tenant’s existing lease exceeds eighty years, the marriage value shall be taken to be nil.

• (3) For the purposes of sub-paragraph (2)—

• (a) the value of the interest of the tenant under his existing lease shall be determined in accordance with paragraph 4A;

• (aa) the value of the interest to be held by the tenant under the new lease shall be determined in accordance with paragraph 4B;

• (b) the value of any such interest of the landlord as is mentioned in paragraph (a) or paragraph (b) of sub-paragraph (2) is the amount determined for the purposes of paragraph 3(1)(a) or paragraph 3(1)(b) (as the case may be); and

• (c) the value of any intermediate leasehold interest shall be determined in accordance with paragraph 8, and shall be so determined as at the relevant date.

Compensation for loss arising out of grant of new lease

5

• (1) Where the landlord 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 landlord in any property other than the tenant’s flat which results from the grant to the tenant of the new lease; and

• (b) any other loss or damage which results therefrom to the extent that it is referable to the landlord’s ownership of any such interest.

• (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 tenant’s flat to the extent that it is referable as mentioned in that paragraph.

• (4) In sub-paragraph (3) “development value”, in relation to the tenant’s flat, means any increase in the value of the landlord’s interest in the flat which is attributable to the possibility of demolishing, reconstructing, or carrying out substantial works of construction affecting, the flat (whether together with any other premises or otherwise).

Part III — AMOUNTS PAYABLE TO OWNERS OF INTERMEDIATE LEASEHOLD INTERESTS

Amount payable to owner of intermediate interest

6

In connection with the grant of the new lease to the tenant there shall be payable by the tenant to the owner of any intermediate leasehold interest an amount which is the aggregate of—

• (a) the diminution in value of that interest as determined in accordance with paragraph 7; and

• (b) any amount of compensation payable to him under paragraph 9.

Diminution in value of intermediate interest

7

• (1) The diminution in value of any intermediate leasehold interest is the difference between—

• (a) the value of that interest prior to the grant of the new lease; and

• (b) the value of that interest once the new lease is granted.

• (2) Each of those values shall be determined, as at the relevant date, in accordance with paragraph 8.

Value of intermediate interests

8

• (1) Subject to sub-paragraph (2), paragraph 3(2) to (6) shall apply for determining the value of any intermediate leasehold interest for the purposes of any provision of this Schedule with such modifications as are appropriate to relate those provisions of paragraph 3 to a sale of the interest in question subject to the tenant’s lease for the time being and to any leases intermediate between the interest in question and that lease.

• (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.

• (4) “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.

• (5) Where the minor intermediate lease or that on which it is in immediate reversion comprises property other than the tenant’s flat, then in sub-paragraph (4) the reference to the rent payable under it means so much of that rent as is apportioned to that flat.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (8) For the purposes of this paragraph the expectation of possession carried by a lease is the expectation which it carries at the relevant date of possession after the tenant’s lease, on the basis that—

• (a) (subject to sub-paragraph (9)) the tenant’s lease terminates at the relevant date if its term date fell before then, or else it terminates on its term date; and

• (b) any other lease terminates on its term date.

• (9) In a case where before the relevant date for the purposes of this Chapter the immediate landlord of the tenant had given notice to quit terminating the tenant’s lease on a date earlier than that date, the date specified in the notice to quit shall be substituted for the date specified in sub-paragraph (8)(a) above.

• (10) 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 arising out of grant of new lease

9

Paragraph 5 shall apply in relation to the owner of any intermediate leasehold interest as it applies in relation to the landlord.

Owners of intermediate interests entitled to part of marriage value

10

• (1) This paragraph applies in a case where—

• (a) the premium payable by the tenant in respect of the grant of the new lease includes an amount in respect of the landlord’s share of the marriage value, and

• (b) there are any intermediate leasehold interests.

• (2) The amount payable to the landlord in respect of his share of the marriage value shall be divided between the landlord and the owners of any such intermediate interests in proportion to the amounts by which the values of their respective interests in the flat will be diminished in consequence of the grant of the new lease.

• (3) For the purposes of sub-paragraph (2)—

• (a) the amount by which the value of the landlord’s interest in the flat will be so diminished is the diminution in value of that interest as determined for the purposes of paragraph 2(a); and

• (b) the amount by which the value of any intermediate leasehold interest will be so diminished is the diminution in value of that interest as determined for the purposes of paragraph 6(a).

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

SCHEDULE 14

1

• (1) This Schedule has effect where a tenant of a flat is entitled to be paid compensation under section 61, or would be so entitled on the landlord obtaining an order for possession, or where an application for such an order is dismissed or withdrawn.

• (2) In this Schedule—

• “application for possession” means a landlord’s application under section 61;

• “the new lease” has the same meaning as in that section; and

• “order for possession” means an order made under that section;

and (except in the case of the reference in paragraph 5(1)(b) to the flat as a dwelling) references to the flat held by the tenant under the new lease shall be construed in accordance with subsection (5) of that section.

2

• (1) Where an order for possession is made—

• (a) the new lease shall determine, and

• (b) the compensation payable to the tenant by virtue of the order shall become payable,

on such date as may, when the amount of compensation has been determined either by agreement between the landlord and the tenant or by the appropriate tribunal, be fixed by order of the court made on the application of either the landlord or the tenant.

• (2) Where the application for possession was made by virtue of section 61(2)(a), then—

• (a) (unless paragraph (b) below applies) an order of the court under this paragraph shall not fix a date earlier than the term date of the lease in relation to which the right to acquire a new lease was exercised;

• (b) in a case where section 61(2)(a) applies in accordance with section 61(3), an order of the court under this paragraph shall not fix a date earlier than the term date of the lease in relation to which that right was first exercised.

• (3) In fixing the date referred to in sub-paragraph (1) the court shall have regard to the conduct of the parties and to the extent to which the landlord has made reasonable preparations for proceeding with the redevelopment (including the obtaining of, or preparations relating to the obtaining of, any requisite permission or consent, whether from any authority whose permission or consent is required under any enactment or from the owner of an interest in any property).

• (4) The court may by order direct that the whole or part of the compensation payable to the tenant shall be paid into court, if the court thinks it expedient to do so for the purpose of ensuring that the sum paid is available for meeting any mortgage on the tenant’s interest in the flat in question, or for the purpose of division, or for any other purpose.

3

• (1) On the termination of a lease under an order for possession there shall terminate also any immediate or derivative sub-lease, and the tenant shall be bound to give up possession of the flat in question to the landlord except in so far as he is precluded from doing so by the rights of other persons to retain possession under or by virtue of any enactment.

• (2) Where a sub-lease of property comprised in the lease has been created after the date of the application for possession, no person shall in respect of that sub-lease be entitled under any of the following provisions (which relate to retaining possession on the termination of a superior tenancy), namely—

• (a) subsection (2) of section 137 of the Rent Act 1977, or any enactment (including subsection (5) of that section) applying or extending it,

• (b) subsection (2) of section 9 of the Rent (Agriculture) Act 1976 as extended by subsection (5) of that section, or

• (c) section 18(1) of the Housing Act 1988,

to retain possession of that property after the termination of the lease under the order for possession.

• (3) In exercising its jurisdiction under section 61 or this Schedule the court shall assume that the landlord, having obtained an order for possession, will not be precluded from obtaining possession by the right of any person to retain possession by virtue of—

• (a) Part VII of the Rent Act 1977 or any enactment applying or extending that Part of that Act,

• (b) the Rent (Agriculture) Act 1976, or

• (c) Part I of the Housing Act 1988,

or otherwise.

• (4) A person in occupation of any property under a sub-lease liable to terminate under sub-paragraph (1) may, with the leave of the court, appear and be heard on any application for possession or any application under paragraph 2.

4

Where an order has been made by the county court under paragraph 2, that court ... shall have jurisdiction to hear and determine any proceedings brought by virtue of the order to recover possession of the property or to recover the compensation.

5

• (1) The amount payable to a tenant, by virtue of an order for possession, by way of compensation for loss of his flat shall be the amount which at the valuation date the new lease, if sold on the open market by a willing seller, might be expected to realise on the following assumptions—

• (a) on the assumption that Chapter I and this Chapter confer no right to acquire any interest in any premises containing the tenant’s flat or to acquire any new lease;

• (b) on the assumption that the vendor is selling—

• (i) subject to the rights of any person who will on the termination of the lease be entitled to retain possession as against the landlord, but otherwise with vacant possession, and

• (ii) subject to any restriction that would be required (in addition to any imposed by the terms of the lease) to limit the uses of the flat to those to which it has been put since the commencement of the lease and to preclude the erection of any new dwelling or any other building not ancillary to the flat as a dwelling; and

• (c) 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 flat will be held by the landlord on the termination of the lease.

• (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 (c) 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 valuation date the new lease might be expected to realise if sold as mentioned in that sub-paragraph.

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

• (4) In this paragraph “the valuation date” means the date when the amount of the compensation payable to the tenant is determined as mentioned in paragraph 2(1).

6

• (1) PartI of the Landlord and Tenant Act 1927 (compensation for improvements on termination of business tenancies) shall not apply on the termination of the new lease or any sub-lease in accordance with this Schedule; and a request for a new tenancy under section26 of the Landlord and Tenant Act 1954 in respect of the new lease or any sub-lease shall be of no effect if made after the application for possession, or, if already made, shall cease to have effect on the making of that application.

• (2) Where a sub-lease terminating with the new lease in accordance with paragraph 3 is one to which Part II of the Landlord and Tenant Act 1954 applies, the compensation payable to the tenant shall be divided between him and the sub-tenant in such proportions as may be just, regard being had to their respective interests in the flat in question and to any loss arising from the termination of those interests and not incurred by imprudence.

• (3) Where the amount of the compensation payable to the tenant is agreed between him and the landlord without the consent of a sub-tenant entitled under sub-paragraph (2) to a share in the compensation, and is shown by the sub-tenant to be less than might reasonably have been obtained by the tenant, the sub-tenant shall be entitled under sub-paragraph (2) to recover from the tenant such increased share as may be just.

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• (1) The landlord shall not be concerned with the application of the amount payable to the tenant by way of compensation under an order for possession, but (subject to any statutory requirements as to payment of capital money arising under a settlement or a trust of land and to any order under paragraph 2(4) for payment into court) the written receipt of the tenant shall be a complete discharge for the amount payable.

• (2) The landlord shall be entitled to deduct from the amount so payable to the tenant—