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Commonhold and Leasehold Reform Act 2002

Type Public General Act

Publication 2002-05-01

Last updated 2025-03-03

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(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

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,

(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,

(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.

(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 ”,

(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

(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,

(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,

(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

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

(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

(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

(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

(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.

(2) In subsection (1), for the words from “to pay” to the end substitute

by a tenant to pay a service charge or administration charge unless— (a) it is finally determined by (or on appeal from) a leasehold valuation tribunal or by a court, or by an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, that the amount of the service charge or administration charge is payable by him, or (b) the tenant has admitted that it is so payable.

(3) For subsection (2) substitute—

(2) The landlord may not exercise a right of re-entry or forfeiture by virtue of subsection (1)(a) until after the end of the period of 14 days beginning with the day after that on which the final determination is made.

(4) For subsection (3) substitute—

(3) For the purposes of this section it is finally determined that the amount of a service charge or administration charge is payable— (a) if a decision that it is payable is not appealed against or otherwise challenged, at the end of the time 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 (3A). (3A) The time referred to in subsection (3)(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.

(5) After subsection (4) insert—

(4A) References in this section to the exercise of a right of re-entry or forfeiture include the service of a notice under section 146(1) of the Law of Property Act 1925 (restriction on re-entry or forfeiture).

(6) In subsection (5), after “this section” insert—

(a) “administration charge” has the meaning given by Part 1 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, (b) “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 matter, means an arbitration agreement made after a dispute about the matter has arisen, (c) “dwelling” has the same meaning as in the Landlord and Tenant Act 1985 (c. 70), and (d)

Power to prescribe additional or different requirements

171

(1) The appropriate national authority may by regulations prescribe requirements which must be met before a right of re-entry or forfeiture may be exercised in relation to a breach of a covenant or condition in a long lease of an unmortgaged dwelling.

(2) The regulations may specify that the requirements are to be in addition to, or instead of, requirements imposed otherwise than by the regulations.

(3) 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

(4) For the purposes of this section a dwelling is unmortgaged if it is not subject to a mortgage, charge or lien.

(5) In this section—

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

Crown application

Application to Crown

172

(1) The following provisions apply in relation to Crown land (as in relation to other land)—

(a) sections 18 to 30B 30I of (and the Schedule to) the 1985 Act (service charges, insurance and managing agents and building safety),

(b) Part 2 of the 1987 Act (appointment of manager by the appropriate tribunal ),

(d) sections 46 to 49 49A of the 1987 Act (information to be furnished to tenants),

(e) Chapter 5 of Part 1 of the 1993 Act (management audit),

(f) section 81 of the Housing Act 1996 (c. 52) (restriction on termination of tenancy for failure to pay service charge etc.),

(g) section 84 of (and Schedule 4 to) that Act (right to appoint surveyor), and

(h) in this Chapter, the provisions relating to any of the provisions within paragraphs (a) to (g), Part 1 of Schedule 11 and sections 164 to 171.

(2) Land is Crown land if there is or has at any time been an interest or estate in the land—

(a) comprised in the Crown Estate,

(b) belonging to Her Majesty in right of the Duchy of Lancaster,

(d) belonging to a government department or held on behalf of Her Majesty for the purposes of a government department.

(3) No failure by the Crown to perform a duty imposed by or by virtue of any of sections 21 to 23A of, or any of paragraphs 2 to 4A of the Schedule to, the 1985 Act makes the Crown criminally liable; but the High Court may declare any such failure without reasonable excuse to be unlawful.

(4) Any sum payable under any of the provisions mentioned in subsection (1) by the Chancellor of the Duchy of Lancaster may be raised and paid under section 25 of the Duchy of Lancaster Act 1817 (c. 97) as an expense incurred in improvement of land belonging to Her Majesty in right of the Duchy.

(5) Any sum payable under any such provision by the Duke of Cornwall (or any other possessor for the time being of the Duchy of Cornwall) may be raised and paid under section 8 of the Duchy of Cornwall Management Act 1863 (c. 49) as an expense incurred in permanently improving the possessions of the Duchy.

(6) In section 56 of the 1987 Act (Crown land)—

(a) in subsection (1), for “This Act” substitute “ Parts 1 and 3 and sections 42 to 42B (and so much of this Part as relates to those provisions) ”, and

(b) in subsection (3), for “this Act” substitute “ the provisions mentioned in subsection (1) ”.

Chapter 6 — Leasehold valuation tribunals

Leasehold valuation tribunals

173

(1) Any jurisdiction conferred on a leasehold valuation tribunal by or under any enactment is exercisable by a rent assessment committee constituted in accordance with Schedule 10 to the Rent Act 1977 (c. 42).

(2) When so constituted for exercising any such jurisdiction a rent assessment committee is known as a leasehold valuation tribunal.

Procedure

174

Schedule 12 (leasehold valuation tribunals: procedure) has effect.

Appeals

175

(1) A party to proceedings before a leasehold valuation tribunal may appeal to the Upper Tribunal from a decision of the leasehold valuation tribunal.

(2) But the appeal may be made only with the permission of—

(a) the leasehold valuation tribunal, or

(b) the Upper Tribunal.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) On the appeal the Upper Tribunal may exercise any power which was available to the leasehold valuation tribunal.

(5) And a decision of the Upper Tribunal on the appeal may be enforced in the same way as a decision of the leasehold valuation tribunal.

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

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

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

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequential amendments

176

Schedule 13 (minor and consequential amendments about leasehold valuation tribunals) has effect.

Chapter 7 — General

Wales

177

The references to the 1985 Act, the 1987 Act and the 1993 Act in Schedule 1 to the National Assembly for Wales (Transfer of Functions) Order 1999 (S.I.1999/672) are to be treated as referring to those Acts as amended by this Part.

Orders and regulations

178

(1) An order or regulations under any provision of this Part—

(a) may include incidental, supplementary, consequential and transitional provision,

(b) may make provision generally or only in relation to specified cases, and

(2) Regulations under Schedule 12 may make different provision for different areas.

(3) Any power to make an order or regulations under this Part is exercisable by statutory instrument.

(4) Regulations shall not be made by the Secretary of State under section 167 or 171 or paragraph 9(3)(b) or 10(3)(b) of Schedule 12 unless a draft of the instrument containing them has been laid before and approved by a resolution of each House of Parliament.

(5) A statutory instrument containing an order or regulations made by the Secretary of State under this Part shall, if not so approved, be subject to annulment in pursuance of a resolution of either House of Parliament.

Interpretation

179

(1) In this Part “the appropriate national authority” means—

(a) the Secretary of State (as respects England), and

(b) the National Assembly for Wales (as respects Wales).

(2) In this Part—

“the 1967 Act” means the Leasehold Reform Act 1967 (c. 88),

“the 1985 Act” means the Landlord and Tenant Act 1985 (c. 70),

“the 1987 Act” means the Landlord and Tenant Act 1987 (c. 31), and

“the 1993 Act” means the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28).

Part 3 — Supplementary

Repeals

180

Schedule 14 (repeals) has effect.

Commencement etc

181

(1) Apart from section 104 and sections 177 to 179, the preceding provisions (and the Schedules) come into force in accordance with provision made by order made by the appropriate authority.

(2) The appropriate authority may by order make any transitional provisions or savings in connection with the coming into force of any provision in accordance with an order under subsection (1).

(3) The power to make orders under subsections (1) and (2) is exercisable by statutory instrument.

(4) In this section “the appropriate authority” means—

(a) in relation to any provision of Part 1 or section 180 and Schedule 14 so far as relating to section 104, the Lord Chancellor, and

(b) in relation to any provision of Part 2 or section 180 and Schedule 14 so far as otherwise relating, the Secretary of State (as respects England) and the National Assembly for Wales (as respects Wales).

Extent

182

This Act extends to England and Wales only.

Short title

183

This Act may be cited as the Commonhold and Leasehold Reform Act 2002.

SCHEDULE 1

Introduction

1

This Schedule lists the documents which are required by section 2 to accompany an application for the registration of a freehold estate as a freehold estate in commonhold land.

Commonhold association documents

2

The commonhold association’s certificate of incorporation under section 15 of the Companies Act 2006.

3

Any altered certificate of incorporation issued under section 80 of that Act (change of name).

4

The articles of association of the commonhold association.

Commonhold community statement

5

The commonhold community statement.

6

(1) Where consent is required under or by virtue of section 3—

(a) the consent,

(b) an order of a court by virtue of section 3(2)(f) dispensing with the requirement for consent, or

(2) In the case of a conditional order under section 3(2)(f), the order must be accompanied by evidence that the condition has been complied with.

Certificate

7

A certificate given by the directors of the commonhold association that—

(a) the articles of association submitted with the application comply with regulations under paragraph 2(1) of Schedule 3,

(b) the commonhold community statement submitted with the application satisfies the requirements of this Part,

(d) the commonhold association has not traded, and

(e) the commonhold association has not incurred any liability which has not been discharged.

SCHEDULE 2

“Flying freehold”

1

(1) Subject to sub-paragraph (2), an application may not be made under section 2 wholly or partly in relation to land above ground level (“raised land”) unless all the land between the ground and the raised land is the subject of the same application.

(2) An application for the addition of land to a commonhold in accordance with section 41 may be made wholly or partly in relation to raised land if all the land between the ground and the raised land forms part of the commonhold to which the raised land is to be added.

Agricultural land

2

An application may not be made under section 2 wholly or partly in relation to land if—

(a) it is agricultural land within the meaning of the Agriculture Act 1947 (c. 48),

(b) it is comprised in a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5), or

Contingent title

3

(1) An application may not be made under section 2 if an estate in the whole or part of the land to which the application relates is a contingent estate.

(2) An estate is contingent for the purposes of this paragraph if (and only if)—

(a) it is liable to revert to or vest in a person other than the present registered proprietor on the occurrence or non-occurrence of a particular event, and

(b) the reverter or vesting would occur by operation of law as a result of an enactment listed in sub-paragraph (3).

(3) The enactments are—

(a) the School Sites Act 1841 (c. 38) (conveyance for use as school),

(b) the Lands Clauses Acts (compulsory purchase),

(d) the Places of Worship Sites Act 1873 (c. 50) (sites for places of worship).

(4) Regulations may amend sub-paragraph (3) so as to—

(a) add an enactment to the list, or

(b) remove an enactment from the list.

SCHEDULE 3

Part 1 — Articles of Association

Introduction

1

In this Schedule “articles” means the articles of association of a commonhold association.

Form and content

2

(1) Regulations shall make provision about the form and content of the articles.

(2) A commonhold association may adopt provisions of the regulations for its articles.

(3) The regulations may include provision which is to have effect for a commonhold association whether or not it is adopted under sub-paragraph (2).

(4) A provision of the articles shall have no effect to the extent that it is inconsistent with the regulations.

(5) Regulations under this paragraph shall have effect in relation to articles—

(a) irrespective of the date of the articles, but

(b) subject to any transitional provision of the regulations.

(6) Section 20 of the Companies Act 2006 (default application of model articles) does not apply to a commonhold association.

Alteration

3

(1) Where a commonhold association alters its articles at a time when the land specified in its articles is commonhold land, the alteration shall have no effect until the altered version is registered in accordance with this paragraph.

(2) If the commonhold association makes an application under this sub-paragraph the Registrar shall arrange for altered articles to be kept in his custody, and referred to in the register, in place of the unaltered version.

(3) An application under sub-paragraph (2) must be accompanied by a certificate given by the directors of the commonhold association that the altered articles comply with regulations under paragraph 2(1).

(4) Where the Registrar amends the register on an application under sub-paragraph (2) he shall make any consequential amendments to the register which he thinks appropriate.

Disapplication of Companies Act 1985

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 2 — Membership

Pre-commonhold period

5

During the period beginning with incorporation of a commonhold association and ending when land specified in its articles becomes commonhold land, the subscribers (or subscriber) to the association's memorandum of association shall be the sole members (or member) of the association.

Transitional period

6

(1) This paragraph applies to a commonhold association during a transitional period.

(2) The subscribers (or subscriber) to the association's memorandum of association shall continue to be members (or the member) of the association.

(3) A person who for the time being is the developer in respect of all or part of the commonhold is entitled to be entered in the register of members of the association.

Unit-holders

7

A person is entitled to be entered in the register of members of a commonhold association if he becomes the unit-holder of a commonhold unit in relation to which the association exercises functions—

(a) on the unit becoming commonhold land by registration with unit-holders under section 9, or

(b) on the transfer of the unit.

Joint unit-holders

8

(1) This paragraph applies where two or more persons become joint unit-holders of a commonhold unit—

(a) on the unit becoming commonhold land by registration with unit-holders under section 9, or

(b) on the transfer of the unit.

(2) If the joint unit-holders nominate one of themselves for the purpose of this sub-paragraph, he is entitled to be entered in the register of members of the commonhold association which exercises functions in relation to the unit.

(3) A nomination under sub-paragraph (2) must—

(a) be made in writing to the commonhold association, and

(b) be received by the association before the end of the prescribed period.

(4) If no nomination is received by the association before the end of the prescribed period the person whose name appears first in the proprietorship register is on the expiry of that period entitled to be entered in the register of members of the association.

(5) On the application of a joint unit-holder the court may order that a joint unit-holder is entitled to be entered in the register of members of a commonhold association in place of a person who is or would be entitled to be registered by virtue of sub-paragraph (4).

(6) If joint unit-holders nominate one of themselves for the purpose of this sub-paragraph, the nominated person is entitled to be entered in the register of members of the commonhold association in place of the person entered by virtue of—

(a) sub-paragraph (2),

(b) sub-paragraph (5), or

Self-membership

9

A commonhold association may not be a member of itself.

No other members

10

A person may not become a member of a commonhold association otherwise than by virtue of a provision of this Schedule.

Effect of registration

11

A person who is entitled to be entered in the register of members of a commonhold association becomes a member when the company registers him in pursuance of its duty under section 113 of the Companies Act 2006 (duty to maintain register of members).

Termination of membership

12

Where a member of a commonhold association ceases to be a unit-holder or joint unit-holder of a commonhold unit in relation to which the association exercises functions—

(a) he shall cease to be a member of the commonhold association, but

(b) paragraph (a) does not affect any right or liability already acquired or incurred in respect of a matter relating to a time when he was a unit-holder or joint unit-holder.

13

A member of a commonhold association may resign by notice in writing to the association if (and only if) he is a member by virtue of paragraph 5 or 6 of this Schedule (and not also by virtue of any other paragraph).

Register of members

14

(1) Regulations may make provision about the performance by a commonhold association of its duty under section 113 of the Companies Act 2006 (duty to maintain register of members) where a person—

(a) becomes entitled to be entered in the register by virtue of paragraphs 5 to 8, or

(b) ceases to be a member by virtue of paragraph 12 or on resignation.

(2) The regulations may in particular require entries in the register to be made within a specified period.

(3) A period specified under sub-paragraph (2) may be expressed to begin from—

(a) the date of a notification under section 15(3),

(b) the date on which the directors of the commonhold association first become aware of a specified matter, or

(4) A requirement by virtue of this paragraph shall be treated as a requirement of section 113 for the purposes of section 113(7) and (8) (offences).

Companies Act 1985

15

(1) Section 112(1) of the Companies Act 2006 (initial members of company) applies to a commonhold association subject to the provisions of this Schedule.

(2) The following provisions of that Act do not apply to a commonhold association—

section 112(2) (new members);

section 136 (membership of holding company).

Part 3 — Miscellaneous

Name

16

Regulations may provide—

(a) that the name by which a commonhold association is registered under the Companies Act 2006 must satisfy specified requirements;

(b) that the name by which a company other than a commonhold association is registered may not include a specified word or expression.

Statutory declaration

17

For the purposes of section 13 of the Companies Act 2006 (registration: statement of compliance) as it applies to a commonhold association, a reference to the requirements of that Act shall be treated as including a reference to a provision of or made under this Schedule.

SCHEDULE 4

Introductory

1

This Schedule sets out the matters which are development business for the purposes of section 58.

Works

2

The completion or execution of works on—

(a) a commonhold,

(b) land which is or may be added to a commonhold, or

Marketing

3

(1) Transactions in commonhold units.

(2) Advertising and other activities designed to promote transactions in commonhold units.

Variation

4

The addition of land to a commonhold.

5

The removal of land from a commonhold.

6

Amendment of a commonhold community statement (including amendment to redefine the extent of a commonhold unit).

Commonhold association

7

Appointment and removal of directors of a commonhold association.

SCHEDULE 5

Law of Property Act 1922 (c. 16)

1

At the end of paragraph 5 of Schedule 15 to the Law of Property Act 1922 (perpetually renewable leases) (which becomes sub-paragraph (1)) there shall be added—

(2) Sub-paragraph (3) applies where a grant— (a) relates to commonhold land, and (b) would take effect by virtue of sub-paragraph (1) as a demise for a term of two thousand years or a subdemise for a fixed term. (3) The grant shall be treated as if it purported to be a grant of the term referred to in sub-paragraph (2)(b) (and sections 17 and 18 of the Commonhold and Leasehold Reform Act 2002 (residential and non-residential leases) shall apply accordingly).

Law of Property Act 1925 (c. 20)

2

After section 101(1) of the Law of Property Act 1925 (mortgagee’s powers) there shall be added—

(1A) Subsection (1)(i) is subject to section 21 of the Commonhold and Leasehold Reform Act 2002 (no disposition of part-units)

3

At the end of section 149 of that Act (90-year term in place of certain determinable terms) there shall be added—

(7) Subsection (8) applies where a lease, underlease or contract— (a) relates to commonhold land, and (b) would take effect by virtue of subsection (6) as a lease, underlease or contract of the kind mentioned in that subsection. (8) The lease, underlease or contract shall be treated as if it purported to be a lease, underlease or contract of the kind referred to in subsection (7)(b) (and sections 17 and 18 of the Commonhold and Leasehold Reform Act 2002 (residential and non-residential leases) shall apply accordingly).

Limitation Act 1980 (c. 58)

4

After section 19 of the Limitation Act 1980 (actions for rent) there shall be inserted—

(19A) An action in respect of a right or duty of a kind referred to in section 37(1) of the Commonhold and Leasehold Reform Act 2002 (enforcement) shall not be brought after the expiration of six years from the date on which the cause of action accrued.

Housing Act 1985 (c. 68)

5

At the end of section 118 of the Housing Act 1985 (the right to buy) there shall be added—

(3) For the purposes of this Part, a dwelling-house which is a commonhold unit (within the meaning of the Commonhold and Leasehold Reform Act 2002) shall be treated as a house and not as a flat.

Insolvency Act 1986 (c. 45)

6

At the end of section 84 of the Insolvency Act 1986 (voluntary winding-up) there shall be added—

(4) This section has effect subject to section 43 of the Commonhold and Leasehold Reform Act 2002.

Law of Property (Miscellaneous Provisions) Act 1994 (c. 36)

7

(1) Section 5 of the Law of Property (Miscellaneous Provisions) Act 1994 (discharge of obligations) shall be amended as follows.

(2) In subsection (1) for the words “or of leasehold land” substitute “ of leasehold land or of a commonhold unit ”.

(3) After subsection (3) insert—

(3A) If the property is a commonhold unit, there shall be implied a covenant that the mortgagor will fully and promptly observe and perform all the obligations under the commonhold community statement that are for the time being imposed on him in his capacity as a unit-holder or as a joint unit-holder.

(4) For subsection (4) substitute—

(4) In this section— (a) “commonhold community statement”, “commonhold unit”, “joint unit-holder” and “unit-holder” have the same meanings as in the Commonhold and Leasehold Reform Act 2002, and (b) “mortgage” includes charge, and “mortgagor” shall be construed accordingly.

Trusts of Land and Appointment of Trustees Act 1996 (c. 47)

8

At the end of section 7 of the Trusts of Land and Appointment of Trustees Act 1996 (partition by trustees) there shall be added—

(6) Subsection (1) is subject to sections 21 (part-unit: interests) and 22 (part-unit: charging) of the Commonhold and Leasehold Reform Act 2002.

SCHEDULE 6

Buildings with substantial non-residential parts

1

(1) This Chapter does not apply to premises falling within section 72(1) if the internal floor area—

(a) of any non-residential part, or

(b) (where there is more than one such part) of those parts (taken together),

exceeds 50% of the internal floor area of the premises (taken as a whole).

(2) A part of premises is a non-residential part if it is neither—

(a) occupied, or intended to be occupied, for residential purposes, nor

(b) comprised in any common parts of the premises.

(3) Where in the case of any such premises any part of the premises (such as, for example, a garage, parking space or storage area) is used, or intended for use, in conjunction with a particular dwelling contained in the premises (and accordingly is not comprised in any common parts of the premises), it shall be taken to be occupied, or intended to be occupied, for residential purposes.

(4) For the purpose of determining the internal floor area of a building or of any part of a building, the floor or floors of the building or part shall be taken to extend (without interruption) throughout the whole of the interior of the building or part, except that the area of any common parts of the building or part shall be disregarded.

Buildings with self-contained parts in different ownership

2

Where different persons own the freehold of different parts of premises falling within section 72(1), this Chapter does not apply to the premises if any of those parts is a self-contained part of a building.

Premises with resident landlord and no more than four units

3

(1) This Chapter does not apply to premises falling within section 72(1) if the premises—

(a) have a resident landlord, and

(b) do not contain more than four units.

(2) Premises have a resident landlord if—

(a) the premises are not, and do not form part of, a purpose-built block of flats (that is, a building which, as constructed, contained two or more flats),

(b) a relevant freeholder, or an adult member of a relevant freeholder’s family, occupies a qualifying flat as his only or principal home, and

(3) A person is a relevant freeholder, in relation to any premises, if he owns the freehold of the whole or any part of the premises.

(4) This sub-paragraph is satisfied if—

(a) the relevant freeholder, or

(b) the adult member of his family,

has throughout the last twelve months occupied the flat as his only or principal home.

(5) This sub-paragraph is satisfied if—

(a) immediately before the date when the relevant freeholder acquired his interest in the premises, the premises were premises with a resident landlord, and

(b) he, or an adult member of his family, entered into occupation of the flat during the period of 28 days beginning with that date and has occupied the flat as his only or principal home ever since.

(6) “Qualifying flat”, in relation to any premises and a relevant freeholder or an adult member of his family, means a flat or other unit used as a dwelling—

(a) which is contained in the premises, and

(b) the freehold of the whole of which is owned by the relevant freeholder.

(7) Where the interest of a relevant freeholder in any premises is held on trust, the references in sub-paragraphs (2), (4) and (5)(b) to a relevant freeholder are to a person having an interest under the trust (whether or not also a trustee).

(8) A person is an adult member of another’s family if he is—

(a) the other’s spouse or civil partner,

(b) a son, daughter, son-in-law or daughter-in-law of the other, or of the other’s spouse or civil partner, who has attained the age of 18, or

and “son” and “daughter” include stepson and stepdaughter (“son-in-law” and “daughter-in-law” being construed accordingly).

Premises owned by local housing authority

4

(1) This Chapter does not apply to premises falling within section 72(1) if a local housing authority is the immediate landlord of any of the qualifying tenants of flats contained in the premises.

(2) “Local housing authority” has the meaning given by section 1 of the Housing Act 1985 (c. 68).

Premises in relation to which rights previously exercised

5

(1) This Chapter does not apply to premises falling within section 72(1) at any time if—

(a) the right to manage the premises is at that time exercisable by a RTM company, or

(b) that right has been so exercisable but has ceased to be so exercisable less than four years before that time.

(2) Sub-paragraph (1)(b) does not apply where the right to manage the premises ceased to be exercisable by virtue of section 73(5).

(3) The appropriate tribunal may, on an application made by a RTM company, determine that sub-paragraph (1)(b) is not to apply in any case if it considers that it would be unreasonable for it to apply in the circumstances of the case.

SCHEDULE 7

Covenants not to assign etc.

1

(1) Section 19 of the Landlord and Tenant Act 1927 (c. 36) (covenants not to assign without approval etc.) has effect with the modifications provided by this paragraph.

(2) Subsection (1) applies as if—

(a) the reference to the landlord, and

(b) the final reference to the lessor,

were to the RTM company.

(3) Subsection (2) applies as if the reference to the payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or neighbouring premises belonging to the landlord were omitted.

(4) Subsection (3) applies as if—

(a) the first and final references to the landlord were to the RTM company, and

(b) the reference to the right of the landlord to require payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or neighbouring premises belonging to him were omitted.

Defective premises

2

(1) Section 4 of the Defective Premises Act 1972 (c. 35) (landlord’s duty of care by virtue of obligation or right to repair demised premises) has effect with the modifications provided by this paragraph.

(2) References to the landlord (apart from the first reference in subsections (1) and (4)) are to the RTM company.

(3) The reference to the material time is to the acquisition date.

Repairing obligations

3

(1) The obligations imposed on a lessor by virtue of section 11 (repairing obligations in short leases) of the Landlord and Tenant Act 1985 (c. 70) (referred to in this Part as “the 1985 Act”) are, so far as relating to any lease of any flat or other unit contained in the premises, instead obligations of the RTM company.

(2) The RTM company owes to any person who is in occupation of a flat or other unit contained in the premises otherwise than under a lease the same obligations as would be imposed on it by virtue of section 11 if that person were a lessee under a lease of the flat or other unit.

(3) But sub-paragraphs (1) and (2) do not apply to an obligation to the extent that it relates to a matter concerning only the flat or other unit concerned.

(4) The obligations imposed on the RTM company by virtue of sub-paragraph (1) in relation to any lease are owed to the lessor (as well as to the lessee).

(5) Subsections (3A) to (5) of section 11 have effect with the modifications that are appropriate in consequence of sub-paragraphs (1) to (3).

(6) The references in subsection (6) of section 11 to the lessor include the RTM company; and a person who is in occupation of a flat or other unit contained in the premises otherwise than under a lease has, in relation to the flat or other unit, the same obligation as that imposed on a lessee by virtue of that subsection.

(7) The reference to the lessor in section 12(1)(a) of the 1985 Act (restriction on contracting out of section 11) includes the RTM company.

Service charges

4

(1) Sections 18 to 30 of the 1985 Act (service charges) have effect with the modifications provided by this paragraph.

(2) References to the landlord are to the RTM company.

(3) References to a tenant of a dwelling include a person who is landlord under a lease of the whole or any part of the premises (so that sums paid by him in pursuance of section 103 of this Act are service charges).

(4) Section 22(5) applies as if paragraph (a) were omitted and the person referred to in paragraph (b) were a person who receives service charges on behalf of the RTM company.

(5) Section 26 does not apply.

Right to request information on insurance

5

(1) Section 30A of, and the Schedule to, the 1985 Act (rights of tenants with respect to insurance) have effect with the modifications provided by this paragraph.

(2) References to the landlord are to the RTM company.

(3) References to a tenant include a person who is landlord under a lease of the whole or any part of the premises and has to make payments under section 103 of this Act.

(4) Paragraphs 2(3) and 3(3) of the Schedule apply as if paragraph (a) were omitted and the person referred to in paragraph (b) were a person who receives service charges on behalf of the RTM company.

Managing agents

6

Section 30B of the 1985 Act (recognised tenants’ associations to be consulted about landlord’s managing agents) has effect as if references to the landlord were to the RTM company (and as if subsection (6) were omitted).

Right of first refusal

7

Where section 5 of the 1987 Act (right of first refusal: requirement that landlord serve offer notice on tenant) requires the landlord to serve an offer notice on the qualifying tenants of the flats contained in the premises, he must serve a copy of the offer notice on the RTM company.

Appointment of manager

8

(1) Part 2 of the 1987 Act (appointment of manager by ... tribunal) has effect with the modifications provided by this paragraph.

(2) References to the landlord are to the RTM company.

(3) References to a tenant of a flat contained in the premises include a person who is landlord under a lease of the whole or any part of the premises.

(4) Section 21(3) (exception for premises where landlord is exempt or resident or where premises are functional land of a charity) does not apply.

(5) The references in paragraph (a)(i) of subsection (2) of section 24 to any obligation owed by the RTM company to the tenant under his tenancy include any obligations of the RTM company under this Act.

(6) And the circumstances in which the appropriate tribunal may make an order under paragraph (b) of that subsection include any in which the RTM company no longer wishes the right to manage the premises to be exercisable by it.

(7) The power in section 24 to make an order appointing a manager to carry out functions includes a power (in the circumstances specified in subsection (2) of that section) to make an order that the right to manage the premises is to cease to be exercisable by the RTM company.

(8) And such an order may include provision with respect to incidental and ancillary matters (including, in particular, provision about contracts to which the RTM company is a party and the prosecution of claims in respect of causes of action, whether tortious or contractual, accruing before or after the right to manage ceases to be exercisable).

Right to acquire landlord’s interest

9

Part 3 of the 1987 Act (compulsory acquisition by tenants of landlord’s interest) does not apply.

Variation of leases

10

Sections 35, 36, 38 and 39 of the 1987 Act (variation of long leases relating to flats) have effect as if references to a party to a long lease (apart from those in section 38(8)) included the RTM company.

Service charges to be held in trust

11

(1) Sections 42 to 42B of the 1987 Act (service charge contributions to be held in trust and in designated account) have effect with the modifications provided by this paragraph.

(2) References to the payee are to the RTM company.

(3) The definition of “tenant” in section 42(1) does not apply.

(4) References to a tenant of a dwelling include a person who is landlord under a lease of the whole or any part of the premises.

(5) The reference in section 42(2) to sums paid to the payee by the contributing tenants by way of relevant service charges includes payments made to the RTM company under section 94 or 103 of this Act.

(6) Section 42A(5) applies as if paragraph (a) were omitted and the person referred to in paragraph (b) were a person who receives service charges on behalf of the RTM company.

Information to be furnished to tenants

12

(1) Sections 46 to 48 of the 1987 Act (information to be furnished to tenants) have effect with the modifications provided by this paragraph.

(2) References to the landlord include the RTM company.

(3) References to a tenant include a person who is landlord under a lease of the whole or any part of the premises; and in relation to such a person the reference in section 47(4) to sums payable to the landlord under the terms of the tenancy are to sums paid by him under section 103 of this Act.

Statutory duties relating to certain covenants

13

(1) The Landlord and Tenant Act 1988 (c. 26) (statutory duties in connection with covenants against assigning etc.) has effect with the modifications provided by this paragraph.

(2) The reference in section 1(2)(b) to the covenant is to the covenant as it has effect subject to section 98 of this Act.

(3) References in section 3(2), (4) and (5) to the landlord are to the RTM company.

Tenants' right to management audit

14

(1) Chapter 5 of Part 1 (tenants’ right to management audit by landlord) of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28) (referred to in this Part as “the 1993 Act”) has effect with the modifications provided by this paragraph.

(2) References to the landlord (other than the references in section 76(1) and (2) to “the same landlord”) are to the RTM company.

(3) References to a tenant include a person who is landlord under a lease of the whole or any part of the premises and has to make payments under section 103 of this Act.

(4) Section 80(5) applies as if the reference to a person who receives rent were to a person who receives service charges.

Right to appoint surveyor

15

(1) Section 84 of the Housing Act 1996 (c. 52) and Schedule 4 to that Act (apart from paragraph 7) (right of recognised tenants’ association to appoint surveyor to advise on matters relating to service charges) have effect as if references to the landlord were to the RTM company.

(2) Section 84(5) and paragraph 4(5) of Schedule 4 apply as if the reference to a person who receives rent were to a person who receives service charges.

Administration charges

16

Schedule 11 to this Act has effect as if references to the landlord (or a party to a lease) included the RTM company.

SCHEDULE 8

Land Compensation Act 1973 (c. 26)

1

(1) Section 12A of the Land Compensation Act 1973 (tenants participating in collective enfranchisement or entitled to individual lease extension) is amended as follows.

(2) In subsection (2)(b)—

(a) in sub-paragraph (i), for “participating tenant in relation to” substitute “ participating member of a RTE company which is making ”, and

(b) in sub-paragraph (ii), for the words from “one” to “made” substitute “ a member of a RTE company which has made an acquisition ”.

(3) In subsection (4), for “nominee purchaser” substitute “ RTE company ”.

(4) In subsection (9), for paragraph (b) substitute—

(b) “participating member” and “RTE company” have the same meanings as in Chapter 1 of Part 1 of that Act; and (c) the reference to the making of an acquisition by a RTE company shall be construed in accordance with section 38(2) of that Act.

Leasehold Reform, Housing and Urban Development Act 1993 (c. 28)

2

The 1993 Act has effect subject to the following amendments.

3

(1) Section 1 (right to collective enfranchisement) is amended as follows.

(2) In subsection (1), for the words from “on qualifying tenants” to the end of paragraph (b) substitute “ the right to acquire the freehold of premises to which this Chapter applies on the relevant date, at a price determined in accordance with this Chapter, exercisable subject to and in accordance with this Chapter by a company (referred to in this Chapter as a RTE company) of which qualifying tenants of flats contained in the premises are members; ”.

(3) In subsection (2)(a), for the words from “the qualifying tenants” to “have acquired,” substitute “ the RTE company by which the right to collective enfranchisement is exercised is entitled, subject to and in accordance with this Chapter, to acquire, ”.

(4) In subsection (5)—

(a) for “qualifying tenants” substitute “ a RTE company ”, and

(b) for “those tenants are” substitute “ the RTE company is ”.

4

For section 2(1) (acquisition of leasehold interests) substitute—

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