Commonhold and Leasehold Reform Act 2002 (c. 15)

(The document as of February, 2008)

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136 Disregard of marriage value in case of very long leases

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

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

(3) After that sub-paragraph insert--

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

Chapter 4 Leasehold houses

Introductory

137 Amendments of 1967 Act

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

Qualifying rules

138 Abolition of residence test

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

(a) ", occupying the house as his residence," and

(b) ", and occupying it as his residence,".

(2) After that subsection insert--

" (1ZA) Where a house is for the time being let under two or more tenancies, a tenant under any of those tenancies which is superior to that held by any tenant on whom this Part of this Act confers a right does not have any right under this Part of this Act.

(1ZB) Where a flat forming part of a house is let to a person who is a qualifying tenant of the flat for the purposes of Chapter 1 or 2 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28), a tenant of the house does not have any right under this Part of this Act unless, at the relevant time, he has been occupying the house, or any part of it, as his only or main residence (whether or not he has been using it for other purposes)--

(a) for the last two years; or

(b) for periods amounting to two years in the last ten years. "

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

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

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

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

139 Reduction of qualifying period as tenant etc

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

(2) After subsection (1A) of that section insert--

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

(a) for the last two years; or

(b) for periods amounting to two years in the last ten years. "

(3) In--

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

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

for "three years" substitute "twelve months".

140 Exclusion of certain business tenancies

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

" (1ZC) The references in subsection (1)(a) and (b) to a long tenancy do not include a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (business tenancies) applies unless--

(a) it is granted for a term of years certain exceeding thirty-five years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture or otherwise,

(b) it is for a term fixed by law under a grant with a covenant or obligation for perpetual renewal, unless it is a tenancy by sub-demise from one which is not a tenancy which falls within any of the paragraphs in this subsection,

(c) it is a tenancy taking effect under section 149(6) of the Law of Property Act 1925 (c. 20) (leases terminable after a death or marriage), or

(d) it is a tenancy which--

(i) is or has been granted for a term of years certain not exceeding thirty-five years, but with a covenant or obligation for renewal without payment of a premium (but not for perpetual renewal), and

(ii) is or has been once or more renewed so as to bring to more than thirty-five years the total of the terms granted (including any interval between the end of a tenancy and the grant of a renewal).

(1ZD) Where this Part of this Act applies as if there were a single tenancy of property comprised in two or more separate tenancies, then, if each of the separate tenancies falls within any of the paragraphs of subsection (1ZC) above, that subsection shall apply as if the single tenancy did so. "

141 Tenancies not at low rent

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

(2) Omit--

(a) in subsection (1)(b), "falls within subsection (2) below and", and

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

(3) In subsection (3) (exceptions)--

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

(b) for paragraph (c) substitute--

" (c) the tenancy either--

(i) was granted on or before that date, or

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

142 Personal representatives

(1) After section 6 of the 1967 Act insert--

" 6A Rights of personal representatives

(1) Where a tenant of a house dies and, immediately before his death, he had under this Part of this Act--

(a) the right to acquire the freehold, or

(b) the right to an extended lease,

the right is exercisable by his personal representatives while the tenancy is vested in them (but subject to subsection (2) below); and, accordingly, in such a case references in this Part of this Act to the tenant shall, in so far as the context permits, be to the personal representatives.

(2) The personal representatives of a tenant may not give notice of their desire to have the freehold or an extended lease by virtue of subsection (1) above later than two years after the grant of probate or letters of administration. "

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

143 Abolition of limits on rights after lease extension

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

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

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

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

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

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

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

" (1AA) Where, in a case in which the price payable for a house and premises is to be determined in accordance with subsection (1A) above, the tenancy has been extended under this Part of this Act--

(a) if the relevant time is on or before the original term date, the assumptions set out in that subsection apply as if the tenancy is to terminate on the original term date; and

(b) if the relevant time is after the original term date, the assumptions set out in paragraphs (a), (c) and (e) of that subsection apply as if the tenancy had terminated on the original term date and the assumption set out in paragraph (b) of that subsection applies as if the words "at the end of the tenancy" were omitted. "

144 Exclusion of shared ownership leases

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

(2) In paragraph 2 (exclusion of certain leases granted by certain public authorities when interest of landlord belongs to authority)--

(a) in sub-paragraph (1), after "such a body" insert ", to a registered social landlord",

(b) in sub-paragraph (3)(b), at the end insert "or to a registered social landlord", and

" (5) In this paragraph "registered social landlord" has the same meaning as in Part 1 of the Housing Act 1996 (c. 52). "

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

Purchase price

145 Tenant's share of marriage value

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

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

(3) After that subsection insert--

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

146 Disregard of marriage value in case of very long leases

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

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

147 Purchase price for enfranchisement during lease extension

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

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

Absent landlords

148 Applications to be to county court

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

(2) In subsection (1)--

(a) for "the High Court" (in both places), and

(b) for "the Court",

substitute "the court".

(3) In subsection (2)--

(a) for "the High Court" (in each place), and

(b) for "the Court" (in both places),

substitute "the court".

(4) In subsection (3)--

(a) for "the Supreme Court", and

(b) for "High Court" (in both places),

substitute "court".

(5) In subsection (4), for "High Court" substitute "court".

(6) In subsection (6), for "the Supreme Court" substitute "court".

(7) In subsection (7)--

(a) for "the High Court" (in both places), and

(b) for "the Court",

substitute "the court".

149 Valuation by leasehold valuation tribunal

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

" (5) The appropriate sum which, in accordance with subsection (3) above, is to be paid into court is the aggregate of--

(a) such amount as may be determined by (or on appeal from) a leasehold valuation tribunal to be the price payable in accordance with section 9 above; and

(b) the amount or estimated amount (as so determined) of any pecuniary rent payable for the house and premises up to the date of the conveyance which remains unpaid. "

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

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

Chapter 5 Other provisions about leases

Service charges, administration charges etc.

150 Extending meaning of service charge and management etc

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

151 Consultation about service charges

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

" 20 Limitation of service charges: consultation requirements

(1) Where this section applies to any qualifying works or qualifying long term agreement, the relevant contributions of tenants are limited in accordance with subsection (6) or (7) (or both) unless the consultation requirements have been either--

(a) complied with in relation to the works or agreement, or

(b) dispensed with in relation to the works or agreement by (or on appeal from) a leasehold valuation tribunal.

(2) In this section "relevant contribution", in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement.

(3) This section applies to qualifying works if relevant costs incurred on carrying out the works exceed an appropriate amount.

(4) The Secretary of State may by regulations provide that this section applies to a qualifying long term agreement--

(a) if relevant costs incurred under the agreement exceed an appropriate amount, or

(b) if relevant costs incurred under the agreement during a period prescribed by the regulations exceed an appropriate amount.

(5) An appropriate amount is an amount set by regulations made by the Secretary of State; and the regulations may make provision for either or both of the following to be an appropriate amount--

(a) an amount prescribed by, or determined in accordance with, the regulations, and

(b) an amount which results in the relevant contribution of any one or more tenants being an amount prescribed by, or determined in accordance with, the regulations.

(6) Where an appropriate amount is set by virtue of paragraph (a) of subsection (5), the amount of the relevant costs incurred on carrying out the works or under the agreement which may be taken into account in determining the relevant contributions of tenants is limited to the appropriate amount.

(7) Where an appropriate amount is set by virtue of paragraph (b) of that subsection, the amount of the relevant contribution of the tenant, or each of the tenants, whose relevant contribution would otherwise exceed the amount prescribed by, or determined in accordance with, the regulations is limited to the amount so prescribed or determined.

20ZA Consultation requirements: supplementary

(1) Where an application is made to a leasehold valuation tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long term agreement, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.

(2) In section 20 and this section--

"qualifying works" means works on a building or any other premises, and
"qualifying long term agreement" means (subject to subsection (3)) an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months.

(3) The Secretary of State may by regulations provide that an agreement is not a qualifying long term agreement--

(a) if it is an agreement of a description prescribed by the regulations, or

(b) in any circumstances so prescribed.

(4) In section 20 and this section "the consultation requirements" means requirements prescribed by regulations made by the Secretary of State.

(5) Regulations under subsection (4) may in particular include provision requiring the landlord--

(a) to provide details of proposed works or agreements to tenants or the recognised tenants' association representing them,

(b) to obtain estimates for proposed works or agreements,

(c) to invite tenants or the recognised tenants' association to propose the names of persons from whom the landlord should try to obtain other estimates,

(d) to have regard to observations made by tenants or the recognised tenants' association in relation to proposed works or agreements and estimates, and

(e) to give reasons in prescribed circumstances for carrying out works or entering into agreements.

(6) Regulations under section 20 or this section--

(a) may make provision generally or only in relation to specific cases, and

(b) may make different provision for different purposes.

(7) Regulations under section 20 or this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. "

152 Statements of account

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

" 21 Regular statements of account

(1) The landlord must supply to each tenant by whom service charges are payable, in relation to each accounting period, a written statement of account dealing with--

(a) service charges of the tenant and the tenants of dwellings associated with his dwelling,

(b) relevant costs relating to those service charges,

(i) at the beginning of the accounting period, and

(ii) at the end of the accounting period, and

(d) related matters.

(2) The statement of account in relation to an accounting period must be supplied to each such tenant not later than six months after the end of the accounting period.

(3) Where the landlord supplies a statement of account to a tenant he must also supply to him--

(a) a certificate of a qualified accountant that, in the accountant's opinion, the statement of account deals fairly with the matters with which it is required to deal and is sufficiently supported by accounts, receipts and other documents which have been produced to him, and

(b) a summary of the rights and obligations of tenants of dwellings in relation to service charges.

(4) The Secretary of State may make regulations prescribing requirements as to the form and content of--

(a) statements of account,

(b) accountants' certificates, and

required to be supplied under this section.

(5) The Secretary of State may make regulations prescribing exceptions from the requirement to supply an accountant's certificate.

(6) If the landlord has been notified by a tenant of an address in England and Wales at which he wishes to have supplied to him documents required to be so supplied under this section, the landlord must supply them to him at that address.

(7) And the landlord is to be taken to have been so notified if notification has been given to--

(a) an agent of the landlord named as such in the rent book or similar document, or

(b) the person who receives the rent on behalf of the landlord;

and where notification is given to such an agent or person he must forward it as soon as may be to the landlord.

(8) For the purposes of this section a dwelling is associated with another dwelling if the obligations of the tenants of the dwellings under the terms of their leases as regards contributing to relevant costs relate to the same costs.

(9) In this section "accounting period" means such period--

(a) beginning with the relevant date, and

(b) ending with such date, not later than twelve months after the relevant date,

as the landlord determines.

(10) In the case of the first accounting period in relation to any dwellings, the relevant date is the later of--

(a) the date on which service charges are first payable under a lease of any of them, and

(b) the date on which section 152 of the Commonhold and Leasehold Reform Act 2002 comes into force,

and, in the case of subsequent accounting periods, it is the date immediately following the end of the previous accounting period.

(11) Regulations under subsection (4) may make different provision for different purposes.

(12) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

21A Withholding of service charges

(1) A tenant may withhold payment of a service charge if--

(a) the landlord has not supplied a document to him by the time by which he is required to supply it under section 21, or

(b) the form or content of a document which the landlord has supplied to him under that section (at any time) does not conform exactly or substantially with the requirements prescribed by regulations under subsection (4) of that section.

(2) The maximum amount which the tenant may withhold is an amount equal to the aggregate of--

(a) the service charges paid by him in the accounting period to which the document concerned would or does relate, and

(b) so much of the aggregate amount required to be dealt with in the statement of account for that accounting period by section 21(1)(c)(i) as stood to his credit.

(3) An amount may not be withheld under this section--

(a) in a case within paragraph (a) of subsection (1), after the document concerned has been supplied to the tenant by the landlord, or

(b) in a case within paragraph (b) of that subsection, after a document conforming exactly or substantially with the requirements prescribed by regulations under section 21(4) has been supplied to the tenant by the landlord by way of replacement of the one previously supplied.

(4) If, on an application made by the landlord to a leasehold valuation tribunal, the tribunal determines that the landlord has a reasonable excuse for a failure giving rise to the right of a tenant to withhold an amount under this section, the tenant may not withhold the amount after the determination is made.

(5) Where a tenant withholds a service charge under this section, any provisions of the tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it. "

153 Notice to accompany demands for service charges

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

" 21B Notice to accompany demands for service charges

(1) A demand for the payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges.

(2) The Secretary of State may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.

(3) A tenant may withhold payment of a service charge which has been demanded from him if subsection (1) is not complied with in relation to the demand.

(4) Where a tenant withholds a service charge under this section, any provisions of the lease relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.

(5) Regulations under subsection (2) may make different provision for different purposes.

(6) Regulations under subsection (2) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. "

154 Inspection etc. of documents

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

" 22 Inspection etc. of documents

(1) A tenant may by notice in writing require the landlord--

(a) to afford him reasonable facilities for inspecting accounts, receipts or other documents relevant to the matters which must be dealt with in a statement of account required to be supplied to him under section 21 and for taking copies of or extracts from them, or

(b) to take copies of or extracts from any such accounts, receipts or other documents and either send them to him or afford him reasonable facilities for collecting them (as he specifies).

(2) If the tenant is represented by a recognised tenants' association and he consents, the notice may be served by the secretary of the association instead of by the tenant (and in that case any requirement imposed by it is to afford reasonable facilities, or to send copies or extracts, to the secretary).

(3) A notice under this section may not be served after the end of the period of six months beginning with the date by which the tenant is required to be supplied with the statement of account under section 21.

(4) But if--

(a) the statement of account is not supplied to the tenant on or before that date, or

(b) the statement of account so supplied does not conform exactly or substantially with the requirements prescribed by regulations under section 21(4),

the six month period mentioned in subsection (3) does not begin until any later date on which the statement of account (conforming exactly or substantially with those requirements) is supplied to him.

(5) A notice under this section is duly served on the landlord if it is served on--

(a) an agent of the landlord named as such in the rent book or similar document, or

(b) the person who receives the rent on behalf of the landlord;

and a person on whom such a notice is so served must forward it as soon as may be to the landlord.

(6) The landlord must comply with a requirement imposed by a notice under this section within the period of twenty-one days beginning with the day on which he receives the notice.

(7) To the extent that a notice under this section requires the landlord to afford facilities for inspecting documents--

(a) he must do so free of charge, but

(b) he may treat as part of his costs of management any costs incurred by him in doing so.

(8) The landlord may make a reasonable charge for doing anything else in compliance with a requirement imposed by a notice under this section. "

155 Liability to pay service charges: jurisdiction

(1) After section 27 of the 1985 Act insert--

" 27A Liability to pay service charges: jurisdiction

(1) An application may be made to a leasehold valuation tribunal for a determination whether a service charge is payable and, if it is, as to--

(a) the person by whom it is payable,

(b) the person to whom it is payable,

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

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