Leasehold and Freehold Reform Act 2024

• (5) In the case of a collective enfranchisement, step 2 is to be followed separately in relation to each part of the premises being valued that is subject to a different current lease.

• (6) In this Schedule the amount determined under step 2 in relation to the premises being valued, or a part of those premises, is referred to as the “reversion value” of the premises or part.

• (7) If a current lease is a deemed single lease, step 2 is to be followed separately in relation to each constituent lease (as if the constituent lease were itself a current lease).

• (8) In this paragraph “applicable deferment rate”, in relation to the determination of the reversion value of premises, means the deferment rate prescribed in regulations made by the Secretary of State that is applicable to that determination — and for this purpose a “deferment rate” is a rate applied to an anticipated future receipt to ascertain its value at an earlier date.

• (9) A statutory instrument containing regulations under this paragraph is subject to the negative procedure.

• (10) The Secretary of State must review the deferment rate or rates every ten years.

Step 2 (lease extensions): determine the value of a 990 year lease (the “reversion value”)

28

• (1) This version of step 2 applies to lease extensions.

• (2) Step 2: for the newly owned premises which are subject to the standard valuation method (the “premises being valued”)—

• (a) determine the market value of a lease of the premises being valued that is granted—

• (i) for a term of 990 years beginning with the date for valuation, and

• (ii) otherwise on the same terms as the statutory lease that will be granted under the LRA 1967 or the LRHUDA 1993, including the peppercorn rent and the property demised, and

• (b) then reduce that market value by using this formula:

$$v 1 + d n$ where— d is the applicable deferment rate; n is the period (in years) that begins with the valuation date and ends at the end of the term of the current lease; v is the market value.$

• (3) The “market value” of the lease of the premises being valued is the amount which that lease could have been expected to realise if it had been sold on the open market with vacant possession by a willing seller at the valuation date.

• (4) If a current lease is a deemed single lease, step 2 is to be followed separately in relation to each constituent lease (as if the constituent lease were itself a current lease).

• (5) In this Schedule the amount determined under step 2 in relation to the premises being valued is referred to as the “reversion value” of those premises.

• (6) But if the current lease is a shared ownership lease—

• (a) the amount determined under step 2 must be multiplied by the tenant’s share in the premises being valued, and

• (b) the amount so calculated is the “reversion value” of the premises being valued.

• (7) In this paragraph “applicable deferment rate”, in relation to the determination of the reversion value of premises, means the deferment rate prescribed in regulations made by the Secretary of State that is applicable to that determination by virtue of the regulations — and for this purpose a “deferment rate” is a rate applied to an anticipated future receipt to ascertain its value at an earlier date.

• (8) A statutory instrument containing regulations under this section is subject to the negative procedure.

• (9) The Secretary of State must review the deferment rate or rates every ten years.

Step 3: calculate the market value of the newly owned premises subject to the standard valuation method

29

• (1) Step 3: add together—

• (a) the term value amount, and

• (b) the reversion value amount.

• (2) The “term value amount” is—

• (a) the term value determined under step 1 (if there is only one term value), or

• (b) the total of all the term values determined under step 1 (if there are two or more of them by virtue of paragraph 25(3) or (7)).

• (3) The “reversion value amount” is—

• (a) the reversion value determined under step 2 (if there is only one reversion value), or

• (b) the total of all the reversion values determined under step 2 (if there are two or more of them by virtue of paragraph 27(5) or (7) or 28(4)).

• (4) The amount calculated under step 3 (with any adjustment resulting from paragraph 20 or 22) is the market value of that property comprised in the relevant freehold or notional lease which is subject to the standard valuation method.

• (5) See paragraph 4(2) for provision about the market value where only some of the property comprised in the relevant freehold or notional lease is subject to the standard valuation method.

Part 6 — Entitlement of eligible persons to shares of the market value

Entitlement and calculation of share

30

• (1) This Part of this Schedule applies if there are two or more eligible persons.

• (2) Each eligible person is entitled to be paid a share of the market value of the relevant freehold or notional lease that is determined in accordance with this Schedule.

• (3) An eligible person’s share of the market value is to be determined using this formula—

$market value × loss suffered by the eligible person total losses suffered by all eligible persons$

Freehold enfranchisements: the “eligible persons” and “qualifying transactions”

31

• (1) A person is an “eligible person” if the whole or a part of a relevant interest of the person is acquired on a freehold enfranchisement.

• (2) The eligible person’s “qualifying transaction” is the acquisition of the whole or the part of the person’s relevant interest.

• (3) But if—

• (a) an eligible person’s relevant interest is a freehold, and

• (b) that person is granted a lease in accordance with section 36 of the LRHUDA 1993,

that person’s qualifying transaction is the acquisition of the freehold together with the grant of that lease.

Lease extensions: the “eligible persons” and “qualifying transactions”

32

• (1) In the case of a lease extension, a person is an “eligible person” if —

• (a) the statutory lease is granted in whole or in part out of a relevant interest of the person, or

• (b) the whole or a part of a relevant interest of the person is deemed to be surrendered and regranted under the LRA 1967 or the LRHUDA 1993 as a result of the claim for the lease extension, or

• (c) the person is the landlord under a lease which is varied under paragraph 12A of Schedule 1 to the LRA 1967 or paragraph 12 of Schedule 11 to the LRHUDA 1993 as a result of the lease extension.

• (2) The eligible person’s “qualifying transaction” is—

• (a) where sub-paragraph (1)(a) or (b) applies, the grant of the statutory lease, or

• (b) where sub-paragraph (1)(c) applies, the variation of the lease.

The loss suffered

33

• (1) The loss suffered by an eligible person is the loss which the person suffers as a result of the person’s qualifying transaction (taking into account, where paragraph 32(1)(c) applies, any reduction under paragraph 12A of Schedule 1 to the LRA 1967 or paragraph 12 of Schedule 11 to the LRHUDA 1993 in the rent of a lease of which the eligible person is a tenant).

• (2) In determining the loss suffered by an eligible person, assumption 2 (in paragraph 17(3)) must be made in relation to the person’s qualifying transaction and, accordingly, no marriage or hope value is taken into account in determining the loss.

• (3) In determining the loss suffered by an eligible person, the value of the eligible person’s relevant interest must not be increased by reason of—

• (a) any transaction which—

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

• (ii) involves the creation or transfer of an interest superior to (whether or not preceding) any interest held by a relevant tenant, or

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

• (4) In this paragraph—

• “eligible person’s relevant interest” means the relevant interest to which the eligible person’s qualifying transaction relates;

• “relevant date” means— 15 February 1979, in relation to the transfer of a freehold house under the LRA 1967; 20 July 1993, in relation to— the collective enfranchisement of a building under the LRHUDA 1993, or the grant of a new lease of a flat under the LRHUDA 1993; 27 November 2023, in relation to the grant of an extended lease of a house under the LRA 1967;

• “relevant tenant” means— a qualifying tenant, or a person who is not a qualifying tenant, but only because of section 5(5) and (6) of the LRHUDA 1993 (a person who is the tenant of three or more flats in the building).

Interpretation

34

In this Part of this Schedule—

• “eligible person” has the meaning given in paragraph 31 or 32;

• “qualifying transaction” has the meaning given in paragraph 31 or 32;

• “relevant interest” means an interest in property that forms the whole or a part of— the currently leased premises, or the newly owned premises.

Part 7 — Determining the term value

Introduction

35

• (1) This Part of this Schedule contains provision for determining the term value in accordance with step 1 in paragraph 25.

• (2) For the purposes of this Part of this Schedule, the rent under a lease is subject to a rent review if the lease or any other arrangement provides for the rent to change.

Lease not subject to a rent review

36

• (1) This paragraph applies to a lease if the rent under the lease is not subject to a rent review at any time during the unexpired term of the lease.

• (2) That includes a case where—

• (a) the rent under the lease is subject to a rent review, but

• (b) the terms of the rent review are such that there will be no further rent reviews during the unexpired term of the lease.

• (3) The term value is determined using this formula—

$$r × 1 - 1 1 + c n c$ where— c is the applicable capitalisation rate; r is the rent (but see sub-paragraph (4)); n is the length (in years) of the unexpired term of the lease.$

• (4) If paragraph 26(3) requires the notional annual rent to be used instead of the rent to determine the term value of the lease, r is the notional annual rent.

Lease subject to a rent review with fixed changes

37

• (1) This paragraph applies to a lease if the rent under the lease is subject to a rent review which provides that, over the unexpired term of the lease—

• (a) the rent will change each time one or more periods (a “review tranche”) begins,

• (b) the length of the review tranche, or each of them, is known at the valuation date (and, in a case where there are two or more review tranches, it does not matter if they are the same or different lengths), and

• (c) the amount by which the rent will change at the beginning of the review tranche, or each of them, is known or can be calculated at the valuation date (and, in a case where there are two or more review tranches, it does not matter if the amount of each change is the same or different).

• (2) The term value is the sum of—

• (a) the term value for the period (the “current tranche”) that begins with the valuation date and ends immediately before the start of the first (or only) review tranche after the valuation date, and

• (b) the term value or values for each (or the) subsequent review tranche.

• (3) The term value for the current tranche is determined using this formula—

$$r × 1 - 1 1 + c n c$ where— c is the applicable capitalisation rate; r is the rent at the valuation date (but see sub-paragraph (4)); n is the length (in years) of the current tranche.$

• (4) If paragraph 26(3) requires the notional annual rent to be used instead of the rent at the valuation date to determine the term value of the lease, r is the notional annual rent.

• (5) The term value for a review tranche (the “relevant review tranche”) is determined using this formula—

$$r 1 + c n × 1 - 1 1 + c t c$ where— c is the applicable capitalisation rate; r is the rent during the relevant review tranche (but see sub-paragraph (6)); n is the length (in years) of the period that begins with the valuation date and ends with the day before the first day of the relevant review tranche. t is the length (in years) of the relevant review tranche.$

• (6) If paragraph 26(3) requires the notional annual rent to be used instead of the rent during the relevant review tranche to determine the term value of the lease, r is the notional annual rent.

Lease subject to any other rent review

38

• (1) This paragraph applies to a lease if—

• (a) the rent under the lease is subject to a rent review, and

• (b) paragraph 36 does not apply to the lease.

• (2) The term value is determined using this formula—

$$r 1 × 1 - 1 1 + c n 1 c + r 2 1 + c n 1 × 1 - 1 1 + c n 2 c$ where— c is the applicable capitalisation rate; r₁ is the rent at the valuation date (but see sub-paragraph (6)); r₂ is the rent after the first rent review following the valuation date (but see sub-paragraph (6)); n₁ is the length (in years) of the period during which the rent at the valuation date will be payable; n₂ is the length (in years) of the period that begins with the first day of the first rent review following the valuation date and ends with the term date of the current lease.$

• (3) If the rent review provides for the rent under the lease to change by the same proportion as an index of price inflation or the capital or rental value of property, r₂ is determined using this formula—

$$r 1 × a 1 a 2$ where— a₁ is the index of price inflation, or the capital or rental value, at the valuation date; a₂ is the index of price inflation, or the capital or rental value, at the time when the previous rent review took effect or (if none has taken effect) when the term of the lease began; r₁ is the rent at the valuation date;$

• (4) If the rent review provides for the rent under the lease to be a percentage or other proportion of the capital value of property, r₂ is determined using this formula—

$$v × p$ where— p is the percentage or other proportion; v is the capital value of the property at the valuation date.$

• (5) If neither sub-paragraph (3) nor (4) applies to the rent review, r₂ is to be determined in line with the terms of the rent review provision.

• (6) If paragraph 26(3) requires the notional annual rent to be used—

• (a) instead of the rent at the valuation date to determine the term value of the lease, r₁ is the notional annual rent;

• (b) instead of the rent after the first rent review following the valuation date, r₂ is the notional annual rent.

Interpretation

39

• (1) In this Part of this Schedule—

• “applicable capitalisation rate”, in relation to any aspect of the determination of a term value, means the capitalisation rate prescribed in regulations made by the Secretary of State that is applicable to that aspect by virtue of the regulations — and for this purpose a “capitalisation rate” is a rate at which the entitlement to receive rent over the remainder of the term of a lease is capitalised;

• “rent” has the same meaning as in the LR(GR)A 2022 (see section 22(2) and (3) of that Act);

• “unexpired term”, in relation to a lease, means the period that— begins with the valuation date, and ends with the term date of the lease.

• (2) A statutory instrument containing regulations under this paragraph is subject to the negative procedure.

• (3) The Secretary of State must review the capitalisation rate or rates every ten years.

Schedule 5

Application of this Schedule

1

This Schedule applies to every kind of statutory transfer or grant.

Compensation payable

2

• (1) The buyer must pay a person (“P”) reasonable compensation for—

• (a) any diminution in value of any interest of P in other property resulting from the statutory transfer or grant, and

• (b) any other loss or damage which results from the statutory transfer or grant to the extent that it is referable to P’s ownership of any interest in other property.

• (2) Sub-paragraph (1)(b) includes loss of development value in relation to the newly owned premises to the extent that it is referable to P’s ownership of any interest in other property.

• (3) In the case of the collective enfranchisement of a building under the LRHUDA 1993, in determining the amount of compensation payable under this Schedule it is not material that—

• (a) loss or damage suffered by the freeholder could to any extent be avoided or reduced by the grant of a relevant leaseback to the freeholder, and

• (b) the freeholder is not requiring the nominee purchaser to grant a relevant leaseback.

• (4) In this paragraph—

• “development value”, in relation to the newly owned premises, means any increase in the value of P’s interest in the premises which is attributable to the possibility of demolishing, reconstructing or carrying out substantial works of construction on, the whole or a substantial part of the premises;

• “other property” means any property other than the newly owned premises;

• “relevant leaseback” means a lease granted under Part 3 of Schedule 9 to the LRHUDA 1993 in accordance with section 36 of, and Schedule 9 to, that Act.

Schedule 6

Provision to be construed as one with existing enfranchisement legislation

1

• (1) Schedules 4 and 5 and this Schedule are to be construed as one—

• (a) with Part 1 of the LRA 1967 in their application to the transfer of freehold houses under the LRA 1967 (and here the reference to Part 1 of the LRA 1967 is a reference to that legislation as it applies to the transfer of freehold houses);

• (b) with Part 1 of the LRA 1967 in their application to the grant of extended leases of houses under the LRA 1967 (and here the reference to Part 1 of the LRA 1967 is a reference to that legislation as it applies to the grant of extended leases);

• (c) with Chapter 1 of Part 1 of the LRHUDA 1993 in their application to collective enfranchisements of buildings under the LRHUDA 1993;

• (d) with Chapter 2 of Part 1 of the LRHUDA 1993 in their application to the grant of new leases of flats under the LRHUDA 1993.

• (2) But in the case of a deemed single lease—

• (a) there is not to be a single term date for the deemed single lease (as would otherwise be the case in accordance with section 3(6) of the LRA 1967 or section 7(6) of the LRHUDA 1993);

• (b) instead, each constituent lease has its own term date (and sub-paragraph (1) applies for the purpose of giving the meaning of “term date” here).

Meaning of specific expressions

2

• (1) In Schedules 4 and 5 and this Schedule—

• “collective enfranchisement” has the meaning given in paragraph 1(3) of Schedule 4;

• “collective enfranchisement of a building under the LRHUDA 1993” has the meaning given in section 37(8);

• “constituent lease” means any lease which is treated as forming part of a deemed single lease;

• “deemed single lease” means a lease to which— the LRA 1967 applies by virtue of section 3(6) of that Act, or the LRHUDA 1993 applies by virtue of section 7(6) of that Act, (separate tenancies with the same landlord and the same tenant treated as single tenancy);

• “freehold enfranchisement” has the meaning given in paragraph 1(3) of Schedule 4;

• “grant of a new lease of a flat under the LRHUDA 1993” has the meaning given in section 37(8);

• “grant of an extended lease of a house under the LRA 1967” has the meaning given in section 37(8);

• “lease extension” has the meaning given in paragraph 1(3) of Schedule 4;

• “market value of the notional lease” has the meaning given in paragraph 3(6) of Schedule 4;

• “market value of the relevant freehold” has the meaning given in paragraph 2(3) of Schedule 4;

• “notional lease” means the notional lease referred to in paragraph 3(2) of Schedule 4;

• “reversion value” has the meaning given in paragraph 27 (in relation to a freehold enfranchisement) or paragraph 28 (in relation to a lease extension);

• “standard valuation method” means the valuation method set out in Part 5 of Schedule 4;

• “statutory transfer or grant” means a statutory transfer or a statutory grant;

• “term date” is to be read subject to paragraph 1(2);

• “term value” has the meaning given in paragraph 25 of Schedule 4;

• “transfer”, in relation to a freehold, includes a conveyance;

• “transfer of a freehold house under the LRA 1967” has the meaning given in section 37(8).

• (2) Paragraph 3 sets out the meaning of other expressions used in Schedule 4 and 5 and this Schedule.

Expressions with different meanings in relation to different statutory grants or leases

3

In Schedules 4 and 5 and this Schedule an expression set out in an entry in the first column of the following table has the meaning given in the corresponding entry in—

• (a) the second column, as that expression is used in relation to the transfer of freeholds of houses under the LRA 1967;

• (b) the third column, as that expression is used in relation to the grant of extended leases of houses under the LRA 1967;

• (c) the fourth column, as that expression is used in relation to collective enfranchisements of buildings under the LRHUDA 1993;

• (d) the fifth column, as that expression is used in relation to the grant of new leases of flats under the LRHUDA 1993.

Expression	Meaning in relation to transfers of freeholds of houses	Meaning in relation to grants of extended leases of houses	Meaning in relation to collective enfranchisement of a building	Meaning in relation to grants of new leases of flats
“buyer”	The tenant acquiring the freehold	The tenant acquiring the extended lease	The nominee purchaser	The tenant acquiring the new lease
“current lease”	The tenancy by virtue of which the tenant is entitled to acquire the freehold	The tenancy by virtue of which the tenant is entitled to acquire the extended lease	A lease by virtue of which a person is, in relation to the acquisition of the freehold— a qualifying tenant, or not a qualifying tenant, but only because of section 5(5) and (6) of the LRHUDA 1993 (a person who is the tenant of three or more flats in the building).	A lease by virtue of which a person is a qualifying tenant in relation to the acquisition of the new lease
“currently leased premises”	The house and premises leased by the current lease	The house and premises leased by the current lease	The flat leased by the current lease, together with any appurtenant property related to that flat and demised by that lease (see section 1(3) of the LRHUDA 1993)	The flat leased by the current lease
“newly owned premises”	The house and premises of which the freehold is being transferred	The house and premises over which the extended lease is being granted	The relevant premises (see section 1(2) of the LRHUDA 1993) and any other property of which the freehold is being transferred	The flat over which the new lease is being granted
“qualifying tenant”	The tenant acquiring the freehold	The tenant acquiring the extended lease	A qualifying tenant (see section 5 of the LRHUDA 1993)	The qualifying tenant (see section 39(3) of the LRHUDA 1993)
“relevant freehold”	The freehold which is being acquired	Not applicable	The freehold which is being acquired	Not applicable
“statutory grant”	Not applicable	The grant of the extended lease	Not applicable	The grant of the new lease
“statutory lease”	Not applicable	The extended lease of the house and premises being granted	Not applicable	The new lease of the flat being granted
“statutory transfer”	The transfer of the freehold	Not applicable	The transfer of the freehold	Not applicable
“valuation date”	The relevant time (see section 37(1)(d) of the LRA 1967)	The relevant time (see section 37(1)(d) of the LRA 1967)	The relevant date (see section 1(8) of the LRHUDA 1993)	The relevant date (see section 39(8) of the LRHUDA 1993)

Schedule 7

Involvement of other landlords: the LRA 1967

1

• (1) Schedule 1 to the LRA 1967 (enfranchisement and extension by sub-tenants) is amended as follows.

• (2) In paragraph 4—

• (a) in sub-paragraph (1)—

• (i) omit “and” at the end of sub-paragraph (a);

• (ii) after sub-paragraph (b) insert—

(c) agree the price payable; (d) receive the whole of the price payable on behalf and in the name of all of the other landlords and, where the reversioner does so, hold that amount for themselves and the other landlords pending determination of the matters dealt with in Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024.

;

• (b) after sub-paragraph (1) insert—

(1A) If the reversioner receives the whole of the price payable (including where required to do so under paragraph 5), the reversioner’s written receipt for payment of that amount is a complete discharge to the claimant. (1B) Sub-paragraphs (1)(d) and (1A) do not apply if the price payable is required to be paid into the tribunal by virtue of paragraph 5(3A).

• (c) in sub-paragraph (3), omit paragraph (c).

• (3) In paragraph 5—

• (a) in sub-paragraph (1), for “under section 9 of this Act” substitute “in accordance with section 9 or 14A”;

• (b) after sub-paragraph (2) insert—

(2A) If required to do so by the claimant, the reversioner must receive the whole of the price payable, on behalf and in the name of all of the other landlords. (2B) But the claimant may not impose such a requirement— (a) if the terms of the acquisition of the freehold or grant of the lease, including the price payable, have not been agreed or determined (whether or not the matters dealt with in Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024 have been determined); or (b) if, or to the extent that, the claimant is required to pay the price payable into the tribunal. (2C) Sub-paragraph (2D) applies if the whole of the price payable is to be— (a) received by the reversioner, or (b) paid into the tribunal. (2D) If required to do so by the claimant— (a) the reversioner must, on behalf and in the name of all or (as the case may be) any of the other landlords execute the conveyance required by section 8(1) or the grant of the tenancy required by section 14(1); (b) a landlord who has given notice under sub-paragraph (2) must deduce, evidence or verify their title for the purpose of the reversioner executing the conveyance or grant.

;

• (c) for sub-paragraph (3) substitute—

(3) Any of the other landlords may require the reversioner to apply to the appropriate tribunal for the price payable to be determined by the appropriate tribunal.

;

• (d) after sub-paragraph (3) insert—

(3A) Any of the other landlords may, by giving notice to the claimant and the reversioner, require the claimant to pay into the tribunal the whole price payable. (3B) The court or the appropriate tribunal may order a landlord to pay to the reversioner the costs, or a contribution to the costs, incurred by the reversioner in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (3A) if— (a) the landlord imposed the requirement, and (b) the reversioner shows that it was unreasonable for the landlord to impose the requirement. (3C) The court or the appropriate tribunal may order the reversioner to pay to a landlord the costs, or a contribution to the costs, incurred by the landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (3A) if— (a) the landlord imposed the requirement, and (b) the landlord shows that the requirement was imposed because of unreasonable conduct by the reversioner.

;

• (e) omit sub-paragraph (4);

• (f) in sub-paragraph (5), in the words before paragraph (a), after “landlords” insert “(whether or not any entitlements to shares of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024 have been determined)”.

• (4) After paragraph 6 insert—

(6A) (1) Any of the other landlords may apply to the appropriate tribunal for the determination of their entitlement to a share of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024. (2) This paragraph does not limit the power of the reversioner to apply to the appropriate tribunal for the determination of any person’s entitlement to a share of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024.

• (5) In paragraph 7(1)—

• (a) omit paragraph (b);

• (b) in paragraph (c), for “price payable for” substitute “share of the purchase price, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, that is payable to the owner of”;

• (c) in paragraph (d), for “the price payable for” substitute “each share of the purchase price, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, that is payable to the owner of”;

• (d) at the end of paragraph (d), insert

; and (e) if the sum payable for the redemption of a rentcharge under section 11 or the discharge of a charge under section 12 cannot be ascertained because the share of the purchase price payable to the relevant landlord has not been agreed or determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, the tenant may pay the whole of the price payable into the tribunal.

• (6) Omit paragraph 7A (minor superior tenancies).

Involvement of other landlords: collective enfranchisement under the LRHUDA 1993

2

In section 24 of the LRHUDA 1993 (applications where terms in dispute or failure to enter contract), after subsection (8) insert—

(9) But the “terms of acquisition” do not include any terms which relate to matters dealt with in Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024.

3

• (1) Schedule 1 to the LRHUDA 1993 (conduct of proceedings by reversioner on behalf of other landlords) is amended as follows.

• (2) In paragraph 6 (acts of reversioner binding on other landlords)—

• (a) in sub-paragraph (1)—

• (i) in paragraph (b)(iv), for “for the acquisition of any interest” substitute “and, where the reversioner does so, hold that amount for themselves and the other landlords pending determination of the matters dealt with in Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024”;

• (ii) at the end of paragraph (b) insert “and

(c) if the reversioner receives the price payable, the reversioner’s written receipt for payment of that amount is a complete discharge to the claimant; but paragraphs (b)(iv) and (c) do not apply if the price payable is required to be paid into the tribunal by virtue of paragraph 7(3A).

;

• (b) in sub-paragraph (3), omit paragraph (c) (and the “and” preceding it).

• (3) In paragraph 7 (which gives a landlord who is not the reversioner certain powers in relation to conduct of the claim)—

• (a) in sub-paragraph (1)(a), at the end insert “, except the price payable”;

• (b) in sub-paragraph (3), at the end insert “, except determination of the share of the price payable to which the landlord is entitled under Part 6 of Schedule 4 to the Freehold and Leasehold Reform Act 2024”;

• (c) after sub-paragraph (3) insert—

(3A) Any of the other relevant landlords may, by giving notice to the nominee purchaser and the reversioner, require the nominee purchaser to pay into the tribunal the whole of the price payable. (3B) The court or the appropriate tribunal may order a relevant landlord to pay to the reversioner the costs, or a contribution to the costs, incurred by the reversioner in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (3A) if— (a) the relevant landlord imposed the requirement, and (b) the reversioner shows that it was unreasonable for the landlord to impose the requirement. (3C) The court or the appropriate tribunal may order the reversioner to pay to a relevant landlord the costs, or a contribution to the costs, incurred by the relevant landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (3A) if— (a) the relevant landlord imposed the requirement, and (b) the relevant landlord shows that the requirement was imposed because of unreasonable conduct by the reversioner.

;

• (d) omit sub-paragraph (4).

• (4) In paragraph 8 (obligations of other landlords to reversioner), in sub-paragraph (1), after “landlords” insert “(whether or not any entitlements to shares of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024 have been determined)”.

• (5) After paragraph 9 insert—

(10) (1) Any of the other relevant landlords may apply to the appropriate tribunal for the determination of their entitlement to a share of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024. (2) This paragraph does not limit the power of the reversioner to apply to the appropriate tribunal for the determination of any person’s entitlement to a share of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024.

4

In Schedule 8 to the LRHUDA 1993 (discharge of mortgages etc)—

• (a) in paragraph 1, for the definition of “the consideration payable” substitute—

• “the consideration payable” means the share payable to the landlord, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, of the purchase price for the acquisition of the relevant interest;

;

• (b) in paragraph 4, after sub-paragraph (3) insert—

(4) If the amount to be applied for the redemption of a mortgage under paragraph 2, or that may be paid into the tribunal under sub-paragraph (1), cannot be ascertained because the share of the purchase price payable to the relevant landlord has not been agreed or determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, the nominee purchaser may pay the whole of the price payable into the tribunal.

Involvement of other landlords: new lease under the LRHUDA 1993

5

In section 48 of the LRHUDA 1993 (applications where terms in dispute or failure to enter into new lease), after subsection (7) insert—

(8) But the “terms of acquisition” do not include any terms which relate to matters dealt with in Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024.

6

• (1) Schedule 11 to the LRHUDA 1993 (procedure where competent landlord is not tenant’s immediate landlord) is amended as follows.

• (2) In paragraph 6 (acts of competent landlord binding on other landlords), for sub-paragraph (2) substitute—

(2) The authority given to the competent landlord by section 40(2) shall extend to receiving the whole of the price payable and, where the competent landlord does so, holding that amount for themselves and the other landlords pending determination of the matters dealt with in Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024. (2A) If the competent landlord receives the price payable, the competent landlord’s written receipt for payment of that amount is a complete discharge to the tenant. (2B) Sub-paragraphs (2) and (2A) do not apply if the price payable is required to be paid into the tribunal by virtue of paragraph 7(2B).

• (3) In paragraph 7 (other landlords acting independently)—

• (a) in sub-paragraph (1)(b), for “any amount payable to him by virtue of Schedule 13” substitute “the price payable”;

• (b) omit sub-paragraph (2) and after it insert—

(2A) Any of the other landlords may, by giving notice to the tenant and the competent landlord, require the tenant to pay into the tribunal the whole price payable and any sums payable to that other landlord under section 56(3). (2B) The court or the appropriate tribunal may order a landlord to pay to the competent landlord the costs, or a contribution to the costs, incurred by the competent landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (2A) if— (a) the landlord imposed the requirement, and (b) the competent landlord shows that it was unreasonable for the landlord to impose the requirement. (2C) The court or the appropriate tribunal may order the competent landlord to pay to a landlord the costs, or a contribution to the costs, incurred by the landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (2A) if— (a) the landlord imposed the requirement, and (b) the landlord shows that the requirement was imposed because of unreasonable conduct by the competent landlord.

• (4) After paragraph 9 insert—

(9A) (1) Any of the other landlords may apply to the appropriate tribunal for the determination of their entitlement to a share of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024. (2) This paragraph does not limit the power of the competent landlord to apply to the appropriate tribunal for the determination of any person’s entitlement to a share of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024.

Other consequential amendments to the LRA 1967

7

The LRA 1967 is amended in accordance with paragraphs 8 to 13.

8

In section 8(1) (obligation to enfranchise), after “price” insert “payable in accordance with section 9”.

9

Omit section 9A (compensation payable in cases where right to enfranchisement arises by virtue of section 1A or 1B).

10

In section 19(10)(b) (price subject to local management scheme), for “under” substitute “in accordance with”.

11

In section 23(5)(b) (terms of extended tenancy), omit “section 9(1) and (1A) above,”.

12

In section 24(1) (application of price), for “under section 9 above” substitute “in accordance with section 9”.

13

In section 31 (ecclesiastical property)—

• (a) in subsection (2)(a), after “payable” insert “in accordance with section 9 or 14A”;

• (b) in subsection (3), for “under section 9 above” substitute “in accordance with section 9 or 14A”;

• (c) in subsection (4)(c), for “under section 9 above” substitute “in accordance with section 9 or 14A”.

Other consequential amendments to the LRHUDA 1993

14

The LRHUDA 1993 is amended in accordance with paragraphs 15 to 29.

15

In section 13(3) (initial notice), for paragraph (d) substitute—

(d) specify the proposed purchase price payable in accordance with section 32(1);

.

16

In section 18(2) (duty to disclose agreements)—

• (a) in paragraph (a), for the words from “to the reversioner” to “for the purposes of Schedule 6” substitute “is determined in accordance with section 32(1)”;

• (b) in the words after paragraph (b), for the words from “to the reversioner” to “relevant landlord” substitute “in addition to the price so determined”.

17

In section 27 (vesting orders under section 26: supplementary provision)—

• (a) in subsection (3), omit “in respect of each of those interests”;

• (b) in subsection (5)—

• (i) in the words before paragraph (a), omit “in respect of any interest”;

• (ii) in paragraph (a), for the words from “in respect of that interest” to “subsection (1)(b)” substitute “in accordance with section 32(1) if the interests referred to in subsection (1) were being acquired in pursuance of a notice under section 13”;

• (iii) in paragraph (b), for “that interest” substitute “the transferor’s interest”;

• (c) in subsection (6)—

• (i) omit “in respect of that interest”;

• (ii) omit “for the acquisition of that interest”.

18

In section 32 (determination of price)—

• (a) in subsection (2), for “any such interest” substitute “the freehold or any other interest to be acquired by the nominee purchaser in accordance with this Chapter”;

• (b) for subsection (5) substitute—

(5) The nominee purchaser is to be treated for all purposes as a purchaser for valuable consideration in money or money’s worth of the freehold or other interest, even if the price payable by the nominee purchaser in accordance with section 32(1), or the share of the purchase price payable to the owner of the interest under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, is zero or only a nominal amount.

19

In section 39(1) (right to acquire new lease), for “a premium” substitute “the price”.

20

In section 42(3)(c) (notice to acquire new lease)—

• (a) for “premium” substitute “price”;

• (b) omit the words from “and, where” to the end.

21

In section 48(7) (applications where terms in dispute etc), for the words from “the premium” to “Schedule 13” substitute “the price payable in accordance with section 56(1)”.

22

In section 51 (vesting orders under section 50: supplementary provision)—

• (a) in subsection (5)—

• (i) in paragraph (a), for “premium which is payable under Schedule 13” substitute “price which is payable in accordance with section 56(1)”;

• (ii) at the end of paragraph (a) insert “and”;

• (iii) omit paragraph (b);

• (b) in subsection (6), for the words from “premium” to the end substitute “price payable”.

23

In section 56 (obligation to grant new lease)—

• (a) omit subsection (2);

• (b) in subsection (3), for the words from “amount of any such premium” to “Schedule 13” substitute “price payable”;

• (c) in subsection (4), for “7(2)” substitute “7(2A)”.

24

Omit section 66 (amendments to the LRA 1967).

25

In section 70(12) (estate management schemes)—

• (a) in paragraph (b), for “under section 9” substitute “in accordance with section 9”;

• (b) in paragraph (c), for “under Schedule 6 to this Act” substitute “in accordance with section 32(1)”.

26

In section 73(10) (applications for estate management schemes), for the words from the beginning to “it shall” substitute “For the purposes of Schedule 4 to the Leasehold and Freehold Reform Act 2024 as it applies in relation to an acquisition mentioned in section 69(1)(a) or (b), it is to”.

27

• (1) Schedule 2 (special categories of landlords) is amended as follows.

• (2) In paragraph 1 (interpretation), omit sub-paragraph (2).

• (3) In paragraph 5 (trustees)—

• (a) in sub-paragraph (1), for the words from “sum” to “Chapter I” substitute “share payable to the landlord, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, of the purchase price in respect of the acquisition of the interest,”;

• (b) in sub-paragraph (2)(a), for “premium” substitute “share of the price payable”.

• (4) In paragraph 7 (universities and colleges)—

• (a) in sub-paragraph (1), for the words from “sum” to “Chapter I” substitute “share payable to the landlord, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, of the purchase price in respect of the acquisition of the interest”;

• (b) in sub-paragraph (2)(a), for “premium” substitute “share of the price payable”.

• (5) In paragraph 8 (ecclesiastical landlords)—

• (a) in sub-paragraph (2)(a), omit “or premium”;

• (b) in sub-paragraph (3)(a)—

• (i) in the words before paragraph (i), after “by way of” insert “a share of”;

• (ii) in paragraph (i), for “for any interest in the property on its acquisition” substitute “in respect of the acquisition of any interest in the property”;

• (iii) in paragraph (ii), for “a premium” substitute “the price payable”;

• (c) in sub-paragraph (4)(b)—

• (i) in the words before paragraph (i), after “by way of” insert “a share of”;

• (ii) in paragraph (i), for “for any interest in property on its acquisition” substitute “in respect of the acquisition of any interest in property”;

• (iii) in paragraph (ii), for “a premium” substitute “the price payable”.

28

• (1) Schedule 5 (vesting orders under sections 24 and 25) is amended as follows.

• (2) In paragraph 2(1) (execution of conveyance), omit “in respect of each of those interests”.

• (3) In paragraph 3(1) (the appropriate sum)—

• (a) in the words before paragraph (a), omit “in respect of any interest”;

• (b) in paragraph (a), for “Schedule 6 in respect of that interest” substitute “section 32(1)”;

• (c) in paragraph (b), for “that interest” substitute “the transferor’s interest”.

• (4) In paragraph 4 (effect of payment of appropriate sum)—

• (a) omit “in respect of that interest”;

• (b) omit “for the acquisition of that interest”.

29

Omit Schedule 15 (section 9 of the LRA 1967 as amended by section 66).

Schedule 8

Part 1 — LRA 1967 and LRHUDA 1993: general

Repeal of section 18 of the LRHUDA 1993

1

• (1) The LRHUDA 1993 is amended as follows.

• (2) Omit section 18 (collective enfranchisement: requirement to disclose agreements affecting specified premises).

• (3) In consequence—

• (a) in section 32 (determination of price for collective enfranchisement), omit subsection (2)(b) and the “and” preceding it;

• (b) in section 91 (jurisdiction of tribunals), omit subsection (2)(c).

Application of security of tenure provisions to extended leases

2

• (1) In section 16 of the LRA 1967 (rights after extension)—

• (a) in subsection (1), omit paragraphs (c) and (d);

• (b) omit subsection (1A).

• (2) In section 59 of the LRHUDA 1993 (rights after extension), omit subsection (2).

Required statements in extended leases

3

• (1) In section 16 of the LRA 1967 (rights after extension), omit subsections (6) to (8).

• (2) In section 59 of the LRHUDA 1993 (rights after extension), omit subsections (4) and (5).

Redevelopment break rights in extended leases

4

• (1) In section 17 of the LRA 1967 (redevelopment rights)—

• (a) in subsection (1)—

• (i) for “not earlier than twelve months before” substitute “during the period of 12 months ending with”;

• (ii) after “date of the tenancy,” insert “or at any time during the period of five years ending with a break date of the new tenancy granted under that section,”;

• (b) after subsection (1) insert—

(1A) A “break date” of a new tenancy granted under section 14 is the date with which a break period of that tenancy ends. (1B) A “break period” of a new tenancy granted under section 14 is a period of 90 years beginning with— (a) the original term date of the tenancy extended under that section; (b) the day after the end of a break period. (1C) Where the new tenancy is not the first tenancy granted under section 14 in respect of a house, “original term date” in subsection (1B) means the term date of the first tenancy extended under that section.

• (2) In section 61 of the LRHUDA 1993 (redevelopment rights)—

• (a) for subsection (2)(b) substitute—

(b) at any time during the period of five years ending with a break date of the new lease.

;

• (b) after subsection (2) insert—

(2A) A “break date” of a new lease is the date with which a break period of that lease ends. (2B) A “break period” of a new lease is a period of 90 years beginning with— (a) the term date of the lease in relation to which the right to acquire a new lease was exercised; (b) the day after the end of a break period.

;

• (c) in subsection (3), for “the term date”, in the first place it occurs, substitute “a break date”.

Consequential amendments to the LRA 1967

5

• (1) The LRA 1967 is amended as follows.

• (2) In section 16 (rights after extension)—

• (a) in subsection (1), omit the words before paragraph (a);

• (b) omit subsection (5).

• (3) In section 23(5)(b) (terms of extended tenancy), for “section 16(1) to (6)” substitute “section 16(1B)”.

Repeal of obsolete provision in section 19 of the LRA 1967

6

In section 19 of the LRA 1967 (retention of management powers for general benefit of neighbourhood), omit subsections (14) and (15).

Orders and regulations under the LRA 1967

7

• (1) The LRA 1967 is amended as follows.

• (2) After section 36 insert—

(36A) (1) A power to make an order or regulations under any provision of this Part includes power to make— (a) consequential, supplementary, incidental, transitional or saving provision; (b) different provision for different purposes. (2) In this section “order” does not include an order of a court or tribunal.

• (3) In paragraph 5(2) of Schedule 4A (regulations relating to exclusion of certain shared ownership leases), for paragraphs (a) and (b) substitute—

(a) make different provision for different areas;

.

Reduction of rent under intermediate leases

8

• (1) Schedule 1 to the LRA 1967 (enfranchisement and extension by sub-tenants) is amended as follows.

• (2) In paragraph 11—

• (a) after sub-paragraph (1) insert—

(1A) Any surrender or provision for the surrender, in accordance with this paragraph, of a tenancy comprising property other than the house and premises, is to be limited to the house and premises.

;

• (b) omit sub-paragraphs (2) to (5).

• (3) After paragraph 12 insert—

(12A) (1) This paragraph applies if at the relevant time (see section 37(1)(d))— (a) relevant rent is payable under the tenancy in possession, (b) that relevant rent is more than a peppercorn rent, and (c) there are one or more qualifying intermediate leases. (2) But if the tenancy in possession is a shared ownership lease— (a) this paragraph does not apply if, at the relevant time, none of the relevant rent payable under the tenancy in possession is payable in respect of the tenant’s share in the house and premises; (b) if the tenancy in possession does not reserve separate rents in respect of the tenant’s share in the house and premises and the landlord’s share in the house and premises, any rent reserved is to be treated as reserved in respect of the landlord’s share. (3) For the purposes of this paragraph a lease is a “qualifying intermediate lease” if— (a) the lease demises the whole or a part of the house and premises, (b) the lease is immediately superior to— (i) the tenancy in possession, or (ii) one or more other leases that are themselves qualifying intermediate leases, (c) relevant rent is payable under the lease, and (d) that relevant rent is more than a peppercorn rent. (4) But any lease that must be surrendered under paragraph 11(1) is to be treated for the purposes of this paragraph as if it had been surrendered immediately before the relevant time. (5) The landlord or the tenant under a qualifying intermediate lease may, by giving notice to the reversioner and other landlords before the grant of the lease under section 14, require the rent payable under the qualifying intermediate lease to be reduced in accordance with sub-paragraphs (8) to (10). (6) If— (a) under sub-paragraph (5) the rent under a lease is required to be reduced in accordance with this paragraph, and (b) that lease is superior to one or more other qualifying intermediate leases, the rent payable under the other qualifying intermediate lease or leases is also to be reduced in accordance with sub-paragraphs (8) to (10). (7) The landlord and tenant under a qualifying intermediate lease must vary the lease— (a) to give effect to a reduction of the rent in accordance with sub-paragraphs (8) to (10), and (b) to remove any terms of the lease which provide for an increase in the rent, or part of the rent, so reduced. (8) If the whole of the rent under a qualifying intermediate lease is relevant rent, the rent under that lease is to be reduced to a peppercorn rent. (9) If only part of the rent under a qualifying intermediate lease is relevant rent— (a) that part of the rent is to be reduced to zero, and (b) the total rent is to be reduced accordingly. (10) But the amount of the reduction in a person’s rental liabilities as tenant is limited to the amount of the reduction in that person’s rental income as landlord; and here— (a) “reduction in a person’s rental liabilities as tenant” means the reduction in accordance with sub-paragraph (8) or (9) of the rent payable by the person as tenant under the qualifying intermediate lease; (b) “reduction in that person’s rental income as landlord” means the amount (or total amount) of the relevant reduction (or reductions) in rent payable to that person as landlord of one or more other reduced rent leases. (11) In this paragraph— - “reduced rent lease” means— the tenancy in possession, or a qualifying intermediate lease; - “relevant reduction” means— in relation to the tenancy in possession, a reduction resulting from that tenancy being substituted by the tenancy at a peppercorn rent granted under section 14; in relation to a qualifying intermediate lease, a reduction resulting from this paragraph; - “relevant rent” means rent that has been, or would properly be, apportioned to the whole or a part of the house and premises.

9

In Schedule 11 to the LRHUDA 1993 (procedure where competent landlord is not tenant’s immediate landlord), after paragraph 11 insert—

(12) (1) This paragraph applies if at the relevant date— (a) relevant rent is payable under the existing lease, (b) that relevant rent is more than a peppercorn rent, and (c) there are one or more qualifying intermediate leases. (2) But if the existing lease is a shared ownership lease— (a) this paragraph does not apply if, at the relevant date, none of the relevant rent payable under the existing lease is payable in respect of the tenant’s share in the flat; (b) if the existing lease does not reserve separate rents in respect of the tenant’s share in the flat and the landlord’s share in the flat, any rent reserved is to be treated as reserved in respect of the landlord’s share. (3) For the purposes of this paragraph a lease is a “qualifying intermediate lease” if— (a) the lease demises the whole or a part of the relevant flat, (b) the lease is immediately superior to— (i) the existing lease, or (ii) one or more other leases that are themselves qualifying intermediate leases, (c) relevant rent is payable under the lease, and (d) that relevant rent is more than a peppercorn rent; but a lease is not a qualifying intermediate lease if it is superior to the lease whose landlord is the competent landlord. (4) But any lease that must be surrendered under paragraph 10(3) is to be treated for the purposes of this paragraph as if it had been surrendered immediately before the relevant date. (5) The landlord or the tenant under a qualifying intermediate lease may, by giving notice to the competent landlord and other landlords before the grant of the lease under section 56, require the rent payable under the qualifying intermediate lease to be reduced in accordance with sub-paragraphs (8) to (10). (6) If— (a) under sub-paragraph (5) the rent under a lease is required to be reduced in accordance with this paragraph, and (b) that lease is superior to one or more other qualifying intermediate leases, the rent payable under the other qualifying intermediate lease or leases is also to be reduced in accordance with sub-paragraphs (8) to (10). (7) The landlord and tenant under a qualifying intermediate lease must vary the lease— (a) to give effect to a reduction of the rent in accordance with sub-paragraphs (8) to (10), and (b) to remove any terms of the lease which provide for an increase in the rent, or part of the rent, so reduced. (8) If the whole of the rent under a qualifying intermediate lease is relevant rent, the rent under that lease is to be reduced to a peppercorn rent. (9) If only part of the rent under a qualifying intermediate lease is relevant rent— (a) that part of the rent is to be reduced to zero, and (b) the total rent is to be reduced accordingly. (10) But the amount of the reduction in a person’s rental liabilities as tenant is limited to the amount of the reduction in that person’s rental income as landlord; and here— (a) “reduction in a person’s rental liabilities as tenant” means the reduction in accordance with sub-paragraph (8) or (9) of the rent payable by the person as tenant under the qualifying intermediate lease; (b) “reduction in that person’s rental income as landlord” means the amount (or total amount) of the relevant reduction (or reductions) in rent payable to that person as landlord of one or more other reduced rent leases. (11) In this paragraph— - “reduced rent lease” means— the existing lease, or a qualifying intermediate lease; - “relevant flat” means the flat and any garage, outhouse, garden, yard and appurtenances that are to be demised by the lease granted under section 56; - “relevant reduction” means— in relation to the existing lease, a reduction resulting from that lease being substituted by the lease at a peppercorn rent granted under section 56; in relation to a qualifying intermediate lease, a reduction resulting from this paragraph; - “relevant rent” means rent that has been, or would properly be, apportioned to the whole or a part of the relevant flat.

Part 2 — Shared ownership leases and the LRA 1967

Amendment of the LRA 1967

10

The LRA 1967 is amended in accordance with this Part of this Schedule.

Repeal of exclusions of shared ownership leases from Part 1 of the LRA 1967

11

• (1) In section 1 (tenants entitled to enfranchisement or extension), omit subsection (1A).

• (2) In section 3(2) (tenancies deemed to be long tenancies), omit the words from “(other than” to “this Act)”.

• (3) Omit section 33A and Schedule 4A (exclusion of certain shared ownership leases).

Rateable value limits and low rent tests not to apply to shared ownership leases

12

In section 1 (tenants entitled to enfranchisement or extension), after subsection (6) insert—

(6A) In determining whether a tenant under a tenancy which is a shared ownership lease has the right to acquire a freehold or extended lease under this Part, the following requirements of this section do not apply— (a) any requirement for the tenancy to be at a low rent; (b) any requirement in subsection (1)(a)(i) or (ii) for the house and premises or the tenancy to be above a certain value.

No right of enfranchisement for certain shared ownership leases

13

Before section 36 insert—

(33B) (1) A notice of a person’s desire to have the freehold of a house and premises under this Part is of no effect if, at the relevant time, the tenancy— (a) is a shared ownership lease, and (b) meets conditions A to D. (2) But conditions C and D do not need to be met if the shared ownership lease is of a description prescribed for this purpose in regulations made by the Secretary of State. (3) Condition A: the tenancy allows for the tenant to increase the tenant’s share in the demised premises by increments of 25% or less (whether or not the tenancy also provides for increments of more than 25%). (4) Condition B: the tenancy provides— (a) for the price payable for an increase in the tenant’s share in the demised premises to be proportionate to the market value of the premises at the time the share is to be increased, and (b) if the tenant’s share is increased, for the rent payable by the tenant in respect of the landlord’s share in the demised premises to be reduced by an amount reflecting the increase in the tenant’s share. (5) Condition C: the tenancy allows for the tenant’s share in the demised premises to reach 100%. (6) Condition D: if and when the tenant’s share of the demised premises is 100%, the tenancy— (a) allows for the tenant to acquire the freehold of the premises (if the landlord has the freehold), or (b) provides that the terms of the lease which make the lease a shared ownership lease cease to have effect (if the landlord does not have the freehold), without the payment of any further consideration. (7) Regulations under this section are to be made by statutory instrument. (8) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament. (9) In this section “demised premises” means the premises demised under the shared ownership lease.

Inclusion of terms for sharing staircasing payments

14

In Schedule 1 (enfranchisement and extension by sub-tenants), after paragraph 12A insert—

(12B) (1) This paragraph applies if— (a) at the relevant time— (i) the tenancy in possession is a shared ownership lease (the “original shared ownership lease”), and (ii) the tenant’s share of the dwelling is less than 100%, and (b) the landlord who grants the new tenancy (the “new shared ownership lease”) is not the immediate landlord under the original shared ownership lease. (2) At any time after the grant of the new shared ownership lease— (a) the immediate landlord under the new shared ownership lease, or (b) the landlord under any relevant intermediate lease, may apply to the appropriate tribunal for an order making provision to secure that each relevant intermediate lease is varied to include (if or to the extent that it does not already do so) a payment sharing term. (3) A “payment sharing term” is a term under which staircasing payments are to be shared between— (a) the immediate landlord under the new shared ownership lease, and (b) each landlord under a relevant intermediate lease, in a way which fairly and reasonably reflects staircasing losses that are incurred after the variation of the lease to include this term. (4) An order under this paragraph may include— (a) an order relating to a relevant intermediate lease not specified in the application; (b) an order appointing a person who is not party to a relevant intermediate lease to execute a variation of the lease. (5) A lease is a “relevant intermediate lease” if— (a) the lease demises some or all of the shared ownership premises, and (b) the lease is intermediate between— (i) the new shared ownership lease, and (ii) the interest of the landlord who granted the new shared ownership lease. (6) In this paragraph— - “shared ownership premises” means the premises demised by the new shared ownership lease; - “staircasing loss”, in relation to a staircasing payment, means the loss that a landlord incurs because of the increase in the tenant’s share in the shared ownership premises to which the staircasing payment relates; - “staircasing payment” means a payment made by the tenant under the new shared ownership lease to their immediate landlord in consideration of an increase in the tenant’s share in the shared ownership premises.

Meaning of “shared ownership lease”

15

In section 37(1) (interpretation of Part 1)—

• (a) after paragraph (b) insert—

(bza) “landlord’s share”, in relation to a shared ownership lease, means the share in the premises demised by the lease which is not comprised in the tenant’s share;

;

• (b) after paragraph (d) insert—

(da) “shared ownership lease” means a lease of premises— (i) granted on payment of a premium calculated by reference to a percentage of the value of the premises or of the cost of providing them, or (ii) under which the tenant (or the tenant’s personal representatives) will or may be entitled to a sum calculated by reference, directly or indirectly, to the value of the premises; (db) “tenant’s share”, in relation to a shared ownership lease, means the tenant’s initial share in the premises demised by the lease, plus any additional share or shares in those demised premises which the tenant has acquired;

.

Part 3 — Shared ownership leases and the LRHUDA 1993

Amendment of the LRHUDA 1993

16

The LRHUDA 1993 is amended in accordance with this Part of this Schedule.

Repeal of special provision for shared ownership leases in definition of “long lease”

17

In section 7 (definition of “long lease”)—

• (a) at the end of subsection (1)(c) insert “or”;

• (b) omit subsection (1)(d);

• (c) in subsection (7), omit the definitions of “shared ownership lease” and “total share”.

No right to collective enfranchisement for certain shared ownership leases

18

• (1) In section 5 (qualifying tenants), after subsection (2)(c) insert “or

(d) the lease is an excluded shared ownership lease (see section 5A);

.

• (2) After section 5 insert—

(5A) (1) For the purposes of this Chapter a lease is an “excluded shared ownership lease” if it— (a) is a shared ownership lease, and (b) meets conditions A to D. (2) But conditions C and D do not need to be met if the shared ownership lease is of a description prescribed for this purpose in regulations made by the Secretary of State. (3) Condition A: the lease allows for the tenant to increase the tenant’s share in the demised premises by increments of 25% or less (whether or not the lease also provides for increments of more than 25%). (4) Condition B: the lease provides— (a) for the price payable for an increase in the tenant’s share in the demised premises to be proportionate to the market value of the premises at the time the share is to be increased, and (b) if the tenant’s share is increased, for the rent payable by the tenant in respect of the landlord’s share in the demised premises to be reduced by an amount reflecting the increase in the tenant’s share. (5) Condition C: the lease allows for the tenant’s share in the demised premises to reach 100%. (6) Condition D: if and when the tenant’s share in the demised premises is 100%, the tenancy provides that the terms of the lease which make the lease a shared ownership lease cease to have effect, without the payment of any further consideration. (7) In this section “demised premises” means the premises demised under the shared ownership lease.

• (3) In section 38(1) (interpretation of Chapter 1 of Part 1), after the definition of “conveyance” insert—

• “excluded shared ownership lease” has the meaning given in section 5A;

.

Tenant under shared ownership lease to have right to new lease

19

In section 39(3)(a) (definition of qualifying tenant: application of section 5), after “subsections” insert “(2)(d),”.

Consequential amendment

20

In section 77(2)(b) (qualifying tenants for audit rights), for “that section” substitute “section 101”.

Collective enfranchisement: mandatory leaseback

21

In Schedule 9 (grant of leases back to the former freeholder), after paragraph 3 insert—

(3A) (1) This paragraph applies where immediately before the appropriate time— (a) any flat falling within sub-paragraph (2) is let under an excluded shared ownership lease (and accordingly the tenant is not a qualifying tenant of the flat), and (b) the landlord under the lease is the freeholder. (2) A flat falls within this sub-paragraph if— (a) the freehold of the whole of it is owned by the same person, and (b) it is contained in the specified premises. (3) Where this paragraph applies, the nominee purchaser shall grant to the freeholder (that is to say, the landlord under the shared ownership lease) a lease of the flat in accordance with section 36 and paragraph 4 below. (4) In this paragraph any reference to a flat includes a reference to a unit (other than a flat) which is used as a dwelling.

Inclusion of terms for sharing staircasing payments

22

In Schedule 11 (procedure where competent landlord is not tenant’s immediate landlord), after paragraph 10 insert—

(10A) (1) This paragraph applies if— (a) at the relevant date— (i) the existing lease is a shared ownership lease (the “original shared ownership lease”), and (ii) the tenant’s share of the dwelling is less than 100%, and (b) the landlord who grants the new tenancy (the “new shared ownership lease”) is not the immediate landlord under the original shared ownership lease. (2) At any time after the grant of the new shared ownership lease— (a) the immediate landlord under the new shared ownership lease, or (b) the landlord under any relevant intermediate lease, may apply to the appropriate tribunal for an order making provision to secure that each relevant intermediate lease is varied to include (if or to the extent that it does not already do so) a payment sharing term. (3) A “payment sharing term” is a term under which staircasing payments are to be shared between— (a) the immediate landlord under the new shared ownership lease, and (b) each landlord under a relevant intermediate lease, in a way which fairly and reasonably reflects staircasing losses that are incurred after the variation of the lease to include this term. (4) An order under this paragraph may include— (a) an order relating to a relevant intermediate lease not specified in the application; (b) an order appointing a person who is not party to a relevant intermediate lease to execute a variation of the lease. (5) A lease is a “relevant intermediate lease” if— (a) the lease demises some or all of the shared ownership premises, and (b) the lease is intermediate between— (i) the new shared ownership lease, and (ii) the interest of the landlord who granted the new shared ownership lease. (6) In this paragraph— - “shared ownership premises” means the premises demised by the new shared ownership lease; - “staircasing loss”, in relation to a staircasing payment, means the loss that a landlord incurs because of the increase in the tenant’s share in the shared ownership premises to which the staircasing payment relates; - “staircasing payment” means a payment made by the tenant under the new shared ownership lease to their immediate landlord in consideration of an increase in the tenant’s share in the shared ownership premises.

Meaning of “shared ownership lease”

23

In section 101(1) (general interpretation of Part 1)—

• (a) after the definition of “interest” insert—

• “landlord’s share”, in relation to a shared ownership lease, means the share in the premises demised by the lease which is not comprised in the tenant’s share;

;

• (b) after the entry relating to “lease” and “tenancy” insert—