Commonhold and Leasehold Reform Act 2002

(4A) (1) A company is a RTE company in relation to premises if— (a) it is a private company limited by guarantee, and (b) its memorandum of association states that its object, or one of its objects, is the exercise of the right to collective enfranchisement with respect to the premises. (2) But a company is not a RTE company if it is a commonhold association (within the meaning of Part 1 of the Commonhold and Leasehold Reform Act 2002). (3) And a company is not a RTE company in relation to premises if another company which is a RTE company in relation to— (a) the premises, or (b) any premises containing or contained in the premises, has given a notice under section 13 with respect to the premises, or any premises containing or contained in the premises, and the notice continues in force in accordance with subsection (11) of that section. (4B) (1) Before the execution of a relevant conveyance to a company which is a RTE company in relation to any premises the following persons are entitled to be members of the company— (a) qualifying tenants of flats contained in the premises, and (b) if the company is also a RTM company which has acquired the right to manage the premises, landlords under leases of the whole or any part of the premises. (2) In this section— - “relevant conveyance” means a conveyance of the freehold of the premises or of any premises containing or contained in the premises; and - “RTM company” has the same meaning as in Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. (3) On the execution of a relevant conveyance to the RTE company, any member of the company who is not a participating member ceases to be a member. (4) In this Chapter “participating member”, in relation to a RTE company, means a person who is a member by virtue of subsection (1)(a) of this section and who— (a) has given a participation notice to the company before the date when the company gives a notice under section 13 or during the participation period, or (b) is a participating member by virtue of either of the following two subsections. (5) A member who is the assignee of a lease by virtue of which a participating member was a qualifying tenant of his flat is a participating member if he has given a participation notice to the company within the period beginning with the date of the assignment and ending 28 days later (or, if earlier, on the execution of a relevant conveyance to the company). (6) And if the personal representatives of a participating member are a member, they are a participating member if they have given a participation notice to the company at any time (before the execution of a relevant conveyance to the company). (7) In this section “participation notice”, in relation to a member of the company, means a notice stating that he wishes to be a participating member. (8) For the purposes of this section a participation notice given to the company during the period— (a) beginning with the date when the company gives a notice under section 13, and (b) ending immediately before a binding contract is entered into in pursuance of the notice under section 13, is of no effect unless a copy of the participation notice has been given during that period to the person who (in accordance with section 9) is the reversioner in respect of the premises. (9) For the purposes of this section “the participation period” is the period beginning with the date when the company gives a notice under section 13 and ending— (a) six months, or such other time as the Secretary of State may by order specify, after that date, or (b) immediately before a binding contract is entered into in pursuance of the notice under section 13, whichever is the earlier. (10) In this section references to assignment include an assent by personal representatives, and assignment by operation of law where the assignment is to a trustee in bankruptcy or to a mortgagee under section 89(2) of the Law of Property Act 1925 (c. 20) (foreclosure of leasehold mortgage); and references to an assignee shall be construed accordingly. (4C) (1) The Secretary of State shall by regulations make provision about the content and form of the memorandum of association and articles of association of RTE companies. (2) A RTE company may adopt provisions of the regulations for its memorandum or articles. (3) The regulations may include provision which is to have effect for a RTE company whether or not it is adopted by the company. (4) A provision of the memorandum or articles of a RTE company has no effect to the extent that it is inconsistent with the regulations. (5) The regulations have effect in relation to a memorandum or articles— (a) irrespective of the date of the memorandum or articles, but (b) subject to any transitional provisions of the regulations. (6) The following provisions of the Companies Act 1985 (c. 6) do not apply to a RTE company— (a) sections 2(7) and 3 (memorandum), and (b) section 8 (articles).

Invitation to participate

123

• (1) After section 12 of the 1993 Act insert—

(12A) (1) Before making a claim to exercise the right to collective enfranchisement with respect to any premises, a RTE company must give notice to each person who at the time when the notice is given— (a) is the qualifying tenant of a flat contained in the premises, but (b) neither is nor has agreed to become a participating member of the RTE company. (2) A notice given under this section (a “notice of invitation to participate”) must— (a) state that the RTE company intends to exercise the right to collective enfranchisement with respect to the premises, (b) state the names of the participating members of the RTE company, (c) explain the rights and obligations of the members of the RTE company with respect to the exercise of the right (including their rights and obligations in relation to meeting the price payable in respect of the freehold, and any other interests to be acquired in pursuance of this Chapter, and associated costs), (d) include an estimate of that price and those costs, and (e) invite the recipients of the notice to become participating members of the RTE company. (3) A notice of invitation to participate must either— (a) be accompanied by a copy of the memorandum of association and articles of association of the RTE company, or (b) include a statement about inspection and copying of the memorandum of association and articles of association of the RTE company. (4) A statement under subsection (3)(b) must— (a) specify a place (in England or Wales) at which the memorandum of association and articles of association may be inspected, (b) specify as the times at which they may be inspected periods of at least two hours on each of at least three days (including a Saturday or Sunday or both) within the seven days beginning with the day following that on which the notice is given, (c) specify a place (in England or Wales) at which, at any time within those seven days, a copy of the memorandum of association and articles of association may be ordered, and (d) specify a fee for the provision of an ordered copy, not exceeding the reasonable cost of providing it. (5) Where a notice given to a person includes a statement under subsection (3)(b), the notice is to be treated as not having been given to him if he is not allowed to undertake an inspection, or is not provided with a copy, in accordance with the statement. (6) A notice of invitation to participate shall not be invalidated by any inaccuracy in any of the particulars required by or by virtue of this section.

• (2) In section 13 of the 1993 Act, after subsection (2ZA) (inserted by section 121(3)) insert—

(2ZB) The initial notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before.

Consequential amendments

124

Schedule 8 (amendments consequential on sections 121 to 123) has effect.

Right of access

125

• (1) In subsection (1) of section 17 of the 1993 Act (access by reversioner or other relevant landlord for purposes of valuation), insert at the end “ or if it is reasonable in connection with any other matter arising out of the claim to exercise the right to collective enfranchisement ”.

• (2) For the sidenote of that section substitute “Rights of access.”

Purchase price

Valuation date

126

• (1) In Schedule 6 to the 1993 Act (purchase price payable), for “the valuation date” (in each place) substitute “ the relevant date ”.

• (2) In section 18(1) of the 1993 Act (duty to disclose existence of agreements affecting premises etc.), for “valuation date for the purposes of Schedule 6” substitute “ time when a binding contract is entered into in pursuance of the initial notice ”.

Freeholder’s share of marriage value

127

In paragraph 4(1) of Schedule 6 to the 1993 Act (freeholder’s share of marriage value), for the words after “freeholder’s share of the marriage value is” substitute “ 50 per cent. of that amount ”.

Disregard of marriage value in case of very long leases

128

• (1) Paragraph 4 of Schedule 6 to the 1993 Act is amended as follows.

• (2) In sub-paragraph (2) (meaning of marriage value), insert at the beginning “ Subject to sub-paragraph (2A), ”.

• (3) After that sub-paragraph insert—

(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.

Chapter 3 — New leases for tenants of flats

Introductory

Amendments of right to acquire new lease

129

This Chapter amends the right of tenants of flats to acquire new leases which is conferred by Chapter 2 of Part 1 of the 1993 Act.

Qualifying rules

Replacement of residence test

130

• (1) Section 39 of the 1993 Act (the right) is amended as follows.

• (2) In subsection (2)(a) (requirement that tenant is qualifying tenant of flat on the relevant date), for “is” substitute “ has for the last two years been ”.

• (3) Omit subsections (2)(b), (2A) and (2B) (requirement that tenant has occupied flat as only or principal home for three years).

Qualifying leases

131

In section 39(3) of the 1993 Act (which applies for the purposes of Chapter 2 of Part 1 of the 1993 Act the definition of qualifying tenant in Chapter 1 of that Part), omit paragraphs (c) and (d) (leases at a low rent and leases for a particularly long term).

Personal representatives

132

• (1) In section 39 of the 1993 Act, after subsection (3) insert—

(3A) On the death of a person who has for the two years before his death been a qualifying tenant of a flat, the right conferred by this Chapter is exercisable, subject to and in accordance with this Chapter, by his personal representatives; and, accordingly, in such a case references in this Chapter to the tenant shall, in so far as the context permits, be to the personal representatives.

• (2) In section 42 of the 1993 Act (notice by qualifying tenant of claim to exercise right), before subsection (5) insert—

(4A) A notice under this section may not be given by the personal representatives of a tenant later than two years after the grant of probate or letters of administration.

Crown leases

133

In section 94 of the 1993 Act (Crown land), for subsection (2) substitute—

(2) Chapter 2 applies as against a landlord under a lease from the Crown if— (a) a sub-tenant is seeking a new lease under that Chapter and the landlord, or a superior landlord under a lease from the Crown, is entitled to grant such a new lease without the concurrence of the appropriate authority, or (b) the appropriate authority notifies the landlord that, as regards any Crown interest affected, it will grant or concur in granting such a new lease.

Purchase price

Valuation date

134

In Schedule 13 to the 1993 Act (premium and other amounts payable by tenant on grant of new lease), for “the valuation date” (in each place) substitute “ the relevant date ”.

Landlord’s share of marriage value

135

In paragraph 4(1) of Schedule 13 to the 1993 Act (landlord’s share of marriage value), for the words after “landlord’s share of the marriage value is” substitute “ 50 per cent. of that amount ”.

Disregard of marriage value in case of very long leases

136

• (1) Paragraph 4 of Schedule 13 to the 1993 Act (meaning of marriage value) is amended as follows.

• (2) In sub-paragraph (2), insert at the beginning “ Subject to sub-paragraph (2A), ”.

• (3) After that sub-paragraph insert—

(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.

Chapter 4 — Leasehold houses

Introductory

Amendments of 1967 Act

137

This Chapter amends the Leasehold Reform Act 1967 (c. 88) (referred to in this Part as “the 1967 Act”).

Qualifying rules

Abolition of residence test

138

• (1) In subsection (1) of section 1 of the 1967 Act (tenants of houses entitled to enfranchisement or extension), omit—

• (a) “, occupying the house as his residence,” and

• (b) “, and occupying it as his residence,”.

• (2) After that subsection insert—

(1ZA) Where a house is for the time being let under two or more tenancies, a tenant under any of those tenancies which is superior to that held by any tenant on whom this Part of this Act confers a right does not have any right under this Part of this Act. (1ZB) Where a flat forming part of a house is let to a person who is a qualifying tenant of the flat for the purposes of Chapter 1 or 2 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28), a tenant of the house does not have any right under this Part of this Act unless, at the relevant time, he has been occupying the house, or any part of it, as his only or main residence (whether or not he has been using it for other purposes)— (a) for the last two years; or (b) for periods amounting to two years in the last ten years.

• (3) In subsection (3) of that section (exception where house is let to and occupied by tenant with other land or premises to which it is ancillary), for “occupation of it as his residence (but shall apply as if he were not so occupying it)” substitute “ being a tenant of it ”.

• (4) In section 2(4) of the 1967 Act (premises previously let with house), for “occupied and used as mentioned in subsection (3) above” substitute “ subject to a tenancy vested in him ”.

• (5) In section 6(1) of the 1967 Act (rights in case of trusts), for the words from the beginning to “right of the tenancy” substitute “ A tenant of a house shall for purposes of this Part of this Act be treated as having been a tenant of it at any earlier time ”.

• (6) In section 7(3) and (4) of the 1967 Act (rights of members of family succeeding to tenancy on death), for “with him” substitute “ in the house ”.

Reduction of qualifying period as tenant etc

139

• (1) In subsection (1)(b) of section 1 of the 1967 Act (requirement that person claiming entitlement to enfranchisement or extension has been tenant of house for last three years or for periods amounting to three years in last ten), for “three years or for periods amounting to three years in the last ten years” substitute “ two years ”.

• (2) After subsection (1A) of that section insert—

(1B) This Part of this Act shall not have effect to confer any right on the tenant of a house under a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies unless, at the relevant time, the tenant has been occupying the house, or any part of it, as his only or main residence (whether or not he has been using it for other purposes)— (a) for the last two years; or (b) for periods amounting to two years in the last ten years.

• (3) In—

• (a) section 9(3)(b) of the 1967 Act (no new notice for three years after withdrawal), and

• (b) section 23(2)(b) of the 1967 Act (agreements excluding or restricting for period not exceeding three years right to give further notice),

for “three years” substitute “ twelve months ”.

Exclusion of certain business tenancies

140

After subsection (1ZB) of section 1 of the 1967 Act (inserted by section 138(2)) insert—

(1ZC) The references in subsection (1)(a) and (b) to a long tenancy do not include a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (business tenancies) applies unless— (a) it is granted for a term of years certain exceeding thirty-five years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture or otherwise, (b) it is for a term fixed by law under a grant with a covenant or obligation for perpetual renewal, unless it is a tenancy by sub-demise from one which is not a tenancy which falls within any of the paragraphs in this subsection, (c) it is a tenancy taking effect under section 149(6) of the Law of Property Act 1925 (c. 20) (leases terminable after a death or marriage), or (d) it is a tenancy which— (i) is or has been granted for a term of years certain not exceeding thirty-five years, but with a covenant or obligation for renewal without payment of a premium (but not for perpetual renewal), and (ii) is or has been once or more renewed so as to bring to more than thirty-five years the total of the terms granted (including any interval between the end of a tenancy and the grant of a renewal). (1ZD) Where this Part of this Act applies as if there were a single tenancy of property comprised in two or more separate tenancies, then, if each of the separate tenancies falls within any of the paragraphs of subsection (1ZC) above, that subsection shall apply as if the single tenancy did so.

Tenancies not at low rent

141

• (1) Section 1AA of the 1967 Act (additional right to enfranchisement where tenancy of house not at low rent) is amended as follows.

• (2) Omit—

• (a) in subsection (1)(b), “falls within subsection (2) below and”, and

• (b) subsection (2) (tenancies for more than 35 years etc.).

• (3) In subsection (3) (exceptions)—

• (a) in paragraph (b), for “the coming into force of section 106 of the Housing Act 1996 (c. 52)” substitute “ 1st April 1997 (the date on which section 106 of the Housing Act 1996 came into force) ”, and

• (b) for paragraph (c) substitute—

(c) the tenancy either— (i) was granted on or before that date, or (ii) was granted after that date, but on or before the coming into force of section 141 of the Commonhold and Leasehold Reform Act 2002, for a term of years certain not exceeding thirty-five years.

Personal representatives

142

• (1) After section 6 of the 1967 Act insert—

(6A) (1) Where a tenant of a house dies and, immediately before his death, he had under this Part of this Act— (a) the right to acquire the freehold, or (b) the right to an extended lease, the right is exercisable by his personal representatives while the tenancy is vested in them (but subject to subsection (2) below); and, accordingly, in such a case references in this Part of this Act to the tenant shall, in so far as the context permits, be to the personal representatives. (2) The personal representatives of a tenant may not give notice of their desire to have the freehold or an extended lease by virtue of subsection (1) above later than two years after the grant of probate or letters of administration.

• (2) In paragraph 6(2) of Schedule 3 (particulars to be contained in notice), after “6” (in both places) insert “ , 6A ”.

Abolition of limits on rights after lease extension

143

• (1) In section 16 of the 1967 Act (limits on rights after extension of lease), omit—

• (a) subsection (1)(a) (no right for tenant under extended tenancy to acquire freehold after end of original lease), and

• (b) in subsection (4) (no right to freehold or extended lease in case of tenancy created by sub-demise under extended tenancy), the words “the freehold or”.

• (2) For subsection (1B) of that section (extended tenancy not an assured tenancy or assured agricultural occupancy or a tenancy to which Schedule 10 to the Local Government and Housing Act 1989 (c. 42) applies) substitute—

(1B) Schedule 10 to the Local Government and Housing Act 1989 applies to every tenancy extended under section 14 above (whether or not it is for the purposes of that Schedule a long tenancy at a low rent as respects which the qualifying condition is fulfilled).

• (3) Paragraph (a) of subsection (1) and subsection (2) apply whether the tenancy in question is extended before or after the coming into force of that paragraph or subsection; and paragraph (b) of subsection (1) applies whether the lease by sub-demise in question is created before or after the coming into force of that paragraph.

• (4) In section 9 of the 1967 Act (purchase price), after subsection (1A) insert—

(1AA) Where, in a case in which the price payable for a house and premises is to be determined in accordance with subsection (1A) above, the tenancy has been extended under this Part of this Act— (a) if the relevant time is on or before the original term date, the assumptions set out in that subsection apply as if the tenancy is to terminate on the original term date; and (b) if the relevant time is after the original term date, the assumptions set out in paragraphs (a), (c) and (e) of that subsection apply as if the tenancy had terminated on the original term date and the assumption set out in paragraph (b) of that subsection applies as if the words “at the end of the tenancy” were omitted.

Exclusion of shared ownership leases

144

• (1) Schedule 4A to the 1967 Act (exclusion of certain shared ownership leases) is amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In paragraph 3(2)(d) (conditions to be satisfied for exclusion of lease granted by a housing association), omit “assign,”.

Purchase price

Tenant’s share of marriage value

145

• (1) Section 9 of the 1967 Act (purchase price etc.) is amended as follows.

• (2) In subsection (1C) (purchase price payable where the right to acquire freehold arises by virtue of section 1A, 1AA or 1B), omit paragraph (a) (tenant’s share of marriage value not to exceed one-half).

• (3) After that subsection insert—

(1D) Where, in determining the price payable for a house and premises in accordance with this section, there falls to be taken into account any marriage value arising by virtue of the coalescence of the freehold and leasehold interests, the share of the marriage value to which the tenant is to be regarded as being entitled shall be one-half of it.

Disregard of marriage value in case of very long leases

146

In section 9 of the 1967 Act (purchase price etc.), after subsection (1D) (inserted by section 145) insert—

(1E) But where at the relevant time the unexpired term of the tenant’s tenancy exceeds eighty years, the marriage value shall be taken to be nil.

Purchase price for enfranchisement during lease extension

147

• (1) In section 9 of the 1967 Act (purchase price on enfranchisement), in subsection (1C) (cases where price is to be determined in accordance with subsection (1A)), after “1B above” insert “ , or where the tenancy of the house and premises has been extended under section 14 below and the notice under section 8(1) above was given (whether by the tenant or a sub-tenant) after the original term date of the tenancy, ”.

• (2) In section 9A(1) of the 1967 Act (compensation payable in certain cases), after “1B above” insert “ or where the tenancy of the house and premises has been extended under section 14 below and the notice under section 8(1) above was given (whether by the tenant or a sub-tenant) after the original term date of the tenancy ”.

Absent landlords

Applications to be to county court

148

• (1) Section 27 of the 1967 Act (enfranchisement where landlord cannot be found) is amended as follows.

• (2) In subsection (1)—

• (a) for “the High Court” (in both places), and

• (b) for “the Court”,

substitute “ the court ”.

• (3) In subsection (2)—

• (a) for “the High Court” (in each place), and

• (b) for “the Court” (in both places),

substitute “ the court ”.

• (4) In subsection (3)—

• (a) for “the Supreme Court”, and

• (b) for “High Court” (in both places),

substitute “ court ”.

• (5) In subsection (4), for “High Court” substitute “ court ”.

• (6) In subsection (6), for “the Supreme Court” substitute “ court ”.

• (7) In subsection (7)—

• (a) for “the High Court” (in both places), and

• (b) for “the Court”,

substitute “ the court ”.

Valuation by leasehold valuation tribunal

149

• (1) In section 27 of the 1967 Act (enfranchisement where landlord cannot be found), for subsection (5) substitute—

(5) The appropriate sum which, in accordance with subsection (3) above, is to be paid into court is the aggregate of— (a) such amount as may be determined by (or on appeal from) a leasehold valuation tribunal to be the price payable in accordance with section 9 above; and (b) the amount or estimated amount (as so determined) of any pecuniary rent payable for the house and premises up to the date of the conveyance which remains unpaid.

• (2) In section 21(1) of the 1967 Act (jurisdiction of leasehold valuation tribunals), after paragraph (c) insert—

(cza) the amount of the appropriate sum to be paid into court under section 27(5);

.

Chapter 5 — Other provisions about leases

Service charges, administration charges etc.

Extending meaning of service charge and management etc

150

Schedule 9 (which amends certain provisions about management of, and service charges in respect of, leasehold properties and confers power further to amend certain of those provisions) has effect.

Consultation about service charges

151

For section 20 of the 1985 Act (limitation of service charges: estimates and consultation) substitute—

(20) (1) Where this section applies to any qualifying works or qualifying long term agreement, the relevant contributions of tenants are limited in accordance with subsection (6) or (7) (or both) unless the consultation requirements have been either— (a) complied with in relation to the works or agreement, or (b) dispensed with in relation to the works or agreement by (or on appeal from) a leasehold valuation tribunal. (2) In this section “relevant contribution”, in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement. (3) This section applies to qualifying works if relevant costs incurred on carrying out the works exceed an appropriate amount. (4) The Secretary of State may by regulations provide that this section applies to a qualifying long term agreement— (a) if relevant costs incurred under the agreement exceed an appropriate amount, or (b) if relevant costs incurred under the agreement during a period prescribed by the regulations exceed an appropriate amount. (5) An appropriate amount is an amount set by regulations made by the Secretary of State; and the regulations may make provision for either or both of the following to be an appropriate amount— (a) an amount prescribed by, or determined in accordance with, the regulations, and (b) an amount which results in the relevant contribution of any one or more tenants being an amount prescribed by, or determined in accordance with, the regulations. (6) Where an appropriate amount is set by virtue of paragraph (a) of subsection (5), the amount of the relevant costs incurred on carrying out the works or under the agreement which may be taken into account in determining the relevant contributions of tenants is limited to the appropriate amount. (7) Where an appropriate amount is set by virtue of paragraph (b) of that subsection, the amount of the relevant contribution of the tenant, or each of the tenants, whose relevant contribution would otherwise exceed the amount prescribed by, or determined in accordance with, the regulations is limited to the amount so prescribed or determined. (20ZA) (1) Where an application is made to a leasehold valuation tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long term agreement, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements. (2) In section 20 and this section— - “qualifying works” means works on a building or any other premises, and - “qualifying long term agreement” means (subject to subsection (3)) an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months. (3) The Secretary of State may by regulations provide that an agreement is not a qualifying long term agreement— (a) if it is an agreement of a description prescribed by the regulations, or (b) in any circumstances so prescribed. (4) In section 20 and this section “the consultation requirements” means requirements prescribed by regulations made by the Secretary of State. (5) Regulations under subsection (4) may in particular include provision requiring the landlord— (a) to provide details of proposed works or agreements to tenants or the recognised tenants’ association representing them, (b) to obtain estimates for proposed works or agreements, (c) to invite tenants or the recognised tenants’ association to propose the names of persons from whom the landlord should try to obtain other estimates, (d) to have regard to observations made by tenants or the recognised tenants’ association in relation to proposed works or agreements and estimates, and (e) to give reasons in prescribed circumstances for carrying out works or entering into agreements. (6) Regulations under section 20 or this section— (a) may make provision generally or only in relation to specific cases, and (b) may make different provision for different purposes. (7) Regulations under section 20 or this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Statements of account

152

For section 21 of the 1985 Act (request for summary of relevant costs) substitute—

(21) (1) The landlord must supply to each tenant by whom service charges are payable, in relation to each accounting period, a written statement of account dealing with— (a) service charges of the tenant and the tenants of dwellings associated with his dwelling, (b) relevant costs relating to those service charges, (c) the aggregate amount standing to the credit of the tenant and the tenants of those dwellings— (i) at the beginning of the accounting period, and (ii) at the end of the accounting period, and (d) related matters. (2) The statement of account in relation to an accounting period must be supplied to each such tenant not later than six months after the end of the accounting period. (3) Where the landlord supplies a statement of account to a tenant he must also supply to him— (a) a certificate of a qualified accountant that, in the accountant’s opinion, the statement of account deals fairly with the matters with which it is required to deal and is sufficiently supported by accounts, receipts and other documents which have been produced to him, and (b) a summary of the rights and obligations of tenants of dwellings in relation to service charges. (4) The Secretary of State may make regulations prescribing requirements as to the form and content of— (a) statements of account, (b) accountants’ certificates, and (c) summaries of rights and obligations, required to be supplied under this section. (5) The Secretary of State may make regulations prescribing exceptions from the requirement to supply an accountant’s certificate. (6) If the landlord has been notified by a tenant of an address in England and Wales at which he wishes to have supplied to him documents required to be so supplied under this section, the landlord must supply them to him at that address. (7) And the landlord is to be taken to have been so notified if notification has been given to— (a) an agent of the landlord named as such in the rent book or similar document, or (b) the person who receives the rent on behalf of the landlord; and where notification is given to such an agent or person he must forward it as soon as may be to the landlord. (8) For the purposes of this section a dwelling is associated with another dwelling if the obligations of the tenants of the dwellings under the terms of their leases as regards contributing to relevant costs relate to the same costs. (9) In this section “accounting period” means such period— (a) beginning with the relevant date, and (b) ending with such date, not later than twelve months after the relevant date, as the landlord determines. (10) In the case of the first accounting period in relation to any dwellings, the relevant date is the later of— (a) the date on which service charges are first payable under a lease of any of them, and (b) the date on which section 152 of the Commonhold and Leasehold Reform Act 2002 comes into force, and, in the case of subsequent accounting periods, it is the date immediately following the end of the previous accounting period. (11) Regulations under subsection (4) may make different provision for different purposes. (12) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. (21A) (1) A tenant may withhold payment of a service charge if— (a) the landlord has not supplied a document to him by the time by which he is required to supply it under section 21, or (b) the form or content of a document which the landlord has supplied to him under that section (at any time) does not conform exactly or substantially with the requirements prescribed by regulations under subsection (4) of that section. (2) The maximum amount which the tenant may withhold is an amount equal to the aggregate of— (a) the service charges paid by him in the accounting period to which the document concerned would or does relate, and (b) so much of the aggregate amount required to be dealt with in the statement of account for that accounting period by section 21(1)(c)(i) as stood to his credit. (3) An amount may not be withheld under this section— (a) in a case within paragraph (a) of subsection (1), after the document concerned has been supplied to the tenant by the landlord, or (b) in a case within paragraph (b) of that subsection, after a document conforming exactly or substantially with the requirements prescribed by regulations under section 21(4) has been supplied to the tenant by the landlord by way of replacement of the one previously supplied. (4) If, on an application made by the landlord to a leasehold valuation tribunal, the tribunal determines that the landlord has a reasonable excuse for a failure giving rise to the right of a tenant to withhold an amount under this section, the tenant may not withhold the amount after the determination is made. (5) Where a tenant withholds a service charge under this section, any provisions of the tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.

Notice to accompany demands for service charges

153

After section 21A of the 1985 Act (inserted by section 152) insert—

(21B) (1) A demand for the payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges. (2) The Secretary of State may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations. (3) A tenant may withhold payment of a service charge which has been demanded from him if subsection (1) is not complied with in relation to the demand. (4) Where a tenant withholds a service charge under this section, any provisions of the lease relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it. (5) Regulations under subsection (2) may make different provision for different purposes. (6) Regulations under subsection (2) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Inspection etc. of documents

154

For section 22 of the 1985 Act (request to inspect documents supporting summary of relevant costs) substitute—

(22) (1) A tenant may by notice in writing require the landlord— (a) to afford him reasonable facilities for inspecting accounts, receipts or other documents relevant to the matters which must be dealt with in a statement of account required to be supplied to him under section 21 and for taking copies of or extracts from them, or (b) to take copies of or extracts from any such accounts, receipts or other documents and either send them to him or afford him reasonable facilities for collecting them (as he specifies). (2) If the tenant is represented by a recognised tenants’ association and he consents, the notice may be served by the secretary of the association instead of by the tenant (and in that case any requirement imposed by it is to afford reasonable facilities, or to send copies or extracts, to the secretary). (3) A notice under this section may not be served after the end of the period of six months beginning with the date by which the tenant is required to be supplied with the statement of account under section 21. (4) But if— (a) the statement of account is not supplied to the tenant on or before that date, or (b) the statement of account so supplied does not conform exactly or substantially with the requirements prescribed by regulations under section 21(4), the six month period mentioned in subsection (3) does not begin until any later date on which the statement of account (conforming exactly or substantially with those requirements) is supplied to him. (5) A notice under this section is duly served on the landlord if it is served on— (a) an agent of the landlord named as such in the rent book or similar document, or (b) the person who receives the rent on behalf of the landlord; and a person on whom such a notice is so served must forward it as soon as may be to the landlord. (6) The landlord must comply with a requirement imposed by a notice under this section within the period of twenty-one days beginning with the day on which he receives the notice. (7) To the extent that a notice under this section requires the landlord to afford facilities for inspecting documents— (a) he must do so free of charge, but (b) he may treat as part of his costs of management any costs incurred by him in doing so. (8) The landlord may make a reasonable charge for doing anything else in compliance with a requirement imposed by a notice under this section.

Liability to pay service charges: jurisdiction

155

• (1) After section 27 of the 1985 Act insert—

(27A) (1) An application may be made to a leasehold valuation tribunal for a determination whether a service charge is payable and, if it is, as to— (a) the person by whom it is payable, (b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable. (2) Subsection (1) applies whether or not any payment has been made. (3) An application may also be made to a leasehold valuation tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to— (a) the person by whom it would be payable, (b) the person to whom it would be payable, (c) the amount which would be payable, (d) the date at or by which it would be payable, and (e) the manner in which it would be payable. (4) No application under subsection (1) or (3) may be made in respect of a matter which— (a) has been agreed or admitted by the tenant, (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party, (c) has been the subject of determination by a court, or (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement. (5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment. (6) An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination— (a) in a particular manner, or (b) on particular evidence, of any question which may be the subject of an application under subsection (1) or (3). (7) The jurisdiction conferred on a leasehold valuation tribunal in respect of any matter by virtue of this section is in addition to any jurisdiction of a court in respect of the matter.

• (2) In section 38 of the 1985 Act (definitions), at the end of the definitions of “arbitration agreement”, “arbitration agreement” and “arbitral tribunal”, insert “ and post-dispute arbitration agreement”, in relation to any matter, means an arbitration agreement made after a dispute about the matter has arisen; ”.

• (3) In section 39 of the 1985 Act (index of defined expressions), in the first column, in the entry “arbitration agreement, arbitration agreement and arbitral tribunal”, for “and arbitral tribunal” substitute “ , arbitral tribunal and post-dispute arbitration agreement ”.

Service charge contributions to be held in separate account

156

• (1) After section 42 of the 1987 Act insert—

(42A) (1) The payee must hold any sums standing to the credit of any trust fund in a designated account at a relevant financial institution. (2) An account is a designated account in relation to sums standing to the credit of a trust fund if— (a) the relevant financial institution has been notified in writing that sums standing to the credit of the trust fund are to be (or are) held in it, and (b) no other funds are held in the account, and the account is an account of a description specified in regulations made by the Secretary of State. (3) Any of the contributing tenants, or the sole contributing tenant, may by notice in writing require the payee— (a) to afford him reasonable facilities for inspecting documents evidencing that subsection (1) is complied with and for taking copies of or extracts from them, or (b) to take copies of or extracts from any such documents and either send them to him or afford him reasonable facilities for collecting them (as he specifies). (4) If the tenant is represented by a recognised tenants’ association and he consents, the notice may be served by the secretary of the association instead of by the tenant (and in that case any requirement imposed by it is to afford reasonable facilities, or to send copies or extracts, to the secretary). (5) A notice under this section is duly served on the payee if it is served on— (a) an agent of the payee named as such in the rent book or similar document, or (b) the person who receives the rent on behalf of the payee; and a person on whom such a notice is so served must forward it as soon as may be to the payee. (6) The payee must comply with a requirement imposed by a notice under this section within the period of twenty-one days beginning with the day on which he receives the notice. (7) To the extent that a notice under this section requires the payee to afford facilities for inspecting documents— (a) he must do so free of charge, but (b) he may treat as part of his costs of management any costs incurred by him in doing so. (8) The payee may make a reasonable charge for doing anything else in compliance with a requirement imposed by a notice under this section. (9) Any of the contributing tenants, or the sole contributing tenant, may withhold payment of a service charge if he has reasonable grounds for believing that the payee has failed to comply with the duty imposed on him by subsection (1); and any provisions of his tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it. (10) Nothing in this section applies to the payee if the circumstances are such as are specified in regulations made by the Secretary of State. (11) In this section— - “recognised tenants’ association” has the same meaning as in the 1985 Act, and - “relevant financial institution” has the meaning given by regulations made by the Secretary of State; and expressions used both in section 42 and this section have the same meaning as in that section. (42B) (1) If a person fails, without reasonable excuse, to comply with a duty imposed on him by or by virtue of section 42A he commits an offence. (2) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 4 on the standard scale. (3) Where an offence under this section committed by a body corporate is proved— (a) to have been committed with the consent or connivance of a director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in such a capacity, or (b) to be due to any neglect on the part of such an officer or person, he, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly. (4) Where the affairs of a body corporate are managed by its members, subsection (3) applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate. (5) Proceedings for an offence under this section may be brought by a local housing authority (within the meaning of section 1 of the Housing Act 1985 (c. 68)).

• (2) In section 53(2)(b) of the 1987 Act (regulations subject to negative procedure), insert at the end “or 42A”.

Service charges: minor and consequential amendments

157

Schedule 10 (minor and consequential amendments about service charges) has effect.

Administration charges

158

Schedule 11 (which makes provision about administration charges payable by tenants of dwellings) has effect.

Charges under estate management schemes

159

• (1) This section applies where a scheme under—

• (a) section 19 of the 1967 Act (estate management schemes in connection with enfranchisement under that Act),

• (b) Chapter 4 of Part 1 of the 1993 Act (estate management schemes in connection with enfranchisement under the 1967 Act or Chapter 1 of Part 1 of the 1993 Act), or

• (c) section 94(6) of the 1993 Act (corresponding schemes in relation to areas occupied under leases from Crown),

includes provision imposing on persons occupying or interested in property an obligation to make payments (“estate charges”).

• (2) A variable estate charge is payable only to the extent that the amount of the charge is reasonable; and “variable estate charge” means an estate charge which is neither—

• (a) specified in the scheme, nor

• (b) calculated in accordance with a formula specified in the scheme.

• (3) Any person on whom an obligation to pay an estate charge is imposed by the scheme may apply to the appropriate tribunal for an order varying the scheme in such manner as is specified in the application on the grounds that—

• (a) any estate charge specified in the scheme is unreasonable, or

• (b) any formula specified in the scheme in accordance with which any estate charge is calculated is unreasonable.

• (4) If the grounds on which the application was made are established to the satisfaction of the tribunal, it may make an order varying the scheme in such manner as is specified in the order.

• (5) The variation specified in the order may be—

• (a) the variation specified in the application, or

• (b) such other variation as the tribunal thinks fit.

• (6) An application may be made to the appropriate tribunal for a determination whether an estate charge is payable by a person and, if it is, as to—

• (a) the person by whom it is payable,

• (b) the person to whom it is payable,

• (c) the amount which is payable,

• (d) the date at or by which it is payable, and

• (e) the manner in which it is payable.

• (7) Subsection (6) applies whether or not any payment has been made.

• (8) The jurisdiction conferred on the appropriate tribunal in respect of any matter by virtue of subsection (6) is in addition to any jurisdiction of a court in respect of the matter.

• (9) No application under subsection (6) may be made in respect of a matter which—

• (a) has been agreed or admitted by the person concerned,

• (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which that person is a party,

• (c) has been the subject of determination by a court, or

• (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.

• (10) But the person is not to be taken to have agreed or admitted any matter by reason only of having made any payment.

• (11) An agreement (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination—

• (a) in a particular manner, or

• (b) on particular evidence,

of any question which may be the subject matter of an application under subsection (6).

• (12) In this section—

• “post-dispute arbitration agreement”, in relation to any matter, means an arbitration agreement made after a dispute about the matter has arisen, and

• “arbitration agreement” and “arbitral tribunal” have the same meanings as in Part 1 of the Arbitration Act 1996 (c. 23).

• (13) For the purposes of this section, “appropriate tribunal” means—

• (a) in relation to premises in England, the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal; and

• (b) in relation to premises in Wales, a leasehold valuation tribunal.

Managers appointed by ... tribunal

Third parties with management responsibilities

160

• (1) The 1987 Act has effect subject to the following amendments.

• (2) In section 22 (notice by tenant before application for appointment of manager is made)—

• (a) in subsection (1), for “on the landlord by the tenant” substitute

by the tenant on— (i) the landlord, and (ii) any person (other than the landlord) by whom obligations relating to the management of the premises or any part of them are owed to the tenant under his tenancy

,

• (b) in subsection (2)(a), for “the landlord” substitute “ any person on whom the notice is served ”,

• (c) in subsection (2)(b), for “landlord complies with the requirement specified in pursuance of that paragraph” substitute “ requirement specified in pursuance of that paragraph is complied with ”,

• (d) in subsection (2)(d), for “the landlord, require the landlord” substitute “ any person on whom the notice is served, require him ”, and

• (e) in subsection (3)—

• (i) after “this section” insert “ on a person ”, and

• (ii) for “landlord” substitute “ person ”.

• (3) In section 23(1) (application to tribunal for appointment of manager), for “landlord having taken the steps that he was required to take in pursuance of that provision” substitute “ person required to take steps in pursuance of that paragraph having taken them ”.

• (4) In section 24 (appointment of manager by tribunal)—

• (a) in subsection (2), for “the landlord” (in both places) substitute “ any relevant person ”,

• (b) after that subsection insert—

(2ZA) In this section “relevant person” means a person— (a) on whom a notice has been served under section 22, or (b) in the case of whom the requirement to serve a notice under that section has been dispensed with by an order under subsection (3) of that section.

,

• (c) in subsection (5), for “the landlord” substitute “ any relevant person ”,

• (d) in subsection (9A), for “a landlord’s application” substitute “ the application of any relevant person ”, and

• (e) in subsection (11), for “section” substitute “ Part ”.

• (5) In section 29(3), insert at the end“which was made by reason of an act or omission on the part of the landlord.”

Restriction of resident landlord exception

161

In section 21 of the 1987 Act (tenant’s right to apply to tribunal for appointment of manager), after subsection (3) insert—

(3A) But this Part is not prevented from applying to any premises because the interest of the landlord in the premises is held by a resident landlord if at least one-half of the flats contained in the premises are held on long leases which are not tenancies to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) applies.

Variation of leases

Grounds for application by party to lease

162

• (1) Section 35 of the 1987 Act (application by party to lease for variation of lease) is amended as follows.

• (2) In subsection (2) (grounds for application), for paragraph (b) substitute—

(b) the insurance of the building containing the flat or of any such land or building as is mentioned in paragraph (a)(iii);

.

• (3) After paragraph (f) of that subsection insert—

(g) such other matters as may be prescribed by regulations made by the Secretary of State.

• (4) After subsection (3) insert—

(3A) For the purposes of subsection (2)(e) the factors for determining, in relation to a service charge payable under a lease, whether the lease makes satisfactory provision include whether it makes provision for an amount to be payable (by way of interest or otherwise) in respect of a failure to pay the service charge by the due date.

• (5) In section 53(2)(b) of the 1987 Act (regulations subject to negative Parliamentary procedure), after “section 20(4)” insert “ or 35(2)(g) ”.

Transfer of jurisdiction of court to tribunal

163

• (1) Part 4 of the 1987 Act (variation of leases) is amended as follows.

• (2) In section 35 (application by party to lease for variation of lease)—

• (a) in subsection (1), for “the court” substitute “ a leasehold valuation tribunal ”, and

• (b) in subsection (5), for “Rules of court” substitute “ Procedure regulations under Schedule 12 to the Commonhold and Leasehold Reform Act 2002 ”.

• (3) In section 36(1) (application by respondent for variation of other leases), for “court” substitute “ tribunal ”.

• (4) In section 37(1) (application by majority of parties for variation of leases), for “the court” substitute “ a leasehold valuation tribunal ”.

• (5) In section 38 (orders varying leases)—

• (a) in subsections (1) to (5), for “court” (in each place) substitute “ tribunal ”,

• (b) in subsection (6)—

• (i) for “The court” substitute “ A tribunal ”, and

• (ii) for “the court” substitute “ the tribunal ”,

• (c) in subsections (7) to (9), for “The court” substitute “ A tribunal ”, and

• (d) in subsection (10)—

• (i) for “the court”, in the first place, substitute “ a tribunal ”, and

• (ii) for “the court”, in the other two places, substitute “ the tribunal ”.

• (6) In section 39 (applications by third parties for orders varying leases)—

• (a) in subsection (3)(b), for “the court” substitute “ a leasehold valuation tribunal ”,

• (b) in subsection (4), for “The court” substitute “ A tribunal ”, and

• (c) in subsection (5)(b), for “court” substitute “ tribunal ”.

• (7) In section 40(1) (variation of insurance provisions of dwelling other than flat), for “the court” substitute “ a leasehold valuation tribunal ”.

• (8) In consequence of the preceding provisions, in section 52(2)(a) of the 1987 Act (jurisdiction of county courts), for “, 3 and 4” substitute “ and 3 ”.

Insurance

Insurance otherwise than with landlord’s insurer

164

• (1) This section applies where a long lease of a house requires the tenant to insure the house with an insurer nominated or approved by the landlord (“the landlord’s insurer”).

• (2) The tenant is not required to effect the insurance with the landlord’s insurer if—

• (a) the house is insured under a policy of insurance issued by an authorised insurer,

• (b) the policy covers the interests of both the landlord and the tenant,

• (c) the policy covers all the risks which the lease requires be covered by insurance provided by the landlord’s insurer,

• (d) the amount of the cover is not less than that which the lease requires to be provided by such insurance, and

• (e) the tenant satisfies subsection (3).

• (3) To satisfy this subsection the tenant—

• (a) must have given a notice of cover to the landlord before the end of the period of fourteen days beginning with the relevant date, and

• (b) if (after that date) he has been requested to do so by a new landlord, must have given a notice of cover to him within the period of fourteen days beginning with the day on which the request was given.

• (4) For the purposes of subsection (3)—

• (a) if the policy has not been renewed the relevant date is the day on which it took effect and if it has been renewed it is the day from which it was last renewed, and

• (b) a person is a new landlord on any day if he acquired the interest of the previous landlord under the lease on a disposal made by him during the period of one month ending with that day.

• (5) A notice of cover is a notice specifying—

• (a) the name of the insurer,

• (b) the risks covered by the policy,

• (c) the amount and period of the cover, and

• (d) such further information as may be prescribed.

• (6) A notice of cover—

• (a) must be in the prescribed form, and

• (b) may be sent by post.

• (7) If a notice of cover is sent by post, it may be addressed to the landlord at the address specified in subsection (8).

• (8) That address is—

• (a) the address last furnished to the tenant as the landlord’s address for service in accordance with section 48 of the 1987 Act (notification of address for service of notices on landlord), or

• (b) if no such address has been so furnished, the address last furnished to the tenant as the landlord’s address in accordance with section 47 of the 1987 Act (landlord’s name and address to be contained in demands for rent).

• (9) But the tenant may not give a notice of cover to the landlord at the address specified in subsection (8) if he has been notified by the landlord of a different address in England and Wales at which he wishes to be given any such notice.

• (10) In this section—

• “authorised insurer”, in relation to a policy of insurance, means a person who may carry on in the United Kingdom the business of effecting or carrying out contracts of insurance of the sort provided under the policy without contravening the prohibition imposed by section 19 of the Financial Services and Markets Act 2000 (c. 8),

• “house” has the same meaning as for the purposes of Part 1 of the 1967 Act,

• “landlord” and “tenant” have the same meanings as in Chapter 1 of this Part,

• “long lease” has the meaning given by sections 76 and 77 of this Act, and

• “prescribed” means prescribed by regulations made by the appropriate national authority.

Extension of right to challenge landlord’s choice of insurer

165

• (1) Paragraph 8 of the Schedule to the 1985 Act (right to challenge landlord’s nomination of insurer) is amended as follows.

• (2) In sub-paragraphs (1) and (2), after “nominated” insert “ or approved ”.

• (3) In sub-paragraph (4), after “nominate” (in both places) insert “ or approve ”.

Ground rent

Requirement to notify long leaseholders that rent is due

166

• (1) A tenant under a long lease of a dwelling is not liable to make a payment of rent under the lease unless the landlord has given him a notice relating to the payment; and the date on which he is liable to make the payment is that specified in the notice.

• (2) The notice must specify—

• (a) the amount of the payment,

• (b) the date on which the tenant is liable to make it, and

• (c) if different from that date, the date on which he would have been liable to make it in accordance with the lease,

and shall contain any such further information as may be prescribed.

• (3) The date on which the tenant is liable to make the payment must not be—

• (a) either less than 30 days or more than 60 days after the day on which the notice is given, or

• (b) before that on which he would have been liable to make it in accordance with the lease.

• (4) If the date on which the tenant is liable to make the payment is after that on which he would have been liable to make it in accordance with the lease, any provisions of the lease relating to non-payment or late payment of rent have effect accordingly.

• (5) The notice—

• (a) must be in the prescribed form, and

• (b) may be sent by post.

• (6) If the notice is sent by post, it must be addressed to a tenant at the dwelling unless he has notified the landlord in writing of a different address in England and Wales at which he wishes to be given notices under this section (in which case it must be addressed to him there).

• (7) In this section “rent” does not include—

• (a) a service charge (within the meaning of section 18(1) of the 1985 Act), or

• (b) an administration charge (within the meaning of Part 1 of Schedule 11 to this Act).

• (8) In this section “long lease of a dwelling” does not include—

• (a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies,

• (b) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5) in relation to which that Act applies, or

• (c) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995 (c. 8).

• (9) In this section—

• “dwelling” has the same meaning as in the 1985 Act,

• “landlord” and “tenant” have the same meanings as in Chapter 1 of this Part,

• “long lease” has the meaning given by sections 76 and 77 of this Act, and

• “prescribed” means prescribed by regulations made by the appropriate national authority.

Forfeiture of leases of dwellings

Failure to pay small amount for short period

167

• (1) A landlord under a long lease of a dwelling may not exercise a right of re-entry or forfeiture for failure by a tenant to pay an amount consisting of rent, service charges or administration charges (or a combination of them) (“the unpaid amount”) unless the unpaid amount—

• (a) exceeds the prescribed sum, or

• (b) consists of or includes an amount which has been payable for more than a prescribed period.

• (2) The sum prescribed under subsection (1)(a) must not exceed £500.

• (3) If the unpaid amount includes a default charge, it is to be treated for the purposes of subsection (1)(a) as reduced by the amount of the charge; and for this purpose “default charge” means an administration charge payable in respect of the tenant’s failure to pay any part of the unpaid amount.

• (4) In this section “long lease of a dwelling” does not include—

• (a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies,

• (b) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5) in relation to which that Act applies, or

• (c) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995 (c. 8).

• (5) In this section—

• “administration charge” has the same meaning as in Part 1 of Schedule 11,

• “dwelling” has the same meaning as in the 1985 Act,

• “landlord” and “tenant” have the same meaning as in Chapter 1 of this Part,

• “long lease” has the meaning given by sections 76 and 77 of this Act, except that a shared ownership lease is a long lease whatever the tenant’s total share,

• “prescribed” means prescribed by regulations made by the appropriate national authority, and

• “service charge” has the meaning given by section 18(1) of the 1985 Act.

No forfeiture notice before determination of breach

168

• (1) A landlord under a long lease of a dwelling may not serve a notice under section 146(1) of the Law of Property Act 1925 (c. 20) (restriction on forfeiture) in respect of a breach by a tenant of a covenant or condition in the lease unless subsection (2) is satisfied.

• (2) This subsection is satisfied if—

• (a) it has been finally determined on an application under subsection (4) that the breach has occurred,

• (b) the tenant has admitted the breach, or

• (c) a court in any proceedings, or an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, has finally determined that the breach has occurred.

• (3) But a notice may not be served by virtue of subsection (2)(a) or (c) until after the end of the period of 14 days beginning with the day after that on which the final determination is made.

• (4) A landlord under a long lease of a dwelling may make an application to the appropriate tribunal for a determination that a breach of a covenant or condition in the lease has occurred.

• (5) But a landlord may not make an application under subsection (4) in respect of a matter which—

• (a) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party,

• (b) has been the subject of determination by a court, or

• (c) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.

• (6) For the purposes of subsection (4), “appropriate tribunal” means—

• (a) in relation to a dwelling in England, the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal; and

• (b) in relation to a dwelling in Wales, a leasehold valuation tribunal.

Section 168: supplementary

169

• (1) An agreement by a tenant under a long lease of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination—

• (a) in a particular manner, or

• (b) on particular evidence,

of any question which may be the subject of an application under section 168(4).

• (2) For the purposes of section 168 it is finally determined that a breach of a covenant or condition in a lease has occurred—

• (a) if a decision that it has occurred is not appealed against or otherwise challenged, at the end of the period for bringing an appeal or other challenge, or

• (b) if such a decision is appealed against or otherwise challenged and not set aside in consequence of the appeal or other challenge, at the time specified in subsection (3).

• (3) The time referred to in subsection (2)(b) is the time when the appeal or other challenge is disposed of—

• (a) by the determination of the appeal or other challenge and the expiry of the time for bringing a subsequent appeal (if any), or

• (b) by its being abandoned or otherwise ceasing to have effect.

• (4) In section 168 and this section “long lease of a dwelling” does not include—

• (a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies,

• (b) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5) in relation to which that Act applies, or

• (c) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995 (c. 8).

• (5) In section 168 and this section—

• “arbitration agreement” and “arbitral tribunal” have the same meaning as in Part 1 of the Arbitration Act 1996 (c. 23) and “post-dispute arbitration agreement”, in relation to any breach (or alleged breach), means an arbitration agreement made after the breach has occurred (or is alleged to have occurred),

• “dwelling” has the same meaning as in the 1985 Act,

• “landlord” and “tenant” have the same meaning as in Chapter 1 of this Part, and

• “long lease” has the meaning given by sections 76 and 77 of this Act, except that a shared ownership lease is a long lease whatever the tenant’s total share.

• (6) Section 146(7) of the Law of Property Act 1925 (c. 20) applies for the purposes of section 168 and this section.

• (7) Nothing in section 168 affects the service of a notice under section 146(1) of the Law of Property Act 1925 in respect of a failure to pay—

• (a) a service charge (within the meaning of section 18(1) of the 1985 Act), or

• (b) an administration charge (within the meaning of Part 1 of Schedule 11 to this Act).

Forfeiture for failure to pay service charge etc

170

• (1) Section 81 of the Housing Act 1996 (c. 52) (restriction on forfeiture for failure to pay service charge) is amended as follows.