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The Housing (Preservation of Right to Buy) Regulations 1989

Type Statutory-Instrument

Publication 1989-03-06

State In force

Department Queen's Printer of Acts of Parliament

Source legislation.gov.uk

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Made: 6th March 1989

Laid before Parliament: 15th March 1989

Coming into force: 5th April 1989

The Secretary of State for the Environment, as respects England, and the Secretary of State for Wales, as respects Wales, in exercise of the powers conferred on them by section 171C of the Housing Act 1985[^f00001], section 101 of the Local Government Act 1985[^f00002], and of all other powers enabling them in that behalf, hereby make the following Regulations:–

1

(1) These Regulations may be cited as the Housing (Preservation of Right to Buy) Regulations 1989 and shall come into force on 5th April 1989.

(2) In these Regulations, “Part V” means Part V of the Housing Act 1985.

2

Where a landlord disposes of an interest in a dwelling-house in the circumstances described in section 171A(1) of the Housing Act 1985 (cases in which right to buy is preserved), Part V continues to apply subject to the exceptions, adaptations and other modifications specified in Schedule 1 to these Regulations.

3

Part V as it continues to apply by virtue of regulation 2 is set out in Schedule 2 to these Regulations

4

The Local Government Reorganisation (Preservation of Right to Buy) Order 1986[^f00003] shall not apply in any case where the qualifying disposal, within the meaning of article 3 of that Order, is made on or after the coming into force of these Regulations.

SCHEDULE 1 — MODIFICATIONS TO PART V AS APPLIED TO THE PRESERVED RIGHT TO BUY

PART I — EXCEPTIONS AND ADAPTATIONS

1

(1) Subject to the following provisions of this paragraph, in the provisions of Part V which apply to the preserved right to buy by virtue of these Regulations, for the expressions “secure tenant” and “tenant” substitute the expression “qualifying person”.

(2) Sub-paragraph (1) does not apply–

(a) to the references to secure tenant in–

section 171A,

section 185, and

Schedule 9A, paragraph 1;

(b) to the references to tenant in–

section 125(4),

section 125A(2)(b),

section 125B,

section 138(2) (second reference only),

section 171B,section 171H(1),

section 175(1),

section 187, the definition of “improvement contribution”,

Schedule 4, paragraphs 2 (the final word), 6(1), 9 and 10, and

Schedule 6, Part I, paragraph 6 and Part III;

(c) to the expressions “former secure tenant”, “joint tenant”, “new tenant”, “public sector tenant”, “tenant condition” and “tenant’s incumbrances”.

(d) to the expressions “secure tenant” and “tenant” when used in a modification made by these Regulations.

(3) In Schedule 6, Part III, for the word “tenant” substitute the expression “qualifying person” in the following paragraphs only–

paragraph 13 (both references),

paragraph 16 (first reference only),

paragraph 16B(4)(c), and

paragraph 16C(4)(c).

2

In section 118 (the right to buy)–

(a) in subsection (1), in paragraphs (a) and (b), for the word “dwelling-house” in the first place where it occurs substitute the words “qualifying dwelling-house”; and

(b) omit subsection (2).

3

In section 119 (qualifying period for right to buy), in subsection (2), for the words “where the secure tenancy is a joint tenancy” substitute the words “where the tenancy held by the qualifying person is a joint tenancy”.

4

In section 122 (qualifying person’s notice claiming to exercise right to buy), after subsection (3), insert–

(4) Where the dwelling-house is occupied by two or more qualifying persons as joint tenants the right to buy may be exercised by such one or more of them as may be agreed between them.

5

In section 123 (claim to share right to buy with members of family) for subsection (3) substitute–

(3) Where by such a notice any members of the qualifying person’s family are validly required to share the right to buy with him, the right to buy the qualifying dwelling-house belongs to the qualifying person and those members jointly and they shall be treated as joint tenants for the purposes, in relation to that dwelling-house, of the right to buy.

6

In section 124 (landlord’s notice admitting or denying right to buy) omit subsection (3).

7

In section 125 (landlord’s notice of purchase price and other matters), in subsection (5)–

(a) at the end of paragraph (a) insert the word “and”, and

(b) omit the word “and” at the end of paragraph (c) and omit paragraphs (b) and (d) and the words following paragraph (d).

8

In section 125A (estimates and information about service charges), in subsection (2)(b), omit the words from “and section 450A” to the end of the subsection.

9

In section 127 (value of dwelling-house), for subsection (4) substitute–

(4) The persons referred to in subsection (1)(b) are– (a) the qualifying person or, where the qualifying person is a qualifying successor, the person who was the qualifying person before him, (b) where the qualifying person is the former secure tenant, any person who, under the same tenancy, was a secure tenant before him, and (c) where the qualifying person is the former secure tenant, any member of his family who, immediately before the grant of the secure tenancy, was the secure tenant of the same dwelling-house under another tenancy, but do not include, in a case where the qualifying person is a former secure tenant whose tenancy has at any time been assigned by virtue of section 92 (assignments by way of exchange), a person who under that tenancy was a secure tenant before the assignment.

10

In section 128 (determination of value by district valuer) for subsection (6) substitute the following–

(6) A notice under subsection (5) shall inform the qualifying person of the effect of sections 140, 141(1), (2) and (4) and 142(1) and (2) (landlord’s notices to complete, effect of failure to comply and right to defer completion).

11

In section 129 (discount on right to buy and similar sales)–

(a) in subsection (2) omit the words “, subject to any order under subsection (2A)”; and

(b) omit subsections (2A) and (2B).

12

In section 130 (reduction of discount where previous discount given)–

(a) in subsection (2), in paragraph (a), omit the words “or, in such circumstances as may be prescribed by order of the Secretary of State, by a person so prescribed”; and

(b) omit subsection (5).

13

For section 131 (limits on amount of discount) substitute the following–

(131) Unless the landlord otherwise agrees– (a) the discount shall not reduce the price below the amount which, in accordance with Schedule 5A, is to be taken as representing the costs incurred by the landlord in respect of the dwelling-house and is to be treated as relevant for the purposes of this section; (b) if the price before discount is below that amount there shall be no discount; and (c) the discount shall not in any case reduce the price by more than £35,000.

14

Omit sections 132 to 135 (the right to a mortgage).

15

In section 136 (change of qualifying person after notice claiming right to buy)–

(a) for subsection (1) substitute–

(1) Where, after a qualifying person has given a notice claiming the right to buy, a qualifying successor becomes the qualifying person in relation to the dwelling-house, the qualifying successor shall be in the same position as if the notice had been given by him and he had been the qualifying person at the time it was given.

(b) for subsections (2) and (3) substitute the following–

(2) If a notice under section 125 (landlord’s notice of purchase price and other matters) has been served on the former qualifying person, the landlord shall serve on the new qualifying person a notice informing him of the effect of sections 140, 141(1), (2) and (4) and 142(1) and (2) (landlord’s notices to complete, effect of failure to comply and right to defer completion). (3) The new qualifying person may then serve a notice under section 142(1)(b) (qualifying person’s notice claiming to exercise right to defer completion) within three months beginning with service on him of the landlord’s notice under subsection (2) or within that period as extended in writing by the landlord.

(d) in subsection (6) for the words “new tenant” substitute the words “new qualifying person”.

16

In section 137 (change of landlord after claiming right to buy)–

(a) in the marginal note omit the words “or right to a mortgage”;

(b) in subsection (1)–

(i) after the word “Where” insert the words “, other than in a case to which section 171D(1)(a) or section 171E(2)(a) applies (disposal to authority or body satisfying landlord condition for secure tenancies),”,

(ii) for the word “body” in each place in which that word occurs substitute the word “person”, and

(iii) omit the words “or the right to a mortgage”;

17

In section 138 (duty of landlord to convey freehold or grant lease), in subsection (1), omit the words from “and to the amount” to the words “security of the dwelling-house”.

18

In section 139 (terms and effect of conveyance or grant)–

(a) in the marginal note omit the words “and mortgage”;

(b) in subsection (2) for the words before the semi-colon substitute the following – “The tenancy held by the qualifying person comes to an end on the grant to him of an estate in fee simple, or of a lease, in pursuance of the provisions of this Part”; and

19

In section 140 (landlord’s first notice to complete)–

(a) for subsection (3) substitute the following–

(3) A notice under this section shall not be served earlier than one year after the service on the qualifying person of– (a) where he exercises his right under section 128 (determination of value by district valuer), the notice under subsection (5) of that section (further notice by landlord after determination), or (b) where he does not exercise that right, the notice under section 125 (landlord’s notice of purchase price and other matters).

(b) after subsection (3) insert the following–

(3A) Where the qualifying person is entitled to defer completion, a notice under this section shall not be served earlier than three years after service of the notice under section 122 (qualifying person’s notice claiming to exercise right to buy), if that period expires after whichever is applicable of the periods specified in subsection (3).

(d) in subsection (5) omit from the words “and to the amount” to the end of the subsection.

20

For section 142 (when qualifying person is entitled to defer completion) substitute the following–

(142) (1) A qualifying person is entitled to defer completion if– (a) his reckonable amount calculated in accordance with Schedule 7A (or the aggregate of such amounts where the right to buy is being exercised by more than one person) is less than the purchase price of the dwelling-house; (b) he has, within the period mentioned below, served on the landlord a notice claiming to exercise the right to defer completion; and (c) he has, within the same period, deposited the sum of £150 with the landlord. (2) The notice must be served and the sum of £150 deposited within the period of three months beginning with the service on the qualifying person– (a) where he exercises his right under section 128 (determination of value by district valuer), of the notice under subsection (5) of that section (further notice by landlord after determination), or (b) where he does not exercise that right, of the notice under section 125 (landlord’s notice of purchase price and other matters), or within that period as extended in writing by the landlord. (3) Where a qualifying person has served on the landlord a notice under subsection (1)(b), the landlord shall, as soon as practicable after the date on which the notice is served, serve on the qualifying person a notice either– (a) admitting the qualifying person’s right to defer completion, or (b) denying it and stating the reasons why, in the landlord’s opinion, the qualifying person does not have the right. (4) If in pursuance of a notice under this section the qualifying person deposits the sum of £150 with the landlord, then– (a) if he completes the transaction, the sum shall be treated as having been paid towards the purchase price, and (b) if he does not complete the transaction but withdraws his notice claiming to exercise the right to buy, or is deemed to have withdrawn it by virtue of section 141(4) (effect of failure to comply with landlord’s second notice to complete), the sum shall be returned to him.

21

Omit sections 143 to 153 and Schedules 8 and 9 (the right to a shared ownership lease).

22

In section 153A (qualifing person’s notices of delay)–

(a) in subsection (1)–

(i) at the end of paragraph (b) insert the word “or” and omit paragraphs (c) and (d),

(ii) in paragraph (e) omit the words “or his right to be granted a shared ownership lease”, and

(iii) in the words following paragraph (e), for the words “any of the cases in paragraphs (a) to (d)” substitute the words “either of the cases in paragraphs (a) and (b)”, and omit the words from “or, if it is later” to the end of the subsection; and

(b) in subsection (3)–

(i) in paragraph (a) for the words “any of the cases in paragraphs (a) to (d)” substitute the words “either of the cases in paragraphs (a) and (b)”, after the words “section 124” insert the word “or” and omit the words “section 146 or section 147”, and

(ii) in paragraph (b) omit the words “or his right to be granted a shared ownership lease”.

23

In section 153B (payments of rent attributable to purchase price etc.)–

(a) in subsection (1)–

(i) in paragraph (b) omit the words “or, as the case may be, section 150”,

(ii) omit paragraph (c), and

(iii) in paragraph (d) omit the words “or, as the case may be, the notice claiming to exercise the right to be granted a shared ownership lease”;

(b) in subsection (2) for the words “any of the paragraphs (c) to (e)” substitute the words “paragraph (d) or (e)”;

(c) in subsection (3) omit the words “or, as the case may be, the tenant’s initial contribution for the grant of a shared ownership lease”; and

(d) in subsection (4) omit the words “or such other percentage as may be prescribed”.

24

In section 154 (registration of title)–

(a) in subsection (1)–

(i) omit the word “or” at the end of paragraph (a) and omit paragraph (b), and

(ii) for the words “not less than 40 years” substitute the words “more than 21 years”; and

(b) in subsection (5) for “1971” substitute “1986”.

25

In section 155 (repayment of discount on early disposal)–

(a) in subsection (1) for the words from “shall contain” to “no discount)” substitute the words “may, at the discretion of the landlord, contain, unless there is no discount,” and add at the end of the subsection the words “but not one the effect of which would be more onerous”;

(b) in subsection (2) omit the words “In the case of a conveyance or grant in pursuance of the right to buy”;

(d) in subsection (3A) omit the word “and” at the end of paragraph (a) and omit paragraph (b).

26

In section 156 (liability to repay is a charge on the premises)–

(a) in subsections (1) and (3A), for the words “required by” substitute the words “imposed by virtue of”;

(b) for subsection (2) substitute–

(2) The charge has priority immediately after any legal charge securing an amount– (a) advanced to the qualifying person for the purpose of enabling him to exercise the right to buy, or (b) further advanced to him by the person who made that advance.

; and

27

In section 157 (restriction on disposal of dwelling-houses in National Parks, etc.)–

(a) in subsection (1) omit the words “a local authority, the Development Board for Rural Wales or”;

(b) in subsection (4) omit the words “the Secretary of State or, where the landlord is a housing association,” and omit the comma after “Housing Corporation”; and

(c) in subsection (5) omit the words “the Secretary of State or” and the words “he, or as the case may be,” and the comma after “the Corporation”.

28

In section 158 (consideration for reconveyance or surrender under s.157)–

(a) in subsection (1) for the word “tenant” substitute the words “a qualifying person (or his successor in title or a person deriving title under him or his successor)”; and

(b) in subsection (2)

(i) in paragraph (a) for the words “the covenant required by” substitute the words “a covenant imposed by virtue of”, and

(ii) omit the word “and” at the end of paragraph (a) and omit paragraph (b).

29

In section 162 (exempted disposals which end liability under covenants), in paragraph (a), for the words “the covenant required by” substitute the words “a covenant imposed by virtue of”.

30

Omit sections 164 to 170 (various powers of Secretary of State).

31

Omit section 171 (power to extend right to buy, etc.).

32

In section 171A (cases in which right to buy is preserved), in subsection (2), omit the words “the following provisions of”.

33

In section 171B (extent of preserved right: qualifying persons and dwelling-houses), in subsection (5)(b), for the words “became the statutory tenant or tenant as mentioned in subsection 4(a) or (b)” substitute the words “acquired the assured tenancy, became the assignee of the assured tenancy or became the tenant, as mentioned in subsection 4(a), (aa) or (b)”.

34

In subsection 171H (disposal after notice claiming to exercise right to buy, etc.)–

(a) in subsection (1) omit the words “or the right to a mortgage”; and

(b) in subsection (2) omit paragraph (b).

35

Omit section 173 (exclusion of shared ownership leases granted under this Part).

36

In section 174 (leases granted under this Part to be treated as long leases at a low rent) omit the word “and” at the end of paragraph (a) and omit paragraph (b).

37

In section 176 (notices) omit subsections (1), (2) and (5).

38

Omit section 177 (errors and omissions in notices).

39

In section 178 (costs)–

(a) in subsection (1)–

(i) in paragraph (a) omit the words from “the right to be granted a shared ownership lease” to the end of the paragraph,

(ii) omit paragraph (b), and

(iii) in the words following paragraph (b) omit the words “or Housing Corporation”; and

(b) omit subsections (2) and (3).

40

In section 179 (provisions restricting right to buy, etc. of no effect)–

(a) in subsection (1), for paragraph (a) substitute–

(a) the grant of a lease in pursuance of the preserved right to buy, or

; and

(b) omit subsection (2).

41

In section 180 (statutory declarations) for the words from the beginning of the section to the words “thinks fit” substitute the words “A landlord may if he thinks fit”.

42

In section 181 (jurisdiction of county court), in subsection (1)–

(a) in paragraph (b) omit the words “or under a shared ownership lease granted in pursuance of this Part”, and

(b) in the words following paragraph (b) omit the words “and paragraph 11 of Schedule 8”.

43

Omit section 182 (power to repeal or amend local Acts).

44

In section 184 (land let with or used for purposes of dwelling-house), in subsection (2) and in subsection (3), omit the words “or the right to be granted a shared ownership lease”.

45

In section 187 (minor definitions) omit the definition of “total share”.

46

In section 188 (the index of defined expressions: Part V)–

(a) omit from the first column of the Table the following expressions together with the corresponding entries in the second column–

“additional share” etc.

“bank”

“building society”

“effective discount” etc.

“friendly society”

“full mortgage”

“housing trust”

“initial share” etc.

“insurance company”

“prescribed percentage” etc.

“right to further advances”

“total share” etc.

“trustee savings bank”;

(b) at the appropriate places in the Table insert–

assured tenancy	section 622
qualifying successor	section 171B(4)
---	---

47

In Schedule 4 (qualifyng period for right to buy and discount)–

(a) in paragraph 7–

(i) in sub-paragraph (1) omit the words “and to any order under paragraph 8” and

(ii) after sub-paragraph (3) insert–

(4) The landlord condition is also satisfied if the interest of the landlord belonged to, or a predecessor of– - an area board established by section 1(2) of the Electricity Act 1947[^f00004], - a community council, - an education and library board established under the Education and Libraries (Northern Ireland) Order 1986[^f00005], - a fire authority for the purposes of the Fire Services Acts 1947 to 1959, - a government department, - an internal drainage board within the meaning of section 6 of the Land Drainage Act 1976[^f00006], - a Minister of the Crown, - a parish council and the trustees of a parish without a parish council, - a passenger transport executive established under Part II of the Transport Act 1968[^f00007], - a police authority, - a water authority established in accordance with section 2 of the Water Act 1973[^f00008] and a water authority in Scotland as constituted under section 3 of the Water (Scotland) Act 1980[^f00009], - the Agricultural and Food Research Council, - the AFRC Institute for Grassland and Animal Production, - the British Airports' Authority, - the British Broadcasting Corporation, - the British Coal Corporation, - the British Gas Corporation, - the British Railways Board, - the British Steel Corporation, - the British Waterways Board, - the Central Electricity Generating Board, - the Church Commissioners, - the Civil Aviation Authority, - the Commissioners of Northern Lighthouses, - the Countryside Commission for Scotland, - the Electricity Council, - The Fire Authority for Northern Ireland constituted under the Fire Services (Northern Ireland) Order 1984[^f00010], - the Highlands and Islands Development Board, - the Historic Buildings and Monuments Commission for England, - the Lake District Special Planning Board, - the Lee Valley Regional Park Authority, - London Regional Transport, - the Medical Research Council, - the National Bus Company, - the National Library of Wales, - the National Museum of Wales, - the Natural Environment Research Council, - the Nature Conservancy Council, - the North of Scotland Hydro-Electric Board, - the Northern Ireland Electricity Service established under the Electricity Supply (Northern Ireland) Order 1972[^f00011], - the Northern Ireland Transport Holding Company established under the Transport Act (Northern Ireland) 1967[^f00012], - the Peak Park Joint Planning Board, - the Police Authority for Northern Ireland, - the Post Office, - the Science and Engineering Research Council, - the Scottish Sports Council, - the South of Scotland Electricity Board, - the Sports Council, the Sports Council for Wales, - the Sports Council for Northern Ireland, - the Trinity House, - the United Kingdom Atomic Energy Authority, - the Welsh Development Agency. (5) The landlord condition is not satisfied if the interest of the landlord belonged to the Trinity House, where the dwelling-house was held otherwise than in connection with its functions as a general lighthouse authority within the meaning of section 634 of the Merchant Shipping Act 1894[^f00013].

(b) omit paragraph 8.

48

In Schedule 5 (exceptions to the right to buy)–

(a) omit paragraphs 1 (charities) and 3 (certain housing associations), and

(b) in paragraph 11, in sub-paragraph (1)(a)(ii), for the words “a predecessor of the tenant or a person qualified to succeed the tenant by virtue of Part IV of the Housing Act 1985” substitute the words “a previous tenant or a person qualified to succeed the tenant under section 17 of the Housing Act 1988[^f00014] (succession to assured periodic tenancy by spouse)”.

49

In Schedule 6 (conveyance of freehold and grant of lease in pursuance of right to buy)–

(a) in Part I (common provisions)–

(i) in paragraphs 2(2)(a) and (b), for the words “the secure tenancy” substitute the words “his tenancy”,

(ii) in paragraph 4, for the words “the secure tenancy” substitute the words “the qualifying person’s tenancy”,

(iii) in paragraph 6, for the word “tenant” substitute the words “transferee or grantee”, and

(iv) in paragraph 7, in the definition of “tenant’s incumbrance”, in sub-paragraph (a) for the words “the secure tenancy” substitute the words “the qualifying person’s tenancy” and in sub-paragraph (b), for the words “the secure tenancy” substitute the words “that tenancy”;

(b) in Part III (leases)–

(i) in paragraph 12 omit sub-paragraph (3),

(ii) in paragraph 13 for the words “the secure tenancy” substitute the words “his tenancy” and

(iii) omit paragraph 16D and add the following paragraphs–

(16E) The inflation allowance for the purposes of paragraphs 16B(2) and 16C(3) shall be calculated, in respect of each item, by the formula– $$I = ( E × C P ) − E$ where– C the index figure relating to the last date in the initial period on which costs were incurred in respect of the item (whether or not such costs were the full costs incurred in respect of that item), E the amount shown in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) as the tenant’s estimated contribution in respect of that item, I the inflation allowance, P the index figure relating to the date on which the landlord served the notice on the qualifying person, and$ the “index figure” is an index figure in the “Public sector housing repair and maintenance cost index” in the “Housing andConstruction Statistics” published from time to time by Her Majesty’s Stationery Office, but does not include a provisional index figure. (16F) (1) The inflation allowance for the purposes of paragraph 16B(3)(a) shall be calculated by the formula– $I = ( A × C P ) − A$ (2) The inflation allowance for the purposes of paragraph 16B(3)(b) shall be calculated by the formula– $I = ( R × C P ) − R$ (3) In this paragraph– (i) the amount shown in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) as the estimated annual average amount, the index figure relating to the date on which the tenant is required to pay the relevant charge for which the inflation allowance is being calculated, or, if earlier, the date the initial period ends, the inflation allowance, the index figure relating to the date on which the landlord served the notice on the qualifying person, and (ii) “Index figure” means an index figure in the “Public sector housing repair and maintenance cost index” in the “Housing and Construction Statistics” published from time to time by Her Majesty’s Stationery Office, but does not include a provisional index figure. (16G) (1) The information which must be given to a tenant when he is asked to pay a relevant charge in respect of works itemised in the estimates is– (a) a description of the works to which the relevant charge relates, together with an identification of the item in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) to which the works relate, (b) whether or not further costs will be incurred in respect of which item in the initial period; and, if not, the last date in the initial period on which costs were incurred in respect of the item (whether or not further costs will be incurred after the end of the initial period), (c) the amount of any payment made by a predecessor in title of the tenant in respect of such item, and (d) an explanation in simple terms of the provisions of paragraphs 16B to 16E, to the extent that they are relevant. (2) In this paragraph “relevant charge” means a service charge or an improvement contribution to which the provisions of paragraph 16B or 16C are or may be relevant. (16H) (1) The information which must be given to a tenant when he is asked to pay a relevant charge in respect of works not itemised in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) is– (a) a description of the works or that part of the works to which the relevant charge relates, (b) the extent to which costs were incurred in respect of such works or part of the works in– (i) any part of the initial period falling within the reference period, and (ii) any part of the initial period not falling within the reference period, (c) the amount of any payment made by a predecessor in title of the tenant which is relevant in relation to such works, and (d) an explanation in simple terms of the provisions of paragraph 16B and paragraphs 16E and 16F, to the extent that they are relevant. (2) In this paragraph “relevant charge” means a service charge or an improvement contribution to which the provisions of paragraph 16B or 16C are or may be relevant.

50

Omit Schedule 7 (mortgage in pursuance of right to a mortgage).

PART II — SCHEDULES TO BE INSERTED AFTER SCHEDULES 5 AND 6

1

After Schedule 5 insert the following Schedule–

SCHEDULE 5A (1) In this Schedule– - “cost floor” means the amount mentioned in paragraph (a) of section 131 (limits on amount of discount), and - “relevant costs” means costs to be taken into account for the purposes of paragraph (a) of section 131. (2) Costs shall be treated as relevant costs if, and only to the extent that, they are not administrative costs or interest. (3) Works of improvement to a dwelling-house are relevant works but works of repair or maintenance or works to deal with any defect affecting the dwelling-house are not relevant works. (4) Costs incurred on any relevant works shall not be treated as relevant costs if payment for them is made on or after the date of service of the qualifying person’s notice under section 122 (notice claiming to exercise right to buy) unless– (a) the landlord has before that date entered into a written contract for the carrying out of the works; or (b) the qualifying person has agreed in writing to the carrying out of the works and either the works have been carried out not later than the date of service of the landlord’s notice under section 125 (notice of purchase price etc., or the works will be carried out under the proposed terms of the conveyance or grant. (5) (1) The cost floor is an amount equal to the aggregate of the costs which under sub-paragraph (2) may be treated as relevant costs. (2) The costs which may be treated as relevant costs are the costs incurred by the landlord in respect of– (a) the acquisition of the dwelling-house, or (b) the construction of the dwelling-house (including development works and the acquisition of land), and (c) relevant works to the dwelling-house. (3) Where the landlord has previously disposed of the dwelling-house and has subsequently re-acquired it in circumstances in which discount was recovered in whole or part, only the costs of re-acquisition net of any discount recovered shall be taken into account for the purposes of sub-paragraph (2)(a). (6) An estimate may be made for the purposes of arriving at the cost floor for a dwelling-house where the amount of any relevant costs or payments for them cannot readily be ascertained. Companies (7) (1) In a case where a landlord is a company, references to the landlord in paragraphs 4(a) and 5(2) include references to a connected company. (2) For this purpose “connected company” means a subsidiary or holding company within the meaning of section 736 of the Companies Act 1985[^f00015].

2

In place of Schedule 7 insert the following Schedule–

SCHEDULE 7A (1) This Schedule has effect with respect to the calculation of a qualifying person’s reckonable amount for the purpose of ascertaining whether he is entitled to defer completion. (2) In this Schedule– - “admissible source” means a source of income of the qualifying person which is to be taken into account for the purposes of this Schedule; and - “qualifying person” means a person who is exercising the preserved right to buy. (3) The qualifying person’s reckonable amount for the purposes of section 142 (deferment of completion) is to be calculated by taking the amount which, in accordance with paragraphs 4 to 7, is his annual income and multiplying it by such factor as, under paragraph 10, is appropriate to the case. (4) (1) This paragraph applies to income from an employment. (2) The amount to be taken into account as income to which this paragraph applies is the qualifying person’s current annual pay, namely his current pay expressed as an annual amount or, where that amount does not fairly represent his current annual pay, such amount as does. (3) In this paragraph– - “employment” includes a part-time employment and an office but does not include a casual or temporary employment; and - “pay” includes any commission, bonus, allowance (but not an expense allowance), tip, gratuity or other payment made to the qualifying person in connection with his employment but does not include any benefit in kind; and references to pay are references to it before any statutory or other deduction has been made. (5) (1) This paragraph applies to income from a business carried on by the qualifying person (whether or not with any other person). (2) The amount to be taken into account as the qualifying person’s annual income from the business is an amount which, having regard to the latest available information, fairly represents the current annual net profit of the business or, if the qualifying person shares the net profit with any other person, his share of the net profit. (3) In this paragraph “business” includes any trade, profession or vocation. (6) (1) This paragraph applies to income from a source to which paragraphs 4 and 5 do not apply. (2) No account shall be taken of state benefits other than benefits under– (a) sections 36 and 37 of the National Insurance Act 1965[^f00016] (graduated retirement benefits); (b) sections 27, 28, 29, 39 and 40 of the Social Security Act 1975[^f00017] (retirement pensions); and (c) sections 6, 7 and 8 of the Social Security Pensions Act 1975[^f00018] (state earnings related pensions). (3) The amount to be taken into account as the qualifying person’s annual income from a source to which this paragraph applies, which is not excluded from account by sub-paragraph (2), is an amount which before any statutory or other deduction represents the qualifying person’s current income from that source expressed as an annual amount. (4) In this paragraph “state benefits” means any benefits under the Family Income Supplements Act 1970[^f00019], the Social Security Acts 1975 to 1985[^f00020], the Child Benefit Act 1975[^f00021] and the Supplementary Benefits Act 1976[^f00022]. (7) If the qualifying person has income from more than one admissible source, the amount to be taken into account as his annual income shall be the total amount of his annual income from all admissible sources determined in accordance with the provisions of this Schedule. (8) The landlord may accept any estimate for the purposes of paragraphs 4 to 6. (9) Where the right to buy is being exercised by more than one qualifying person, the preceding provisions of this Schedule shall be applied separately to determine the amount of each person’s annual income. (10) (1) This paragraph specifies the appropriate factor to be applied as a multiplier of the qualifying person’s annual income to arrive at his reckonable amount. (2) If the qualifying person’s income is the principal income, the appropriate factor in relation to his annual income is the multiplier shown in the following Table corresponding to his age on the date of service of the notice under section 122 claiming to exercise the right to buy.

Qualifying person’s age on the date of service of the notice	Multiplier
Under 60	2.5
60 and over but under 65	2.0
65 and over	1.0

(3) If the qualifying person’s income is not the principal income, the appropriate factor in relation to his annual income is 1.
(4) Subject to sub-paragraph (5), the qualifying person’s income is the principal income for the purposes of this paragraph if–
  (a) he is the only qualifying person with annual income, or
  (b) there is more than one qualifying person with annual income and the amount of his annual income is larger than that of the other qualifying person or, as the case may be, of any of the other qualifying persons, or
  (c) in a case to which paragraph (b) applies, the landlord agrees to treat the qualifying person’s income as the principal income, despite the fact that the amount of the annual income of another qualifying person is larger than his.
(5) The income of only one qualifying person shall be treated as the principal income for the purposes of this paragraph.

SCHEDULE 2 — PART V AS IT APPLIES IN CASES WHERE THE RIGHT TO BUY IS PRESERVED

THE RIGHT TO BUY

The right to buy

The right to buy.

118

(1) A qualifying person has the right to buy, that is to say, the right, in the circumstances and subject to the conditions and exceptions stated in the following provisions of this Part–

(a) if the qualifying dwelling-house is a house and the landlord owns the freehold, to acquire the freehold of the dwelling-house;

(b) if the landlord does not own the freehold or if the qualifying dwelling-house is a flat (whether or not the landlord owns the freehold), to be granted a lease of the dwelling-house.

Qualifying period for right to buy.

119

(1) The right to buy does not arise unless the period which, in accordance with Schedule 4, is to be taken into account for the purposes of this section is at least two years.

(2) Where the tenancy held by the qualifying person is a joint tenancy the condition in subsection (1) need be satisfied with respect to one only of the joint tenants.

Exceptions to the right to buy.

120

The right to buy does not arise in the cases specified in Schedule 5 (exceptions to the right to buy).

Circumstances in which the right to buy cannot be exercised.

121

(1) The right to buy cannot be exercised if the qualifying person is obliged to give up possession of the dwelling-house in pursuance of an order of the court or will be so obliged at a date specified in the order.

(2) The right to buy cannot be exercised if the person, or one of the persons, to whom the right to buy belongs–

(a) has a bankruptcy petition pending against him,

(d) has made a composition or arrangement with his creditors the terms of which remain to be fulfilled.

Claim to exercise right to buy

Qualifying person’s notice claiming to exercise right to buy.

122

(1) A qualifying person claims to exercise the right to buy by written notice to that effect served on the landlord.

(2) In this Part “the relevant time”, in relation to an exercise of the right to buy, means the date on which that notice is served.

(3) The notice may be withdrawn at any time by notice in writing served on the landlord.

(4) Where the dwelling-house is occupied by two or more qualifying persons as joint tenants the right to buy may be exercised by such one or more of them as may be agreed between them.

123

(1) A qualifying person may in his notice under section 122 require that not more than three members of his family who are not joint tenants but occupy the dwelling-house as their only or principal home should share the right to buy with him.

(2) He may validly do so in the case of any such member only if–

(a) that member is his spouse or has been residing with him throughout the period of twelve months ending with the giving of the notice, or

(b) the landlord consents.

(3) Where by such a notice any members of the qualifying person’s family are validly required to share the right to buy with him, the right to buy the qualifying dwelling-house belongs to the qualifying person and those members jointly and they shall be treated as joint tenants for the purposes, in relation to that dwelling-house, of the right to buy.

Landlord’s notice admitting or denying right to buy.

124

(1) Where a notice under section 122 (notice claiming to exercise right to buy) has been served by the qualifying person, the landlord shall, unless the notice is withdrawn, serve on the qualifying person within the period specified in subsection (2) a written notice either–

(a) admitting his right, or

(b) denying it and stating the reasons why, in the opinion of the landlord, the qualifying person does not have the right to buy.

(2) The period for serving a notice under this section is four weeks where the requirement of section 119 (qualifying period for the right to buy) is satisfied by a period or periods during which the landlord was the landlord on which the qualifying person’s notice under section 122 was served, and eight weeks in any other case.

Landlord’s notice of purchase price and other matters.

125

(1) Where a qualifying person has claimed to exercise the right to buy and that right has been established (whether by the landlord’s admission or otherwise), the landlord shall–

(a) within eight weeks where the right is that mentioned in section 118(1)(a) (right to acquire freehold), and

(b) within twelve weeks where the right is that mentioned in section 118(1)(b) (right to acquire leasehold interest),

serve on the qualifying person a notice complying with this section.

(2) The notice shall describe the dwelling-house, shall state the price at which, in the opinion of the landlord, the qualifying person is entitled to have the freehold conveyed or, as the case may be, the lease granted to him and shall, for the purpose of showing how the price has been arrived at, state–

(a) the value at the relevant time,

(b) the improvements disregarded in pursuance of section 127 (improvements to be disregarded in determining value), and

(c) the discount to which the qualifying person is entitled, stating the period to be taken into account under section 129 (discount) and, where applicable, the amount mentioned in section 130(1) (reduction for previous discount) or section 131(1) or (2) (limits on amount of discount).

(3) The notice shall state the provisions which, in the opinion of the landlord, should be contained in the conveyance or grant.

(4) Where the notice states provisions which would enable the landlord to recover from the qualifying person–

(a) service charges, or

(b) improvement contributions,

the notice shall also contain the estimates and other information required by section 125A (service charges) or 125B (improvement contributions).

(4A) The notice shall contain a description of any structural defect known to the landlord affecting the dwelling-house or the building in which it is situated or any other building over which the qualifying person will have rights under the conveyance or lease.

(5) The notice shall also inform the qualifying person of–

(a) his right under section 128 to have the value of the dwelling-house at the relevant time determined or re-determined by the district valuer, and

(c) the effect of sections 140, 141(1), (2) and (4) and 142(1) and (2) (landlord’s notices to complete and effect of failure to comply and right to defer completion).

Estimates and information about service charges.

125A

A landlord’s notice under section 125 shall state as regards service charges (excluding, in the case of a flat, charges to which subsection (2) applies)–

(a) the landlord’s estimate of the average annual amount (at current prices) which would be payable in respect of each head of charge in the reference period, and

(b) the aggregate of those estimated amounts,

and shall contain a statement of the reference period adopted for the purpose of the estimates.

(2) A landlord’s notice under section 125 given in respect of a flat shall, as regards service charges in respect of repairs (including works for the making good of structural defects), contain–

(a) the estimates required by subsection (3), together with a statement of the reference period adopted for the purpose of the estimates, and

(b) a statement of the effect of–paragraph 16B of Schedule 6 (which restricts by reference to the estimates the amounts payable by the tenant).

(3) The following estimates are required for works in respect of which the landlord considers that costs may be incurred in the reference period–

(a) for works itemised in the notice, estimates of the amount (at current prices) of the likely cost of, and of the qualifying person’s likely contribution in respect of, each item, and the aggregate amounts of those estimated costs and contributions, and

(b) for works not so itemised, an estimate of the average annual amount (at current prices) which the landlord considers is likely to be payable by the qualifying person.

Estimates and information about improvement contributions.

125B

A landlord’s notice under section 125 given in respect of a flat shall, as regards improvement contributions, contain–

(a) the estimates required by this section, together with a statement of the reference period adopted for the purpose of the estimates, and

(b) a statement of the effect of paragraph 16C of Schedule 6 (which restricts by reference to the estimates the amounts payable by the tenant).

(2) Estimates are required for works in respect of which the landlord considers that costs may be incurred in the reference period.

(3) The works to which the estimates relate shall be itemised and the estimates shall show–

(a) the amount (at current prices) of the likely cost of, and of the tenant’s likely contribution in respect of, each item, and

(b) the aggregate amounts of those estimated costs and contributions.

Reference period for purposes of ss. 125A and 125B.

125C

The reference period for the purposes of the estimates required by section 125A or 125B is the period–

(a) beginning on such date not more than six months after the notice is given as the landlord may reasonably specify as being a date by which the conveyance will have been made or the lease granted, and

(b) ending five years after that date or, where the notice states that the conveyance or lease will provide for a service charge or improvement contribution to be calculated by reference to a specified annual period, with the end of the fifth such period beginning after that date.

(2) For the purpose of the estimates it shall be assumed that the conveyance will be made or the lease granted at the beginning of the reference period on the terms stated in the notice.

Purchase Price

Purchase Price.

126

(1) The price payable for a dwelling-house on a conveyance or grant in pursuance of this Part is–

(a) the amount which under section 127 is to be taken as its value at the relevant time, less

(b) the discount to which the purchaser is entitled under this Part.

(2) References in this Part to the purchase price include references to the consideration for the grant of a lease.

Value of dwelling-house.

127

(1) The value of a dwelling-house at the relevant time shall be taken to be the price which at that time it would realise if sold on the open market by a willing vendor–

(a) on the assumptions stated for a conveyance in subsection (2) and for a grant in subsection (3),

(b) disregarding any improvements made by any of the persons specified in subsection (4) and any failure by any of those persons to keep the dwelling-house in good internal repair, and

(c) on the assumption that any service charges or improvement contributions payable will not be less than the amounts to be expected in accordance with the estimates contained in the landlord’s notice under section 125.

(2) For the conveyance the assumptions are–

(a) that the vendor was selling for an estate in fee simple with vacant possession,

(b) that neither the qualifying person nor a member of his family residing with him wanted to buy, and

(c) that the dwelling-house was to be conveyed with the same rights and subject to the same burdens as it would be in pursuance of this Part.

(3) For the grant of a lease the assumptions are–

(a) that the vendor was granting a lease with vacant possession for the appropriate term defined in paragraph 12 of Schedule 6 (but subject to sub-paragraph (3) of that paragraph),

(b) that neither the qualifying person nor a member of his family residing with him wanted to take the lease,

(d) that the grant was to be made with the same rights and subject to the same burdens as it would be in pursuance of this Part.

(4) The persons referred to in subsection (1)(b) are–

(a) the qualifying person or, where the qualifying person is a qualifying successor, the person who was the qualifying person before him,

(b) where the qualifying person is the former secure tenant, any person who, under the same tenancy, was a secure tenant before him, and

(c) where the qualifying person is the former secure tenant, any member of his family who, immediately before the grant of the secure tenancy, was the secure tenant of the same dwelling-house under another tenancy,but do not include, in a case where the qualifying person is a former secure tenant whose tenancy has at any time been assigned by virtue of section 92 (assignments by way of exchange), a person who under that tenancy was a secure tenant before the assignment.

Determination of value by district valuer.

128

(1) Any question arising under this Part as to the value of a dwelling-house at the relevant time shall be determined by the district valuer in accordance with this section.

(2) A qualifying person may require that value to be determined, or as the case may be re-determined, by a notice in writing served on the landlord not later than three months after the service on him of the notice under section 125 (landlord’s notice of purchase price and other matters) or, if proceedings are then pending between the landlord and the qualifying person for the determination of any other question arising under this Part, within three months of the final determination of the proceedings.

(3) If such proceedings are begun after a previous determination under this section–

(a) the qualifying person may, by notice in writing served on the landlord within four weeks of the final determination of the proceedings, require the value of the dwelling-house at the relevant time to be re-determined, and

(b) the landlord may at any time within those four weeks, whether or not a notice under paragraph (a) is served, require the district valuer to re-determine that value;

and where the landlord requires a re-determination to be made in pursuance of this subsection, it shall serve on the qualifying person a notice stating that the requirement is being or has been made.

(4) Before making a determination or re-determination in pursuance of this section, the district valuer shall consider any representation made to him by the landlord or the qualifying person within four weeks from the service of the qualifying person’s notice under this section, or as the case may be, from the service of the landlord’s notice under subsection (3).

(5) As soon as practicable after a determination or re-determination has been made in pursuance of this section, the landlord shall serve on the qualifying person a notice stating the effect of the determination or re-determination and the matters mentioned in section 125(2) and (3) (terms for exercise of right to buy).

(6) A notice under subsection (5) shall inform the qualifying person of the effect of sections 140, 141(1), (2) and (4) and 142(1) and (2) (landlord’s notices to complete, effect of failure to comply and right to defer completion).

Discount.

129

(1) Subject to the following provisions of this Part, a person exercising the right to buy is entitled to a discount of a percentage calculated by reference to the period which is to be taken into account in accordance with Schedule 4 (qualifying period for right to buy and discount).

(2) The discount is–

(a) in the case of a house, 32 per cent. plus one per cent. for each complete year by which the qualifying period exceeds two years, up to a maximum of 60 per cent.;

(b) in the case of a flat, 44 per cent. plus two per cent. for each complete year by which the qualifying period exceeds two years, up to a maximum of 70 per cent.

(3) Where joint tenants exercise the right to buy, Schedule 4 shall be construed as if for the qualifying person there were substituted that one of the joint tenants whose substitution will produce the largest discount.

Reduction of discount where previous discount given.

130

(1) There shall be deducted from the discount an amount equal to any previous discount qualifying, or the aggregate of previous discounts qualifying, under the provisions of this section.

(2) A “previous discount” means a discount given before the relevant time–

(a) on conveyance of the freehold, or a grant or assignment of a long lease of a dwelling-house by a person within para 7 or 7A of Schedule 4 (public sector landlords), or

(aa) on conveyance of the freehold, or a grant or assignment of a long lease of a dwelling-house by a person against whom the right to buy was exercisable by virtue of section 171A (preservation of right to buy on disposal to private sector landlord) to a person who was a qualifying person for the purposes of the preserved right to buy and in relation to whom that dwelling-house was the qualifying dwelling-house, or

(b) in pursuance of the provision required by paragraph 1 of Schedule 8 (terms of shared ownership lease: right to acquire additional shares), or any other provision to the like effect.

(3) A previous discount qualifies for the purposes of this section if it was given–

(a) to the person or one of the persons exercising the right to buy, or

(b) to the spouse of that person or one of those persons (if they are living together at the relevant time), or

and where a previous discount was given to two or more persons jointly, this section has effect as if each of them had been given an equal proportion of the discount.

(4) Where the whole or part of a previous discount has been recovered by the person by whom it was given (or a successor in title of his)–

(a) by the receipt of a payment determined by reference to the discount, or

(b) by a reduction so determined of any consideration given by that person (or a successor in title of his), or

then, so much of the discount as has been so recovered shall be disregarded for the purposes of this section.

(6) In this section “dwelling-house” includes any yard, garden, outhouses and appurtenances belonging to the dwelling-house or usually enjoyed with it.

Limits on amount of discount

131

Unless the landlord otherwise agrees–

(a) the discount shall not reduce the price below the amount which, in accordance with Schedule 5A, is to be taken as representing the costs incurred by the landlord in respect of the dwelling-house and is to be treated as relevant for the purposes of this section;

(b) if the price before discount is below that amount, there shall be no discount; and

Change of qualifying person or landlord after service of notice claiming right to buy

Change of qualifying person after notice claiming right to buy.

136

(1) Where, after a qualifying person has given a notice claiming the right to buy, a qualifying successor becomes the qualifying person in relation to the dwelling-house, the qualifying successor shall be in the same position as if the notice had been given by him and he had been the qualifying person at the time it was given.

(2) If a notice under section 125 (landlord’s notice of purchase price and other matters) has been served on the former qualifying person, the landlord shall serve on the new qualifying person a notice informing him of the effect of sections 140, 141(1), (2) and (4) and 142(1) and (2) (landlord’s notices to complete, effect of failure to comply and right to defer completion).

(3) The new qualifying person may then serve a notice under section 142(1)(b) (qualifying person’s notice claiming to exercise right to defer completion) within three months beginning with service on him of the landlord’s notice under subsection (2) or within that period as extended in writing by the landlord.

(6) The preceding provisions of this section do not confer any right on a person required in pursuance of section 123 (claim to share right to buy with members of family) to share the right to buy, unless he could have been validly so required had the notice claiming to exercise the right to buy been given by the new qualifying person.

(7) The preceding provisions of this section apply with the necessary modifications if there is a further change in the person who is the qualifying person.

Change of landlord after notice claiming right to buy.

137

(1) Where, other than in a case to which section 171D(1)(a) or section 171E(2)(a) applies (disposal to authority or body satisfying landlord condition for secure tenancies), the interest of the landlord in the dwelling-house passes from the landlord to another person after a qualifying person has given a notice claiming to exercise the right to buy, all parties shall subject to subsection (2) be in the same position as if the other person had become the landlord before the notice was given and had given that notice and any further notice given by the qualifying person to the landlord and had taken all steps which the landlord had taken.

(2) If the circumstances after the disposal differ in any material respect, as for example where–

(a) the interest of the disponee in the dwelling-house after the disposal differs from that of the disponor before the disposal, or

all those concerned shall, as soon as practicable after the disposal, take all such steps (whether by way of amending or withdrawing and re-serving any notice or extending any period or otherwise) as may be requisite for the purpose of securing that all parties are, as nearly as may be, in the same position as they would have been if those circumstances had obtained before the disposal.

Completion of purchase in pursuance of right to buy

Duty of landlord to convey freehold or grant lease.

138

(1) Where a qualifying person has claimed to exercise the right to buy and that right has been established, then, as soon as all matters relating to the grant have been agreed or determined, the landlord shall make to the qualifying person–

(a) if the dwelling-house is a house and the landlord owns the freehold, a grant of the dwelling-house for an estate in fee simple absolute, or

(b) if the landlord does not own the freehold or if the dwelling-house is a flat (whether or not the landlord owns the freehold), a grant of a lease of the dwelling-house,

in accordance with the following provisions of this Part.

(2) If the qualifying person has failed to pay the rent or any other payment due from him as a tenant for a period of four weeks after it has been lawfully demanded from him, the landlord is not bound to comply with subsection (1) while the whole or part of that payment remains outstanding.

(3) The duty imposed on the landlord by subsection (1) is enforceable by injunction.

Terms and effect of conveyance or grant.

139

(1) A conveyance of the freehold executed in pursuance of the right to buy shall conform with Parts I and II of Schedule 6; a grant of a lease so executed shall conform with Parts I and III of that Schedule; and Part IV of that Schedule has effect in relation to certain charges.

(2) The tenancy held by the qualifying person comes to an end on the grant to him of an estate in fee simple, or of a lease, in pursuance of the provisions of this Part; and if there is then a subtenancy section 139 of the Law of Property Act 1925 (effect of extinguishment of reversion) applies as on a merger or surrender.

Landlord’s first notice to complete.

140

(1) The landlord may, subject to the provisions of this section, serve on the qualifying person at any time a written notice requiring him–

(a) if all relevant matters have been agreed or determined, to complete the transaction within a period stated in the notice, or

(b) if any relevant matters are outstanding, to serve on the landlord within that period a written notice to that effect specifying the matters,

and informing the qualifying person of the effect of this section and of section 141(1), (2) and (4) (landlord’s second notice to complete).

(2) The period stated in a notice under this section shall be such period (of at least 56 days) as may be reasonable in the circumstances.

(3) A notice under this section shall not be served earlier than one year after the service on the qualifying person of–

(a) where he exercises his right under section 128 (determination of value by district valuer), the notice under subsection (5) of that section (further notice by landlord after determination), or

(b) where he does not exercise that right, the notice under section 125 (landlord’s notice of purchase price and other matters).

(3A) Where the qualifying person is entitled to defer completion, a notice under this section shall not be served earlier than three years after service of the notice under section 122 (qualifying person’s notice claiming to exercise right to buy), if that period expires after whichever is applicable of the periods specified in subsection (3).

(4) A notice under this section shall not be served if–

(b) proceedings for the determination of any relevant matter have not been disposed of, or

(c) any relevant matter stated to be outstanding in a written notice served on the landlord by the qualifying person has not been agreed in writing or determined.

(5) In this section “relevant matters” means matters relating to the grant.

Landlord’s second notice to complete.

141

(1) If the qualifying person does not comply with a notice under section 140 (landlord’s first notice to complete), the landlord may serve on him a further written notice–

(a) requiring him to complete the transaction within a period stated in the notice, and

(b) informing him of the effect of this section in the event of his failing to comply.

(2) The period stated in a notice under this section shall be such period (of at least 56 days) as may be reasonable in the circumstances.

(3) At any time before the end of that period (or that period as previously extended) the landlord may by a written notice served on the qualifying person extend it (or further extend it).

(4) If the qualifying person does not comply with a notice under this section the notice claiming to exercise the right to buy shall be deemed to be withdrawn at the end of that period (or as the case may require, that period as extended under subsection (3)).

(5) If a notice under this section has been served on the qualifying person and by virtue of section 138(2) (failure of qualifying person to pay rent, etc) the landlord is not bound to complete, the qualifying person shall be deemed not to comply with the notice.

When qualifying person is entitled to defer completion.

142

(1) A qualifying person is entitled to defer completion if–

(a) his reckonable amount calculated in accordance with Schedule 7A (or the aggregate of such amounts where the right to buy is being exercised by more than one person) is less than the purchase price of the dwelling-house;

(b) he has, within the period mentioned below, served on the landlord a notice claiming to exercise the right to defer completion; and

(2) The notice must be served and the sum of £150 deposited within the period of three months beginning with the service on the qualifying person–

(a) where he exercises his right under section 128 (determination of value by district valuer), of the notice under subsection (5) of that section (further notice by landlord after determination), or

(b) where he does not exercise that right, of the notice under section 125 (landlord’s notice of purchase price and other matters),

or within that period as extended in writing by the landlord.

(3) Where a qualifying person has served on the landlord a notice under subsection (1)(b), the landlord shall, as soon as practicable after the date on which the notice is served, serve on the qualifying person a notice either–

(a) admitting the qualifying person’s right to defer completion, or

(b) denying it and stating the reasons why, in the landlord’s opinion, the qualifying person does not have the right.

(4) If in pursuance of a notice under this section the qualifying person deposits the sum of £150 with the landlord, then–

(a) if he completes the transaction, the sum shall be treated as having been paid towards the purchase price, and

(b) if he does not complete the transaction but withdraws his notice claiming to exercise the right to buy, or is deemed to have withdrawn it by virtue of section 141(4) (effect of failure to comply with landlord’s second notice to complete), the sum shall be returned to him.

Qualifying person’s notices of delay.

153A

(1) Where a qualifying person has claimed to exercise the right to buy, he may serve on his landlord a notice (in this section referred to as an “initial notice of delay”) in any of the following cases, namely,–

(a) where the landlord has failed to serve a notice under section 124 within the period appropriate under subsection (2) of that section;

(b) where the tenant’s right to buy has been established and the landlord has failed to serve a notice under section 125 within the period appropriate under subsection (1) of that section; or

(e) where the tenant considers that delays on the part of the landlord are preventing him from exercising expeditiously his right to buy;

and where an initial notice of delay specifies either of the cases in paragraphs (a) and (b) any reference in this section or section 153B to the default date is a reference to the end of the period referred to in the paragraph in question.

(2) An initial notice of delay–

(a) shall specify the most recent action of which the qualifying person is aware which has been taken by the landlord pursuant of this Part of this Act; and

(b) shall specify a period (in this section referred to as “the response period”), not being less than one month, beginning on the date of service of the notice, within which the service by the landlord of a counter notice under subsection (3) will have the effect of cancelling the initial notice of delay.

(3) Within the response period specified in an initial notice of delay or at any time thereafter, the landlord may serve on the qualifying person a counter notice in either of the following circumstances–

(a) if the initial notice specifies either of the cases in paragraphs (a) and (b) of subsection (1) and the landlord has served, or is serving together with the counter notice, the required notice under section 124 or section 125, as the case may be; or

(b) if the initial notice specifies the case in subsection (1)(e) and there is no action under this Part which, at the beginning of the response period, it was for the landlord to take in order to allow the qualifying person expeditiously to exercise his right to buy and which remains to be taken at the time of service of the counter notice.

(4) A counter notice under subsection (3) shall specifiy the circumstances by virtue of which it is served.

(5) At any time when–

(a) the response period specified in an initial notice of delay has expired, and

(b) the landlord has not served a counter notice under subsection (3),

the qualifying person may serve on the landlord a notice (in this section and section 153B referred to as an “operative notice of delay”) which shall state that section 153B will apply to payments of rent made by the qualifying person on or after the default date or, if the initial notice of delay specified the case in subsection (1)(e), the date of the service of the notice.

(6) If, after a qualifying person has served an initial notice of delay, a counter notice has been served under subsection (3), then, whether or not the qualifying person has also served an operative notice of delay, if any of the cases in subsection (1) again arises, the qualifying person may serve a further initial notice of delay and the provisions of this section shall apply again accordingly.

Payments of rent attributable to purchase price etc.

153B

(1) Where a qualifying person has served on his landlord an operative notice of delay, this section applies to any payment of rent which is made on or after the default date or, as the case may be, the date of the service of the notice and before the occurence of any of the following events (and, if more than one event occurs, before the earliest to occur)–

(a) the service by the landlord of a counter notice under section 153A(3);

(b) the date on which the landlord makes to the qualifying person the grant required by section 138;

(d) the date on which the qualifying person withdraws or is deemed to have withdrawn the notice claiming to exercise the right to buy; and

(e) the date on which the qualifying person ceases to be entitled to exercise the right to buy.

(2) Except where this section ceases to apply on a date determined under paragraph (d) or (e) of subsection (1), so much of any payment of rent to which this section applies as does not consist of–

(a) a sum due on account of rates, or

(b) a service charge (as defined in section 621A),

shall be treated not only as a payment of rent but also as a payment on account by the qualifying person which is to be taken into account in accordance with subsection (3).

(3) In a case where subsection (2) applies, the amount which, apart from this section, would be the purchase price shall be reduced by an amount equal to the aggregate of–

(a) the total of any payments on account treated as having been paid by the qualifying person by virtue of subsection (2); and

(b) if those payments on account are derived from payments of rent referable to a period of more than twelve months, a sum equal to the appropriate percentage of the total referred to in paragraph (a).

(4) In subsection (3)(b) “the appropriate percentage” means 50 per cent.

Registration of title

Registration of title.

154

(1) Where the landord’s title to the dwelling-house is not registered, section 123 of the Land Registration Act 1925 (compulsory registration of title) applies in relation to–

(a) the conveyance of the freehold or the grant of a lease in pursuance of this Part,

whether or not the dwelling-house is in an area in which an Order in Council under section 120 of that Act is for the time being in force (areas of compulsory registration) and, in the case of a lease, whether or not the lease is granted for a term of more than 21 years.

(2) Where the landlord’s title to the dwelling-house is not registered, the landlord shall give the qualifying person a certificate stating that the landlord is entitled to convey the freehold or make the grant subject only to such incumbrances, rights and interests as are stated in the conveyance or grant or summarised in the certificate.

(3) Where the landlord’s interest in the dwelling-house is a lease, the certificate under subsection (2) shall also state particulars of that lease and, with respect to each superior title–

(a) where it is registered, the title number;

(b) where it is not registered, whether it was investigated in the usual way on the grant of the landlord’s lease.

(4) A certificate under subsection (2) shall be–

(a) in a form approved by the Chief Land Registrar, and

(b) signed by such officer of the landlord or such other person as may be approved by the Chief Land Registrar.

(5) The Chief Land Registrar shall, for the purpose of the registration of title, accept such a certificate as sufficient evidence of the facts stated in it; but if as a result he has to meet a claim against him under the Land Registration Acts 1925 to 1986 the landlord is liable to indemnify him.

(6) Sections 8 and 22 of the Land Registration Act 1925 (application for registration of leasehold land and registration of dispositions of leasehold) apply in relation to a lease granted in pursuance of this Part notwithstanding that it is a lease for a term of which not more than 21 years are unexpired or, as the case may be, a lease granted for a term not exceeding 21 years.

Provisions affecting future disposals

Repayment of discount on early disposal.

155

(1) A conveyance of the freehold or grant of a lease in pursuance of this Part may, at the discretion of the landlord, contain, unless there is no discount, a covenant binding on the qualifying person and his successors in title to the following effect, but not one the effect of which would be more onerous.

(2) The covenant shall be to pay to the landlord on demand, if within a period of three years there is a relevant disposal which is not an exempted disposal (but if there is more than one such disposal, then only on the first of them), the discount to which the qualifying person was entitled, reduced by one third for each complete year which has elapsed after the conveyance or grant and before the disposal.

(3A) Where a qualifying person has served on his landlord an operative notice of delay, as defined in section 153A–

(a) the three years referred to in subsection (2) shall begin from a date which precedes the date of the conveyance of the freehold or grant of the lease by a period equal to the time (or, if there is more than one such notice, the aggregate of the times) during which, by virtue of section 153B, any payment of rent fails to be taken into account in accordance with subsection (3) of that section.

Liability to repay is a charge on the premises.

156

(1) The liability that may arise under the covenant imposed by virtue of section 155 is a charge on the dwelling-house, taking effect as if it had been created by deed expressed to be by way of legal mortgage.

(2) The charge has priority immediately after any legal charge securing an amount–

(a) advanced to the qualifying person for the purpose of enabling him to exercise the right to buy, or

(b) further advanced to him by the person who made that advance.

(3) A charge taking effect by virtue of this section is a land charge for the purposes of section 59 of the Land Registration Act 1925 notwithstanding subsection (5) of that section (exclusion of mortgages), and subsection (2) of that section applies accordingly with respect to its protection and realisation.

(3A) The covenant imposed by virtue of section 155 (covenant for repayment of discount) does not, by virtue of its binding successors in title of the qualifying person, bind a person exercising rights under a charge having priority over the charge taking effect by virtue of this section, or a person deriving title under him; and a provision of the conveyance or grant, or of a collateral agreement, is void in so far as it purports to authorise a forfeiture, or to impose a penalty or disability, in the event of any such person failing to comply with that covenant.

Restriction on disposal of dwelling-houses in National Parks, etc.

157

(1) Where in pursuance of this Part a conveyance or grant is executed by a housing association (“the landlord”) of a dwelling-house situated in–

(a) a National Park,

(b) an area designated under section 87 of the National Parks and Access to the countryside Act 1949 as an area of outstanding beauty, or

the conveyance or grant may contain a covenant limiting the freedom of the qualifying person (including any successor in title of his and any person deriving title under him or such a successor) to dispose of the dwelling-house in the manner specified below.

(2) The limitation is, subject to subsection (4), that until such time (if any) as may be notified in writing by the landlord to the qualifying person or a successor in title of his–

(a) there will be no relevant disposal which is not an exempted disposal without the written consent of the landlord; but that consent shall not be withheld if the disposal is to a person satisfying the condition stated in subsection (3); and

(b) there will be no disposal by way of tenancy or licence without the written consent of the landlord unless the disposal is to a person satisfying that condition or by a person whose only or principal home is and, throughout the duration of the tenancy or licence, remains the dwelling-house.

(3) The condition is that the person to whom the disposal is made (or, if it is made to more than one person, at least one of them) has, throughout the period of three years immediately preceding the application for consent or, in the case of a disposal by way of tenancy or licence, preceding the disposal –

(a) had his place of work in a region designated by order of the Secretary of State which, or part of which, is comprised in the National Park or area, or

(b) had his only or principal home in such a region;

or has had the one in part or parts of that period and the other in the remainder; but the region need not have been the same throughout the period.

(4) If the Housing Corporation consents, the limitations specified in subsection (2) may be replaced by the following limitation, that is to say, that until the end of the period of ten years beginning with the conveyance or grant there will be no relevant disposal which is not an exempted disposal, unless in relation to that or a previous such disposal–

(a) the qualifying person (or his successor in title or the person deriving title under him or his successor) has offered to reconvey the dwelling-house, or as the case may be surrender the lease, to the landlord for such consideration as is mentioned in section 158, and

(b) the landlord has refused the offer or has failed to accept it within one month after it was made.

(5) The consent of the Housing Corporation under subsection (4) may be given subject to such conditions as the Corporation thinks fit.

(6) A disposal in breach of such a covenant as is mentioned in subsection (1) is void and, so far as it relates to disposals by way of tenancy or licence, such a conveyance may be enforced by the landlord as if–

(a) the landlord were possessed of land adjacent to the house concerned; and

(b) the covenant were expressed to be made for the benefit such adjacent land.

(6A) Any reference in the preceding provisions of this section to a disposal by way of tenancy or licence does not include a reference to a relevant disposal or an exempted disposal.

(7) Where such a covenant imposes the limitation specified in subsection (2), the limitation is a local land charge and the Chief Land Registrar shall enter the appropriate restriction on the register of title as if application therefor had been made under section 58 of the Land Registration Act 1925.

(8) An order under this section–

(a) may make different provision with respect to different cases or descriptions of case, including different provision for different areas, and

(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution by either House of Parliament.

Consideration for re-conveyance or surrender under s. 157.

158

(1) The consideration for the offer by a qualifying person (or his successor in title or a person deriving title under him or his successor), referred to in section 157(4)(a), to reconvey or surrender his interest to the landlord shall be such amount as may be agreed between the parties or determined by the district valuer as being the amount which is to be taken as the value of the dwelling-house at the time the offer is made.

(2) That value shall be taken to be the price which, at that time, the interest to be reconveyed or surrendered would realise if sold on the open market by a willing vendor, on the assumption that any liability under–

(a) a covenant imposed by virtue of section 155 (repayment of discount on early disposal),

would be discharged by the vendor.

(3) If the landlord accepts the offer, no payment shall be required in pursuance of any such covenant as is mentioned in subsection (2), but the consideration shall be reduced subject to subsection (4) by such amount (if any) as, on a disposal made at the time the offer was made, being a relevant disposal which is not an exempted disposal, would fall to be paid under that covenant.

(4) Where there is a charge on the dwelling-house having priority over the charge to secure payment of the sum due under the covenant mentioned in subsection (2), the consideration shall not be reduced under subsection (3) below the amount necessary to discharge the outstanding sum secured by the first-mentioned charge at the date of the offer to reconvey or surrender.

Relevant disposals.

159

(1) A disposal, whether of the whole or part of the dwelling-house, is a relevant disposal for the purposes of this Part if it is–

(a) a further conveyance of the freehold or an assignment of the lease, or

(b) the grant of a lease (other than a mortgage term) for a term of more than 21 years otherwise than at a rack rent.

(2) For the purposes of subsection (1)(b) it shall be assumed–

(a) that any option to renew or extend a lease or sub-lease, whether or not forming part of a series of options, is exercised, and

(b) that any option to terminate a lease or sub-lease is not exercised.

Exempted disposals.

160

(1) A disposal is an exempted disposal for the purposes of this Part if–

(a) it is a disposal of the whole of the dwelling-house and a further conveyance of the freehold or an assignment of the lease and the person or each of the persons to whom it is made is a qualifying person (as defined in subsection (2));

(b) it is a vesting of the whole of the dwelling-house in a person taking under a will or on an intestacy;

(c) it is a disposal of the whole of the dwelling-house in pursuance of an order made under section 24 of the Matrimonial Causes Act 1973 (property adjustment orders in connection with matrimonial proceedings) or section 2 of the Inheritance (Provision for Famly and Dependants) Act 1975 (orders as to financial provision to be made from estate);

(d) it is compulsory disposal (as defined in section 161); or

(e) it is a disposal of property consisting of land included in the dwelling-house by virtue of section 184 (land let with or used for the purposes of the dwelling-house).

(2) For the purposes of subsection (1)(a), a person is a qualifying person in relation to a disposal if–

(a) he is the person, or one of the persons, by whom the disposal is made,

(b) he is the spouse or a former spouse of that person, or one of those persons, or

(c) he is a member of the family of that person, or one of those persons, and has resided with him throughout the period of twelve months ending with the disposal.

Meaning of “compulsory disposal”.

161

In this Part a “compulsory disposal” means a disposal of property which is acquired compulsorily, or is acquired by a person who has made or would have made, or for whom another person has made or would have made, a compulsory purchase order authorising its compulsory purchase for the purposes for which it is acquired.

Exempted disposals which end liability under covenants.

162

Where there is a relevant disposal which is an exempted disposal by virtue of section 160(1)(d) or (e) (compulsory disposals or disposals of land let with or used for purposes of dwelling-house)–

(a) a covenant imposed by virtue of section 155 (repayment of discount on early disposal) is not binding on the person to whom the disposal is made or any successor in title of his, and that covenant and the charge taking effect by virtue of section 156 cease to apply in relation to the property disposed of, and

(b) any such covenant as is mentioned in section 157 (restriction on disposal of dwelling-houses in National Parks, etc.) ceases to apply in relation to the property disposed of.

Treatment of options.

163

(1) For the purposes of this Part the grant of an option enabling a person to call for a relevant disposal which is not an exempted disposal shall be treated as such a disposal made to him.

(2) For the purposes of section 157(2) (requirements of consent to disposal of dwelling-house in National Park, etc.) a consent to such a grant shall be treated as a consent to a disposal in pursuance of the option.

Preservation of right to buy on disposal to private sector landlord

Cases in which right to buy is preserved.

171A

(1) The provisions of this Part continue to apply where a person ceases to be a secure tenant of a dwelling-house by reason of the disposal by the landlord of an interest in the dwelling-house to a person who is not an authority or body within section 80 (the landlord condition for secure tenancies).

(2) In this Part–

(a) references to the preservation of the right to buy and to a person having the preserved right to buy are to the continued application of the provisions of this Part by virtue of this section and to a person in relation to whom those provisions so apply;

(b) “qualifying disposal” means a disposal in relation to which this section applies, and

(3) This section does not apply–

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