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

(The document as of February, 2008)

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(b) any right of the tenant to relief under section 16(2) of the Landlord and Tenant Act 1954 (relief where landlord proceeding to enforce covenants) or under paragraph 9 of Schedule 5 to that Act (relief in proceedings brought by superior landlord).

Restriction on proceedings to enforce right of re-entry or forfeiture

6 Where by a notice under section 42 a tenant makes a claim to acquire a new lease of a flat, then during the currency of the claim--

(a) no proceedings to enforce any right of re-entry or forfeiture terminating the lease of the flat shall be brought in any court without the leave of that court, and

(b) leave shall only be granted if the court is satisfied that the notice was given solely or mainly for the purpose of avoiding the consequences of the breach of the terms of the tenant's lease in respect of which proceedings are proposed to be brought;

but where leave is granted, the notice shall cease to have effect.

Effect of notice under section 16(2) of Landlord and Tenant Act 1954 on tenant's notice

7 (1) A tenant who, in proceedings to enforce a right of re-entry or forfeiture or a right to damages in respect of a failure to comply with any terms of his lease, applies for relief under section 16 of the [1954 c. 56.] Landlord and Tenant Act 1954 is not thereby precluded from making a claim to acquire a new lease under this Chapter; but if he gives notice under section 16(2) of that Act (under which the tenant is relieved from any order for recovery of possession or for payment of damages, but the tenancy is cut short), any notice given by him under section 42 with respect to property comprised in his lease shall be of no effect or, if already given, shall cease to have effect.

(2) Sub-paragraph (1) shall apply in relation to proceedings relating to a superior tenancy with the substitution for the references to section 16 and to section 16(2) of the Landlord and Tenant Act 1954 of references to paragraph 9 and to paragraph 9(2) of Schedule 5 to that Act.

Interpretation

8 (1) For the purposes of this Part of this Schedule--

(a) references to a notice under section 42 include, in so far as the context permits, references to a notice purporting to be given under that section (whether by a qualifying tenant or not), and references to the tenant by whom a notice is given shall be construed accordingly;

(b) references to a claim being effective are references to a new lease being acquired in pursuance of the claim; and

(i) where the claim is made by a valid notice under section 42, references to the period during which the notice continues in force in accordance with subsection (8) of that section, or

(ii) where the claim is made by a notice which is not a valid notice under section 42, references to the period beginning with the giving of the notice and ending with the time when the notice is set aside by the court or is withdrawn or when it would (if valid) cease to have effect or be deemed to have been withdrawn.

(2) For the purposes of sub-paragraph (1)(c) the date when a notice is set aside, or would (if valid) cease to have effect, in consequence of an order of a court shall be taken to be the date when the order becomes final.

(3) The references in this Schedule--

(a) to section 16 of the Landlord and Tenant Act 1954 and subsection (2) of that section, and

(b) to paragraph 9 of Schedule 5 to that Act and sub-paragraph (2) of that paragraph,

include references to those provisions as they apply in relation to Schedule 10 to the [1989 c. 42.] Local Government and Housing Act 1989 (security of tenure on ending of long residential tenancies).

Part II Other provisions

9 (1) The tenant's notice shall not be invalidated by any inaccuracy in any of the particulars required by section 42(3) or by any misdescription of any of the property to which the claim extends.

(2) Where the tenant's notice--

(a) specifies any property which he is not entitled to have demised to him under a new lease granted in pursuance of this Chapter, or

(b) fails to specify any property which he is entitled to have so demised to him,

the notice may, with the leave of the court and on such terms as the court may think fit, be amended so as to exclude or include the property in question.

Section 56.

SCHEDULE 13 Premium and other amounts payable by tenant on grant of new lease

Part I General

1 In this Schedule--

"intermediate leasehold interest" means the interest of any person falling within section 40(4)(c), to the extent that it is an interest in the tenant's flat subsisting immediately before the grant of the new lease;
"the valuation date" means the date when all of the terms of acquisition (apart from those relating to the premium and any other amounts payable by virtue of this Schedule in connection with the grant of the new lease) have been determined either by agreement or by a leasehold valuation tribunal under this Chapter.

Part II Premium payable in respect of grant of new lease

Premium payable by tenant

2 The premium payable by the tenant in respect of the grant of the new lease shall be the aggregate of--

(a) the diminution in value of the landlord's interest in the tenant's flat as determined in accordance with paragraph 3,

(b) the landlord's share of the marriage value as determined in accordance with paragraph 4, and

Diminution in value of landlord's interest

3 (1) The diminution in value of the landlord's interest is the difference between--

(a) the value of the landlord's interest in the tenant's flat prior to the grant of the new lease; and

(b) the value of his interest in the flat once the new lease is granted.

(2) Subject to the provisions of this paragraph, the value of any such interest of the landlord as is mentioned in sub-paragraph (1)(a) or (b) is the amount which at the valuation date that interest might be expected to realise if sold on the open market by a willing seller (with the tenant not buying or seeking to buy) on the following assumptions--

(a) on the assumption that the vendor is selling for an estate in fee simple or (as the case may be) such other interest as is held by the landlord, subject to the relevant lease and any intermediate leasehold interests;

(b) on the assumption that Chapter I and this Chapter confer no right to acquire any interest in any premises containing the tenant's flat or to acquire any new lease;

(c) on the assumption that any increase in the value of the flat which is attributable to an improvement carried out at his own expense by the tenant or by any predecessor in title is to be disregarded; and

(d) on the assumption that (subject to paragraph (b)) the vendor is selling with and subject to the rights and burdens with and subject to which the relevant lease has effect or (as the case may be) is to be granted.

(3) In sub-paragraph (2) "the relevant lease" means either the tenant's existing lease or the new lease, depending on whether the valuation is for the purposes of paragraph (a) or paragraph (b) of sub-paragraph (1).

(4) It is hereby declared that the fact that sub-paragraph (2) requires assumptions to be made as to the matters specified in paragraphs (a) to (d) of that sub-paragraph does not preclude the making of assumptions as to other matters where those assumptions are appropriate for determining the amount which at the valuation date any such interest of the landlord as is mentioned in sub-paragraph (1)(a) or (b) might be expected to realise if sold as mentioned in sub-paragraph (2).

(5) In determining any such amount there shall be made such deduction (if any) in respect of any defect in title as on a sale of that interest on the open market might be expected to be allowed between a willing seller and a willing buyer.

(6) The value of any such interest of the landlord as is mentioned in sub-paragraph (1)(a) or (b) shall not be increased by reason of--

(a) any transaction which--

(i) is entered into on or after the date of the passing of this Act (otherwise than in pursuance of a contract entered into before that date), and

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

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

Landlord's share of marriage value

4 (1) The marriage value is the amount referred to in sub-paragraph (2), and the landlord's share of the marriage value is--

(a) such proportion of that amount as is determined by agreement between the landlord and the tenant or, in default of agreement, as is determined by a leasehold valuation tribunal to be the proportion which in its opinion would have been determined by an agreement made at the valuation date between the parties on a sale on the open market by a willing seller, or

(b) 50 per cent. of that amount,

whichever is the greater.

(2) The marriage value is the difference between the following amounts, namely--

(a) the aggregate of--

(i) the value of the interest of the tenant under his existing lease,

(ii) the value of the landlord's interest in the tenant's flat prior to the grant of the new lease, and

(iii) the values prior to the grant of that lease of all intermediate leasehold interests (if any); and

(b) the aggregate of--

(i) the value of the interest to be held by the tenant under the new lease,

(ii) the value of the landlord's interest in the tenant's flat once the new lease is granted, and

(iii) the values of all intermediate leasehold interests (if any) once that lease is granted.

(3) For the purposes of sub-paragraph (2)--

(a) the value of any interest of the tenant shall be determined as at the valuation date;

(b) the value of any such interest of the landlord as is mentioned in paragraph (a) or paragraph (b) of that sub-paragraph is the amount determined for the purposes of paragraph 3(1)(a) or paragraph 3(1)(b) (as the case may be); and

(c) the value of any intermediate leasehold interest shall be determined in accordance with paragraph 8, and shall be so determined as at the valuation date.

Compensation for loss arising out of grant of new lease

5 (1) Where the landlord will suffer any loss or damage to which this paragraph applies, there shall be payable to him such amount as is reasonable to compensate him for that loss or damage.

(2) This paragraph applies to--

(a) any diminution in value of any interest of the landlord in any property other than the tenant's flat which results from the grant to the tenant of the new lease; and

(b) any other loss or damage which results therefrom to the extent that it is referable to the landlord's ownership of any such interest.

(3) Without prejudice to the generality of paragraph (b) of sub-paragraph (2), the kinds of loss falling within that paragraph include loss of development value in relation to the tenant's flat to the extent that it is referable as mentioned in that paragraph.

(4) In sub-paragraph (3) "development value", in relation to the tenant's flat, means any increase in the value of the landlord's interest in the flat which is attributable to the possibility of demolishing, reconstructing, or carrying out substantial works of construction affecting, the flat (whether together with any other premises or otherwise).

Part III Amounts payable to owners of intermediate leasehold interests

Amount payable to owner of intermediate interest

6 In connection with the grant of the new lease to the tenant there shall be payable by the tenant to the owner of any intermediate leasehold interest an amount which is the aggregate of--

(a) the diminution in value of that interest as determined in accordance with paragraph 7; and

(b) any amount of compensation payable to him under paragraph 9.

Diminution in value of intermediate interest

7 (1) The diminution in value of any intermediate leasehold interest is the difference between--

(a) the value of that interest prior to the grant of the new lease; and

(b) the value of that interest once the new lease is granted.

(2) Each of those values shall be determined, as at the valuation date, in accordance with paragraph 8.

Value of intermediate interests

8 (1) Subject to sub-paragraph (2), paragraph 3(2) to (6) shall apply for determining the value of any intermediate leasehold interest for the purposes of any provision of this Schedule with such modifications as are appropriate to relate those provisions of paragraph 3 to a sale of the interest in question subject to the tenant's lease for the time being and to any leases intermediate between the interest in question and that lease.

(2) The value of an intermediate leasehold interest which is the interest of the tenant under a minor intermediate lease shall be calculated by applying the formula set out in sub-paragraph (6) instead of in accordance with sub-paragraph (1).

(3) "A minor intermediate lease" means a lease complying with the following requirements, namely--

(a) it must have an expectation of possession of not more than one month, and

(b) the profit rent in respect of the lease must be not more than £5 per year.

(4) "Profit rent" means an amount equal to that of the rent payable under the lease on which the minor intermediate lease is in immediate reversion, less that of the rent payable under the minor intermediate lease.

(5) Where the minor intermediate lease or that on which it is in immediate reversion comprises property other than the tenant's flat, then in sub-paragraph (4) the reference to the rent payable under it means so much of that rent as is apportioned to that flat.

(6) The formula is--

---

where--

P = the price payable;
R = the profit rent;
Y = the yield (expressed as a decimal fraction) from 2½ per cent. Consolidated Stock;
n = the period, expressed in years (taking any part of a year as a whole year), of the remainder of the term of the minor intermediate lease as at the valuation date.

(7) In calculating the yield from 2½ per cent. Consolidated Stock, the price of that stock shall be taken to be the middle market price at the close of business on the last trading day in the week before the valuation date.

(8) For the purposes of this paragraph the expectation of possession carried by a lease is the expectation which it carries at the valuation date of possession after the tenant's lease, on the basis that--

(a) (subject to sub-paragraph (9)) the tenant's lease terminates at the valuation date if its term date fell before then, or else it terminates on its term date; and

(b) any other lease terminates on its term date.

(9) In a case where before the relevant date for the purposes of this Chapter the immediate landlord of the tenant had given notice to quit terminating the tenant's lease on a date earlier than that date, the date specified in the notice to quit shall be substituted for the date specified in sub-paragraph (8)(a) above.

Compensation for loss arising out of grant of new lease

9 Paragraph 5 shall apply in relation to the owner of any intermediate leasehold interest as it applies in relation to the landlord.

Owners of intermediate interests entitled to part of marriage value

10 (1) This paragraph applies in a case where--

(a) the premium payable by the tenant in respect of the grant of the new lease includes an amount in respect of the landlord's share of the marriage value, and

(b) there are any intermediate leasehold interests.

(2) The amount payable to the landlord in respect of his share of the marriage value shall be divided between the landlord and the owners of any such intermediate interests in proportion to the amounts by which the values of their respective interests in the flat will be diminished in consequence of the grant of the new lease.

(3) For the purposes of sub-paragraph (2)--

(a) the amount by which the value of the landlord's interest in the flat will be so diminished is the diminution in value of that interest as determined for the purposes of paragraph 2(a); and

(b) the amount by which the value of any intermediate leasehold interest will be so diminished is the diminution in value of that interest as determined for the purposes of paragraph 6(a).

(4) Where the owner of any intermediate leasehold interest is entitled in accordance with sub-paragraph (2) to any part of the amount payable to the landlord in respect of the landlord's share of the marriage value, the amount to which he is so entitled shall be payable to him by the landlord.

Section 61.

SCHEDULE 14 Provisions supplementary to section 61

1 (1) This Schedule has effect where a tenant of a flat is entitled to be paid compensation under section 61, or would be so entitled on the landlord obtaining an order for possession, or where an application for such an order is dismissed or withdrawn.

(2) In this Schedule--

"application for possession" means a landlord's application under section 61;
"the new lease" has the same meaning as in that section; and
"order for possession" means an order made under that section;

and (except in the case of the reference in paragraph 5(1)(b) to the flat as a dwelling) references to the flat held by the tenant under the new lease shall be construed in accordance with subsection (5) of that section.

2 (1) Where an order for possession is made--

(a) the new lease shall determine, and

(b) the compensation payable to the tenant by virtue of the order shall become payable,

on such date as may, when the amount of compensation has been determined either by agreement between the landlord and the tenant or by a leasehold valuation tribunal, be fixed by order of the court made on the application of either the landlord or the tenant.

(2) Where the application for possession was made by virtue of section 61(2)(a), then--

(a) (unless paragraph (b) below applies) an order of the court under this paragraph shall not fix a date earlier than the term date of the lease in relation to which the right to acquire a new lease was exercised;

(b) in a case where section 61(2)(a) applies in accordance with section 61(3), an order of the court under this paragraph shall not fix a date earlier than the term date of the lease in relation to which that right was first exercised.

(3) In fixing the date referred to in sub-paragraph (1) the court shall have regard to the conduct of the parties and to the extent to which the landlord has made reasonable preparations for proceeding with the redevelopment (including the obtaining of, or preparations relating to the obtaining of, any requisite permission or consent, whether from any authority whose permission or consent is required under any enactment or from the owner of an interest in any property).

(4) The court may by order direct that the whole or part of the compensation payable to the tenant shall be paid into court, if the court thinks it expedient to do so for the purpose of ensuring that the sum paid is available for meeting any mortgage on the tenant's interest in the flat in question, or for the purpose of division, or for any other purpose.

3 (1) On the termination of a lease under an order for possession there shall terminate also any immediate or derivative sub-lease, and the tenant shall be bound to give up possession of the flat in question to the landlord except in so far as he is precluded from doing so by the rights of other persons to retain possession under or by virtue of any enactment.

(2) Where a sub-lease of property comprised in the lease has been created after the date of the application for possession, no person shall in respect of that sub-lease be entitled under any of the following provisions (which relate to retaining possession on the termination of a superior tenancy), namely--

(a) subsection (2) of section 137 of the [1977 c. 42.] Rent Act 1977, or any enactment (including subsection (5) of that section) applying or extending it,

(b) subsection (2) of section 9 of the [1976 c. 80.] Rent (Agriculture) Act 1976 as extended by subsection (5) of that section, or

to retain possession of that property after the termination of the lease under the order for possession.

(3) In exercising its jurisdiction under section 61 or this Schedule the court shall assume that the landlord, having obtained an order for possession, will not be precluded from obtaining possession by the right of any person to retain possession by virtue of--

(a) Part VII of the Rent Act 1977 or any enactment applying or extending that Part of that Act,

(b) the Rent (Agriculture) Act 1976, or

or otherwise.

(4) A person in occupation of any property under a sub-lease liable to terminate under sub-paragraph (1) may, with the leave of the court, appear and be heard on any application for possession or any application under paragraph 2.

4 Where an order has been made by a county court under paragraph 2, that court or another county court shall have jurisdiction to hear and determine any proceedings brought by virtue of the order to recover possession of the property or to recover the compensation.

5 (1) The amount payable to a tenant, by virtue of an order for possession, by way of compensation for loss of his flat shall be the amount which at the valuation date the new lease, if sold on the open market by a willing seller, might be expected to realise on the following assumptions--

(a) on the assumption that Chapter I and this Chapter confer no right to acquire any interest in any premises containing the tenant's flat or to acquire any new lease;

(b) on the assumption that the vendor is selling--

(i) subject to the rights of any person who will on the termination of the lease be entitled to retain possession as against the landlord, but otherwise with vacant possession, and

(ii) subject to any restriction that would be required (in addition to any imposed by the terms of the lease) to limit the uses of the flat to those to which it has been put since the commencement of the lease and to preclude the erection of any new dwelling or any other building not ancillary to the flat as a dwelling; and

(c) on the assumption that (subject to paragraphs (a) and (b)) the vendor is selling with and subject to the rights and burdens with and subject to which the flat will be held by the landlord on the termination of the lease.

(2) It is hereby declared that the fact that sub-paragraph (1) requires assumptions to be made as to the matters specified in paragraphs (a) to (c) of that sub-paragraph does not preclude the making of assumptions as to other matters where those assumptions are appropriate for determining the amount which at the valuation date the new lease might be expected to realise if sold as mentioned in that sub-paragraph.

(3) In determining any such amount there shall be made such deduction (if any) in respect of any defect in title as on a sale of that interest on the open market might be expected to be allowed between a willing seller and a willing buyer.

(4) In this paragraph "the valuation date" means the date when the amount of the compensation payable to the tenant is determined as mentioned in paragraph 2(1).

6 (1) Part I of the [1927 c. 36.] Landlord and Tenant Act 1927 (compensation for improvements on termination of business tenancies) shall not apply on the termination of the new lease or any sub-lease in accordance with this Schedule; and a request for a new tenancy under section 26 of the [1954 c. 56.] Landlord and Tenant Act 1954 in respect of the new lease or any sub-lease shall be of no effect if made after the application for possession, or, if already made, shall cease to have effect on the making of that application.

(2) Where a sub-lease terminating with the new lease in accordance with paragraph 3 is one to which Part II of the Landlord and Tenant Act 1954 applies, the compensation payable to the tenant shall be divided between him and the sub-tenant in such proportions as may be just, regard being had to their respective interests in the flat in question and to any loss arising from the termination of those interests and not incurred by imprudence.

(3) Where the amount of the compensation payable to the tenant is agreed between him and the landlord without the consent of a sub-tenant entitled under sub-paragraph (2) to a share in the compensation, and is shown by the sub-tenant to be less than might reasonably have been obtained by the tenant, the sub-tenant shall be entitled under sub-paragraph (2) to recover from the tenant such increased share as may be just.

7 (1) The landlord shall not be concerned with the application of the amount payable to the tenant by way of compensation under an order for possession, but (subject to any statutory requirements as to payment of capital money arising under a settlement or a disposition on trust for sale and to any order under paragraph 2(4) for payment into court) the written receipt of the tenant shall be a complete discharge for the amount payable.

(2) The landlord shall be entitled to deduct from the amount so payable to the tenant--

(a) the amount of any sum recoverable as rent in respect of the flat up to the termination of the new lease; and

(b) the amount of any other sums due and payable by the tenant to the landlord under or in respect of the lease or any agreement collateral thereto.

8 (1) Where a landlord makes an application for possession, and it is made to appear to the court that in relation to matters arising out of that application (including the giving up of possession of the flat or the payment of compensation) the landlord or the tenant has been guilty of any unreasonable delay or default, the court may--

(a) by order revoke or vary, and direct repayment of sums paid under, any provision made by a previous order as to payment of the costs of proceedings taken in the court on or with reference to the application; or

(b) where costs have not been awarded, award costs.

(2) Where an application for possession is dismissed or withdrawn, and it is made to appear to the court--

(a) that the application was not made in good faith, or

(b) that the landlord had attempted in any material respect to support by misrepresentation or the concealment of material facts a request to the tenant to deliver up possession without an application for possession,

the court may order that no further application for possession of the flat made by the landlord shall be entertained if it is made within the period of five years beginning with the date of the order.

9 Where--

(a) the new lease is held on trust for sale, and

(b) compensation is paid by the landlord on the termination of the new lease (whether the payment is made in pursuance of an order for possession or in pursuance of an agreement made in conformity with paragraph 5 above without an application having been made under section 61),

the sum received shall be dealt with as if it were proceeds of sale arising under the trust.

10 Where--

(a) the tenant under the new lease is a university or college to which the [1925 c. 24.] Universities and College Estates Act 1925 applies, and

(b) compensation is paid as mentioned in paragraph 9(b) above,

the sum received shall be dealt with as if it were an amount payable by way of consideration on a sale effected under that Act.

11 Where--

(a) the tenant under the new lease is a capitular body within the meaning of the [1963 No. 2.] Cathedrals Measure 1963 and the lease comprises property which forms part of the endowment of a cathedral church, and

(b) compensation is paid as mentioned in paragraph 9(b) above,

the sum received shall be treated as part of that endowment.

12 (1) Where--

(a) the tenant under the new lease is a diocesan board of finance and the lease comprises diocesan glebe land, and

(b) compensation is paid as mentioned in paragraph 9(b) above,

the sum received shall be paid to the Church Commissioners to be applied for purposes for which the proceeds of any disposition of property by agreement would be applicable under any enactment or Measure authorising such a disposition or disposing of the proceeds of such a disposition.

(2) In this paragraph "diocesan board of finance" and "diocesan glebe land" have the same meaning as in the [1976 No. 4.] Endowments and Glebe Measure 1976.

Section 66.

SCHEDULE 15 Section 9 of the Leasehold Reform Act 1967, as amended

Purchase price and costs of enfranchisement, and tenant's right to withdraw.

9 (1) Subject to subsection (2) below, the price payable for a house and premises on a conveyance under section 8 above shall be the amount which at the relevant time the house and premises, if sold in the open market by a willing seller (with the tenant and members of his family who reside in the house not buying or seeking to buy), might be expected to realise on the following assumptions:--

(a) on the assumption that the vendor was selling for an estate in fee simple, subject to the tenancy but on the assumption that this Part of this Act conferred no right to acquire the freehold, and if the tenancy has not been extended under this Part of this Act, on the assumption that (subject to the landlord's rights under section 17 below) it was to be so extended;

(b) on the assumption that (subject to paragraph (a) above) the vendor was selling subject, in respect of rentcharges to which section 11(2) below applies, to the same annual charge as the conveyance to the tenant is to be subject to, but the purchaser would otherwise be effectively exonerated until the termination of the tenancy from any liability or charge in respect of tenant's incumbrances; and

(c) on the assumption that (subject to paragraphs (a) and (b) above) the vendor was selling with and subject to the rights and burdens with and subject to which the conveyance to the tenant is to be made, and in particular with and subject to such permanent or extended rights and burdens as are to be created in order to give effect to section 10 below.

The reference in this subsection to members of the tenant's family shall be construed in accordance with section 7(7) of this Act.

(1A) Notwithstanding the foregoing subsection, the price payable for a house and premises,--

(i) the rateable value of which was above £1,000 in Greater London and £500 elsewhere on 31st March 1990, or,

(ii) which had no rateable value on that date and R exceeded £16,333 under the formula in section 1(1)(a) above (and section 1(7) above shall apply to that amount as it applies to the amount referred to in subsection (1)(a)(ii) of that section)

shall be the amount which at the relevant time the house and premises, if sold in the open market by a willing seller, might be expected to realise on the following assumptions:--

(a) on the assumption that the vendor was selling for an estate in fee simple, subject to the tenancy, but on the assumption that this Part of this Act conferred no right to acquire the freehold or an extended lease and, where the tenancy has been extended under this Part of this Act, that the tenancy will terminate on the original term date;

(b) on the assumption that at the end of the tenancy the tenant has the right to remain in possession of the house and premises--

(i) if the tenancy is such a tenancy as is mentioned in subsection (2) or subsection (3) of section 186 of the Local Government and Housing Act 1989, or is a tenancy which is a long tenancy at a low rent for the purposes of Part I of the Landlord and Tenant Act 1954 in respect of which the landlord is not able to serve a notice under section 4 of that Act specifying a date of termination earlier than 15th January 1999, under the provisions of Schedule 10 to the Local Government and Housing Act 1989; and

(ii) in any other case under the provisions of Part I of the Landlord and Tenant Act 1954;

(c) on the assumption that the tenant has no liability to carry out any repairs, maintenance or redecorations under the terms of the tenancy or Part I of the Landlord and Tenant Act 1954;

(d) on the assumption that the price be diminished by the extent to which the value of the house and premises has been increased by any improvement carried out by the tenant or his predecessors in title at their own expense;

(e) on the assumption that (subject to paragraph (a) above) the vendor was selling subject, in respect of rentcharges to which section 11(2) below applies, to the same annual charge as the conveyance to the tenant is to be subject to, but the purchaser would otherwise be effectively exonerated until the termination of the tenancy from any liability or charge in respect of tenant's incumbrances; and

(f) on the assumption that (subject to paragraphs (a) and (b) above) the vendor was selling with and subject to the rights and burdens with and subject to which the conveyance to the tenant is to be made, and in particular with and subject to such permanent or extended rights and burdens as are to be created in order to give effect to section 10 below.

(1B) For the purpose of determining whether the rateable value of the house and premises is above £1000 in Greater London, or £500 elsewhere, the rateable value shall be adjusted to take into account any tenant's improvements in accordance with Schedule 8 to the Housing Act 1974.

(1C) Notwithstanding subsection (1) above, the price payable for a house and premises where the right to acquire the freehold arises by virtue of any one or more of the provisions of sections 1A and 1B above shall be determined in accordance with subsection (1A) above; but in any such case--

(a) if in determining the price so payable 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 not exceed one-half of it; and

(b) section 9A below has effect for determining whether any additional amount is payable by way of compensation under that section;

and in a case where the provision (or one of the provisions) by virtue of which the right to acquire the freehold arises is section 1A(1) above, subsection (1A) above shall apply with the omission of the assumption set out in paragraph (b) of that subsection.

(2) The price payable for the house and premises shall be subject to such deduction (if any) in respect of any defect in the title to be conveyed to the tenant as on a sale in the open market might be expected to be allowed between a willing seller and a willing buyer.

(3) On ascertaining the amount payable, or likely to be payable, as the price for a house and premises in accordance with this section (but not more than one month after the amount payable has been determined by agreement or otherwise), the tenant may give written notice to the landlord that he is unable or unwilling to acquire the house and premises at the price he must pay; and thereupon--

(a) the notice under section 8 above of his desire to have the freehold shall cease to have effect, and he shall be liable to make such compensation as may be just to the landlord in respect of the interference (if any) by the notice with the exercise by the landlord of his power to dispose of or deal with the house and premises or any neighbouring property; and

(b) any further notice given under that section with respect to the house or any part of it (with or without other property) shall be void if given within the following three years.

(4) Where a person gives notice of his desire to have the freehold of a house and premises under this Part of this Act, then unless the notice lapses under any provision of this Act excluding his liability, there shall be borne by him (so far as they are incurred in pursuance of the notice) the reasonable costs of or incidental to any of the following matters:--

(a) any investigation by the landlord of that person's right to acquire the freehold;

(b) any conveyance or assurance of the house and premises or any part thereof or of any outstanding estate or interest therein;

(d) making out and furnishing such abstracts and copies as the person giving the notice may require;

(e) any valuation of the house and premises;

but so that this subsection shall not apply to any costs if on a sale made voluntarily a stipulation that they were to be borne by the purchaser would be void.

(5) The landlord's lien (as vendor) on the house and premises for the price payable shall extend--

(a) to any sums payable by way of rent or recoverable as rent in respect of the house and premises up to the date of the conveyance; and

(b) to any sums for which the tenant is liable under subsection (4) above; and

(c) to any other sums due and payable by him to the landlord under or in respect of the tenancy or any agreement collateral thereto.

Section 117(2).

SCHEDULE 16 Schedule inserted after Schedule 6 to the Housing Act 1985

" Schedule 6A Redemption of Landlord's Share

Obligation to redeem landlord's share in certain circumstances

1 (1) The conveyance or grant shall contain a covenant binding on the secure tenant and his successors in title to make to the landlord, immediately after--

(a) the making of a relevant disposal which is not an excluded disposal, or

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