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

(The document as of February, 2008)

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(a) the value of the freeholder's interest in the specified premises (as determined in accordance with paragraph 3), or

(b) the value of any intermediate leasehold interest (as determined in accordance with paragraph 7),

is a negative amount, the value of the interest for the relevant purposes shall be nil.

(2) Where sub-paragraph (1) applies to any intermediate leasehold interest whose value is a negative amount ("the negative interest"), then for the relevant purposes any interests in the specified premises superior to the negative interest and having a positive value shall be reduced in value--

(a) beginning with the interest which is immediately superior to the negative interest and continuing (if necessary) with any such other superior interests in order of proximity to the negative interest;

(b) until the aggregate amount of the reduction is equal to the negative amount in question; and

(3) In a case where sub-paragraph (1) applies to two or more intermediate leasehold interests whose values are negative amounts, sub-paragraph (2) shall apply separately in relation to each of those interests--

(a) beginning with the interest which is inferior to every other of those interests and then in order of proximity to that interest; and

(b) with any reduction in the value of any interest for the relevant purposes by virtue of any prior application of sub-paragraph (2) being taken into account.

(4) For the purposes of sub-paragraph (2) an interest has a positive value if (apart from that sub-paragraph) its value for the relevant purposes is a positive amount.

(5) In this Part of this Schedule "the relevant purposes"--

(a) as respects the freeholder's interest in the specified premises, means the purposes of paragraph 2(1)(a); and

(b) as respects any intermediate leasehold interest, means the purposes of paragraph 6(1)(b)(i).

Calculation of marriage value

15 (1) Where (as determined in accordance with paragraph 4(3) and (4)) the value of any interest--

(a) when held by the person from whom it is to be acquired by the nominee purchaser, or

(b) when acquired by the nominee purchaser,

is a negative amount, then for the purposes of paragraph 4(2) the value of the interest when so held or acquired shall be nil.

(2) Where sub-paragraph (1) above applies to any intermediate leasehold interest whose value when held or acquired as mentioned in paragraph (a) or (b) of that sub-paragraph is a negative amount, paragraph 14(2) to (4) shall apply for determining for the purposes of paragraph 4(2) the value when so held or acquired of other interests in the specified premises, as if--

(a) any reference to paragraph 14(1) were a reference to sub-paragraph (1) above; and

(b) any reference to the relevant purposes were, as respects any interest, a reference to the purposes of paragraph 4(2) as it applies to the interest when so held or acquired.

(3) References in paragraph 16 or 17 to paragraph 14(2) or (3) do not extend to that provision as it applies in accordance with sub-paragraph (2) above.

Apportionment of marriage value

16 (1) Where paragraph 14(1) applies to an interest, the value of the interest for the purposes of paragraph 9(2) shall be nil, unless sub-paragraph (2) below applies.

(2) In a case where paragraph 14(1) applies to the freeholder's interest in the specified premises and to every intermediate leasehold interest--

(a) sub-paragraph (1) above shall not apply for the purposes of paragraph 9(2); and

(b) any division falling to be made on the proportional basis referred to in paragraph 9(2) shall be so made in such a way as to secure that the greater the negativity of an interest's value the smaller the share in respect of the interest.

(3) In a case where--

(a) paragraph 14(2) operates to reduce the value of any such superior interest as is there mentioned ("the superior interest"), and

(b) after the operation of that provision there remains any interest whose value for the relevant purposes is a positive amount,

the value of the superior interest for the purposes of paragraph 9(2) shall be the value which (in accordance with paragraph 14(2)) it has for the relevant purposes.

(4) In a case where--

(a) paragraph 14(2) operates to reduce the value of any such superior interest as is there mentioned ("the superior interest"), but

(b) after the operation of that provision there remains no such interest as is mentioned in sub-paragraph (3)(b) above,

the value of the superior interest for the purposes of paragraph 9(2) shall be the value which it has for the relevant purposes apart from paragraph 14(2).

Adjustment of compensation

17 (1) Where--

(a) paragraph 14(2) operates to reduce the value of any such superior interest as is there mentioned ("the superior interest"), and

(b) apart from this paragraph any amount of compensation is payable under paragraph 8 to the owner of any relevant inferior interest in respect of that interest,

there shall be payable to the owner of the superior interest so much of the amount of compensation as is equal to the amount of the reduction or, if less than that amount, the whole of the amount of compensation.

(2) Where--

(a) paragraph 14(2) operates to reduce the value of two or more such superior interests as are there mentioned ("the superior interests"), and

(b) apart from this paragraph any amount of compensation is payable under paragraph 8 to the owner of any relevant inferior interest in respect of that interest,

sub-paragraph (1) shall apply in the first instance as if the reference to the owner of the superior interest were to the owner of such of the superior interests as is furthest from the negative interest, and then, as respects any remaining amount of compensation, as if that reference were to the owner of such of the superior interests as is next furthest from the negative interest, and so on.

(3) In sub-paragraph (1) or (2) "relevant inferior interest", in relation to any interest whose value is reduced as mentioned in that sub-paragraph ("the superior interest"), means--

(a) the negative interest on account of which any such reduction is made, or

(b) any other interest intermediate between that negative interest and the superior interest;

but sub-paragraph (1) shall apply in the first instance in relation to any amount of compensation payable to the owner of that negative interest, and then, for the purpose of offsetting (so far as possible) any reduction remaining to be offset in accordance with sub-paragraph (1) or (2), in relation to any amount of compensation payable to the owner of the interest immediately superior to that negative interest, and so on in order of proximity to it.

(4) To the extent that an amount of compensation is payable to the owner of any interest by virtue of this paragraph--

(a) paragraph 2(1)(c) or 6(1)(b)(ii) shall have effect as if it were an amount of compensation payable to him, as owner of that interest, in accordance with paragraph 5 or 8, as the case may be; and

(b) the person who would otherwise have been entitled to it in accordance with paragraph 8 shall accordingly not be so entitled.

(5) In a case where paragraph 14(2) applies separately in relation to two or more negative interests in accordance with paragraph 14(3), the preceding provisions of this paragraph shall similarly apply separately in relation to the reductions made on account of each of those interests, and shall so apply--

(a) according to the order determined by paragraph 14(3)(a); and

(b) with there being taken into account any reduction in the amount of compensation payable to any person under paragraph 8 which results from the prior application of the preceding provisions of this paragraph.

Part VI Valuation etc. of other interests with negative values

Valuation of freehold and leasehold interests

18 (1) Where--

(a) the value of any freehold interest (as determined in accordance with paragraph 11(1)), or

(b) the value of any leasehold interest (as determined in accordance with paragraph 11(2)),

is a negative amount, the value of the interest for the relevant purposes shall be nil.

(2) Where, in the case of any property, sub-paragraph (1) applies to any leasehold interest in the property whose value is a negative amount ("the negative interest"), then for the relevant purposes any interests in the property superior to the negative interest and having a positive value shall, if they are interests which are to be acquired by the nominee purchaser, be reduced in value--

(a) beginning with the interest which is nearest to the negative interest and continuing (if necessary) with any such other superior interests in order of proximity to the negative interest;

(b) until the aggregate amount of the reduction is equal to the negative amount in question; and

(3) In a case where sub-paragraph (1) applies to two or more leasehold interests in any property whose values are negative amounts, sub-paragraph (2) shall apply separately in relation to each of those interests--

(a) beginning with the interest which is inferior to every other of those interests and then in order of proximity to that interest; and

(b) with any reduction in the value of any interest for the relevant purposes by virtue of any prior application of sub-paragraph (2) being taken into account.

(4) For the purposes of sub-paragraph (2) an interest has a positive value if (apart from that sub-paragraph) its value for the relevant purposes is a positive amount.

(5) In this Part of this Schedule "the relevant purposes"--

(a) as respects any freehold interest, means the purposes of paragraph 10(1)(a); and

(b) as respects any leasehold interest, means the purposes of paragraph 10(2)(a).

Calculation of marriage value

19 (1) Where (as determined in accordance with paragraph 4(3) and (4)) the value of any interest--

(a) when held by the person from whom it is to be acquired by the nominee purchaser, or

(b) when acquired by the nominee purchaser,

is a negative amount, then for the purposes of paragraph 4(2) the value of the interest when so held or acquired shall be nil.

(2) Where, in the case of any property, sub-paragraph (1) above applies to any leasehold interest in the property whose value when held or acquired as mentioned in paragraph (a) or (b) of that sub-paragraph is a negative amount, paragraph 18(2) to (4) shall apply for determining for the purposes of paragraph 4(2) the value when so held or acquired of other interests in the property, as if--

(a) any reference to paragraph 18(1) were a reference to sub-paragraph (1) above; and

(b) any reference to the relevant purposes were, as respects any interest, a reference to the purposes of paragraph 4(2) as it applies to the interest when so held or acquired.

(3) In this paragraph any reference to any provision of paragraph 4 is a reference to that provision as it applies in accordance with paragraph 12(1).

(4) References in paragraph 20 or 21 to paragraph 18(2) or (3) do not extend to that provision as it applies in accordance with sub-paragraph (2) above.

Apportionment of marriage value

20 (1) Where paragraph 18(1) applies to any interest in any property to which paragraph 12(1) applies, the value of the interest for the purposes of paragraph 12(2) shall be nil, unless sub-paragraph (2) below applies.

(2) Where, in the case of any property, paragraph 18(1) applies to every interest which is to be acquired by the nominee purchaser--

(a) sub-paragraph (1) above shall not apply for the purposes of paragraph 12(2); and

(b) any division falling to be made on the proportional basis referred to in paragraph 12(2) shall be so made in such a way as to secure that the greater the negativity of an interest's value the smaller the share in respect of the interest.

(3) Where in the case of any property--

(a) paragraph 18(2) operates to reduce the value of any such superior interest as is there mentioned ("the superior interest"), and

(b) after the operation of that provision there remains any interest which is to be acquired by the nominee purchaser and whose value for the relevant purposes is a positive amount,

the value of the superior interest for the purposes of paragraph 12(2) shall be the value which (in accordance with paragraph 18(2)) it has for the relevant purposes.

(4) Where in the case of any property--

(a) paragraph 18(2) operates to reduce the value of any such superior interest as is there mentioned ("the superior interest"), but

(b) after the operation of that provision there remains no such interest as is mentioned in sub-paragraph (3)(b) above,

the value of the superior interest for the purposes of paragraph 12(2) shall be the value which it has for the relevant purposes apart from paragraph 18(2).

Adjustment of compensation

21 (1) Where in the case of any property--

(a) paragraph 18(2) operates to reduce the value of any such superior interest as is there mentioned ("the superior interest"), and

(b) apart from this paragraph any amount of compensation is payable by virtue of paragraph 13 to the owner of any relevant inferior interest in respect of that interest,

(2) Where in the case of any property--

(a) paragraph 18(2) operates to reduce the value of two or more such superior interests as are there mentioned ("the superior interests"), and

(b) apart from this paragraph any amount of compensation is payable by virtue of paragraph 13 to the owner of any relevant inferior interest in respect of that interest,

(3) In sub-paragraph (1) or (2) "relevant inferior interest", in relation to any interest whose value is reduced as mentioned in that sub-paragraph ("the superior interest"), means--

(a) the negative interest on account of which any such reduction is made, or

(b) any other interest in the property in question which is to be acquired by the nominee purchaser and is intermediate between that negative interest and the superior interest;

but sub-paragraph (1) shall apply in the first instance in relation to any amount of compensation payable to the owner of that negative interest, and then, for the purpose of offsetting (so far as possible) any reduction remaining to be offset in accordance with sub-paragraph (1) or (2), in relation to any amount of compensation payable to the owner of such interest falling within paragraph (b) above as is nearest to that negative interest, and so on in order of proximity to it.

(4) To the extent that an amount of compensation is payable to the owner of any interest by virtue of this paragraph--

(a) paragraph 10(1)(c) or (as the case may be) paragraph 10(2)(b) shall have effect as if it were an amount of compensation payable to him, as owner of that interest, in accordance with paragraph 13; and

(b) the person who would otherwise have been entitled to it in accordance with paragraph 13 shall accordingly not be so entitled.

(5) In a case where paragraph 18(2) applies separately in relation to two or more negative interests in accordance with paragraph 18(3), the preceding provisions of this paragraph shall similarly apply separately in relation to the reductions made on account of each of those interests, and shall so apply--

(a) according to the order determined by paragraph 18(3)(a); and

(b) with there being taken into account any reduction in the amount of compensation payable to any person by virtue of paragraph 13 which results from the prior application of the preceding provisions of this paragraph.

Section 34.

SCHEDULE 7 Conveyance to nominee purchaser on enfranchisement

Interpretation

1 In this Schedule--

(a) "the relevant premises" means, in relation to such a conveyance as is mentioned in section 34(1), the premises of which the freehold is to be conveyed by means of the conveyance;

(b) "the freeholder", in relation to any such conveyance, means the person whose freehold interest in the relevant premises is to be conveyed by means of the conveyance;

(c) "other property" means property of which the freehold is not to be acquired by the nominee purchaser under this Chapter; and

(d) "the appropriate time" means the time when the freehold of the relevant premises is to be conveyed to the nominee purchaser.

General

2 (1) The conveyance shall not exclude or restrict the general words implied in conveyances under section 62 of the [1925 c. 20.] Law of Property Act 1925, or the all-estate clause implied under section 63 of that Act, unless--

(a) the exclusion or restriction is made for the purpose of preserving or recognising any existing interest of the freeholder in tenant's incumbrances or any existing right or interest of any other person, or

(b) the nominee purchaser consents to the exclusion or restriction.

(2) The freeholder shall not be bound--

(a) to convey to the nominee purchaser any better title than that which he has or could require to be vested in him, or

(b) to enter into any covenant for title other than such covenant as under section 76(1)(F) of the [1925 c. 20.] Law of Property Act 1925 is implied in the case of a person conveying, and expressed to convey, as trustee or mortgagee.

(3) In this paragraph "tenant's incumbrances" includes any interest directly or indirectly derived out of a lease, and any incumbrance on a lease or any such interest (whether or not the same matter is an incumbrance also on any interest reversionary on the lease); and "incumbrances" has the same meaning as it has for the purposes of section 34 of this Act.

Rights of support, passage of water etc.

3 (1) This paragraph applies to rights of any of the following descriptions, namely--

(a) rights of support for a building or part of a building;

(b) rights to the access of light and air to a building or part of a building;

(c) rights to the passage of water or of gas or other piped fuel, or to the drainage or disposal of water, sewage, smoke or fumes, or to the use or maintenance of pipes or other installations for such passage, drainage or disposal;

(d) rights to the use or maintenance of cables or other installations for the supply of electricity, for the telephone or for the receipt directly or by landline of visual or other wireless transmissions;

and the provisions required to be included in the conveyance by virtue of sub-paragraph (2) are accordingly provisions relating to any such rights.

(2) The conveyance shall include provisions having the effect of--

(a) granting with the relevant premises (so far as the freeholder is capable of granting them)--

(i) all such easements and rights over other property as are necessary to secure as nearly as may be for the benefit of the relevant premises the same rights as exist for the benefit of those premises immediately before the appropriate time, and

(ii) such further easements and rights (if any) as are necessary for the reasonable enjoyment of the relevant premises; and

(b) making the relevant premises subject to the following easements and rights (so far as they are capable of existing in law), namely--

(i) all easements and rights for the benefit of other property to which the relevant premises are subject immediately before the appropriate time, and

(ii) such further easements and rights (if any) as are necessary for the reasonable enjoyment of other property, being property in which the freeholder has an interest at the relevant date.

Rights of way

4 Any such conveyance shall include--

(a) such provisions (if any) as the nominee purchaser may require for the purpose of securing to him and the persons deriving title under him rights of way over other property, so far as the freeholder is capable of granting them, being rights of way that are necessary for the reasonable enjoyment of the relevant premises; and

(b) such provisions (if any) as the freeholder may require for the purpose of making the relevant premises subject to rights of way necessary for the reasonable enjoyment of other property, being property in which he is to retain an interest after the acquisition of the relevant premises.

Restrictive covenants

5 (1) As regards restrictive covenants, the conveyance shall include--

(a) such provisions (if any) as the freeholder may require to secure that the nominee purchaser is bound by, or to indemnify the freeholder against breaches of, restrictive covenants which--

(i) affect the relevant premises otherwise than by virtue of any lease subject to which the relevant premises are to be acquired or any agreement collateral to any such lease, and

(ii) are immediately before the appropriate time enforceable for the benefit of other property; and

(b) such provisions (if any) as the freeholder or the nominee purchaser may require to secure the continuance (with suitable adaptations) of restrictions arising by virtue of any such lease or collateral agreement as is mentioned in paragraph (a)(i), being either--

(i) restrictions affecting the relevant premises which are capable of benefiting other property and (if enforceable only by the freeholder) are such as materially to enhance the value of the other property, or

(ii) restrictions affecting other property which are such as materially to enhance the value of the relevant premises; and

(c) such further restrictions as the freeholder may require to restrict the use of the relevant premises in a way which--

(i) will not interfere with the reasonable enjoyment of those premises as they have been enjoyed during the currency of the leases subject to which they are to be acquired, but

(ii) will materially enhance the value of other property in which the freeholder has an interest at the relevant date.

(2) In this paragraph "restrictive covenant" means a covenant or agreement restrictive of the user of any land or building.

Section 35.

SCHEDULE 8 Discharge of mortgages etc.: Supplementary provisions

Construction

1 In this Schedule--

"the consideration payable" means the consideration payable for the acquisition of the relevant interest;
"the landlord" means the person from whom the relevant interest is being acquired;
"the relevant interest" means any such interest as is mentioned in paragraph 2(1).

Duty of nominee purchaser to redeem mortgages

2 (1) Where in accordance with section 35(1) a conveyance will operate to discharge any interest from a mortgage to secure the payment of money, it shall be the duty of the nominee purchaser to apply the consideration payable, in the first instance, in or towards the redemption of any such mortgage (and, if there are more than one, then according to their priorities).

(2) If any amount payable in accordance with sub-paragraph (1) to the person entitled to the benefit of a mortgage is not so paid, nor paid into court in accordance with paragraph 4, the relevant interest shall remain subject to the mortgage as regards the amount in question, and to that extent section 35(1) shall not apply.

(3) Subject to sub-paragraph (4), sub-paragraph (1) shall not apply to a debenture holders' charge, that is to say, a charge (whether a floating charge or not) in favour of the holders of a series of debentures issued by a company or other body of persons, or in favour of trustees for such debenture holders; and any such charge shall be disregarded in determining priorities for the purposes of sub-paragraph (1).

(4) Sub-paragraph (3) shall not have effect in relation to a charge in favour of trustees for debenture holders which, at the date of the conveyance by virtue of which the relevant interest is acquired by the nominee purchaser, is (as regards that interest) a specific and not a floating charge.

Determination of amounts due in respect of mortgages

3 (1) For the purpose of determining the amount payable in respect of any mortgage under paragraph 2(1)--

(a) a person entitled to the benefit of a mortgage to which that provision applies shall not be permitted to exercise any right to consolidate that mortgage with a separate mortgage on other property; and

(b) if the landlord or any participating tenant is himself entitled to the benefit of a mortgage to which that provision applies, it shall rank for payment as it would if another person were entitled to it, and the nominee purchaser shall be entitled to retain the appropriate amount in respect of any such mortgage of a participating tenant.

(2) For the purpose of discharging any interest from a mortgage to which paragraph 2(1) applies, a person may be required to accept three months or any longer notice of the intention to pay the whole or part of the principal secured by the mortgage, together with interest to the date of payment, notwithstanding that the terms of the security make other provision or no provision as to the time and manner of payment; but he shall be entitled, if he so requires, to receive such additional payment as is reasonable in the circumstances--

(a) in respect of the costs of re-investment or other incidental costs and expenses; and

(b) in respect of any reduction in the rate of interest obtainable on re-investment.

Payments into court

4 (1) Where under section 35(1) any interest is to be discharged from a mortgage and, in accordance with paragraph 2(1), a person is or may be entitled in respect of the mortgage to receive the whole or part of the consideration payable, then if--

(a) for any reason difficulty arises in ascertaining how much is payable in respect of the mortgage, or

(b) for any reason mentioned in sub-paragraph (2) below difficulty arises in making a payment in respect of the mortgage,

the nominee purchaser may pay into court on account of the consideration payable the amount, if known, of the payment to be made in respect of the mortgage or, if that amount is not known, the whole of that consideration or such lesser amount as the nominee purchaser thinks right in order to provide for that payment.

(2) Payment may be made into court in accordance with sub-paragraph (1)(b) where the difficulty arises for any of the following reasons, namely--

(a) because a person who is or may be entitled to receive payment cannot be found or his identity cannot be ascertained;

(b) because any such person refuses or fails to make out a title, or to accept payment and give a proper discharge, or to take any steps reasonably required of him to enable the sum payable to be ascertained and paid; or

(c) because a tender of the sum payable cannot, by reason of complications in the title to it or the want of two or more trustees or for other reasons, be effected, or not without incurring or involving unreasonable cost or delay.

(3) Without prejudice to sub-paragraph (1)(a), the whole or part of the consideration payable shall be paid into court by the nominee purchaser if, before execution of the conveyance referred to in paragraph 2(1), notice is given to him--

(a) that the landlord, or a person entitled to the benefit of a mortgage on the relevant interest, requires him to do so for the purpose of protecting the rights of persons so entitled, or for reasons related to the bankruptcy or winding up of the landlord, or

(b) that steps have been taken to enforce any mortgage on the relevant interest by the bringing of proceedings in any court, or by the appointment of a receiver, or otherwise;

and where payment into court is to be made by reason only of a notice under this sub-paragraph, and the notice is given with reference to proceedings in a court specified in the notice other than a county court, payment shall be made into the court so specified.

Savings

5 (1) Where any interest is discharged by section 35(1) from a mortgage (without the obligations secured by the mortgage being satisfied by the receipt of the whole or part of the consideration payable), the discharge of that interest from the mortgage shall not prejudice any right or remedy for the enforcement of those obligations against other property comprised in the same or any other security, nor prejudice any personal liability as principal or otherwise of the landlord or any other person.

(2) Nothing in this Schedule or section 35 shall be construed as preventing a person from joining in the conveyance referred to in paragraph 2(1) for the purpose of discharging the relevant interest from any mortgage without payment or for a lesser payment than that to which he would otherwise be entitled; and, if he does so, the persons to whom the consideration payable ought to be paid shall be determined accordingly.

Section 36.

SCHEDULE 9 Grant of leases back to former freeholder

Part I General

1 (1) In this Schedule--

"the appropriate time" means the time when the freehold of the specified premises is acquired by the nominee purchaser;
"the demised premises", in relation to a lease granted or to be granted in pursuance of Part II or III of this Schedule, means--
(a)
the flat or other unit demised or to be demised under the lease, or
(b)
in the case of such a lease under which two or more units are demised, both or all of those units or (if the context so permits) any of them;
"the freeholder" means the person who owns the freehold of the specified premises immediately before the appropriate time;
"housing association" has the meaning given by section 1(1) of the [1985 c. 69.] Housing Associations Act 1985;
"intermediate landlord", in relation to a flat or other unit let to a tenant, means a person who holds a leasehold interest in the flat or other unit which is superior to that held by the tenant's immediate landlord;
"other property" means property other than the demised premises.

(2) In this Schedule any reference to a flat or other unit, in the context of the grant of a lease of it, includes any yard, garden, garage, outhouses and appurtenances belonging to or usually enjoyed with it and let with it immediately before the appropriate time.

Part II Mandatory leaseback

Flats etc. let under secure tenancies

2 (1) This paragraph applies where immediately before the appropriate time any flat contained in the specified premises is let under a secure tenancy and either--

(a) the freeholder is the tenant's immediate landlord, or

(b) the freeholder is a public sector landlord and every intermediate landlord of the flat (as well as the immediate landlord under the secure tenancy) is also a public sector landlord.

(2) Sub-paragraph (1)(b) has effect whether any such intermediate landlord, or the immediate landlord under the secure tenancy, is or is not a qualifying tenant of the flat.

(3) Where this paragraph applies, the nominee purchaser shall grant to the freeholder a lease of the flat in accordance with section 36 and paragraph 4 below.

(4) In this paragraph any reference to a flat includes a reference to a unit (other than a flat) which is used as a dwelling.

Flats etc. let by housing associations under tenancies other than secure tenancies

3 (1) This paragraph applies where immediately before the appropriate time any flat contained in the specified premises is let by a housing association under a tenancy other than a secure tenancy and--

(a) the housing association is the freeholder, and

(b) the tenant is not a qualifying tenant of the flat.

(2) Where this paragraph applies, the nominee purchaser shall grant to the freeholder (that is to say, the housing association) a lease of the flat in accordance with section 36 and paragraph 4 below.

(3) In this paragraph any reference to a flat includes a reference to a unit (other than a flat) which is used as a dwelling.

Provisions as to terms of lease

4 (1) Any lease granted to the freeholder in pursuance of paragraph 2 or 3, and any agreement collateral to it, shall conform with the provisions of Part IV of this Schedule except to the extent that any departure from those provisions is agreed to by the nominee purchaser and the freeholder with the approval of a leasehold valuation tribunal.

(2) A leasehold valuation tribunal shall not approve any such departure from those provisions unless it appears to the tribunal that it is reasonable in the circumstances.

(3) In determining whether any such departure is reasonable in the circumstances, the tribunal shall have particular regard to the interests of the tenant under the secure tenancy referred to in paragraph 2(1) or (as the case may be) under the housing association tenancy referred to in paragraph 3(1).

(4) Subject to the preceding provisions of this paragraph, any such lease or agreement as is mentioned in sub-paragraph (1) may include such terms as are reasonable in the circumstances.

Part III Right of freeholder to require leaseback of certain units

Flats without qualifying tenants and other units

5 (1) Subject to sub-paragraph (3), this paragraph applies to any unit contained in the specified premises which is not immediately before the appropriate time a flat let to a person who is a qualifying tenant of it.

(2) Where this paragraph applies, the nominee purchaser shall, if the freeholder by notice requires him to do so, grant to the freeholder a lease of the unit in accordance with section 36 and paragraph 7 below.

(3) This paragraph does not apply to a flat or other unit to which paragraph 2 or 3 applies.

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