Be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Leasehold houses
Ban on grant or assignment of certain long residential leases of houses
A person may not grant or enter into an agreement to grant a long residential lease of a house on or after the day on which this section comes into force, unless it is a permitted lease (see section 7).
A person may not assign or enter into an agreement to assign the whole or a part of a lease which was granted on or after the day on which this section comes into force if—
at the time of the assignment the lease is a long residential lease of a house, but
at the time of the grant the lease was not a long residential lease of a house.
This section does not affect—
the validity of a lease granted, or an assignment entered into, in breach of this section, and does not affect the powers of a person to grant or assign such a lease (whether under section 23(1) of the Land Registration Act 2002 or otherwise);
any contractual rights of a party to an agreement entered into in breach of this section.
Key definitions
A lease is a “long residential lease of a house” if conditions A to C are met in relation to the lease.
Condition B: the lease demises one house (see section 5), with or without appurtenant property, and nothing else.
Condition C: the lease is a residential lease (see section 6).
A lease has a “long term” in any of cases A to D.
Case A: the lease is granted for a term certain exceeding 21 years.
Case B: section 149(6) of the Law of Property Act 1925 applies to the lease (lease granted for life or until marriage or civil partnership) and the lease accordingly takes effect with a term fixed by law.
Case C: the lease is granted with a covenant or obligation for perpetual renewal and accordingly takes effect with a term fixed by law - unless it is a sub-lease with a term fixed by law of 21 years or shorter.
Case D: the lease is capable of forming part of a series of leases whose terms would extend beyond 21 years (see section 4).
In determining whether a lease has a long term, it is irrelevant if the lease is, or may become, terminable by notice, re-entry or forfeiture.
A lease (“the original lease”) is “capable of forming part of a series of leases whose terms would extend beyond 21 years” if conditions A to C are met at the time when the original lease is granted.
Condition B: provision for the grant of another lease of the same house (the “new lease”) is included in—
the original lease, or
any related arrangements.
Condition C: the total duration of— would exceed 21 years.
the term of the original lease,
the term of the new lease (if granted), and
the term or terms of any subsequent leases (if granted),
In a case where the provision for the grant of the new lease, or for the grant of any subsequent lease, allows for the possibility of the term of the lease being one of a number of differing durations, the reference in condition C to the term of the lease is to the longest of those possible durations.
A lease is a “lease of the same house” if the lease demises one house, being the house comprised in the original lease, with or without any appurtenant property, and nothing else.
Arrangements are “related arrangements” if they are entered into in connection with the grant of the original lease (whether or not they are entered into in writing).
A lease is a “subsequent lease” if—
it is not the new lease,
it is a lease of the same house, and
provision for the grant of the lease—
is included in the original lease or any related arrangements,
would be included in the new lease (if granted), or
would be included in any other lease that (if granted) would itself be a subsequent lease.
A “house” is a separate set of premises (on one or more floors) which—
forms the whole, or part, of a building, and
is constructed or adapted for use for the purposes of a dwelling.
But where the separate set of premises forms part of a building, it is not a house if the whole of or a material part of the set of premises lies above or below some other part of the building.
A lease is a “residential lease” if it is a lease of a house and the terms of the lease do not prevent the house from being occupied under that lease as a separate dwelling.
A lease is a “permitted lease” if—
it is a long residential lease of a house, and
it falls into one or more of the categories set out in Schedule 1.
Regulation of permitted leases
The appropriate tribunal must, on an application by a person, issue a certificate (a “permitted lease certificate”) in relation to a new long residential lease of a house, where the tribunal is satisfied that the lease is or will be a permitted lease falling within Part 1 of Schedule 1.
An application under this section may be made and determined whether or not the application includes a draft of the instrument creating the new lease.
The appropriate tribunal may issue a permitted lease certificate on such terms and conditions as it considers appropriate, but the certificate must—
identify the house or the land on which the house will be built, and
state the category or categories set out in Part 1 of Schedule 1 into which the lease will fall.
If an application under this section relates to two or more leases, the appropriate tribunal may issue just one certificate relating to some or all of those leases.
This section applies in relation to the marketing of a house where—
the house is to be comprised in a new lease, and
the lease will be a long residential lease of the house.
A person (“a promoter”) may not make any material marketing the house to be comprised in the lease available to any person, unless the permitted lease information relating to the lease is included in or provided with that material.
The “permitted lease information”, in relation to a lease, means—
if the lease falls or will fall into one or more of the categories set out in Part 1 of Schedule 1, a copy of the permitted lease certificate together with a statement identifying that category or those categories,
if to the best of the knowledge and belief of the promoter at the time the material is made available the lease falls or will fall into one or more of the categories set out in Part 2 of Schedule 1, a statement identifying that category or those categories, or
if both paragraphs (a) and (b) apply to the lease, the information required under both those paragraphs.
“Marketing” includes any form of advertising or promotion.
A person may not, on or after the day on which section 1 comes into force—
enter into an agreement to grant a permitted lease unless the transaction warning conditions are met in relation to the agreement, or
subject to subsection (5), grant a permitted lease unless the transaction warning conditions are met in relation to the lease.
The “transaction warning conditions” are as follows—
at least 7 days before the relevant date the grantor must give a warning notice relating to the permitted lease—
to the proposed tenant, or
where there is more than one proposed tenant, to each of them;
a notice of receipt of the warning notice must be given to the grantor—
by the proposed tenant, or
where there is more than one proposed tenant, jointly by all of the proposed tenants;
a reference to the warning notice and the notice of receipt must be included in or endorsed on the relevant instrument in the specified manner.
A “warning notice” is a notice provided in a specified form and manner and containing—
sufficient information to identify the house to be comprised in the lease,
if the lease falls within Part 1 of Schedule 1, a copy of the permitted lease certificate,
if the lease falls into one or more of the categories set out in Part 2 of Schedule 1, a statement identifying that category or those categories,
if both paragraphs (b) and (c) apply to the lease, the information required under both those paragraphs, and
such other information as may be specified.
A “notice of receipt” is a notice provided in a specified form and manner and containing such information as may be specified.
A person does not breach subsection (1) in relation to the grant of a lease if—
the person previously entered into an agreement to grant that lease,
the transaction warning conditions were met in relation to that agreement, and
a reference to the warning notice and the notice of receipt relating to that agreement is included in or endorsed on the instrument creating the lease.
This section does not apply to the grant of a permitted lease which falls within paragraph 6 of Schedule 1 (leases agreed before commencement).
This section does not affect—
the validity of a lease granted in breach of subsection (1), and does not affect the powers of a person to grant such a lease (whether under section 23(1) of the Land Registration Act 2002 or otherwise);
any contractual rights of a party to an agreement entered into in breach of subsection (1).
In this section— “grantor”, in relation to a lease, means the person proposing to grant the lease (whether or not that person holds the freehold or leasehold title out of which the lease will be granted); “proposed tenant”, in relation to a lease, means the proposed tenant of the house to be comprised in the lease; “relevant date” means— in the case of an agreement to grant a lease, the day on which the agreement is entered into, and in the case of a grant of a lease, the day on which the lease is granted; “relevant instrument” means— in the case of an agreement to grant a lease, that agreement, and in the case of a grant of a lease, the instrument creating that lease; “specified” means specified or described in regulations made— in relation to a lease of a house in England, by the Secretary of State; in relation to a lease of a house in Wales, by the Welsh Ministers.
A statutory instrument containing regulations under this section is subject to the negative procedure.
Land registration
This section applies to a lease of land which—
has a long term, and
is granted on or after the day on which section 1 comes into force.
If the lease is not a long residential lease of a house, the lease must include a statement to that effect.
If the lease is a permitted lease, the lease must include a statement to that effect.
A statement under subsection (2) or (3) must comply with such requirements as may be prescribed by land registration rules under the Land Registration Act 2002.
This section does not apply to—
a lease with a long term only by virtue of falling within section 3(5);
a lease which takes effect as a deemed surrender and regrant of a lease.
Subsection (3) applies where—
the Chief Land Registrar approves an application for registration of a lease (the “registered lease”),
section 11 applies to the registered lease, but
the registered lease does not contain a statement made in accordance with subsection (2) or (3) of that section.
An “application for registration of a lease” is an application for—
completion by registration of a disposition of registered land, if that disposition is the grant of a lease, or
registration of a lease within section 4(1)(c) of the Land Registration Act 2002.
The Chief Land Registrar must enter in the register a restriction that no registrable disposition, other than the grant of a legal charge, of the registered lease is to be completed by registration.
Subsection (6) applies where—
a restriction has been entered in the register in accordance with subsection (3) in relation to a registered lease, and
the Chief Land Registrar approves an application for registration of a deed of variation relating to the lease by virtue of which a new lease takes effect as a deemed surrender and regrant of the lease.
The Chief Land Registrar must enter in the register a restriction that no registrable disposition, other than the grant of a legal charge, of the new lease is to be completed by registration.
The restriction under subsection (6) may be removed if the Chief Land Registrar is satisfied that the new lease—
is not a long residential lease of a house, or
is a permitted lease.
An expression used in this section and in the Land Registration Act 2002 has the same meaning in this section as in that Act.
Redress
This section applies where a long residential lease of a house is granted or assigned in breach of section 1.
The rights holder in relation to the lease has the right to acquire (for no consideration)—
the freehold estate in the land comprised in the lease, and
any superior leasehold estate or estates in that land.
The right to acquire the freehold or leasehold estate is exercisable against the person holding that estate for the time being (the “landlord”).
The “rights holder”, in relation to a lease, means—
in a case where a mortgagee or chargee has for the time being the right to deal with the house comprised in the lease, that person, or
in any other case the tenant for the time being under the lease.
In this section, “superior leasehold estate”, in relation to a long residential lease of a house, means a leasehold estate that is superior to the long residential lease.
Section 13 ceases to apply in relation to a long residential lease of a house if—
the term of the lease expires (but see subsection (2)), or
the lease otherwise ceases to exist.
Where the term of the lease expires, section 13 continues to apply for as long as the lease is continued under a relevant enactment.
Section 13 ceases to apply in relation to a long residential lease of a house if the tenant for the time being under the lease acquires the freehold estate and any superior leasehold estate or estates in the land comprised in the lease (whether or not by exercising the right to acquire).
In subsection (2) “relevant enactment” means—
Part 1 of the Landlord and Tenant Act 1954, or
Schedule 10 to the Local Government and Housing Act 1989.
A lease to which section 13 applies is not as a result of any right to acquire—
registrable under the Land Charges Act 1972, or
to be taken to be an estate contract within the meaning of that Act.
An agreement relating to a long residential lease of a house (whether or not contained in the instrument creating the lease or made before the grant of the lease) is of no effect to the extent that it makes provision—
excluding or modifying the right to acquire, or
providing for the surrender or termination of the lease, or for the imposition of any penalty, in the event of the rights holder taking steps to exercise the right to acquire.
Subsection (2) does not prevent a tenant under a long residential lease of a house from—
surrendering the lease,
terminating the lease, or
entering into an agreement to acquire the freehold estate in the land comprised in the lease, or any superior leasehold estate or estates in that land, other than by way of exercising the right to acquire.
The right to acquire in relation to a long residential lease of a house is not capable of subsisting apart from the lease.
In this section, “rights holder” has the meaning given by section 13.
The Secretary of State may by regulations (“redress regulations”) make provision for and in connection with the exercise of the rights holder’s right to acquire in relation to a long residential lease of a house.
Redress regulations may, in particular, include provision for or in connection with—
the period within which the right to acquire must be exercised;
the giving of notice by the rights holder to the landlord or any other specified person for the purpose of exercising the right to acquire (including the form and manner in which, and the period within which, any such notice must be given);
registration under the Land Charges Act 1972 or the Land Registration Act 2002 of any notice given by virtue of paragraph (b);
the giving of notice by the landlord to the rights holder or any other specified person for the purpose of accepting or rejecting the rights holder’s right to acquire (including the form and manner in which, and the period within which, any such notice must be given);
the making by the appropriate tribunal or a court of an order on an application by a specified person determining whether or not, in the absence of agreement between the rights holder and the landlord, the rights holder has the right to acquire (including provision for the order to be made subject to such terms and conditions as the tribunal or court considers appropriate, including terms about costs);
further steps that must be taken by the rights holder (including the provision of specified information or specified documents), and any conditions that must be met in relation to the taking of those further steps (including conditions about timing), in order to exercise the right to acquire;
requirements that must be met in relation to a conveyance executed to give effect to the right to acquire (a “relevant conveyance”), including requirements for the conveyance to include specified provisions in respect of specified easements or rights over property, rights of way or covenants (positive or restrictive);
any other requirements that must be met in relation to a relevant conveyance, including a requirement that the conveyance is granted free of specified incumbrances, and subject to such burdens as may be specified;
the effect of the execution of a relevant conveyance, including provision for the conveyance to have the effect of discharging the house comprised in the lease from any specified incumbrance (including a charge);
any statement which must be included in a relevant conveyance, including a statement identifying the conveyance as executed for the purposes of this Part, and any requirements that must be met in relation to such a statement (including any requirements prescribed by land registration rules under the Land Registration Act 2002);
the making by the appropriate tribunal or a court of an order (a “relevant order”) on an application by a specified person for the purpose of giving effect to the right to acquire (whether or not in connection with an application to the appropriate tribunal or a court for a determination as described in paragraph (e));
the modification of the right to acquire in relation to any appurtenant property comprised in the lease (including for the rights holder to continue to hold a lease of such property, or conferring on them a right to use the property);
the circumstances in which the rights holder exercising the right to acquire is to be treated as a purchaser for value of the legal estate of the land comprised in the lease;
the circumstances in which a mortgagee or chargee is to be treated for the purposes of section 13(5)(a) as having the right to deal with the house comprised in the lease;
in a case where the rights holder is a tenant for the time being under the lease—
the circumstances in which a representative of the rights holder has the right to acquire instead of that tenant, and
the exercise by such a representative of any powers or duties of a rights holder conferred or imposed by this Part or under redress regulations;
the liability for specified costs in connection with the exercise of the right to acquire (including provision as to how to calculate such costs or for the amount of any costs payable to be determined, in the absence of agreement, by the appropriate tribunal or a court);
proceedings for the recovery by specified persons from the landlord who granted the lease of compensation for any loss or damage resulting from the breach of section 1, including provision as to how to calculate the value of such loss or damage, and conferring powers on the appropriate tribunal or a court in connection with the recovery of such compensation (including provision as to costs).
Provision under subsection (2)(k) may, in particular, include provision—
for the making of a relevant order where the landlord cannot be found or identified, including where the rights holder has been unable to give notice for the purpose of exercising the right to acquire;
for a relevant order to determine the content of a relevant conveyance and who may execute it, and to be made subject to such further terms and conditions as the appropriate tribunal or court considers appropriate, including terms about costs.
Redress regulations may include provision about cases where the rights holder’s right to acquire in relation to a lease is exercisable in relation to more than one landlord, including (but not limited to) provision—
for or in connection with functions to be carried out by one landlord (the “reversioner”) on behalf of the other landlords;
for the landlord holding the freehold estate to be the reversioner;
for another landlord to be the reversioner in specified circumstances;
for or in connection with the appointment or removal of a reversioner by order of the appropriate tribunal or a court, on an application by a specified person;
for things done by the reversioner to be binding on the other landlords and on their interests in the land comprised in the lease;
for or in connection with the provision of information, documents or other assistance by other landlords to the reversioner for the purpose of enabling the reversioner to carry out functions under redress regulations;
for the indemnification of the reversioner against any liability incurred by the reversioner in consequence of failure by other landlords to comply with any requirement imposed on them by redress regulations;
excluding the reversioner from liability to any of the other landlords in specified circumstances;
for or in connection with the making of an order by the appropriate tribunal or a court, on an application by the reversioner, directing how the right to acquire may be given effect if any of the other landlords cannot be found or identified, or in case of a dispute between the reversioner and any other landlord.
Redress regulations may—
apply or incorporate (with or without modifications) any provision made by or under any relevant enactment;
amend or repeal any provision made by an Act.
A statutory instrument containing redress regulations is subject to the negative procedure.
In this section— “incumbrances” has the same meaning as in section 9 of the LRA 1967; “landlord” has the meaning given by section 13; “relevant enactment” means— the LRA 1967; the LRHUDA 1993; the Tribunals, Courts and Enforcement Act 2007; “representative”, in relation to a rights holder, means the personal representative, trustee in bankruptcy, trustee in sequestration, receiver, liquidator or person otherwise acting in a representative capacity in relation to that person; “rights holder” has the meaning given by section 13; “specified” means specified or described in redress regulations.
Enforcement
It is the duty of every local weights and measures authority in England or Wales (an “enforcement authority”) to enforce the leasehold house restrictions in its area.
section 1(1) so far as it relates to an agreement to grant a lease,
section 1(1) so far as it relates to the grant of a lease,
section 1(2) so far as it relates to an agreement to assign a lease,
section 1(2) so far as it relates to the assignment of a lease,
section 9(2) (marketing restrictions on permitted leases),
section 10(1)(a) (conditions on agreement to grant permitted lease), and
section 10(1)(b) (conditions on grant of permitted lease).
The duty in subsection (1) is subject to sections 19(4) (enforcement by another enforcement authority) and 22 (enforcement by the lead enforcement authority).
An enforcement authority may impose a financial penalty on a person if the authority is satisfied beyond reasonable doubt that the person has breached a leasehold house restriction.
The amount of a penalty for a breach is to be such amount as the authority determines but—
is not to be less than £500, and
is not to be more than £30,000.
Conduct within any one of the following paragraphs is to be regarded as a single breach of one leasehold house restriction— Subsection (5) is to be read in accordance with this subsection.
entering into an agreement to grant a lease in breach of section 1(1) and subsequently granting the lease in breach of that provision;
entering into an agreement to assign a lease in breach of section 1(2) and subsequently assigning the lease in breach of that provision;
A person who makes marketing material available in relation to the same lease on more than one occasion in breach of section 9(2) is to be regarded as committing only one breach of that provision.
The following are to be regarded as separate breaches— and accordingly an enforcement authority may impose a separate penalty in relation to each breach (or may impose a single penalty of an amount equal to the total of the amounts of the penalties that could have been separately imposed).
breaches by the same person of the same leasehold house restriction in relation to different leases, and
breaches by the same person of different leasehold house restrictions in relation to the same lease,
The Secretary of State may by regulations amend an amount for the time being specified in subsection (2) to reflect a change in the value of money.
A statutory instrument containing regulations under subsection (6) is subject to the negative procedure.
Schedule 2 contains further provision about financial penalties under this section.
An enforcement authority may impose a penalty under section 18 in respect of a breach of a leasehold house restriction which occurs outside that authority’s area (as well as in respect of a breach which occurs within that area).
If an enforcement authority (“LA1”) proposes to impose a penalty in respect of a breach which occurred in the area of a different enforcement authority (“LA2”), LA1 must notify LA2 that it proposes to do so.
If LA1 notifies LA2 under subsection (2) but does not impose the penalty, LA1 must notify LA2 of that fact.
If an enforcement authority receives a notification under subsection (2), the authority is relieved of its duty under section 17(1) in relation to the breach unless the authority receives a notification under subsection (3).
If an enforcement authority (“LA1”) imposes a penalty in respect of a breach which occurred in the area of a different enforcement authority (“LA2”), LA1 must notify LA2 of that fact.
the Secretary of State, or
a person whom the Secretary of State has arranged to be the lead enforcement authority in accordance with subsection (2).
The Secretary of State may make arrangements for a local weights and measures authority in England or Wales to be the lead enforcement authority instead of the Secretary of State.
The arrangements—
may include provision for payments by the Secretary of State;
may include provision about bringing the arrangements to an end.
The Secretary of State may by regulations make transitional or saving provision which applies when there is a change in the lead enforcement authority.
The regulations may relate to a specific change in the lead enforcement authority or to changes that might arise from time to time.
A statutory instrument containing regulations under subsection (4) is subject to the negative procedure.
It is the duty of the lead enforcement authority to oversee the operation of the relevant provisions of this Part in England and Wales.
It is the duty of the lead enforcement authority to issue guidance to enforcement authorities about their enforcement of the leasehold house restrictions (and if the lead enforcement authority is not the Secretary of State, the Secretary of State may give directions as to the content of the guidance).
It is the duty of the lead enforcement authority to provide information and advice to the public in England and Wales about the operation of the relevant provisions of this Part, in such form and manner as it considers appropriate.
The lead enforcement authority may disclose information to an enforcement authority for the purposes of enabling that authority to determine whether there has been a breach of a leasehold house restriction.
If the lead enforcement authority is not the Secretary of State, the lead enforcement authority must keep under review and from time to time advise the Secretary of State about—
the operation of the relevant provisions of this Part, and
social and commercial developments relating to the grant or assignment of long residential leases of houses in England and Wales.
The lead enforcement authority may—
take steps to enforce the leasehold house restrictions if it considers it is necessary or expedient to do so;
for that purpose, exercise any powers that an enforcement authority may exercise for the purpose of the enforcement of the leasehold house restrictions.
If the lead enforcement authority proposes to take steps in respect of a breach (or suspected breach) of a leasehold house restriction, it must notify the enforcement authority for the area in which the breach occurred (or may have occurred) that it proposes to do so.
If the lead enforcement authority notifies an enforcement authority under subsection (2) but does not take the proposed steps, the lead enforcement authority must notify the enforcement authority of that fact.
If an enforcement authority receives a notification under subsection (2), the authority is relieved of its duty under section 17(1) in relation to the breach unless the authority receives a notification under subsection (3).
But the lead enforcement authority may require the enforcement authority to assist the lead enforcement authority in taking steps to enforce the leasehold house restriction referred to in subsection (2).
An enforcement authority must notify the lead enforcement authority if the enforcement authority believes that a breach of a leasehold house restriction has occurred in its area.
An enforcement authority must report to the lead enforcement authority, whenever the lead enforcement authority requires and in such form and with such particulars as it requires, on that enforcement authority’s enforcement of the leasehold house restrictions.
An enforcement authority must have regard to the guidance issued under section 21(3).
For the investigatory powers available to an enforcement authority for the purposes of enforcing a leasehold house restriction, see Schedule 5 to the Consumer Rights Act 2015 (investigatory powers of enforcers etc).
In paragraph 10 of Schedule 5 to the Consumer Rights Act 2015 (duties and powers to which Schedule 5 applies), at the appropriate places insert—
“section 17 of the Leasehold and Freehold Reform Act 2024;”;
“section 22 of the Leasehold and Freehold Reform Act 2024”.
See also paragraph 44 of Schedule 5 to the Consumer Rights Act 2015 (exercise of functions outside enforcer’s area).
General
This Part binds the Crown.
The Secretary of State may by regulations—
amend the following definitions—
“long residential lease of a house” in section 2;
a lease which has a “long term” in section 3;
“house” in section 5;
amend Schedule 1.
A statutory instrument containing (whether alone or with other provision)— is subject to the affirmative procedure.
regulations under subsection (1)(a), or
regulations under subsection (1)(b) which add a category of lease to Schedule 1 or omit a category of lease from that Schedule,
Any other statutory instrument containing regulations under subsection (1)(b) is subject to the negative procedure.
See also the powers to make regulations under paragraphs 2(1)(b), 3(1)(b), 7(2) and 8(1)(b) of Schedule 1.
The provision that may be made by regulations under this section by virtue of section 122(1) (consequential etc provision) includes provision amending or repealing any provision of this Part.
In this Part— “appropriate tribunal” means— in relation to a lease of a house in England, the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal; and in relation to a lease of a house in Wales, a leasehold valuation tribunal; “appurtenant property”, in relation to a house, means any garage, outhouse, garden, yard or appurtenances belonging to, or usually enjoyed with, the house; “enforcement authority” means a local weights and measures authority in England or Wales; “house”: see section 5; “lead enforcement authority” has the meaning given by section 20; “lease”— means a lease at law or in equity (and references to the grant or assignment of a lease are to be construed accordingly); includes a sub-lease; does not include a mortgage term; “leasehold house restrictions” has the meaning given by section 17(2); “long residential lease of a house”: see section 2; “long term”, in relation to a lease: see section 3; “notify” means notify in writing, and “notification” is to be construed accordingly; “permitted lease”: see section 7; “permitted lease certificate” means a certificate issued by the appropriate tribunal under section 8; “residential lease”: see section 6.
In this Part, references to the grant of a lease in relation to a lease which takes effect as a deemed surrender and regrant of a lease are to the regrant of the lease.
Leasehold enfranchisement and extension
Eligibility for enfranchisement and extension
In section 1 of the Leasehold Reform Act 1967 (“the LRA 1967”) (tenants entitled to enfranchisement or extension)—
in subsection (1), omit paragraph (b) and the “and” preceding it;
in subsection (1ZC), in the words before paragraph (a), for “(1)(a) and (b)” substitute “(1)”.
In section 39 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the LRHUDA 1993”) (right of qualifying tenant of flat to acquire new lease)—
in subsection (1)—
after “conferring on a” insert “qualifying”;
omit “, in the circumstances mentioned in subsection (2),”;
omit subsection (2) (requirement to have been a qualifying tenant for last two years);
omit subsection (3A) (right of personal representatives).
Omit section 42(4A) of the LRHUDA 1993 (notices given by personal representatives).
In the LRA 1967—
omit section 9(3)(b) and the “and” preceding it (prohibition on further claim);
in section 16, omit subsections (1)(b), (2) and (3) (prohibition of further extension of lease);
in section 20, omit subsections (5) and (6) (power of court to void further claims);
in section 23 (agreements excluding or modifying rights of tenant), in subsection (2)(b), omit the words from “or any provision” to “or any part of it”;
in Schedule 3, omit paragraph 4(3) (power of court to void further claims).
In the LRHUDA 1993—
omit section 13(9) (prohibition of further claim for collective enfranchisement);
omit section 42(7) (prohibition of further claim for new lease).
In section 4(1)(b) of the LRHUDA 1993 (non-residential limit on collective enfranchisement claims), for “25 per cent.” substitute “50%”.
Schedule 3 makes provision about the availability of rights to enfranchisement and extension under the LRA 1967 and the LRHUDA 1993 in certain specific cases.
Effects of enfranchisement
The LRHUDA 1993 is amended as follows.
In section 1 (the right to collective enfranchisement), for subsection (2)(b) substitute—
Before Schedule 1 insert—
Omit section 2 (acquisition of leasehold interests).
In section 9 (the reversioner and other relevant landlords), in subsections (2) and (2A), for “section 2(1)(a) or (b)” substitute “Schedule A1”.
In section 13 (notice by qualifying tenants of claim to exercise right), in subsection (3)(c), for sub-paragraph (i) substitute— .
In section 19 (effect of initial notice as respects subsequent transactions by freeholder etc), in subsection (1)(a)(ii), for “by virtue of section 2(1)(a) or (b)” substitute “under or by virtue of Schedule A1”.
In section 21 (reversioner’s counter-notice), in subsection (3), after paragraph (b) insert—
In Schedule 3 (initial notice: supplementary provisions), in paragraph 15 (inaccuracies or misdescription in initial notice)—
for the heading substitute “initial notice: inaccuracies or misdescription and variation”;
in sub-paragraph (2)(a), for “or 2” substitute “or Schedule A1”;
after sub-paragraph (2), insert— .
The LRHUDA 1993 is amended as follows.
In section 13(3) (contents of initial notice), after paragraph (c) insert— .
In section 21(3)(a) (contents of counter-notice), in sub-paragraph (ii), after “leaseback proposals” insert “under Part 2 or 3 of Schedule 9”.
In section 36 (nominee purchaser required to grant leases back to former freeholder in certain circumstances)—
after subsection (1) insert— ;
in subsection (2), for “such lease” substitute “lease required under this section and Schedule 9 to be granted or accepted”;
in subsection (4), for “II or III” substitute “2, 3 or 3A”;
for the heading substitute “Required grant and acceptance of leasebacks in certain circumstances”.
In Schedule 9 (grant of leases back to former freeholder)—
in paragraph 1(1), in the definition of “the demised premises”, for “II or III” substitute “2, 3 or 3A”;
after Part 3 insert— ;
in paragraph 10, after sub-paragraph (2) insert— ;
in paragraph 16(2), for “4 or 7” substitute “4, 7 or 7B”.
Effects of extension
In section 14(1) of the LRA 1967 (obligation to grant extended lease), for “fifty years” substitute “990 years”.
In section 56(1) of the LRHUDA 1993 (obligation to grant new lease), in the words after paragraph (b), for “90 years” substitute “990 years”.
The LRA 1967 is amended as follows.
in subsection (1), for “, in substitution for the existing tenancy” substitute ;
omit subsection (2)(c);
in subsection (3), in the words before paragraph (a), after “otherwise than on tender” insert “, in addition to the price payable,”;
after subsection (7) insert—
In section 15 (terms of tenancy to be granted on extension)—
for subsection (2) substitute— ;
in subsection (3)—
for “rent”, in the first place it occurs, substitute “peppercorn rent”;
for “the time when rent becomes payable in accordance with subsection (2) above” substitute “the original term date”;
in subsection (6)—
omit “the first reference in subsection (2) above to that date shall have effect as a reference to the grant of the new tenancy; but”;
omit “(after making any necessary apportionment)”;
omit “rent and” in both places it occurs;
after “section 14(3)(a) above shall apply” insert “in respect of those matters”.
In section 21(1) (jurisdiction of tribunals), omit paragraph (b).
In section 31(2)(a) (ecclesiastical property), omit “or rent”.
In Schedule 1 (enfranchisement or extension by sub-tenants), in paragraph 10(4)—
omit the words from the first “shall give effect to” to “intermediate landlord, and”;
for “any of those landlords” substitute “the landlord granting the new tenancy, the immediate landlord of whom the new tenancy will be held and any intermediate landlord”.
Price payable on enfranchisement or extension
The LRA 1967 is amended as follows.
In section 9 (purchase price and costs of enfranchisement)—
before subsection (1) insert— ;
omit subsections (1) to (2).
After section 14 insert—
The LRHUDA 1993 is amended as follows.
In section 32 (determination of price for collective enfranchisement), for subsection (1) substitute—
In section 56 (obligation to grant new lease)—
in subsection (1), for paragraph (b) substitute— ;
after subsection (1) insert—
Omit Schedule 6 (purchase price payable by nominee purchaser).
Omit Schedule 13 (premium and other amounts payable by tenant on grant of new lease).
Where this section applies to the acquisition of a freehold or grant of a lease, the price payable is—
the market value, and
the other compensation (if any).
Schedule 4 sets out—
how the market value is to be determined — see Parts 1 to 5 and 7 of the Schedule, and
how to divide the market value into shares (where loss is suffered by certain landlords other than the landlord transferring the freehold or granting the lease) — see Part 6 of the Schedule.
Schedule 5 sets out when other compensation is payable and how to determine its amount.
These are the provisions under which this section applies to the acquisition of a freehold or grant of a lease—
section 9(A1) of the LRA 1967 (transfer of a freehold house under the LRA 1967);
section 14A(1) of the LRA 1967 (grant of an extended lease of a house under the LRA 1967);
section 32(1) of the LRHUDA 1993 (collective enfranchisement of a building under the LRHUDA 1993);
section 56(1)(b) of the LRHUDA 1993 (grant of a new lease of a flat under the LRHUDA 1993).
This section has effect subject to the following provisions (which provide for the adjustment of the price payable where property is in the area of a management scheme)—
section 19(10)(b) of the LRA 1967;
section 70(12)(b) and (c) of the LRHUDA 1993.
In this Part—
“transfer of a freehold house under the LRA 1967” means the conveyance or transfer of the freehold of a house and any other premises under Part 1 of the LRA 1967;
“grant of an extended lease of a house under the LRA 1967” means the grant of an extended lease of a house and any other premises under Part 1 of the LRA 1967;
“collective enfranchisement of a building under the LRHUDA 1993” means the acquisition by a nominee purchaser of a freehold and any other interests under Chapter 1 of Part 1 of the LRHUDA 1993;
“grant of a new lease of a flat under the LRHUDA 1993” means the grant of a new lease under Chapter 2 of Part 1 of the LRHUDA 1993.
Costs of enfranchisement or extension
The LRA 1967 is amended as follows.
In section 9 (costs of enfranchisement)—
in the heading, omit “and costs of enfranchisement,”;
omit subsections (4) and (4A);
omit subsection (5)(b).
In section 10(1A) (landlord’s covenants on enfranchisement), omit the words from “and in the absence” to “assurance)”.
In section 14 (costs of extension)—
omit subsections (2) and (2A);
omit subsection (3)(b).
In section 15(9) (landlord’s covenants on extension), omit the words from “and in the absence” to “assurance)”.
After section 19 insert—
In section 20 (jurisdiction of county court), omit subsections (4) and (4A).
In section 22(3)(a) (deposits), omit “and landlord’s costs”.
In consequence of the amendments made by subsections (2) to (8)—
in section 9(5)(c) (landlord’s lien as vendor), for “him” substitute “the tenant”;
in section 14(3)(c) (conditions for grant of extended lease), for “him” substitute “the tenant”;
in section 17(4)(b) (redevelopment rights), omit the words from “but” to “the notice”;
in section 18(6)(b) (residential rights), omit the words from “but” to “the notice”;
in section 19(14)(b) (management powers), omit the words from “and” to “withdrawn”;
in section 27A(5) (compensation for ineffective claim in certain cases), for paragraph (b) substitute— ;
in section 32A(5) (property transferred for public benefit), omit paragraph (a).
The LRHUDA 1993 is amended as follows.
In section 28 (withdrawal of acquisition), omit subsections (4) to (7).
In section 29 (deemed withdrawal), omit subsections (6) to (8).
In section 32(2) (vendor’s lien), omit paragraph (c).
Omit section 33 (costs of enfranchisement).
In section 56(3) (conditions of grant of new lease), omit paragraph (b).
In section 57(8) (landlord’s covenants on extension), omit the words from “and in the absence” to “assurance)”.
Omit section 60 (costs of extension) and the italic heading preceding it.
Before section 90 insert—
In Schedule 7, in paragraph 2(2) (terms of enfranchisement), omit the words from “and in the absence” to “assurance)”.
In consequence of the amendments made by subsections (2) to (10)—
in section 15(7) (appointment and replacement of nominee purchaser)—
for the words from “he shall not be liable” to “but if” substitute “and”;
for “under section 33” substitute “as otherwise referred to in section 89A”;
in section 31(5) (designation for inheritance tax purposes), omit paragraph (a);
in the italic heading before section 32, omit “and costs of enfranchisement”;
in section 52 (withdrawal from acquisition of new lease), omit subsection (3);
in section 74 (effect of estate management schemes on freehold claims), omit subsection (4).
Jurisdiction of the county court and tribunals
The LRA 1967 is amended as follows.
In the following provisions, for “the court” substitute “the appropriate tribunal” in each place it occurs—
section 2;
section 27;
in Schedule 1—
paragraph 3;
paragraph 4;
in Schedule 3—
paragraph 6(3);
paragraph 7(5);
in Schedule 4A—
paragraph 3(3);
paragraph 3A(3);
paragraph 4A(6).
In the following provisions, for “into court” substitute “into the tribunal” in each place it occurs—
section 27;
in Schedule 1, paragraph 4(3)(c).
In the following provisions, after “court” insert “or tribunal”—
section 5(7);
section 13(3)(b);
section 37(7);
in Schedule 3, paragraph 5, in both places it occurs.
In section 11(5), for “in court” substitute “in the tribunal”.
In section 13(3), in the words after paragraph (b)—
after “a court” insert “or tribunal”;
omit “other than the county court”;
after “the court” insert “or tribunal”.
In section 27A(7)(b)—
after “the court” insert “or the appropriate tribunal”;
after “court order” insert “or order of a tribunal”.
The LRHUDA 1993 is amended as follows.
After section 27 insert—
In section 48 (applications where terms in dispute or failure to enter into new lease)—
after subsection (3) insert— ;
in subsection (4), for “Any such order” substitute “An order under subsection (3)”.
In section 49 (applications where landlord fails to give counter-notice or further counter-notice)—
after subsection (4) insert— ;
in subsection (5), for “Any such order” substitute “An order under subsection (4)”.
In section 90 (jurisdiction of county courts)—
omit subsection (2);
in subsection (3), for “or (2)” substitute “or section 91A”;
omit subsection (4).
For section 91 (jurisdiction of tribunals) substitute—
In section 92 (enforcement of obligations under Chapters 1 and 2)—
in the heading, for “Enforcement of” substitute “Power to order compliance with”;
in subsection (1), after “The court” insert “or appropriate tribunal”;
after subsection (2) insert— .
The LRHUDA 1993 is amended as follows.
In the following provisions, for “the court” substitute “the appropriate tribunal” in each place it occurs—
section 74(3)(c);
in Schedule 1—
paragraphs 2 to 5;
paragraphs 5B to 5E;
paragraph 6(3);
in Schedule 3, paragraph 15(2);
in Schedule 5—
paragraph 1(1);
paragraph 2(1);
in Schedule 11, paragraph 6(3);
in Schedule 12, paragraph 9(2).
In the following provisions, for “into court” substitute “into the tribunal” in each place it occurs—
section 27;
section 51;
in Schedule 1, paragraph 6(3)(c);
in Schedule 5, paragraphs 2 to 4, including the heading of paragraph 4;
in Schedule 8, paragraphs 2 and 4, including the heading of paragraph 4.
In section 19(6), after “any court” insert “or tribunal”.
In section 26(9), for “Rules of court” substitute “Tribunal Procedure Rules, and regulations under Schedule 12 to the Commonhold and Leasehold Reform Act 2002 (leasehold valuation tribunals: procedure),”.
In section 37A(8)(b)—
after “the court” insert “or the appropriate tribunal”;
after “court order” insert “or order of a tribunal”.
In section 61A(7)(b)—
after “the court” insert “or the appropriate tribunal”;
after “court order” insert “or order of a tribunal”.
In section 101(9), in the words before paragraph (a), after “a decision” insert “or order”.
In Schedule 1, in paragraph 6(2), in the words after paragraph (b), for “the court” substitute “the appropriate tribunal”.
In Schedule 3—
in paragraph 10(1)(d)(ii), after “the court” insert “or the appropriate tribunal”;
in paragraph 10(2), after “a court” insert “or tribunal”.
In Schedule 8, in paragraph 4(3)—
in paragraph (b), after “any court” insert “or tribunal”;
in the words after paragraph (b)—
after “a court” insert “or tribunal”;
omit “other than the county court”;
after “the court” insert “or tribunal”.
In Schedule 11, in paragraph 6(1), in the words after paragraph (c), for “the court” substitute “the appropriate tribunal”.
In Schedule 12—
in paragraph 8(1)(c)(ii), after “the court” insert “or the appropriate tribunal”;
in paragraph 8(2), after “a court” insert “or tribunal”.
Jurisdiction of the High Court
Where jurisdiction in respect of a matter is conferred on the appropriate tribunal exclusively under the LRA 1967 or a specified provision of the LRHUDA 1993, a person may not apply to the High Court in respect of that matter.
Subsection (1) has no effect in relation to any proceedings that may be brought in the High Court for the purpose of challenging a decision, declaration, direction or order of the appropriate tribunal.
The specified provisions of the LRHUDA 1993 are—
Chapters 1, 2, 4 and 7 of Part 1;
section 88.
In subsection (1) “appropriate tribunal” has the same meaning as in the LRA 1967 or the specified provision of the LRHUDA 1993 (whichever is relevant).
For the purposes of this section, jurisdiction in respect of a matter is conferred on the appropriate tribunal exclusively where—
a provision of the LRA 1967 or the LRHUDA 1993 provides for the matter to be determined by the appropriate tribunal alone (and not by a court or the appropriate tribunal), or
proceedings in respect of the matter fall within the jurisdiction of the appropriate tribunal by virtue of section 21A of the LRA 1967 or section 91A of the LRHUDA 1993.
Enfranchisement and extension: miscellaneous amendments
Schedule 8 contains miscellaneous further amendments to existing legislation relating to enfranchisement and extension.
Preservation of existing law for certain purposes
After section 7 of the LRA 1967 insert—
Consequential amendments to other legislation
Schedule 9 contains amendments to other legislation that are consequential on this Part.
Other rights of long leaseholders
New right to replace rent with peppercorn rent
Schedule 10 confers on certain leaseholders the right to a variation of their leases so that the whole or part of the rent payable becomes and will remain a peppercorn rent.
The right to manage
In Schedule 6 to the Commonhold and Leasehold Reform Act 2002 (“the CLRA 2002”), in paragraph 1(1) (non-residential limit on right to manage claims), for “25 per cent.” substitute “50%”.
The CLRA 2002 is amended as follows.
In section 82 (right to obtain information before right to manage claim)—
in subsection (2)(b), omit “on payment of a reasonable fee”;
after subsection (3) insert—
After section 87 insert—
Section 107 of the CLRA 2002 (enforcement of obligations) is amended as follows.
In subsection (1), for “county court” substitute “appropriate tribunal”.
After subsection (2) insert—
For the heading substitute “Power of tribunal to order compliance”.
Where jurisdiction in respect of a matter is conferred on the appropriate tribunal under Chapter 1 of Part 2 of the CLRA 2002, a person may not apply to the High Court in respect of that matter.
Subsection (1) has no effect in relation to any proceedings that may be brought in the High Court for the purpose of challenging a decision, declaration, direction or order of the appropriate tribunal.
In subsection (1) “appropriate tribunal” has the same meaning as in the Chapter mentioned in that subsection.
Regulation of leasehold
Service charges
The Landlord and Tenant Act 1985 (“the LTA 1985”) is amended in accordance with subsections (2) to (6).
In section 18 (meaning of “service charge” and “relevant costs”)—
in the heading, after ““service charge”” insert “, “variable service charge””;
for subsections (1) and (2) substitute— ;
in subsection (3)(b), for “a service charge” substitute “a variable service charge”.
In the provisions referred to in subsection (4)—
for “service charge” substitute “variable service charge”;
for “service charges” substitute “variable service charges”.
The provisions are—
in section 19 (reasonableness of service charges), the heading and subsections (1) and (2);
in section 20 (consultation requirements), the heading and subsection (2);
in section 20A (grant-aided works), the heading and subsections (1) and (2);
in section 20B (time limit on making demands), the heading and subsection (1) in the first place “service charge” occurs;
in section 20D (remediation works), the heading and subsections (4) and (5);
in section 20F (excluded costs for higher-risk buildings), the heading and subsection (2);
in section 30D (liability for building safety costs), subsection (2)(a)(ii);
in section 30E (liability for remuneration), subsection (1)(c).
In section 30E(3), for ““service charge” has the meaning” substitute ““service charge” and “variable service charge” have the meaning”.
In section 39 (index of defined expressions), at the end insert— .
The Landlord and Tenant Act 1987 (“the LTA 1987”) is amended in accordance with subsections (8) to (10).
In the provisions referred to in subsection (9), in each place they occur—
for “service charge” substitute “variable service charge”;
for “service charges” substitute “variable service charges”.
The provisions are—
in section 24 (appointment of manager by tribunal), subsections (2) and (2A);
in section 35 (application by party to lease for variation of lease), subsections (2) and (4);
in section 42 (service charge contributions to be held in trust), the heading and subsections (1), (2), (3), (4), (6), and (8).
In section 35(8), for ““service charge” has the meaning” substitute ““service charge” and “variable service charge” have the meaning”.
In section 167 of the CLRA 2002 (failure to pay small amount for short period)—
in subsection (1), for “service charges” substitute “variable service charges”;
in subsection (5), for “service charge” substitute “variable service charge”.
In section 20B of the LTA 1985 (time limit on making service charge demands), in subsection (2), for the words from “notified in writing” to the end substitute “given a future demand notice in respect of those costs.
The LTA 1985 is amended in accordance with subsections (2) and (3).
Omit the following sections—
section 21 (request for summary of relevant costs);
section 21A (withholding of service charges);
section 21B (notice to accompany demands for service charges).
Before section 22 insert—
In the LTA 1987—
in section 47 (landlord’s name and address to be contained in demands for rent etc), after subsection (3) insert— ;
in section 47A (building safety information to be contained in demands for rent etc), after subsection (3) insert—
The LTA 1985 is amended as follows.
After section 21C (as inserted by section 55) insert—
In section 28 (meaning of “qualified accountant”)—
in subsection (1), for the words from “in section” to “person” substitute “in section 21D(2)(b) (report on service charge account) is to a person”;
for subsection (2) substitute— ;
in subsection (4)(d), for the words from “covered” to the end substitute “covered by the statement of account in question relate”;
after subsection (6) insert—
The LTA 1985 is amended as follows.
After section 21E (as inserted by section 56) insert—
Omit the following sections—
section 22 (request to inspect supporting accounts);
section 23 (request relating to information held by superior landlord);
section 24 (effect of assignment on request).
The LTA 1985 is amended as follows.
Omit section 25 (offences).
Before section 26 insert—
Insurance
After section 20F of the LTA 1985 insert—
The Schedule to the LTA 1985 (rights in relation to insurance) is amended as follows.
After paragraph 1 insert—
Omit paragraphs 2 to 6.
In paragraph 9(1)—
for “Paragraphs 2 to 8” substitute “Paragraphs 1A to 8”;
for the words from “in which case” to “does not”, substitute “in which case paragraphs 1A, 1B, 7 and 8 apply but paragraph 1C does not.”
Administration charges
In Schedule 11 to the CLRA 2002 (administration charges)—
omit paragraph 4 (notice in connection with demands for administration charges);
before paragraph 5 insert—
Litigation costs
The LTA 1985 is amended in accordance with subsections (2) and (3).
Omit section 20C (limitation of service charges: costs of proceedings).
Before section 20D insert—
The CLRA 2002 is amended in accordance with subsections (5) to (7).
In section 172(1) (application of provision to the Crown)—
omit the “and” at the end of paragraph (g);
in paragraph (h), at the end insert
In section 178(4) (orders and regulations), after “171” insert “, paragraph 5C of Schedule 11”.
In Schedule 11 (administration charges)—
omit paragraph 5A (limitation of administration charges: costs of proceedings);
before paragraph 6 insert—
After section 30I of the LTA 1985 insert—
Non-litigation costs: enfranchisement, extension and right to manage
After section 20I of the LTA 1985 (as inserted by section 59) insert—
Appointment of manager by Tribunal
In section 24 of the LTA 1987 (appointment of manager by a tribunal)—
in subsection (9), after “interested” insert “or of its own motion”;
in subsection (9A), omit “on the application of any relevant person”.
In section 24(2) of the LTA 1987 (grounds for appointment of manager)—
omit the “or” at the end of paragraph (ac);
after paragraph (ac) insert— .
Sales information requests
In the LTA 1985, after section 30J (as inserted by section 63) insert—
General
The LTA 1985 is amended as follows.
After section 37 insert—
In section 38 (minor definitions), after the definition of “address” insert— .
In section 39 (index of defined expressions), after the entry for “address” insert— .
Before section 40 of the LTA 1985 insert—
In section 172 of the CLRA 2002 (application to Crown of certain provisions)—
in subsection (1), omit paragraph (a);
omit subsection (3).
Schedule 11 contains amendments that are consequential on this Part.
Each section of this Part has effect in relation to a lease (within the meaning of the LTA 1985) whether the lease was entered into before or after the section comes into force.
Regulation of estate management
Key definitions
This section has effect for the purposes of this Part.
“Estate management” means— for the benefit of one or more dwellings.
the provision of services,
the carrying out of maintenance, repairs or improvements,
the effecting of insurance, or
the making of payments,
“Estate manager” means a body of persons (whether incorporated or not)—
which carries out, or is required to carry out, estate management, and
which recovers the costs of carrying out estate management by means of relevant obligations.
A reference to an estate manager in relation to a managed dwelling means an estate manager which carries out, or is required to carry out, estate management in relation to that dwelling.
“Managed dwelling” means a dwelling in relation to which an estate manager carries out, or is required to carry out, estate management.
“Relevant obligation”, in relation to a dwelling, means any of the following obligations (whether or not the obligation arises before this section comes into force)—
a rentcharge which—
is charged on or issues out of the land which comprises the dwelling or a building of which the dwelling forms part, and
is an estate rentcharge by virtue of section 2(4)(b) and (5) of the Rentcharges Act 1977 (“the RA 1977”);
an obligation under a lease of the dwelling;
any other obligation that—
runs with the land which comprises the dwelling or a building of which the dwelling forms part, or
otherwise (whether in law or in equity) binds an owner for the time being of the land which comprises the dwelling;
any other obligation—
to which an owner of the dwelling is subject, and
to which any immediate successor in title of that owner will become subject, if an arrangement to which the estate manager and that owner are parties is performed.
The arrangements that are within subsection (6)(d) include an arrangement under which the owner is required (in particular by a limitation on transfer of title to the dwelling or on registration of a transfer of title) to ensure that any immediate successor in title to the owner enters into an obligation.
“Estate management charge” means an amount in relation to which each of the following applies—
the amount is payable by an owner of a managed dwelling;
the amount is payable for the purpose of meeting, or contributing towards, relevant costs (see subsection (11)) in relation to that dwelling;
payment of the amount is required by, or enforceable through, a relevant obligation.
But none of the following is an estate management charge—
an amount payable under a scheme established in accordance with section 19 of the LRA 1967 or Chapter 4 of Part 1 of the LRHUDA 1993 (estate management schemes following enfranchisement);
rent reserved under a lease;
a service charge (which has the meaning given in section 18 of the LTA 1985);
an administration charge (see section 83);
a charge payable by a unit-holder of a commonhold unit to meet the expenses of a commonhold association.
For the purposes of subsection (9)(e)—
“unit-holder”, “commonhold unit” and “commonhold association” have the same meaning as in Part 1 of the CLRA 2002 (see section 1(3) of that Act);
the expenses of a commonhold association include the building safety expenses of the association (within the meaning given in section 38A of the CLRA 2002).
“Relevant costs”, in relation to a dwelling, means costs which are incurred by an estate manager in carrying out estate management for the benefit of the dwelling or for the benefit of the dwelling and other dwellings.
Costs are relevant costs in relation to an estate management charge whether they are incurred, or to be incurred, in the period for which the charge is payable or in an earlier or later period.
Limitation of estate management charges
A charge demanded as an estate management charge is payable—
only to the extent that the amount of the charge reflects relevant costs;
only to the extent not otherwise limited under this Part.
are not relevant costs, or
are relevant costs only to a limited extent.
Costs incurred by an estate manager are relevant costs—
only to the extent that they are reasonably incurred, and
where they are incurred in the provision of services or the carrying out of works, only if the services or works are of a reasonable standard.
Where an estate management charge is payable before relevant costs are incurred—
no greater amount than is reasonable is so payable, and
after the costs have been incurred, any necessary adjustment must be made to the charge (by repayment, reduction of subsequent charges or otherwise).
This section applies to works if costs incurred by an estate manager in carrying out those works exceed an appropriate amount.
An “appropriate amount” is an amount set by regulations made by the Secretary of State.
Regulations under subsection (2) may make provision for either or both of the following to be an appropriate amount—
an amount specified in, or determined in accordance with, the regulations;
an amount which results in the relevant contribution of any one or more persons being an amount specified in, or determined in accordance with, the regulations.
The “relevant contribution” is the amount which an owner of a managed dwelling may be required to contribute by the payment of an estate management charge to the relevant costs incurred in carrying out the works.
Where this section applies to works, the relevant contribution is limited in accordance with subsection (9) or (10) (or both) unless the consultation requirements have, in relation to the works, been either—
complied with, or
dispensed with by (or on appeal from) the appropriate tribunal.
The “consultation requirements” are requirements specified in regulations made by the Secretary of State.
Regulations under subsection (6) may, among other things, include provision requiring an estate manager to—
provide details of proposed works to owners of managed dwellings;
obtain estimates for proposed works;
invite owners of managed dwellings to propose the names of persons from which the estate manager should try to obtain other estimates;
have regard to observations made by owners of managed dwellings in relation to proposed works and estimates;
give reasons in specified circumstances for carrying out works.
The appropriate tribunal may make a determination under subsection (5)(b) that all or any of the consultation requirements are to be dispensed with only if the tribunal is satisfied that it is reasonable to dispense with the requirements.
Where an appropriate amount is set by virtue of subsection (3)(a), the relevant contribution of an owner of a managed dwelling is limited to the appropriate amount.
Where an appropriate amount is set by virtue of subsection (3)(b), the relevant contribution of an owner of a managed dwelling whose relevant contribution would otherwise exceed the amount specified or determined in accordance with the regulations is limited to that amount.
A statutory instrument containing regulations under this section is subject to the negative procedure.
Costs incurred by an estate manager in relation to a managed dwelling are not relevant costs for the purposes of an estate management charge payable by an owner of the dwelling if—
they were incurred more than 18 months before a demand for payment of the charge in relation to those costs is served on that owner, and
that owner was not given a future demand notice in respect of the costs before the end of the period of 18 months beginning with the date on which the costs were incurred.
A “future demand notice” is a notice in writing that—
relevant costs have been incurred, and
the owner will subsequently be required to contribute to the costs by the payment of an estate management charge.
A future demand notice must— “Specified” means specified in regulations made by the Secretary of State.
be in the specified form,
contain the specified information, and
be given in a specified manner.
The regulations may, among other things, specify as information to be contained in a future demand notice—
an amount estimated as the amount of the costs incurred (an “estimated costs amount”);
an amount which the owner is expected to be required to contribute to the costs (an “expected contribution”);
a date on or before which it is expected that payment of the estate management charge will be demanded (an “expected demand date”).
Regulations that include provision by virtue of subsection (4) may also provide for a relevant rule to apply in a case where—
the owner has been given a future demand notice in respect of relevant costs, and
a demand for payment of an estate management charge as a contribution to those costs is served on the owner more than 18 months after the costs were incurred.
The relevant rules are—
in a case where a future demand notice is required to contain an estimated costs amount, that the owner is liable to pay the charge only to the extent it reflects relevant costs that do not exceed the estimated costs amount;
in a case where a future demand notice is required to contain an expected contribution, that the owner is liable to pay the charge only to the extent it does not exceed the expected contribution;
in a case where a future demand notice is required to contain an expected demand date, that, if the demand is served after the expected demand date, the owner is not liable to pay the charge to the extent it reflects any of the costs.
Regulations that provide for the relevant rule in subsection (6)(c) to apply may also provide that, in a case set out in the regulations, the rule is to apply as if, for the expected demand date, there were substituted a later date determined in accordance with the regulations.
A statutory instrument containing regulations under this section is subject to the negative procedure.
An application may be made to the appropriate tribunal for a determination as to whether an estate management charge is payable and, if it is, as to—
the person by which it is payable,
the person to which it is payable,
the amount which is payable,
the date on or by which it is payable, and
the manner in which it is payable.
Subsection (1) applies whether or not any payment has been made.
An application may also be made to the appropriate tribunal for a determination as to whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, an estate management charge would be payable for the costs and, if it would, as to—
the person by which it would be payable,
the person to which it would be payable,
the amount which would be payable,
the date on or by which it would be payable, and
the manner in which it would be payable.
No application under subsection (1) or (3) may be made in respect of a matter which—
relates to a managed dwelling, and has been agreed or admitted by every owner of the dwelling,
has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which every owner of the dwelling is a party,
has been the subject of determination by a court, or
has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.
But an owner of a managed dwelling is not to be taken to have agreed or admitted any matter by reason only of having made any payment.
An agreement (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination— of any question which may be the subject of an application under subsection (1) or (3).
in a particular manner, or
on particular evidence,
Rights relating to estate management charges
A person may not demand the payment of an estate management charge unless the demand— “Specified” means specified in regulations made by the Secretary of State.
is in the specified form,
contains the specified information, and
is provided in a specified manner.
Accordingly, where a demand for payment of an estate management charge does not comply with subsection (1), a provision of a deed, lease, contract or other arrangement or instrument relating to non-payment or late payment of estate management charges does not have effect in relation to that charge.
The Secretary of State may by regulations provide for exceptions from subsection (1) by reference to—
descriptions of person making the demand;
descriptions of estate management charge;
any other matter.
A statutory instrument containing regulations under this section is subject to the negative procedure.
Subsection (2) applies where—
an estate manager carries out estate management, and
an owner of the managed dwelling is or may be required to pay estate management charges in respect of the management carried out.
The estate manager must, on or before the report date for an accounting period, provide the owner with a report under this section.
The Secretary of State may by regulations make provision as to—
the information to be contained in the report;
the form of the report;
the manner in which the report is to be provided.
An “accounting period” is—
a period of 12 months agreed between the estate manager and the owner for the purposes of this section, or
if no such period is agreed, a period of 12 months beginning with 1 April.
The “report date” for an accounting period is the final day of the period of one month beginning with the day after the final day of the accounting period.
The Secretary of State may by regulations provide for exceptions from the duty in subsection (1) by reference to—
descriptions of estate manager;
descriptions of estate management charge;
any other matter.
A statutory instrument containing regulations under this section is subject to the negative procedure.
An owner of a managed dwelling may require an estate manager carrying out estate management in relation to the dwelling to provide information specified in regulations made by the Secretary of State.
The Secretary of State may specify information only if it relates to estate management.
The estate manager must provide the owner with any of the information requested that is within their possession.
The estate manager must request information from another person if—
the information has been requested from the estate manager under subsection (1),
the estate manager does not possess the information when the request is made, and
the estate manager believes that the other person possesses the information.
That person must provide the estate manager with any of the information requested that is within their possession.
A person (“A”) must request information from another person (“B”) if—
the information has been requested from A under subsection (4) or this subsection,
A does not possess the information when the request is made, and
A believes that B possesses the information.
B must provide A with any of the information requested that is within B’s possession.
The Secretary of State may by regulations—
provide for how a request is to be made under this section;
provide that a request under this section may not be made until the end of a particular period, or until another condition is met;
make provision as to the period within which a request under subsection (4) or (6) must be made;
provide for circumstances in which a duty to comply with a request under this section does not apply.
Section 81 makes further provision about requests under this section.
A statutory instrument containing regulations under this section is subject to the negative procedure.
Subsections (2) to (6) apply where a person (“R”) requests information under section 80 from another person (“P”).
R may request that P provide the information to R by allowing R access to premises where R may inspect the information and make and remove a copy of the information.
P must provide information which P is required to provide under section 80— “Specified” means specified in regulations made by the Secretary of State.
before the end of a specified period beginning with the day the request is made, and
if R has made a request under subsection (2), by allowing R the access requested during a specified period.
P may charge R for the costs of doing anything required under section 80 or this section.
But, if P is an estate manager, P may not charge an owner of a managed dwelling for the costs of allowing the owner access to premises to inspect information (but may charge for the making of copies).
The costs referred to in subsection (4) may be relevant costs for the purposes of an estate management charge (whether charged to an owner of that dwelling or another dwelling).
Regulations under subsection (3) may provide for circumstances in which a specified period is to be extended.
The Secretary of State may by regulations make further provision as to how information requested under section 80 is to be provided.
A statutory instrument containing regulations under this section is subject to the negative procedure.
An owner of a managed dwelling may make an application to the appropriate tribunal on the ground that—
a person demanded the payment of an estate management charge otherwise than in accordance with section 78(1);
an estate manager failed to provide a report in accordance with section 79.
On an application made under subsection (1), the tribunal may make one or more of the following orders—
an order that an estate manager must, before the end of the period of 14 days beginning with the day after the date of the order—
demand the payment of an estate management charge in accordance with section 78(1);
provide a report in accordance with section 79;
an order that an estate manager pay damages to the owner for the failure;
any other order which the tribunal considers consequential on an order under paragraph (a) or (b).
On an application made under subsection (3), the tribunal may make one or more of the following orders—
an order that D comply with the requirement before the end of the period of 14 days beginning with the day after the date of the order;
an order that D pay damages to C for the failure;
any other order which the tribunal considers consequential on an order under paragraph (a) or (b).
Damages under this section may not exceed £5,000.
The appropriate authority may by regulations amend the amount in subsection (5) if the appropriate authority considers it expedient to do so to reflect changes in the value of money.
A statutory instrument containing regulations under this section is subject to the negative procedure.
Administration charges
For the purposes of this Part, “administration charge” means an amount payable, directly or indirectly, by an owner of a dwelling—
for or in connection with—
the grant of approvals in connection with a relevant obligation, or
applications for such approvals;
for or in connection with the provision of information or documents by or on behalf of an estate manager;
for or in connection with—
the sale or transfer of land to which a relevant obligation relates, or
the creation of an interest in or right over that land;
in respect of a failure by the owner to make a payment by the due date under a relevant obligation;
in connection with a breach (or alleged breach) of a relevant obligation.
But “administration charge” does not include an amount payable by a tenant of a dwelling in a case where all of the following conditions are met—
the tenant’s lease specifies that only a person who has attained a minimum age may occupy the dwelling;
the amount is payable under a term of the tenant’s lease or is otherwise payable in connection with the tenant’s lease;
the amount is payable if—
the tenant’s lease is granted, assigned or terminated,
a lease of the dwelling which is inferior to the tenant’s lease is granted, assigned or terminated, or
there is a change in the person or persons occupying the dwelling;
the amount is fixed or is calculated by a method determinable in advance;
any other conditions specified in regulations made by the appropriate authority.
The appropriate authority may by regulations make provision (including provision amending this Act) so as to amend the definition of “administration charge”.
A statutory instrument containing regulations under this section (whether alone or with other provision) is subject to the affirmative procedure.
If an estate manager expects to charge an administration charge, the estate manager must produce and publish an administration charge schedule.
An “administration charge schedule” is a document setting out—
the administration charges the estate manager considers may be payable, and
for each charge—
its amount, or
if it is not possible to determine its amount before it becomes payable, how its amount will be determined if it becomes payable.
The estate manager—
may revise a published administration charge schedule, and
must publish a revised schedule.
The estate manager must provide a person with the administration charge schedule for the time being published setting out the charges that may be payable by that person.
The appropriate authority may by regulations make provision as to—
the form of an administration charge schedule;
the content of an administration charge schedule;
how an administration charge schedule must be published;
how an administration charge schedule is to be provided to owners of dwellings.
A statutory instrument containing regulations under this section is subject to the negative procedure.
An owner of a dwelling may make an application to the appropriate tribunal on the ground that an estate manager has not complied with section 84 or regulations made under it.
The tribunal may make one or both of the following orders—
an order that the manager comply with section 84 or regulations made under it before the end of the period of 14 days beginning with the day after the date of the order;
an order that the manager pay damages to the owner for the failure.
Damages under subsection (2)(b) may not exceed £1,000.
The appropriate authority may by regulations amend the amount in subsection (3) if the appropriate authority considers it expedient to do so to reflect changes in the value of money.
A statutory instrument containing regulations under this section is subject to the negative procedure.
An administration charge is payable only to the extent that the amount of the charge is reasonable.
An administration charge is payable to an estate manager only if—
its amount appeared for the required period on an administration charge schedule published under section 84, or
its amount was determined in accordance with a method that appeared on the published administration charge schedule for the required period.
“The required period” is the period of 28 days ending with the day on which the administration charge is demanded to be paid.
An administration charge is not payable to an estate manager if—
the charge relates to the same matter as, or a matter of a similar nature to, a matter for which an administration charge is payable by another person to the estate manager,
the amount of the charge is different from the charge payable by that other person, and
it is not reasonable for the amount of the charge to be different.
An application may be made to the appropriate tribunal for a determination as to whether an administration charge is payable and, if it is, as to—
the person by which it is payable,
the person to which it is payable,
the amount which is payable,
the date on or by which it is payable, and
the manner in which it is payable.
Subsection (1) applies whether or not any payment has been made.
No application under subsection (1) may be made in respect of a matter which—
relates to a dwelling, and has been agreed or admitted by every owner of the dwelling,
has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which every owner of the dwelling is a party,
has been the subject of determination by a court, or
has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.
But an owner of a dwelling is not to be taken to have agreed or admitted any matter by reason only of having made any payment.
An agreement (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination— of any question which may be the subject matter of an application under subsection (1).
in a particular manner, or
on particular evidence,
Codes of management practice
In section 87 of the LRHUDA 1993 (codes of management practice)—
in subsection (6)(b)(i), before “tenants” insert “owners or”;
in subsection (8)(b), omit “let on leases”.
Appointment of substitute manager by Tribunal
An owner of a managed dwelling may give a notice of complaint to an estate manager.
A notice of complaint is a notice that—
sets out one or more complaints listed in subsection (3) in relation to the estate manager,
states that, if the complaints are not remedied by the end of the qualifying period (see subsection (7)), the owner may make an application under section 90 (application to appoint substitute manager), and
contains any other information specified in regulations made by the Secretary of State.
The complaints are—
that the estate manager—
is in breach of an obligation in relation to the dwelling, or
in the case of an obligation dependent on notice, would be in breach of such an obligation but for the fact that it has not been reasonably practicable to give the estate manager the appropriate notice;
that sums payable by way of estate management charges by the owner, or, if the owner is a tenant or sub-tenant, by the landlord or superior landlord, are not being applied in an efficient or effective manner;
that an estate management charge payable, or proposed or likely to be payable, by the owner, or, if the owner is a tenant or sub-tenant, by the landlord or superior landlord, is unreasonable;
that an administration charge payable, or proposed or likely to be payable, by the owner, or, if the owner is a tenant or sub-tenant, by the landlord or superior landlord, is unreasonable;
that the estate manager has failed to comply with a relevant provision of a code of practice approved under section 87 of the LRHUDA 1993 (codes of management practice).
A notice of complaint may be given jointly by two or more persons if each of those persons is entitled to give a notice to the estate manager (whether or not in respect of the same dwelling).
For that purpose, it is not necessary for every complaint set out in the notice, or every part of each complaint, to apply in relation to each dwelling owned by each of the persons giving the notice.
The Secretary of State may by regulations make provision for determining when a notice of complaint is given.
A statutory instrument containing regulations under this section is subject to the negative procedure.
The appropriate tribunal may, on the application of an owner of a managed dwelling, by order appoint a person to carry out, in place of an estate manager, such functions in connection with the estate management relating to that dwelling as the tribunal thinks fit.
Section 91 sets out conditions that must be met for a person to make an application.
Section 92 sets out criteria the appropriate tribunal must consider in deciding whether to make an appointment order.
Section 93 makes further provision in relation to appointment orders.
An owner of a managed dwelling may make an application for an appointment order in relation to an estate manager only if—
the owner has given a notice of complaint to the estate manager,
the qualifying period in relation to that notice has ended,
the owner has, after the end of the qualifying period but before the application is made, given further notice to the estate manager (a “final warning notice”), and
the condition in subsection (5) is met in relation to the final warning notice.
If the owner gave the notice of complaint jointly with other persons, the owner may not make an application for an appointment order unless—
the owner does so jointly with each of those other persons that remain owners of managed dwellings in relation to the estate manager, and
the final warning notice was given jointly by the owner and each of those other persons.
The owner, or the owners acting jointly in accordance with subsection (2), may make an application jointly with an owner of a managed dwelling who did not give the notice of complaint to the estate manager (a “joined applicant”), if the final warning notice was given jointly by the owner or owners and the joined applicant.
A final warning notice must—
specify—
the name of the person (or persons) giving the notice,
the address of their dwelling (or the addresses of each of their dwellings), and
if different, an address (or addresses) at which a person may give notice to that person (or one or more of those persons) in connection with the application,
state that the person or persons giving the notice intend to make an application for an appointment order in respect of the dwelling specified in the notice,
specify the grounds on which the appropriate tribunal would be asked to make such an order and the matters that would be relied on by the person or persons for the purpose of establishing those grounds,
where those matters are capable of being remedied by the estate manager, require the estate manager, within a reasonable period specified in the notice, to take specified steps for the purpose of remedying them,
state that, if those matters are remedied, the person or persons will not make an application, and
contain any other information specified in regulations made by the Secretary of State.
The condition in this subsection is met if—
the matters specified in the final warning notice were not capable of being remedied, or
the period specified in the final warning notice for the matters to be remedied has expired without the estate manager having taken the required steps to remedy them.
The appropriate tribunal may by order dispense with a requirement in subsection (1), (2) or (3) if the tribunal is satisfied in light of the urgency of the case that it would not be reasonably practicable for the requirement to be satisfied.
But the tribunal may, when so ordering, direct that such other notices are given, or such other steps are taken, as it thinks fit.
If the tribunal makes an order under subsection (6), an application for an appointment order may be made only if any notices required to be given, and any other steps required to be taken, by virtue of the order have been given or taken.
The Secretary of State may by regulations make provision for determining when a notice under this section is given.
A statutory instrument containing regulations under this section is subject to the negative procedure.
The appropriate tribunal may not make an appointment order in relation to an estate manager if the estate manager is specified, or is of a description specified, in regulations made by the Secretary of State.
The appropriate tribunal may make an appointment order only if the tribunal is satisfied that—
it is just and convenient to make the order in all the circumstances of the case, and
either—
those circumstances include those set out in subsection (3), or
there are other circumstances that make it just and convenient for the order to be made.
The circumstances are—
that the estate manager is—
in breach of an obligation in relation to a dwelling, or
in the case of an obligation dependent on notice, would be in breach of the obligation but for the fact that it has not been reasonably practicable to give the estate manager the appropriate notice;
that an estate management charge payable, or proposed or likely to be payable, is unreasonable;
that an administration charge payable, or proposed or likely to be payable, is unreasonable;
that the estate manager has failed to comply with a relevant provision of a code of practice approved under section 87 of the LRHUDA 1993 (codes of management practice);
that the estate manager has breached regulations under section 100(1) of this Act (requirement to be member of redress scheme).
For the purposes of subsection (3)(b), an estate management charge is to be taken to be unreasonable if—
the amount is unreasonable having regard to the items for which it is payable,
the items for which it is payable are of an unnecessarily high standard, or
the items for which it is payable are of an insufficient standard with the result that additional charges are or may be incurred.
An appointment order may be made despite the fact that—
a period specified in a final warning notice was not a reasonable period, or
a final warning notice otherwise failed to comply with a requirement under section 91(4).
A statutory instrument containing regulations under this section is subject to the negative procedure.
An appointment order may—
make provision with respect to such matters relating to the exercise by the substitute manager of their functions under the order, and such incidental or ancillary matters, as the tribunal thinks fit, including—
for rights and liabilities arising under contracts or other arrangements to which the substitute manager is not party to become rights and liabilities of the substitute manager;
for the substitute manager to be entitled to prosecute claims in respect of causes of action (whether contractual or tortious) accruing before or after the date of their appointment;
for remuneration to be paid to the substitute manager by the estate manager;
for the substitute manager’s functions to be exercisable during a specified period;
be subject to such conditions as the tribunal thinks fit;
be subject to suspension on terms set by the tribunal.
The appropriate tribunal may, on the application of any interested person or of its own motion, vary or discharge (whether conditionally or unconditionally) an appointment order.
The tribunal may not vary or discharge an appointment order unless the tribunal is satisfied that—
the variation or discharge will not result in a recurrence of the circumstances which led to the appointment order being made, and
it is just and convenient in all the circumstances of the case to vary or discharge the order.
In deciding— the appropriate tribunal must have regard to whether the estate manager in relation to which the order is made has breached regulations under section 100(1) (requirement to be member of redress scheme).
the terms of an appointment order, or
whether or how to vary or discharge an appointment order,
Sales information requests
An owner of a managed dwelling may give a sales information request to the estate manager.
A “sales information request” is a document in a specified form, and given in a specified manner, setting out—
that the owner is contemplating selling the dwelling,
information that the owner requests from the estate manager for the purpose of the contemplated sale, and
any other specified information.
An owner of a managed dwelling may request information in a sales information request only if the information is specified in regulations made by the appropriate authority.
The appropriate authority may specify information for the purposes of subsection (3) only if the information—
relates to estate management, estate managers, estate management charges or relevant obligations, and
could reasonably be expected to assist a prospective purchaser in deciding whether to purchase a dwelling.
The appropriate authority may by regulations provide that a sales information request may not be given until the end of a particular period, or until another condition is met.
a reference to purchasing a dwelling is a reference to becoming an owner of the dwelling, and references to selling a dwelling are to be read accordingly;
“sales information request” has the meaning given in subsection (2);
“specified” means specified in, or determined in accordance with, regulations made by the appropriate authority.
A statutory instrument containing regulations under this section is subject to the negative procedure.
An estate manager who has been given a sales information request by the owner of a managed dwelling must provide the owner with any of the information requested that is within the estate manager’s possession.
The estate manager must request information from another person if—
the information has been requested from the estate manager in a sales information request,
the estate manager does not possess the information when the request is made, and
the estate manager believes that the other person possesses the information.
That person must provide the estate manager with any of the information requested that is within that person’s possession.
A person (“A”) must request information from another person (“B”) if—
the information has been requested from A in a request under subsection (2) or this subsection (an “onward request”),
A does not possess the information when the request is made, and
A believes that B possesses the information.
B must provide A with any of the information requested that is within B’s possession.
A person who is required to provide information under this section must do so before the end of a specified period beginning with the day on which the request for the information is made.
A person who— must give the person making the request a negative response confirmation.
has been given a sales information request or an onward request, and
as a result of not possessing the information requested, does not provide the information before the end of a specified period beginning with the day on which the request is made,
A “negative response confirmation” is a document in a specified form, and given in a specified manner, setting out—
that the person is unable to provide the information requested because it is not in the person’s possession;
a description of what action the person has taken to determine whether the information is in the person’s possession;
any onward requests the person has made and the persons to whom they were made;
an explanation of why the person was unable to obtain the information, including details of any negative response confirmation received by the person;
any other specified information.
A person who is required to give a negative response confirmation must do so before the end of a specified period beginning with the day after the day on which the period referred to in subsection (7)(b) ends.
The appropriate authority may by regulations—
provide that an onward request may not be made until the end of a particular period, or until another condition is met;
provide for how an onward request is to be made;
make provision as to the period within which an onward request must be made;
provide for circumstances in which a duty to comply with a sales information request or an onward request does not apply;
make provision as to how information requested in a sales information request or an onward request is to be provided;
make provision for circumstances in which a period specified for the purposes of subsection (6), (7) or (9) is to be extended.
A statutory instrument containing regulations under this section is subject to the negative procedure.
Subject to any regulations under subsection (2), a person (“P”) may charge another person for—
determining whether information requested in a sales information request or an onward request is in P’s possession;
providing or obtaining information under section 95.
The appropriate authority may by regulations—
limit the amount that may be charged under subsection (1);
prohibit a charge under subsection (1) in specified circumstances or unless specified requirements are met.
If an estate manager charges the owner of a managed dwelling under subsection (1), the charge—
is an administration charge for the purposes of this Part, and
is not to be treated as an estate management charge for the purposes of this Part.
For the purposes of this Part, the costs of— are not to be regarded as relevant costs to be taken into account in determining the amount of any estate management charge.
determining whether information requested in a sales information request or an onward request is in a person’s possession, or
providing or obtaining information under section 95,
A statutory instrument containing regulations under this section is subject to the negative procedure.
The tribunal may make one or more of the following orders—
an order that D comply with the requirement before the end of a period specified by the tribunal;
an order that D pay damages to C for the failure;
if D charged C in excess of a limit specified in regulations under section 96(2)(a), an order that D repay the amount charged in excess of the limit to C;
if D charged C in breach of regulations under section 96(2)(b), an order that D repay the amount charged to C.
Damages under subsection (2)(b) may not exceed £5,000.
The appropriate authority may by regulations amend the amount in subsection (3) if the appropriate authority considers it expedient to do so to reflect changes in the value of money.
A statutory instrument containing regulations under this section is subject to the negative procedure.
General
The other provisions of this Part—
apply in relation to estate management carried out by, or on behalf of, a government department and otherwise bind the Crown in relation to such estate management, and
bind the Crown in relation to other estate management only if carried out by, or on behalf of, a person other than the Crown.
In this Part— “administration charge” has the meaning given in section 83; “the appropriate authority” means— in relation to England, the Secretary of State; in relation to Wales, the Welsh Ministers; “the appropriate tribunal” means— in relation to a dwelling in England, the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal; in relation to a dwelling in Wales, a leasehold valuation tribunal; “arbitration agreement”, “arbitration proceedings” and “arbitral tribunal” have the same meaning as in Part 1 of the Arbitration Act 1996; “costs” includes overheads; “dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it; “estate management” has the meaning given in section 72 (see section 72(2)); “estate management charge” has the meaning given in section 72 (see section 72(8) and (9)); “estate manager” has the meaning given in section 72 (see section 72(3) and (4)); “information” includes a document containing information, and a copy of such a document; “long lease” has the meaning given in section 77(2) of the LRHUDA 1993; “managed dwelling” has the meaning given in section 72 (see section 72(5)); “post-dispute arbitration agreement”, in relation to any matter, means an arbitration agreement made after a dispute about the matter has arisen; “relevant costs” has the meaning given in section 72 (see section 72(11) and (12)); “relevant obligation” has the meaning given in section 72 (see section 72(6) and (7)); “rentcharge” has the same meaning as in the RA 1977 (see section 1 of that Act).
For the purposes of this Part, a person is an “owner” of a dwelling if—
the person owns freehold land which comprises the dwelling,
the person is a tenant of the dwelling under a long lease, or
where the dwelling is part of a building—
the person owns freehold land which comprises the building, or
the person is a tenant of the building under a long lease.
Leasehold and estate management: redress schemes
Redress schemes: general
The Secretary of State may by regulations require a person that carries out estate management in respect of a dwelling in England in a relevant capacity to be a member of a redress scheme.
A person carries out estate management in a “relevant capacity” if they do so—
as a relevant landlord of the dwelling, or
as an estate manager.
But a person may not be required to be a member of a redress scheme under this section if they carry out estate management only—
as a tenant, or
as an agent.
A “redress scheme” is a scheme—
which provides for a complaint against a member of the scheme made by or on behalf of a current or former owner of a dwelling in relation to which estate management is carried out to be independently investigated and determined by an independent individual, and
which is—
approved by the lead enforcement authority for the purposes of regulations under subsection (1), or
administered by or on behalf of the lead enforcement authority and designated by the lead enforcement authority for those purposes.
Regulations under subsection (1) may require a person to remain a member of a redress scheme after ceasing to be a person mentioned in that subsection, for a period specified in the regulations.
Before making regulations under subsection (1), the Secretary of State must be satisfied that all persons who are to be required to be a member of a redress scheme will be eligible to join such a scheme before being so required (subject to any provision in the scheme about expulsion, as to which see section 103(3)(l)).
For potential consequences of breaching regulations under subsection (1), see—
section 24(2)(ad) of the LTA 1987 and section 92(3)(e) of this Act (appointment of manager by tribunal);
section 105 of this Act (financial penalties by enforcement authorities).
In this Part— “estate management” means— the provision of services, the carrying out of maintenance, repairs or improvements, the effecting of insurance, or the making of payments, for the benefit of one or more dwellings; “estate manager” means a body of persons (whether incorporated or not)— which carries out, or is required to carry out, estate management, and which recovers the costs of carrying out estate management by means of relevant obligations; “the lead enforcement authority” means either— the Secretary of State, or another person designated by the Secretary of State as the lead enforcement authority, and see section 108 for further provision about the lead enforcement authority; “relevant landlord”, in relation to a dwelling, means a landlord under a long lease of the dwelling; “relevant obligation”, in relation to a dwelling, means each of the following— a rentcharge which— is charged on or issues out of the land which comprises the dwelling or a building of which the dwelling forms part, and is an estate rentcharge by virtue of section 2(4)(b) and (5) of the RA 1977; an obligation under a long lease of the dwelling; any other obligation that— runs with the land which comprises the dwelling or a building of which the dwelling forms part, or otherwise (whether in law or in equity) binds the owner for the time being of the land which comprises the dwelling; any other obligation— to which the owner of the dwelling is subject, and to which any immediate successor in title of that owner will become subject, if an arrangement to which a relevant landlord or an estate manager and that owner are parties is performed.
The arrangements that are within paragraph (d) of the definition of “relevant obligation” include an arrangement under which the owner is required (in particular by a limitation on transfer of title to the dwelling or on registration of a transfer of title) to ensure that any immediate successor in title to the owner enters into an obligation.
The Secretary of State may by regulations make provision (including provision amending this Act) for the purpose of changing the meaning of “relevant capacity”, “relevant landlord” or “relevant obligation”.
A statutory instrument containing regulations under this section (whether alone or with other provision) is subject to the affirmative procedure.
Nothing in this Part prevents a redress scheme from providing (subject to regulations under section 103)—
for membership to be open to persons who wish to join as voluntary members;
for the investigation or determination of any complaints under a voluntary jurisdiction (including complaints by persons who are not current or former owners of dwellings in relation to which estate management is carried out);
for voluntary mediation services;
for the exclusion from investigation and determination under the scheme of any complaint in such cases or circumstances as may be specified in or determined under the scheme.
In this Part— “complaints under a voluntary jurisdiction” means complaints in relation to which there is no duty to be a member of a redress scheme, where the members against which the complaints are made have voluntarily accepted the jurisdiction of the scheme over those complaints; “voluntary mediation services” means mediation, conciliation or similar processes provided at the request of a member in relation to complaints made— against the member, or by the member against another person; “voluntary members”, in relation to a scheme, means members who are not subject to a duty to be a member of a redress scheme.
The Secretary of State may give financial assistance (by way of grant, loan, or guarantee, or in any other form) or make other payments to a person for the establishment or maintenance of—
a redress scheme, or
a scheme that would be a redress scheme if it were approved or designated under section 100(4)(b).
This section applies where the Secretary of State makes regulations under section 100(1).
The Secretary of State must by regulations set out conditions which are to be satisfied before a scheme is approved or designated under section 100(4)(b).
The conditions must include conditions requiring the scheme to include provision in accordance with the regulations—
for the appointment of an individual to be responsible for overseeing and monitoring the investigation and determination of complaints under the scheme;
about the terms and conditions of that individual and the termination of their appointment;
about the complaints that may be made under the scheme, which must include provision enabling the making of complaints about non-compliance with any codes of practice that are issued or approved by the Secretary of State;
about the time to be allowed for scheme members to resolve matters before a complaint is accepted under the scheme in relation to those matters;
about the circumstances in which a complaint may be rejected;
about co-operation (which may include the joint exercise of functions) of an individual who is investigating or determining a complaint with persons who have functions in relation to other kinds of complaint and with enforcement authorities;
about the provision of information to the persons mentioned in paragraph (f);
if members are required to pay fees in respect of compulsory aspects of the scheme, about the level of those fees;
if there are voluntary aspects of the scheme—
for fees to be payable in respect of those aspects of the scheme, and
for the fees to be set at a level that, taking one year with another, is sufficient to meet the costs incurred in the administration of, and the investigation and determination of complaints under, those aspects of the scheme;
for the individual determining a complaint to be able to require members to provide redress of the following types to the complainant—
providing an apology or explanation,
paying compensation, and
taking such other actions in the interests of the complainant as the individual determining the complaint may specify;
about the enforcement of the scheme and decisions made under the scheme;
for a person to be expelled from the scheme only—
in circumstances specified in the regulations,
once steps to secure compliance that are specified in the regulations have been taken, and
once the decision to expel the person has been reviewed by an independent person in accordance with the regulations;
for an expulsion to be revoked in circumstances specified in the regulations;
prohibiting a person from joining the scheme when the person has been expelled from another redress scheme and the expulsion has not been revoked;
for circumstances in which the administration of the scheme is to be transferred to a different administrator;
about the closure of the scheme by an administrator of the scheme.
Conditions set out in regulations under subsection (3)—
may include conditions requiring an administrator or proposed administrator of a scheme to undertake to do things—
on an ongoing basis following approval or designation;
after ceasing to be an administrator of the scheme;
in the case of conditions set out in regulations by virtue of subsection (3)(e), may require a scheme to reject complaints by a current or former owner of a dwelling where that owner is of a description specified in the regulations;
in the case of conditions set out in regulations by virtue of subsection (3)(o), may—
require an approved scheme to provide for the administration of that scheme to be transferred to the lead enforcement authority or a person acting on behalf of the lead enforcement authority in circumstances specified in the regulations, and
where they so require, provide for a scheme whose administration is transferred to be treated as a designated scheme instead of an approved one.
Subsections (3) and (4) do not limit the conditions that may be set out in regulations under subsection (2).
The Secretary of State may by regulations make further provision about the approval or designation of redress schemes under section 100(4)(b), including provision—
about the number of redress schemes that may be approved or designated (which may be one or more);
about the making of applications for approval;
about the period for which an approval or designation is valid;
about the withdrawal of approval or revocation of designation;
authorising the approval or designation of a scheme which provides for fees payable by a compulsory member to be calculated by reference to the total of the costs incurred, or to be incurred, in the administration of the compulsory aspects of the scheme and the investigation and determination of complaints under those aspects of the scheme (including costs unconnected with the member in question).
Regulations under this section may—
confer functions (including functions involving the exercise of discretion) on the lead enforcement authority, or authorise or require a scheme to do so;
provide for the delegation of such functions by the lead enforcement authority, or authorise or require a scheme to provide for that.
In this section— “compulsory aspects”, in relation to a scheme, means aspects of the scheme relating to complaints in relation to which there is a duty to be a member of a redress scheme; “compulsory member”, in relation to a scheme, means a member of the scheme who is subject to a duty to be a member of a redress scheme; “voluntary aspects”, in relation to a scheme, means aspects of the scheme that relate to— complaints under a voluntary jurisdiction, voluntary mediation services, or voluntary members.
A statutory instrument containing regulations under this section (whether alone or with other provision) is subject to the affirmative procedure.
A person exercising functions under a redress scheme (other than the Secretary of State) is not to be regarded as the servant or agent of the Crown or as enjoying any status, privilege or immunity of the Crown or as exempt from any tax, duty, rate, levy or other charge whatsoever, whether general or local, and any property held by such a person is not to be regarded as property of, or held on behalf of, the Crown.
Enforcement
An enforcement authority may impose a financial penalty on a person if satisfied beyond reasonable doubt that the person has breached regulations under section 100(1).
The Secretary of State may by regulations make provision about the investigation by an enforcement authority of suspected breaches of regulations under section 100(1) for the purpose of determining whether to impose a financial penalty.
Regulations under subsection (2) may, among other things, make provision about— for the purposes of an investigation.
co-operation between enforcement authorities, and
the sharing of information between enforcement authorities,
The amount of a financial penalty imposed under this section is to be determined in accordance with section 106.
More than one penalty may be imposed for the same conduct only if—
the conduct continues after the end of 28 days beginning with the day after the day on which the final notice in respect of the previous penalty for the conduct was given to the person, unless the person appeals against that notice within that period, or
if the person appeals against that notice within that period, the conduct continues after the end of 28 days beginning with the day after the day on which the appeal is finally determined, withdrawn or abandoned.
Subsection (5) does not enable a penalty to be imposed after the final notice in respect of the previous penalty has been withdrawn or quashed on appeal.
Schedule 12 makes provision about—
the procedure for imposing a financial penalty under this section,
appeals against financial penalties,
enforcement of financial penalties, and
how enforcement authorities are to deal with the proceeds of financial penalties.
For the purposes of this section and section 106—
a financial penalty is imposed on the date specified in the final notice as the date on which the notice is given;
“final notice” has the meaning given by paragraph 3 of Schedule 12.
A statutory instrument containing regulations under this section (whether alone or with other provision) is subject to the affirmative procedure.
The amount of a financial penalty imposed on a person under section 105 is to be determined by the enforcement authority imposing it, but—
if Case A, B or C applies, the penalty must not be more than £30,000;
otherwise, the penalty must not be more than £5,000.
Case A applies if—
a relevant penalty has been imposed on the person and the final notice imposing the penalty has not been withdrawn, and
the conduct for which the penalty was imposed continues after the end of the period of 28 days beginning with—
the day after the day on which the penalty was imposed on the person, or
if the person appeals against the final notice in respect of the penalty within that period, the day after the day on which the appeal is finally determined, withdrawn or abandoned.
Case B applies if—
a relevant penalty has been imposed on the person for a breach of regulations under section 100(1) and the final notice imposing the penalty has not been withdrawn, and
the person engages in conduct which constitutes a different breach of such regulations within the period of five years beginning with the day on which the penalty was imposed.
Case C applies if—
a relevant penalty has been imposed on the person for conduct in respect of which Case A, B or C applies and the final notice imposing the penalty has not been withdrawn, and
the person breaches regulations under section 100(1) within the period of five years beginning with the day on which the penalty was imposed.
For the purposes of this section, “relevant penalty” means a financial penalty imposed under section 105 where—
the period for bringing an appeal against the penalty under paragraph 5 of Schedule 12 has expired without an appeal being brought,
an appeal against the financial penalty under that paragraph has been withdrawn or abandoned, or
the final notice imposing the penalty has been confirmed or varied on appeal.
The Secretary of State may by regulations amend the amounts specified in subsection (1) to reflect changes in the value of money.
A statutory instrument containing regulations under this section is subject to the negative procedure.
The Secretary of State may by regulations make provision for, or in connection with, authorising an administrator of a redress scheme to apply to a court or tribunal for an order that a determination made under the scheme and accepted by the complainant in question be enforced as if it were an order of a court.
A statutory instrument containing regulations under this section is subject to the negative procedure.
The lead enforcement authority must oversee the operation of a redress scheme under this Part.
The lead enforcement authority must provide— with information and advice about the operation of redress schemes, in such form and manner as the lead enforcement authority considers appropriate.
other enforcement authorities, and
the public in England,
The lead enforcement authority may disclose information to another enforcement authority for the purposes of enabling that authority to determine whether there has been a breach of regulations under section 100(1).
The lead enforcement authority may issue guidance to other enforcement authorities about the exercise of their functions under this Part.
Enforcement authorities other than the lead enforcement authority must have regard to any guidance issued under subsection (4).
If the Secretary of State designates a person as the lead enforcement authority for the purposes of this Part—
the Secretary of State may make arrangements in connection with the person’s role as the lead enforcement authority, which may include arrangements—
for payments by the Secretary of State;
about bringing the arrangements to an end;
the Secretary of State may give the lead enforcement authority directions as to the exercise of any of its functions, which—
may relate to all or particular kinds of enforcement authorities, and
may make different provision for different purposes;
the lead enforcement authority must keep under review and from time to time advise the Secretary of State about—
the operation of redress schemes;
social and commercial developments relating to estate management (including by relevant landlords) in England, so far as it considers those developments relevant to redress schemes.
The Secretary of State may by regulations make transitional or saving provision which applies when there is a change in the lead enforcement authority (which may relate to a specific change in the lead enforcement authority or to changes that might arise from time to time).
A statutory instrument containing regulations under this section is subject to the negative procedure.
Guidance
The Secretary of State may from time to time issue or approve guidance for enforcement authorities in England and administrators of redress schemes about co-operation between such enforcement authorities and persons exercising functions under the schemes.
An enforcement authority in England other than the Secretary of State must have regard to any guidance issued or approved under this section.
The Secretary of State must exercise the powers in section 103 for the purpose of ensuring that every administrator of a redress scheme has regard to any guidance issued or approved under this section.
Amendments to other Acts
Schedule 13 makes amendments to other Acts in connection with this Part.
Interpretation
In this Part— “complaints under a voluntary jurisdiction” has the meaning given in section 101(2); “dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it; “enforcement authority” means— the lead enforcement authority, the Secretary of State, a county council in England, a district council, a London borough council, the Common Council of the City of London (in its capacity as a local authority), the Council of the Isles of Scilly, or another person designated by the Secretary of State as an enforcement authority; “estate management” has the meaning given in section 100(8); “estate manager” has the meaning given in section 100(8); “the lead enforcement authority” has the meaning given in section 100(8); “long lease” has the meaning given in section 77(2) of the LRHUDA 1993; “owner”, in relation to a dwelling, means— the owner of freehold land which comprises the dwelling; a tenant under a long lease of the dwelling; “redress scheme” has the meaning given in section 100(4); “relevant capacity” has the meaning given in section 100(2); “relevant landlord” has the meaning given in section 100(8); “relevant obligation” has the meaning given in section 100(8); “rentcharge” has the same meaning as in the RA 1977 (see section 1 of that Act); “voluntary mediation services” has the meaning given in section 101(2); “voluntary members” has the meaning given in section 101(2).
Rentcharges
In section 2(4)(b) of the RA 1977 (meaning of “estate rentcharge”), for “or repairs” substitute “, repairs or improvements”.
The Law of Property Act 1925 is amended in accordance with this section.
Before section 121 insert—
In section 121 (remedies for the recovery of annual sums charged on land) after subsection (1) insert—
In section 122 (creation of rentcharges charged on another rentcharge and remedies for recovery thereof), after subsection (1) insert—
The amendments made by subsections (1) to (4) have effect in relation to rentcharge arrears arising before or after the coming into force of this section.
After section 122 insert—
Amendments of Part 5 of the Building Safety Act 2022
Remediation of building defects
The BSA 2022 is amended as follows.
In the heading of section 120 (meaning of “relevant defect”), at the end insert “and “relevant steps””.
In section 120, after subsection (4) insert—
In Schedule 8 (remediation costs under qualifying leases etc), in paragraph 1(1)—
omit the definitions of “building safety risk” and “relevant risk”;
for the definition of “relevant measure” substitute— .
Section 123 of the BSA 2022 (remediation orders) is amended in accordance with subsections (2) to (4).
In subsection (2), for “remedy specified relevant defects in a specified relevant building by a specified time” substitute
For subsection (6) substitute—
After subsection (7) insert—
The amendments made by this section apply in relation to proceedings for a remediation order as mentioned in section 123 of the BSA 2022 which are pending on the day on which those amendments come into force (as well as proceedings for such an order which are commenced on or after that day).
Section 124 of the BSA 2022 (remediation contribution orders) is amended in accordance with subsections (2) to (6).
In subsection (2), after “remedying” insert “, or otherwise in connection with,”.
After subsection (2) insert—
In subsection (3), after “specified” insert “as a person required to make payments”.
In subsection (4)—
in paragraph (a), omit from “or payments” to the end;
after paragraph (a) insert— .
In subsection (5)—
after the definition of “developer” insert— ;
after the definition of “relevant defect” insert— ;
after the definition of “specified” insert—
The amendments made by this section apply—
in relation to proceedings for a remediation contribution order under section 124 of the BSA 2022 which are pending on the day on which those amendments come into force (as well as proceedings for such an order which are commenced on or after that day);
in relation to costs incurred before as well as after those amendments come into force.
Schedule 8 to the BSA 2022 (remediation costs under qualifying leases etc) is amended in accordance with subsections (2) and (3).
After paragraph 9(1) insert—
After paragraph 9(2) insert—
The amendments made by this section do not apply in relation to legal or other professional services provided before this section comes into force.
Omit section 125 of the BSA 2022 (meeting remediation costs of insolvent landlord).
In consequence of that repeal—
in section 116(1), for “125” substitute “124”;
omit section 116(2)(e);
in section 117(1), for “125” substitute “124”;
in section 119(1), for “125” substitute “124”;
in section 119A(9), for “125” substitute “124”;
in section 120(1), for “125” substitute “124”;
in section 121(1), for “125” substitute “124”;
in section 164(1)(c), for “125” substitute “124”.
Insolvency of responsible persons
Before section 126 of the BSA 2022 (and the italic heading before it) insert—
General
In this Act— “the BSA 2022” means the Building Safety Act 2022; “the CLRA 2002” means the Commonhold and Leasehold Reform Act 2002; “the LRA 1967” means the Leasehold Reform Act 1967; “the LRHUDA 1993” means the Leasehold Reform, Housing and Urban Development Act 1993; “the LR(GR)A 2022” means the Leasehold Reform (Ground Rent) Act 2022; “the LTA 1985” means the Landlord and Tenant Act 1985; “the LTA 1987” means the Landlord and Tenant Act 1987; “the RA 1977” means the Rentcharges Act 1977.
The Secretary of State may by regulations make provision that is consequential on this Act.
Regulations under this section may amend, repeal or revoke provision made by or under—
an Act of Parliament passed before, or in the same Session as, this Act, or
this Act.
A statutory instrument containing (whether alone or with other provision) regulations under this section that amend or repeal provision made by an Act of Parliament is subject to the affirmative procedure.
Any other statutory instrument containing regulations under this section is subject to the negative procedure.
A power to make regulations under any provision of this Act includes power to make—
consequential, supplementary, incidental, transitional or saving provision;
different provision for different purposes.
A power to make regulations under Part 6 also includes power to make different provision for different areas.
Regulations under this Act are to be made by statutory instrument.
In this Act, if a statutory instrument is “subject to the affirmative procedure” it may not be made unless—
where it contains (whether alone or with other provision) regulations made by the Secretary of State, a draft of the instrument has been laid before and approved by a resolution of each House of Parliament;
where it contains (whether alone or with other provision) regulations made by the Welsh Ministers, a draft of the instrument has been laid before and approved by a resolution of Senedd Cymru.
In this Act, if a statutory instrument is “subject to the negative procedure” it is—
where it contains regulations made by the Secretary of State, subject to annulment in pursuance of a resolution of either House of Parliament;
where it contains regulations made by the Welsh Ministers, subject to annulment in pursuance of a resolution of Senedd Cymru.
If a draft of a statutory instrument containing regulations under Part 6 would, apart from this subsection, be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.
This section does not apply to regulations under section 124.
This Act extends to England and Wales only, subject to subsection (2).
Section 23(5) extends to England and Wales, Scotland and Northern Ireland.
This Part comes into force on the day on which this Act is passed.
The following provisions come into force at the end of the period of two months beginning with the day on which this Act is passed—
section 113 (regulation of remedies for rentcharge arrears);
section 117 (recovery of legal costs etc through service charge);
section 119 (higher-risk and relevant buildings: notifications in connection with insolvency).
The other provisions of this Act come into force on such day or days as the Secretary of State may by regulations appoint.
The Secretary of State may by regulations make transitional or saving provision in connection with the coming into force of any provision of this Act.
The power to make regulations under this section includes power to make different provision for different purposes.
Regulations under this section are to be made by statutory instrument.
This Act may be cited as the Leasehold and Freehold Reform Act 2024.
Categories of permitted lease
Categories of permitted lease for Tribunal certification
A lease granted out of a leasehold estate (the “superior leasehold estate”) where—
the superior leasehold estate was granted before 22 December 2017, or
the superior leasehold estate was granted on or after 22 December 2017 in pursuance of an agreement entered into before that date.
A lease that—
is a community housing lease, and
meets any further conditions which may be specified in regulations made by the Secretary of State.
A lease is a community housing lease if—
the landlord under the lease is a community land trust within the meaning of section 2(7A) of the LR(GR)A 2022 (excepted leases), or
it is a lease of a house which is, or is in, a building within paragraph 2B of Schedule 14 to the Housing Act 2004 (buildings controlled or managed by co-operative societies), disregarding sub-paragraph (3)(b) of that paragraph.
A statutory instrument containing regulations made under sub-paragraph (1)(b) is subject to the negative procedure.
A lease that—
is a retirement housing lease, and
meets any further conditions which may be specified in regulations made by the Secretary of State.
A lease is a retirement housing lease if—
it is a term of the lease that the house comprised in the lease may be occupied only by persons who have attained a minimum age,
that minimum age is not less than 55, and
the house comprised in the lease is part of a retirement development or scheme in which the leases of all the houses in that development or scheme meet the requirements set out in paragraphs (a) and (b).
A statutory instrument containing regulations made under sub-paragraph (1)(b) is subject to the negative procedure.
A lease of a house where the house comprised in the lease—
is a property or part of a property vested inalienably in the National Trust for Places of Historic Interest or Natural Beauty (“the National Trust”) under section 21 of the National Trust Act 1907, or
is inalienable by the National Trust by virtue of section 8 of the National Trust Act 1939.
A lease granted out of a freehold estate by the Crown.
In this paragraph “the Crown” means—
His Majesty in right of the Crown, in right of His private estates, or in right of the Duchy of Lancaster, or
the Duchy of Cornwall.
Categories of permitted lease for self-certification
A lease granted in pursuance of an agreement entered into before the day on which section 1 comes into force.
A lease that—
is a shared ownership lease, and
meets conditions A to D.
But conditions C and D do not need to be met if the shared ownership lease is of a description specified for this purpose in regulations made by the Secretary of State.
A shared ownership lease means a lease of a house—
granted on payment of a premium calculated by reference to a percentage of the value of the house or of the cost of providing it, or
under which the tenant (or the tenant’s personal representatives) will or may be entitled to a sum calculated by reference, directly or indirectly, to the value of the house.
Condition A: the lease allows for the tenant to increase the tenant’s share in the house by increments of 25% or less (whether or not the lease also provides for increments of more than 25%).
Condition B: the lease provides—
for the price payable for an increase in the tenant’s share in the house to be proportionate to the market value of the house at the time the share is to be increased, and
if the tenant’s share is increased, for the rent payable by the tenant in respect of the landlord’s share in the house to be reduced by an amount reflecting the increase in the tenant’s share.
Condition C: the lease allows for the tenant’s share in the house to reach 100%.
Condition D: if and when the tenant’s share in the house is 100%, the tenancy— without the payment of further consideration.
allows for the tenant to acquire the freehold of the house (if the landlord has the freehold), or
provides that the terms of the lease which make the lease a shared ownership lease cease to have effect (if the landlord does not have the freehold),
A statutory instrument containing regulations made under sub-paragraph (2) is subject to the negative procedure.
A lease that —
is a home finance plan lease, and
meets any further conditions which may be specified in regulations made by the Secretary of State.
A lease is a home finance plan lease if—
it is granted pursuant to an arrangement which is a regulated home reversion plan within the meaning of Article 63B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), or
it is granted by a finance provider to a home buyer, pursuant to a rent to buy arrangement.
A “rent to buy arrangement” is an arrangement in relation to which the following conditions are met—
a person (the “finance provider”) buys a qualifying interest, or an undivided share of a qualifying interest, in land, and
the arrangement provides for the obligation of another person (the “home buyer”) to buy the interest bought by the finance provider over the course of, or at the end of, a specified period.
A “qualifying interest in land” means an estate in fee simple absolute or a term of years absolute, whether subsisting at law or in equity.
A statutory instrument containing regulations made under sub-paragraph (1)(b) is subject to the negative procedure.
An extended lease, which is a lease that falls within any of cases A to C.
Case A: a lease of a house granted under Part 1 of the LRA 1967 (tenant of leasehold house entitled to extended lease) in substitution for a lease of a house granted before this Part comes into force.
Case B: a lease of a house granted in consideration of the surrender in whole or part of a lease of that house granted before this Part comes into force.
Case C: a lease of a house which takes effect as a deemed surrender and regrant of a lease of a house granted before this Part comes into force.
An agricultural lease, which is a lease where the house is comprised in—
an agricultural holding within the meaning of the Agricultural Holdings Act 1986 which is held under a tenancy to which that Act applies, or
a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995.
Leasehold houses: financial penalties
Before imposing a financial penalty on a person under section 18, an enforcement authority must give the person notice of its proposal to do so (a “notice of intent”).
A notice of intent must set out—
the date on which it is given,
the amount of the proposed penalty,
the reasons for proposing to impose the penalty, and
information about the right to make representations under paragraph 3.
A notice of intent may not be given to a person in respect of a breach of a leasehold house restriction after the earlier of the following—
the end of the period of 6 years beginning with the day the breach occurs, and
the end of the period of 6 months beginning with the day on which evidence comes to the knowledge of the enforcement authority which the authority considers sufficient to justify giving the notice.
For the purposes of sub-paragraph (1)(a)—
a breach of section 1(1) or 10(1) occurs on the day the lease is granted or (as the case may be) the agreement is entered into (or, in the case of a breach of either of those provisions consisting of entering into an agreement to grant a lease and subsequently granting it, the day on which the agreement is entered into);
a breach of section 1(2) occurs on the day of the assignment or (as the case may be) the agreement is entered into (or, in the case of a breach of that provision consisting of entering into an agreement to assign a lease and subsequently assigning it, the day on which the agreement is entered into);
a breach of section 9(2) occurs on the day the marketing material is made available (or, in the case of marketing material made available in relation to the same lease on more than one occasion, the first day on which such material is made available).
A person who is given a notice of intent may, within the period of 28 days beginning with the day on which the notice is given, make written representations about the proposal.
After the period allowed for representations has expired, the enforcement authority must—
decide whether to impose a penalty on the person, and
if it decides to do so, decide the amount of the penalty.
If the enforcement authority decides to impose a penalty, it must do so by giving the person a notice (a “final notice”).
A final notice must require the penalty to be paid before the end of the period of 28 days beginning with the day after that on which the notice is given.
A final notice must set out—
the date on which it is given,
the amount of the penalty,
the reasons for imposing the penalty,
information about how to pay the penalty,
the period for payment of the penalty,
information about rights of appeal, and
the consequences of failure to comply with the notice.
An enforcement authority may at any time— by giving a notice to that effect to the person to whom the notice of intent or final notice is given.
withdraw a notice of intent or final notice, or
reduce an amount specified in a notice of intent or final notice,
A person who is given a final notice may appeal to the appropriate tribunal against—
the decision to impose the penalty, or
the amount of the penalty.
An appeal must be brought before the end of the period of 28 days beginning with the day after that on which the final notice is given.
If an appeal is brought under this paragraph, the final notice is suspended so far as it relates to the matter which is the subject of the appeal until the appeal is finally determined or withdrawn.
An appeal under this paragraph—
is to be a re-hearing of the enforcement authority’s decision, but
may be determined having regard to evidence which was not available to the authority when giving the notice.
On an appeal under this paragraph the appropriate tribunal may quash, confirm or vary the notice.
If the appropriate tribunal varies the amount of the penalty imposed by the notice, the new amount must be an amount that the enforcement authority had power to impose.
A penalty is recoverable by the enforcement authority that imposed it, if the county court so orders, as if it were payable under an order of that court.
In proceedings before the county court for the recovery of a penalty, a certificate that— is evidence of that fact.
is signed by the chief finance officer of the authority that imposed the penalty, and
states that the amount due has not been received by a date specified in the certificate,
A certificate to that effect and purporting to be so signed is to be treated as being so signed unless the contrary is proved.
In this paragraph “chief finance officer” has the same meaning as in section 5 of the Local Government and Housing Act 1989.
An enforcement authority may apply the proceeds of a penalty towards meeting the costs and expenses (whether administrative or legal) incurred in, or associated with, carrying out its enforcement functions under this Part.
Any proceeds of a penalty which are not applied in accordance with paragraph 8 must be paid—
if the penalty was imposed in relation to a lease of a house in England, to the Secretary of State;
if the penalty was imposed in relation to a lease of a house in Wales, to the Welsh Ministers.
The Secretary of State may by regulations make provision about—
how any notice under this Schedule is to be given to a person;
when such a notice is to be treated as being given.
A statutory instrument containing regulations under this paragraph is subject to the negative procedure.
Eligibility for enfranchisement and extension: specific cases
In section 17 of the LRA 1967 (redevelopment rights)—
omit subsections (4) and (5);
in subsection (6)(a), omit the words from “, or” to “application”.
Omit section 18 of the LRA 1967 (residential restriction on enfranchisement and extension rights).
Omit section 28 of the LRA 1967 (restrictions on enfranchisement and extension where land required for public purposes).
The LRA 1967 is amended as follows.
In section 1 (tenants eligible for enfranchisement and extension), after subsection (1B) insert—
After section 4A insert—
The LRHUDA 1993 is amended as follows.
In section 5 (qualifying tenants for enfranchisement), after subsection (2)(a) insert— .
Before section 9 insert—
In section 39(3)(a) (qualifying tenants for extension), before “(5)” insert “(2)(aa), ”.
In section 100 (orders and regulations), after subsection (2) insert—
In the LRA 1967—
in section 15(8) (terms of new tenancy), omit the words from “shall make” to “, and”;
in section 16 (exclusion of further rights after extension)—
omit subsection (4);
in subsection (5), omit the words from “and the instrument” to the end.
In the LRHUDA 1993—
in section 57(7) (terms of new lease), omit paragraph (a);
in section 59 (further renewal after grant of new lease), omit subsection (3).
For section 32 of the LRA 1967 (saving for National Trust) substitute—
For section 95 of the LRHUDA 1993 (saving for National Trust) substitute—
The LRA 1967 is amended in accordance with paragraphs 10 to 18.
In section 20(2)(d) (jurisdiction and special powers of county court), omit “or 18”.
In section 21(1)(c) (jurisdiction of tribunals), omit “or 18”.
In section 25(5)(a) (mortgagee in possession of landlord’s interest), omit “or 18”.
In section 29 (reservation of future right to develop)—
for subsection (5) substitute— ;
in subsection (6)(b), omit “as defined in section 28(5)(c) above”;
after subsection (6) insert— ;
in subsection (6B)(a), omit “(within the meaning of section 28(6)(b) above)”;
after subsection (8) insert—
In section 38 (modification of right to possession under Landlord and Tenant Act 1954)—
in subsection (1), omit the words from “, except” to “so required”;
for subsection (2) substitute— ;
omit subsection (3).
In Schedule 1 (enfranchisement and extension by sub-tenants), omit paragraph 6(1).
in paragraph 1(1), in the words before paragraph (a), omit “or 18”;
in paragraph 1(1)(a), omit “or 18(1)”;
in paragraph 1(1)(b), omit “or 18(4)”;
omit paragraph 1(2);
in paragraph 2(2), omit the words from “; and in a case” to “original term date”;
in paragraph 3(2), omit the words from “(or any earlier date” to “on the tenant)”;
in paragraph 3(3), omit “or 18”;
omit paragraph 5(2);
in paragraph 7(3), omit “or 18”;
in paragraph 9(1), omit “or 18”.
In Schedule 3 (procedure)—
omit paragraph 7(3);
in paragraph 10, omit sub-paragraphs (2)(c) (and the “and” preceding it) and (4).
In Schedule 4 (covenants with local authorities etc), in paragraph 5(3), for “section 28(5)(c)” substitute “29(6ZA)”.
The LRHUDA 1993 is amended in accordance with paragraphs 20 to 39.
In section 13(9) (initial notice for enfranchisement)—
omit paragraph (b) and the “or” preceding it;
omit the words from “or with the time” to “case may be)”.
Omit section 21(2)(c) (counter-notice for enfranchisement).
In section 22 (proceedings relating to validity of initial notice for enfranchisement)—
in subsection (1)(a), omit the words from “(whether” to “or (c) of that section)”;
in subsection (3), omit “(subject to subsection (4))”;
omit subsection (4).
In section 33(4) (costs of enfranchisement), omit “23(4) or”.
In section 37A(8)(c)(i) (compensation for ineffective enfranchisement claim), omit “23(4),”.
In section 42(7) (notice of extension)—
omit paragraph (b) (and the “or” preceding it);
omit the words from “or with the time” to “case may be”).
Omit section 45(2)(c) (counter-notice for extension).
In section 46 (proceedings relating to validity of notice for extension)—
in subsection (1)(a), omit the words from “(whether” to “or (c) of that section)”;
in subsection (4), omit “(subject to subsection (5))”;
omit subsection (5).
In section 48(1)(b) (applications in extension where terms in dispute etc), omit “or section 47(4) or (5)”.
In section 49(1)(b) (applications in extension on failure to give counter-notice), omit “or section 47(4) or (5)”.
In section 54(6) (suspension of extension during enfranchisement)—
in paragraph (b)—
omit “or (c)”;
omit “or 47(1)”;
in paragraph (c), omit “or 47(4)”.
In section 60(4) (costs incurred in connection with new lease), omit “47(1) or”.
In section 61A(6)(a) (compensation for ineffective extension claim), omit “47(1) or”.
In section 62(3)(a) (definitions), omit “47 or”.
In section 74 (effect of scheme applications on claims)—
in subsection (3)(c)—
omit “or 23”;
for “either of those sections” substitute “that section”.
omit subsection (8)(b) and the “or” preceding it.
In Schedule 1 (conduct of proceedings by reversioner), omit paragraph 9 and the italic heading preceding it.
In Schedule 2 (special categories of landlord), in paragraph 2, omit sub-paragraphs (2) and (3).
In Schedule 11 (procedure where competent landlord is not tenant’s immediate landlord), omit paragraph 9 and the italic heading preceding it.
Determining and sharing the market value
Introduction
This Schedule sets out how to determine, for the purposes of section 37, the market value on—
the transfer of a freehold house under the LRA 1967,
the grant of an extended lease of a house under the LRA 1967,
the collective enfranchisement of a building under the LRHUDA 1993, or
the grant of a new lease of a flat under the LRHUDA 1993.
This Schedule also sets out how to divide the market value into shares (where loss is suffered by certain landlords in addition to the landlord with responsibility for conducting the claim under the LRA 1967 or the LRHUDA 1993).
In this Schedule— “collective enfranchisement” means the collective enfranchisement of a building under the LRHUDA 1993; “freehold enfranchisement” means— the transfer of a freehold house under the LRA 1967, or a collective enfranchisement; “lease extension” means— the grant of an extended lease of a house under the LRA 1967, or the grant of a new lease of a flat under the LRHUDA 1993.
The market value
The paragraph applies to a freehold enfranchisement.
The market value is the amount which the relevant freehold could have been expected to realise if it had been sold on the open market by a willing seller at the valuation date.
In the following provisions of this Schedule, that market value is referred to as the market value of the relevant freehold.
If the nominee purchaser acquires a leasehold interest in any property under section 21(4) of the LRHUDA 1993, but does not acquire the freehold of that property, a reference in this Schedule to the relevant freehold is a reference to the relevant freehold together with that leasehold interest.
This paragraph applies to a lease extension.
It must be assumed that—
the current lease will continue on the terms on which it is granted, and therefore will not be substituted by the statutory lease;
the current lease will continue (on those terms) until its term date;
a notional lease is granted out of the interest of the person granting the statutory lease;
the notional lease is subject to, and enjoys the benefit of, the current lease (and therefore enjoys the right to receive the rent payable under the current lease);
the term of the notional lease begins on the date for valuation;
subject to that, the terms of the notional lease are the same as the terms of the statutory lease that will be granted under the LRA 1967 or the LRHUDA 1993, including the peppercorn rent (and any other rent payable under a shared ownership lease in respect of the landlord’s share), the property demised, and the term expiring 990 years after the term date of the current lease.
But if the tenant is holding over under the Local Government and Housing Act 1989 at the valuation date—
in the assumption in sub-paragraph (2)(a), the reference to the terms on which the current lease is granted has effect as a reference to the terms on which the tenant is holding over under that Act;
the assumption in sub-paragraph (2)(b) does not apply.
Paragraph 21 makes provision about whether any right to hold over under the Local Government and Housing Act 1989 is to be taken into consideration in determining the market value of the notional lease (if the tenant is not holding over under that Act at the valuation date).
The market value is the amount which the notional lease could have been expected to realise if it had been sold on the open market by a willing seller at the valuation date.
In the following provisions of this Schedule, that market value is referred to as the market value of the notional lease.
The market value of the relevant freehold or notional lease is to be determined in accordance with Part 3.
If the market value of different parts of the relevant freehold or notional lease are determined (in accordance with Part 3) in different ways, the market value is the total of the amounts determined in those ways.
Part 4 sets out—
assumptions that must be made in determining the market value of the relevant freehold or notional lease, and
certain matters that must, or must not, be taken into consideration in determining the market value.
Determining the market value
The standard valuation method (see Part 5 of this Schedule) must be used to determine the market value of the relevant freehold or notional lease for the purposes of this Schedule.
But this Schedule does not require the standard valuation method to be used to determine the market value of—
the relevant freehold or notional lease if all of the property comprised in that freehold or lease is property for which the standard valuation method is not compulsory, or
any part or parts of the relevant freehold or notional lease which comprise property for which the standard valuation method is not compulsory.
Paragraphs 6 to 13 contain provision about the kinds of property for which the standard valuation method is not compulsory.
Paragraphs 6 to 8 apply in relation to any kind of freehold enfranchisement or lease extension.
Paragraphs 9 to 13 specify the kinds of freehold enfranchisement or lease extension to which they apply.
The standard valuation method is not compulsory for the property comprised in a current lease if—
the tenant is holding over under the Local Government and Housing Act 1989 at the valuation date, or
the term date of the current lease is within the period of five years beginning at the valuation date.
The standard valuation method is not compulsory for the property comprised in a current lease if it is an excepted home finance plan lease at the valuation date.
An “excepted home finance plan lease” is a home finance plan lease within the meaning of section 2(9) of the LR(GR)A 2022 which meets any further specified conditions as mentioned in section 2(8)(b) of that Act.
The standard valuation method is not compulsory for the property comprised in a current lease if it is a market rack rent lease at the valuation date.
If section 3(3) of the LRA 1967 applies to the current lease (successive leases treated as a single lease), sub-paragraph (1) is to apply only if the one of those leases which is in effect at the valuation date is a market rack rent lease.
A “market rack rent lease” is a lease which—
was granted—
for no premium, or
for a premium which was low relative to the value of the freehold of the property with vacant possession at the time of the grant,
was granted at a market rack rent, and
the parties entered into with the intention that the rent would be a market rack rent.
In this paragraph “market rack rent” means a rent which was, or was reasonably close to, a market rack rent at the time of the grant.
This paragraph applies only to—
the transfer of a freehold house under the LRA 1967, or
the grant of an extended lease of a house under the LRA 1967.
The standard valuation method is not compulsory for any parts of the property comprised in the newly owned premises that are included by virtue of section 2(4) of the LRA 1967 (separately let property enjoyed with the house).
This paragraph applies only to—
the transfer of a freehold house under the LRA 1967, or
the grant of an extended lease of a house under the LRA 1967.
The standard valuation method is not compulsory for the property comprised in the current lease if that lease is a pre-commencement lease granted under section 14 of the LRA 1967.
This paragraph applies only to—
the transfer of a freehold house under the LRA 1967, or
the grant of an extended lease of a house under the LRA 1967.
The standard valuation method is not compulsory for the property comprised in the current lease if that lease is a tenancy to which Part 2 of the Landlord and Tenant Act 1954 applies (see section 1(1ZC) of the LRA 1967).
This paragraph applies only to the transfer of a freehold house under the LRA 1967.
The standard valuation method is not compulsory for any property comprised in the newly owned premises if it, or any part of it, is demised by a shared ownership lease.
This paragraph applies only to a collective enfranchisement.
The requirement under paragraph 5(1) to use the standard valuation method applies only in relation to property comprised in the newly owned premises that is—
a relevant flat, or
appurtenant property leased with a relevant flat.
Accordingly, the standard valuation method is not compulsory for any other property comprised in the newly owned premises.
A flat is a “relevant flat” for the purposes of this paragraph if the flat is—
demised to a qualifying tenant, or
demised to a person who is not a qualifying tenant, but only because of section 5(5) and (6) of the LRHUDA 1993 (a person who is the tenant of three or more flats in the building).
But a flat is not a relevant flat if—
it, or any part of it, is demised by a lease which the nominee purchaser could acquire, but is not acquiring, under paragraph 2(5) of Schedule A1 to the LRHUDA 1993 (acquisition of intermediate leases);
it, or any part of it, is demised by a shared ownership lease.
Appurtenant property is “leased with” a relevant flat for the purposes of this paragraph if—
the appurtenant property and the relevant flat are leased under the same lease (including where, under section 7(6) of the LRHUDA 1993, two or more leases are treated as a single lease), and
by virtue of that lease, the tenant is a qualifying tenant or, but for the impediment referred to in sub-paragraph (4)(b), would be a qualifying tenant.
By virtue of paragraph 1(1)(c) of Schedule 6, the references in this paragraph to a flat, a qualifying tenant, appurtenant property or a shared ownership lease have the same meanings that they have in Chapter 1 of Part 1 of the LRHUDA 1993 (see, respectively, sections 101(1), 5, 1(7) and 101(1) of that Act).
This Schedule does not prevent the standard valuation method from being used to determine the market value of property comprised in the relevant freehold or notional lease for which the standard valuation method is not compulsory.
Property comprised in the relevant freehold or notional lease is “subject to the standard valuation method” if—
this Part of this Schedule requires the standard valuation method to be used in relation to the property, or
the standard valuation method is to be used (otherwise than where its use is required by this Part of this Schedule) in relation to the property.
Assumptions and other matters affecting determination of market value
This Part of this Schedule, except for paragraph 22, applies to the determination of the market value in accordance with this Schedule—
whether or not the standard valuation method is being used, and
whether or not that method is being used because this Schedule requires its use.
Paragraph 22 applies to the determination of the market value in accordance with this Schedule only if the standard valuation method is being used.
This paragraph applies when determining the market value of the relevant freehold (on any freehold enfranchisement) or notional lease (on any lease extension).
Assumption 1: it must be assumed that the following occurred immediately before the valuation date—
in the case of the transfer of a freehold house under the LRA 1967—
the merger with the freehold of any lease which the claimant will acquire as part of the statutory transfer;
the surrender of any lease of the currently leased premises that belongs to the qualifying tenant and is superior to the current lease;
in the case of the grant of an extended lease of a house under the LRA 1967—
the merger with the interest of the person granting the statutory lease of any lease which will be deemed to be surrendered and regranted as part of the statutory grant;
the surrender of any lease that will be surrendered under paragraph 11(1) of Schedule 1 to the LRA 1967 as part of the statutory grant;
in the case of the collective enfranchisement of a building under the LRHUDA 1993, the merger with the freehold of any lease which the claimant will acquire as part of the enfranchisement;
in the case of the grant of a new lease of a flat under the LRHUDA 1993—
the merger with the interest of the person granting the statutory lease of any lease which will be deemed to be surrendered and regranted as part of the statutory grant;
the surrender of any lease that will be surrendered under paragraph 10(3) of Schedule 11 to the LRHUDA 1993 as part of the statutory grant.
Assumption 2: it must be assumed (having made assumption 1) that— Accordingly, no marriage or hope value is payable.
the claimant is not seeking, and will never seek, to acquire the relevant freehold or notional lease;
in the case of a collective enfranchisement, the nominee purchaser is not seeking, and will never seek, to acquire the relevant freehold;
any persons holding any leasehold interests in the newly owned premises or any part of those premises (including, in the case of a collective enfranchisement, the qualifying tenants) are not seeking, and will never seek—
to acquire the relevant freehold or notional lease, or
to dispose of their leasehold interests;
in the case of a lease extension, the freeholder is not seeking, and will never seek, to acquire the notional lease or to dispose of their freehold interest; and
in the case of a freehold enfranchisement where there are two or more freeholders, none of them is seeking, or will ever seek, to acquire any of the relevant freehold which they do not already own.
This paragraph does not prevent other assumptions from being made when determining the market value as long as they are consistent with assumptions 1 and 2 and the other provisions of this Schedule.
In this paragraph “claimant” means the person or persons making the claim under the LRA 1967 or the LRHUDA 1993 for the freehold enfranchisement or lease extension.
This paragraph applies when determining the market value of—
the relevant freehold on the transfer of a freehold house under the LRA 1967, or
the notional lease on a lease extension.
Assumption 3: it must be assumed—
that the qualifying tenant has complied with any tenant’s repairing obligations under the current lease at the valuation date, so that the property has not been devalued by any breach of those obligations, and
that any improvements to the currently leased premises that have been made by any tenant under the current lease (including the current tenant) at the tenant’s own expense have not been made, unless they were required to be made by any tenant’s repairing obligations under the lease.
In the case of the transfer of a freehold house, if section 3(3) of the LRA 1967 applies to the current lease (successive leases treated as single lease), assumption 3 is to apply only to the one of those leases which is in effect at the valuation date.
This paragraph does not prevent other assumptions from being made when determining the market value as long as they are consistent with assumption 3 and the other provisions of this Schedule.
In this paragraph “tenant’s repairing obligation”, in relation to a lease, means an obligation under the lease (however expressed or described) for the tenant under the lease to repair, maintain or decorate the currently leased premises.
This paragraph applies when determining the market value of the relevant freehold on a collective enfranchisement.
Assumption 4: it must be assumed—
as respects each current lease held by a relevant tenant, that the relevant tenant has complied with any tenant’s repairing obligations under the lease at the valuation date, so that the property has not been devalued by any breach of those obligations, and
as respects each current lease held by a participating tenant, any improvements to the currently leased premises that have been made by any tenant under the lease (including the participating tenant) at the tenant’s own expense have not been made, unless they were required to be made by any tenant’s repairing obligations under the lease.
Assumption 5: it must be assumed that the relevant freehold is subject to any leases to be granted in accordance with section 36 of the LRHUDA 1993.
This paragraph does not prevent other assumptions from being made when determining the market value as long as they are consistent with assumptions 4 and 5 and the other provisions of this Schedule.
In this paragraph— “relevant tenant” means— a qualifying tenant, or a person who is not a qualifying tenant, but only because of section 5(5) and (6) of the LRHUDA 1993 (a person who is the tenant of three or more flats in the building); “tenant’s repairing obligation”, in relation to a lease, means an obligation under the lease (however expressed or described) for the tenant under the lease to repair, maintain or decorate the currently leased premises.
This paragraph applies if any specified matters arise in relation to newly owned premises.
The specified matters that arise must be taken into consideration when determining the market value of those premises.
If the standard valuation method is being used to determine the market value (on any freehold enfranchisement or lease extension), the effect of those specified matters on the market value, including during the period between— must be taken into consideration.
the valuation date, and
the term date of the current lease,
In this paragraph “specified matters” means—
any defects in the title to the relevant freehold or statutory lease;
any property rights that burden or benefit the title to the relevant freehold or statutory lease;
any burden on, or benefit to, the title to the relevant freehold or statutory lease that arises under or by virtue of legislation (including any permanent or extended rights and burdens that are to be created in order to give effect to section 10 of the LRA 1967 or Schedule 7 to the LRHUDA 1993) or any other law;
any physical characteristics of the newly owned premises giving rise to a liability under or by virtue of legislation or any other law;
any order of a court or tribunal enforceable against the relevant freehold or statutory lease;
any obligation in a contract or other arrangement—
which runs with the newly owned premises, or
which will bind the owner for the time being of the relevant freehold or statutory lease (including where the owner for the time being is required to ensure that an immediate successor in title enters into the obligation, in particular by a limitation on transfer of the title to the relevant freehold or statutory lease or on registration of such a transfer).
But, as this paragraph has effect subject to any assumptions that must be made in accordance with other provisions of this Schedule, the effect of those assumptions must form part of the determination of what, if any, specified matters arise.
In this paragraph “legislation” means—
an Act of Parliament or Act of Senedd, or
any instrument made under an Act of Parliament or Act of Senedd.
This paragraph applies when determining the market value of the relevant freehold or the notional lease if—
some or all of the newly owned premises are comprised in a current lease which gives rise to a right to hold over under the Local Government and Housing Act 1989, and
the tenant is not holding over under that Act at the valuation date.
That right to hold over, and the likelihood of that right being exercised, is to be taken into consideration in determining the market value only if—
the term date of the current lease is within the period of five years beginning at the valuation date, and
that right to hold over is likely to be exercised.
This paragraph applies if the standard valuation method is used to determine the market value.
In the case of a lease extension, if the terms of the notional lease differ from the terms of the current lease, the effect of that difference on the market value during the period between— must be taken into consideration when determining the market value of the notional lease.
the valuation date, and
the term date of the current lease,
In the case of a collective enfranchisement, this Schedule applies with the modification in sub-paragraph (4) if any property comprised in the newly owned premises is demised under a lease, or part of a lease, which the nominee purchaser could not acquire under paragraph 2 of Schedule A1 to the LRHUDA 1993 because of paragraph 2(7) (the tenant under that superior lease is also the qualifying tenant).
In the application of this Schedule to the use of the standard valuation method to value that property, any reference to the current lease has effect as a reference to the lease, or the part of the lease, that could not be acquired under paragraph 2(7) of Schedule A1 to the LRHUDA 1993.
This paragraph applies when determining— if the qualifying tenant is also the tenant of a relevant superior lease.
the market value of the relevant freehold on the transfer of a freehold house under the LRA 1967, or
the market value of the notional lease on a lease extension,
A “relevant superior lease” is a lease that—
is superior to the current lease, and
in accordance with paragraph 17(2)(a)(ii), (b)(ii) or (d)(ii) must be assumed to have been surrendered.
After the application of the other provisions of this Schedule for the purposes of calculating the market value, including the assumptions in paragraph 17(2)—
the amount produced by the application of those other provisions must be reduced to take account of the value of the relevant superior lease, and
the amount produced after that reduction is the market value.
The standard valuation method
This Part of this Schedule sets out the standard valuation method.
The standard valuation method consists of steps 1 to 3 (see paragraph 25, paragraph 27 or 28, and paragraph 29).
There are two versions of step 2—
the version in paragraph 27 applies to freehold enfranchisements;
the version in paragraph 28 applies to lease extensions.
Step 1: determine the value of the right to receive rent over the remainder of the term of the current lease.
The “right to receive rent” is— Paragraph 26 contains provision about the rent that is to be used in step 1, including if and when a capped notional rent is to be used.
in the case of a freehold acquisition, the landlord’s right to receive the rent under the current lease;
in the case of a lease extension, the right of the tenant under the notional lease to receive the rent under the current lease.
In the case of a collective enfranchisement, step 1 is to be followed separately in relation to each current lease.
In this Schedule the value determined under step 1 in relation to a lease is referred to as the “term value” of the lease.
Part 7 of this Schedule contains provision about the determination of the term value under this paragraph.
But, if there is no rent under a lease, or the rent under a lease is only a peppercorn rent, the term value of the lease is nil (and so sub-paragraph (5) does not apply).
If a current lease is a deemed single lease, step 1 is to be followed separately in relation to each constituent lease (as if the constituent lease were itself a current lease).
The rent under the current lease must be used in step 1 to determine the lease’s term value.
If only some of the property demised by the current lease is subject to the standard valuation method, the rent under the lease that is attributable to that property must be used in step 1.
But, as respects any period when the notional annual rent for the current lease is lower than the actual annual rent, the notional annual rent must be used instead (and accordingly sub-paragraphs (1) and (2) are not to apply in relation to that period).
The “notional annual rent” for the current lease is an amount equivalent to 0.1% of the market value of the premises being valued.
The “premises being valued” are the premises that—
are demised by the current lease, and
are subject to the standard valuation method.
The “market value” of the premises being valued is—
in the case of a freehold enfranchisement, or lease extension, under the LRA 1967, the amount which the freehold of the premises being valued could have been expected to realise if it had been sold on the open market with vacant possession by a willing seller at the valuation date;
in the case of a collective enfranchisement or lease extension under the LRHUDA 1993, the share of the relevant freehold market value which is attributable to the premises being valued.
The “relevant freehold market value” is —
in the case of a collective enfranchisement, the amount which the freehold to be acquired on the collective enfranchisement could have been expected to realise if it had been sold on the open market with vacant possession by a willing seller at the valuation date;
in the case of a lease extension under the LRHUDA 1993, the amount which the freehold of the building and any other land which contain the premises being valued could have been expected to realise if it had been sold on the open market with vacant possession by a willing seller at the valuation date.
The “actual annual rent” is the rent referred to in sub-paragraph (1) or (2).
The notional annual rent must not be used in step 1 if—
no premium was payable on the grant of the current lease, or
the current lease was granted on the basis that—
the premium was lower, and the rent was higher, than each would otherwise have been, and
the value of paying the lower premium was (at the time of the grant) broadly equivalent to, or greater than, the capitalised value of the extra rent.
It must be assumed that sub-paragraph (9)(b) is not applicable unless it is shown to be applicable.
If section 3(3) of the LRA 1967 applies to the current lease (successive leases treated as a single lease), sub-paragraph (9) is to apply only if the one of those leases which is in effect at the valuation date meets the condition in sub-paragraph (9)(a) or (b).
If the current lease is a shared ownership lease—
the rent that is to be used for the purposes of sub-paragraph (1) and (2) is the rent that is payable under the lease in respect of the tenant’s share in the property demised by the lease;
where the lease does not reserve separate rents in respect of the tenant’s share in the demised premises and the landlord’s share in the property demised by the lease, any rent reserved is to be treated as reserved in respect of the landlord’s share.
This version of step 2 applies to freehold enfranchisements.
Step 2: for the newly owned premises which are subject to the standard valuation method (the “premises being valued”)—
determine the market value of those premises, and
then reduce that market value by using this formula: v 1 + d n where— d is the applicable deferment rate; n is the period (in years) that begins with the valuation date and ends at the end of the term of the current lease; v is the market value.
The “market value” of the premises being valued is—
in the case of the transfer of a freehold house under the LRA 1967, the amount which the freehold of the premises being valued could have been expected to realise if it had been sold on the open market with vacant possession by a willing seller at the valuation date;
in the case of a collective enfranchisement, the share of the relevant freehold market value which is attributable to the premises being valued.
The “relevant freehold market value” is the amount which the freehold to be acquired on the collective enfranchisement could have been expected to realise if it had been sold on the open market with vacant possession by a willing seller at the valuation date.
In the case of a collective enfranchisement, step 2 is to be followed separately in relation to each part of the premises being valued that is subject to a different current lease.
In this Schedule the amount determined under step 2 in relation to the premises being valued, or a part of those premises, is referred to as the “reversion value” of the premises or part.
If a current lease is a deemed single lease, step 2 is to be followed separately in relation to each constituent lease (as if the constituent lease were itself a current lease).
In this paragraph “applicable deferment rate”, in relation to the determination of the reversion value of premises, means the deferment rate prescribed in regulations made by the Secretary of State that is applicable to that determination — and for this purpose a “deferment rate” is a rate applied to an anticipated future receipt to ascertain its value at an earlier date.
A statutory instrument containing regulations under this paragraph is subject to the negative procedure.
The Secretary of State must review the deferment rate or rates every ten years.
This version of step 2 applies to lease extensions.
Step 2: for the newly owned premises which are subject to the standard valuation method (the “premises being valued”)—
determine the market value of a lease of the premises being valued that is granted—
for a term of 990 years beginning with the date for valuation, and
otherwise on the same terms as the statutory lease that will be granted under the LRA 1967 or the LRHUDA 1993, including the peppercorn rent and the property demised, and
then reduce that market value by using this formula: v 1 + d n where— d is the applicable deferment rate; n is the period (in years) that begins with the valuation date and ends at the end of the term of the current lease; v is the market value.
The “market value” of the lease of the premises being valued is the amount which that lease could have been expected to realise if it had been sold on the open market with vacant possession by a willing seller at the valuation date.
If a current lease is a deemed single lease, step 2 is to be followed separately in relation to each constituent lease (as if the constituent lease were itself a current lease).
In this Schedule the amount determined under step 2 in relation to the premises being valued is referred to as the “reversion value” of those premises.
But if the current lease is a shared ownership lease—
the amount determined under step 2 must be multiplied by the tenant’s share in the premises being valued, and
the amount so calculated is the “reversion value” of the premises being valued.
In this paragraph “applicable deferment rate”, in relation to the determination of the reversion value of premises, means the deferment rate prescribed in regulations made by the Secretary of State that is applicable to that determination by virtue of the regulations — and for this purpose a “deferment rate” is a rate applied to an anticipated future receipt to ascertain its value at an earlier date.
A statutory instrument containing regulations under this section is subject to the negative procedure.
The Secretary of State must review the deferment rate or rates every ten years.
Step 3: add together—
the term value amount, and
the reversion value amount.
The “term value amount” is—
the term value determined under step 1 (if there is only one term value), or
the total of all the term values determined under step 1 (if there are two or more of them by virtue of paragraph 25(3) or (7)).
The “reversion value amount” is—
the reversion value determined under step 2 (if there is only one reversion value), or
the total of all the reversion values determined under step 2 (if there are two or more of them by virtue of paragraph 27(5) or (7) or 28(4)).
The amount calculated under step 3 (with any adjustment resulting from paragraph 20 or 22) is the market value of that property comprised in the relevant freehold or notional lease which is subject to the standard valuation method.
See paragraph 4(2) for provision about the market value where only some of the property comprised in the relevant freehold or notional lease is subject to the standard valuation method.
Entitlement of eligible persons to shares of the market value
This Part of this Schedule applies if there are two or more eligible persons.
Each eligible person is entitled to be paid a share of the market value of the relevant freehold or notional lease that is determined in accordance with this Schedule.
An eligible person’s share of the market value is to be determined using this formula— market value × loss suffered by the eligible person total losses suffered by all eligible persons
A person is an “eligible person” if the whole or a part of a relevant interest of the person is acquired on a freehold enfranchisement.
The eligible person’s “qualifying transaction” is the acquisition of the whole or the part of the person’s relevant interest.
But if— that person’s qualifying transaction is the acquisition of the freehold together with the grant of that lease.
an eligible person’s relevant interest is a freehold, and
that person is granted a lease in accordance with section 36 of the LRHUDA 1993,
In the case of a lease extension, a person is an “eligible person” if —
the statutory lease is granted in whole or in part out of a relevant interest of the person, or
the whole or a part of a relevant interest of the person is deemed to be surrendered and regranted under the LRA 1967 or the LRHUDA 1993 as a result of the claim for the lease extension, or
The eligible person’s “qualifying transaction” is—
where sub-paragraph (1)(a) or (b) applies, the grant of the statutory lease, or
where sub-paragraph (1)(c) applies, the variation of the lease.
The loss suffered by an eligible person is the loss which the person suffers as a result of the person’s qualifying transaction (taking into account, where paragraph 32(1)(c) applies, any reduction under paragraph 12A of Schedule 1 to the LRA 1967 or paragraph 12 of Schedule 11 to the LRHUDA 1993 in the rent of a lease of which the eligible person is a tenant).
In determining the loss suffered by an eligible person, assumption 2 (in paragraph 17(3)) must be made in relation to the person’s qualifying transaction and, accordingly, no marriage or hope value is taken into account in determining the loss.
In determining the loss suffered by an eligible person, the value of the eligible person’s relevant interest must not be increased by reason of—
any transaction which—
is entered into on or after the relevant date (otherwise than in pursuance of a contract entered into before the relevant date), and
involves the creation or transfer of an interest superior to (whether or not preceding) any interest held by a relevant tenant, or
any alteration on or after the relevant date of the terms on which any such superior interest is held.
In this paragraph— “eligible person’s relevant interest” means the relevant interest to which the eligible person’s qualifying transaction relates; “relevant date” means— 15 February 1979, in relation to the transfer of a freehold house under the LRA 1967; 20 July 1993, in relation to— the collective enfranchisement of a building under the LRHUDA 1993, or the grant of a new lease of a flat under the LRHUDA 1993; 27 November 2023, in relation to the grant of an extended lease of a house under the LRA 1967; “relevant tenant” means— a qualifying tenant, or a person who is not a qualifying tenant, but only because of section 5(5) and (6) of the LRHUDA 1993 (a person who is the tenant of three or more flats in the building).
In this Part of this Schedule— “eligible person” has the meaning given in paragraph 31 or 32; “qualifying transaction” has the meaning given in paragraph 31 or 32; “relevant interest” means an interest in property that forms the whole or a part of— the currently leased premises, or the newly owned premises.
Determining the term value
This Part of this Schedule contains provision for determining the term value in accordance with step 1 in paragraph 25.
For the purposes of this Part of this Schedule, the rent under a lease is subject to a rent review if the lease or any other arrangement provides for the rent to change.
This paragraph applies to a lease if the rent under the lease is not subject to a rent review at any time during the unexpired term of the lease.
That includes a case where—
the rent under the lease is subject to a rent review, but
the terms of the rent review are such that there will be no further rent reviews during the unexpired term of the lease.
The term value is determined using this formula— r × 1 - 1 1 + c n c where— c is the applicable capitalisation rate; r is the rent (but see sub-paragraph (4)); n is the length (in years) of the unexpired term of the lease.
If paragraph 26(3) requires the notional annual rent to be used instead of the rent to determine the term value of the lease, r is the notional annual rent.
This paragraph applies to a lease if the rent under the lease is subject to a rent review which provides that, over the unexpired term of the lease—
the rent will change each time one or more periods (a “review tranche”) begins,
the length of the review tranche, or each of them, is known at the valuation date (and, in a case where there are two or more review tranches, it does not matter if they are the same or different lengths), and
the amount by which the rent will change at the beginning of the review tranche, or each of them, is known or can be calculated at the valuation date (and, in a case where there are two or more review tranches, it does not matter if the amount of each change is the same or different).
The term value is the sum of—
the term value for the period (the “current tranche”) that begins with the valuation date and ends immediately before the start of the first (or only) review tranche after the valuation date, and
the term value or values for each (or the) subsequent review tranche.
The term value for the current tranche is determined using this formula— r × 1 - 1 1 + c n c where— c is the applicable capitalisation rate; r is the rent at the valuation date (but see sub-paragraph (4)); n is the length (in years) of the current tranche.
If paragraph 26(3) requires the notional annual rent to be used instead of the rent at the valuation date to determine the term value of the lease, r is the notional annual rent.
The term value for a review tranche (the “relevant review tranche”) is determined using this formula— r 1 + c n × 1 - 1 1 + c t c where— c is the applicable capitalisation rate; r is the rent during the relevant review tranche (but see sub-paragraph (6)); n is the length (in years) of the period that begins with the valuation date and ends with the day before the first day of the relevant review tranche. t is the length (in years) of the relevant review tranche.
If paragraph 26(3) requires the notional annual rent to be used instead of the rent during the relevant review tranche to determine the term value of the lease, r is the notional annual rent.
This paragraph applies to a lease if—
the rent under the lease is subject to a rent review, and
paragraph 36 does not apply to the lease.
The term value is determined using this formula— r 1 × 1 - 1 1 + c n 1 c + r 2 1 + c n 1 × 1 - 1 1 + c n 2 c where— c is the applicable capitalisation rate; r 1 is the rent at the valuation date (but see sub-paragraph (6)); r 2 is the rent after the first rent review following the valuation date (but see sub-paragraph (6)); n 1 is the length (in years) of the period during which the rent at the valuation date will be payable; n 2 is the length (in years) of the period that begins with the first day of the first rent review following the valuation date and ends with the term date of the current lease.
If the rent review provides for the rent under the lease to change by the same proportion as an index of price inflation or the capital or rental value of property, r 2 is determined using this formula— r 1 × a 1 a 2 where— a 1 is the index of price inflation, or the capital or rental value, at the valuation date; a 2 is the index of price inflation, or the capital or rental value, at the time when the previous rent review took effect or (if none has taken effect) when the term of the lease began; r 1 is the rent at the valuation date;
If the rent review provides for the rent under the lease to be a percentage or other proportion of the capital value of property, r 2 is determined using this formula— v × p where— p is the percentage or other proportion; v is the capital value of the property at the valuation date.
If neither sub-paragraph (3) nor (4) applies to the rent review, r 2 is to be determined in line with the terms of the rent review provision.
If paragraph 26(3) requires the notional annual rent to be used—
instead of the rent at the valuation date to determine the term value of the lease, r 1 is the notional annual rent;
instead of the rent after the first rent review following the valuation date, r 2 is the notional annual rent.
In this Part of this Schedule— “applicable capitalisation rate”, in relation to any aspect of the determination of a term value, means the capitalisation rate prescribed in regulations made by the Secretary of State that is applicable to that aspect by virtue of the regulations — and for this purpose a “capitalisation rate” is a rate at which the entitlement to receive rent over the remainder of the term of a lease is capitalised; “rent” has the same meaning as in the LR(GR)A 2022 (see section 22(2) and (3) of that Act); “unexpired term”, in relation to a lease, means the period that— begins with the valuation date, and ends with the term date of the lease.
A statutory instrument containing regulations under this paragraph is subject to the negative procedure.
The Secretary of State must review the capitalisation rate or rates every ten years.
Other compensation
This Schedule applies to every kind of statutory transfer or grant.
The buyer must pay a person (“P”) reasonable compensation for—
any diminution in value of any interest of P in other property resulting from the statutory transfer or grant, and
any other loss or damage which results from the statutory transfer or grant to the extent that it is referable to P’s ownership of any interest in other property.
Sub-paragraph (1)(b) includes loss of development value in relation to the newly owned premises to the extent that it is referable to P’s ownership of any interest in other property.
In the case of the collective enfranchisement of a building under the LRHUDA 1993, in determining the amount of compensation payable under this Schedule it is not material that—
loss or damage suffered by the freeholder could to any extent be avoided or reduced by the grant of a relevant leaseback to the freeholder, and
the freeholder is not requiring the nominee purchaser to grant a relevant leaseback.
In this paragraph— “development value”, in relation to the newly owned premises, means any increase in the value of P’s interest in the premises which is attributable to the possibility of demolishing, reconstructing or carrying out substantial works of construction on, the whole or a substantial part of the premises; “other property” means any property other than the newly owned premises; “relevant leaseback” means a lease granted under Part 3 of Schedule 9 to the LRHUDA 1993 in accordance with section 36 of, and Schedule 9 to, that Act.
Schedules 4 and 5: interpretation
Schedules 4 and 5 and this Schedule are to be construed as one—
with Part 1 of the LRA 1967 in their application to the transfer of freehold houses under the LRA 1967 (and here the reference to Part 1 of the LRA 1967 is a reference to that legislation as it applies to the transfer of freehold houses);
with Part 1 of the LRA 1967 in their application to the grant of extended leases of houses under the LRA 1967 (and here the reference to Part 1 of the LRA 1967 is a reference to that legislation as it applies to the grant of extended leases);
with Chapter 1 of Part 1 of the LRHUDA 1993 in their application to collective enfranchisements of buildings under the LRHUDA 1993;
with Chapter 2 of Part 1 of the LRHUDA 1993 in their application to the grant of new leases of flats under the LRHUDA 1993.
But in the case of a deemed single lease—
there is not to be a single term date for the deemed single lease (as would otherwise be the case in accordance with section 3(6) of the LRA 1967 or section 7(6) of the LRHUDA 1993);
instead, each constituent lease has its own term date (and sub-paragraph (1) applies for the purpose of giving the meaning of “term date” here).
In Schedules 4 and 5 and this Schedule— “collective enfranchisement” has the meaning given in paragraph 1(3) of Schedule 4; “collective enfranchisement of a building under the LRHUDA 1993” has the meaning given in section 37(8); “constituent lease” means any lease which is treated as forming part of a deemed single lease; “deemed single lease” means a lease to which— the LRA 1967 applies by virtue of section 3(6) of that Act, or the LRHUDA 1993 applies by virtue of section 7(6) of that Act, (separate tenancies with the same landlord and the same tenant treated as single tenancy); “freehold enfranchisement” has the meaning given in paragraph 1(3) of Schedule 4; “grant of a new lease of a flat under the LRHUDA 1993” has the meaning given in section 37(8); “grant of an extended lease of a house under the LRA 1967” has the meaning given in section 37(8); “lease extension” has the meaning given in paragraph 1(3) of Schedule 4; “market value of the notional lease” has the meaning given in paragraph 3(6) of Schedule 4; “market value of the relevant freehold” has the meaning given in paragraph 2(3) of Schedule 4; “notional lease” means the notional lease referred to in paragraph 3(2) of Schedule 4; “reversion value” has the meaning given in paragraph 27 (in relation to a freehold enfranchisement) or paragraph 28 (in relation to a lease extension); “standard valuation method” means the valuation method set out in Part 5 of Schedule 4; “statutory transfer or grant” means a statutory transfer or a statutory grant; “term date” is to be read subject to paragraph 1(2); “term value” has the meaning given in paragraph 25 of Schedule 4; “transfer”, in relation to a freehold, includes a conveyance; “transfer of a freehold house under the LRA 1967” has the meaning given in section 37(8).
Paragraph 3 sets out the meaning of other expressions used in Schedule 4 and 5 and this Schedule.
In Schedules 4 and 5 and this Schedule an expression set out in an entry in the first column of the following table has the meaning given in the corresponding entry in—
the second column, as that expression is used in relation to the transfer of freeholds of houses under the LRA 1967;
the third column, as that expression is used in relation to the grant of extended leases of houses under the LRA 1967;
the fourth column, as that expression is used in relation to collective enfranchisements of buildings under the LRHUDA 1993;
the fifth column, as that expression is used in relation to the grant of new leases of flats under the LRHUDA 1993.
Schedule 1 to the LRA 1967 (enfranchisement and extension by sub-tenants) is amended as follows.
In paragraph 4—
in sub-paragraph (1)—
omit “and” at the end of sub-paragraph (a);
after sub-paragraph (b) insert— ;
after sub-paragraph (1) insert—
in sub-paragraph (3), omit paragraph (c).
In paragraph 5—
in sub-paragraph (1), for “under section 9 of this Act” substitute “in accordance with section 9 or 14A”;
after sub-paragraph (2) insert— ;
for sub-paragraph (3) substitute— ;
after sub-paragraph (3) insert— ;
omit sub-paragraph (4);
in sub-paragraph (5), in the words before paragraph (a), after “landlords” insert “(whether or not any entitlements to shares of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024 have been determined)”.
After paragraph 6 insert—
In paragraph 7(1)—
omit paragraph (b);
in paragraph (c), for “price payable for” substitute “share of the purchase price, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, that is payable to the owner of”;
in paragraph (d), for “the price payable for” substitute “each share of the purchase price, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, that is payable to the owner of”;
at the end of paragraph (d), insert
Omit paragraph 7A (minor superior tenancies).
In section 24 of the LRHUDA 1993 (applications where terms in dispute or failure to enter contract), after subsection (8) insert—
Schedule 1 to the LRHUDA 1993 (conduct of proceedings by reversioner on behalf of other landlords) is amended as follows.
In paragraph 6 (acts of reversioner binding on other landlords)—
in sub-paragraph (1)—
in paragraph (b)(iv), for “for the acquisition of any interest” substitute “and, where the reversioner does so, hold that amount for themselves and the other landlords pending determination of the matters dealt with in Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024”;
at the end of paragraph (b) insert “and ;
in sub-paragraph (3), omit paragraph (c) (and the “and” preceding it).
In paragraph 7 (which gives a landlord who is not the reversioner certain powers in relation to conduct of the claim)—
in sub-paragraph (1)(a), at the end insert “, except the price payable”;
in sub-paragraph (3), at the end insert “, except determination of the share of the price payable to which the landlord is entitled under Part 6 of Schedule 4 to the Freehold and Leasehold Reform Act 2024”;
after sub-paragraph (3) insert— ;
omit sub-paragraph (4).
In paragraph 8 (obligations of other landlords to reversioner), in sub-paragraph (1), after “landlords” insert “(whether or not any entitlements to shares of the purchase price under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024 have been determined)”.
After paragraph 9 insert—
In Schedule 8 to the LRHUDA 1993 (discharge of mortgages etc)—
in paragraph 1, for the definition of “the consideration payable” substitute— ;
in paragraph 4, after sub-paragraph (3) insert—
In section 48 of the LRHUDA 1993 (applications where terms in dispute or failure to enter into new lease), after subsection (7) insert—
Schedule 11 to the LRHUDA 1993 (procedure where competent landlord is not tenant’s immediate landlord) is amended as follows.
In paragraph 6 (acts of competent landlord binding on other landlords), for sub-paragraph (2) substitute—
In paragraph 7 (other landlords acting independently)—
in sub-paragraph (1)(b), for “any amount payable to him by virtue of Schedule 13” substitute “the price payable”;
omit sub-paragraph (2) and after it insert—
After paragraph 9 insert—
The LRA 1967 is amended in accordance with paragraphs 8 to 13.
Omit section 9A (compensation payable in cases where right to enfranchisement arises by virtue of section 1A or 1B).
In section 19(10)(b) (price subject to local management scheme), for “under” substitute “in accordance with”.
In section 24(1) (application of price), for “under section 9 above” substitute “in accordance with section 9”.
In section 31 (ecclesiastical property)—
in subsection (2)(a), after “payable” insert “in accordance with section 9 or 14A”;
in subsection (3), for “under section 9 above” substitute “in accordance with section 9 or 14A”;
in subsection (4)(c), for “under section 9 above” substitute “in accordance with section 9 or 14A”.
The LRHUDA 1993 is amended in accordance with paragraphs 15 to 29.
In section 13(3) (initial notice), for paragraph (d) substitute— .
In section 18(2) (duty to disclose agreements)—
in the words after paragraph (b), for the words from “to the reversioner” to “relevant landlord” substitute “in addition to the price so determined”.
in subsection (3), omit “in respect of each of those interests”;
in subsection (5)—
in the words before paragraph (a), omit “in respect of any interest”;
in paragraph (b), for “that interest” substitute “the transferor’s interest”;
in subsection (6)—
omit “in respect of that interest”;
omit “for the acquisition of that interest”.
In section 32 (determination of price)—
in subsection (2), for “any such interest” substitute “the freehold or any other interest to be acquired by the nominee purchaser in accordance with this Chapter”;
for subsection (5) substitute—
In section 39(1) (right to acquire new lease), for “a premium” substitute “the price”.
In section 42(3)(c) (notice to acquire new lease)—
for “premium” substitute “price”;
omit the words from “and, where” to the end.
in subsection (5)—
at the end of paragraph (a) insert “and”;
omit paragraph (b);
in subsection (6), for the words from “premium” to the end substitute “price payable”.
In section 56 (obligation to grant new lease)—
omit subsection (2);
in subsection (3), for the words from “amount of any such premium” to “Schedule 13” substitute “price payable”;
in subsection (4), for “7(2)” substitute “7(2A)”.
Omit section 66 (amendments to the LRA 1967).
In section 70(12) (estate management schemes)—
in paragraph (b), for “under section 9” substitute “in accordance with section 9”;
In section 73(10) (applications for estate management schemes), for the words from the beginning to “it shall” substitute “For the purposes of Schedule 4 to the Leasehold and Freehold Reform Act 2024 as it applies in relation to an acquisition mentioned in section 69(1)(a) or (b), it is to”.
Schedule 2 (special categories of landlords) is amended as follows.
In paragraph 1 (interpretation), omit sub-paragraph (2).
In paragraph 5 (trustees)—
in sub-paragraph (1), for the words from “sum” to “Chapter I” substitute “share payable to the landlord, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, of the purchase price in respect of the acquisition of the interest,”;
in sub-paragraph (2)(a), for “premium” substitute “share of the price payable”.
In paragraph 7 (universities and colleges)—
in sub-paragraph (1), for the words from “sum” to “Chapter I” substitute “share payable to the landlord, as determined under Part 6 of Schedule 4 to the Leasehold and Freehold Reform Act 2024, of the purchase price in respect of the acquisition of the interest”;
in sub-paragraph (2)(a), for “premium” substitute “share of the price payable”.
In paragraph 8 (ecclesiastical landlords)—
in sub-paragraph (2)(a), omit “or premium”;
in sub-paragraph (3)(a)—
in the words before paragraph (i), after “by way of” insert “a share of”;
in paragraph (i), for “for any interest in the property on its acquisition” substitute “in respect of the acquisition of any interest in the property”;
in paragraph (ii), for “a premium” substitute “the price payable”;
in sub-paragraph (4)(b)—
in the words before paragraph (i), after “by way of” insert “a share of”;
in paragraph (i), for “for any interest in property on its acquisition” substitute “in respect of the acquisition of any interest in property”;
in paragraph (ii), for “a premium” substitute “the price payable”.
In paragraph 2(1) (execution of conveyance), omit “in respect of each of those interests”.
In paragraph 3(1) (the appropriate sum)—
in the words before paragraph (a), omit “in respect of any interest”;
in paragraph (b), for “that interest” substitute “the transferor’s interest”.
In paragraph 4 (effect of payment of appropriate sum)—
omit “in respect of that interest”;
omit “for the acquisition of that interest”.
Leasehold enfranchisement and extension: miscellaneous amendments
LRA 1967 and LRHUDA 1993: general
The LRHUDA 1993 is amended as follows.
Omit section 18 (collective enfranchisement: requirement to disclose agreements affecting specified premises).
In consequence—
in section 32 (determination of price for collective enfranchisement), omit subsection (2)(b) and the “and” preceding it;
in section 91 (jurisdiction of tribunals), omit subsection (2)(c).
In section 16 of the LRA 1967 (rights after extension)—
in subsection (1), omit paragraphs (c) and (d);
omit subsection (1A).
In section 59 of the LRHUDA 1993 (rights after extension), omit subsection (2).
In section 16 of the LRA 1967 (rights after extension), omit subsections (6) to (8).
In section 59 of the LRHUDA 1993 (rights after extension), omit subsections (4) and (5).
In section 17 of the LRA 1967 (redevelopment rights)—
in subsection (1)—
for “not earlier than twelve months before” substitute “during the period of 12 months ending with”;
after “date of the tenancy,” insert “or at any time during the period of five years ending with a break date of the new tenancy granted under that section,”;
after subsection (1) insert—
In section 61 of the LRHUDA 1993 (redevelopment rights)—
for subsection (2)(b) substitute— ;
after subsection (2) insert— ;
in subsection (3), for “the term date”, in the first place it occurs, substitute “a break date”.
The LRA 1967 is amended as follows.
In section 16 (rights after extension)—
in subsection (1), omit the words before paragraph (a);
omit subsection (5).
In section 19 of the LRA 1967 (retention of management powers for general benefit of neighbourhood), omit subsections (14) and (15).
The LRA 1967 is amended as follows.
After section 36 insert—
In paragraph 5(2) of Schedule 4A (regulations relating to exclusion of certain shared ownership leases), for paragraphs (a) and (b) substitute— .
Schedule 1 to the LRA 1967 (enfranchisement and extension by sub-tenants) is amended as follows.
In paragraph 11—
after sub-paragraph (1) insert— ;
omit sub-paragraphs (2) to (5).
After paragraph 12 insert—
In Schedule 11 to the LRHUDA 1993 (procedure where competent landlord is not tenant’s immediate landlord), after paragraph 11 insert—
Shared ownership leases and the LRA 1967
The LRA 1967 is amended in accordance with this Part of this Schedule.
In section 1 (tenants entitled to enfranchisement or extension), omit subsection (1A).
In section 3(2) (tenancies deemed to be long tenancies), omit the words from “(other than” to “this Act)”.
Omit section 33A and Schedule 4A (exclusion of certain shared ownership leases).
In section 1 (tenants entitled to enfranchisement or extension), after subsection (6) insert—
Before section 36 insert—
In Schedule 1 (enfranchisement and extension by sub-tenants), after paragraph 12A insert—
In section 37(1) (interpretation of Part 1)—
after paragraph (b) insert— ;
after paragraph (d) insert— .
Shared ownership leases and the LRHUDA 1993
The LRHUDA 1993 is amended in accordance with this Part of this Schedule.
In section 7 (definition of “long lease”)—
at the end of subsection (1)(c) insert “or”;
omit subsection (1)(d);
in subsection (7), omit the definitions of “shared ownership lease” and “total share”.
In section 5 (qualifying tenants), after subsection (2)(c) insert “or .
After section 5 insert—
In section 38(1) (interpretation of Chapter 1 of Part 1), after the definition of “conveyance” insert— .
In section 39(3)(a) (definition of qualifying tenant: application of section 5), after “subsections” insert “(2)(d),”.
In section 77(2)(b) (qualifying tenants for audit rights), for “that section” substitute “section 101”.
In Schedule 9 (grant of leases back to the former freeholder), after paragraph 3 insert—
In Schedule 11 (procedure where competent landlord is not tenant’s immediate landlord), after paragraph 10 insert—
In section 101(1) (general interpretation of Part 1)—
after the definition of “interest” insert— ;
after the entry relating to “lease” and “tenancy” insert— .
Other legislation
Omit these provisions of the CLRA 2002 (which would have required a freehold to be acquired by an RTE company on a collective enfranchisement)—
Schedule 8.
Part 2: consequential amendments to other legislation
In Schedule 4 to the Parliamentary Commissioner Act 1967 (relevant tribunals), in the entry relating to rent assessment committees, omit “and also known as leasehold valuation tribunals for the purpose of determinations pursuant to section 21(1), (2) and (3) of the Leasehold Reform Act 1967”.
In section 1 of the Leasehold Reform Act 1979 (price of enfranchisement under the LRA 1967 not to be made less favourable by reference to superior interest), in subsection (1), after “the price payable on a conveyance for giving effect to that section” insert “, in a case where the price payable is determined under section 9(1) of that Act by virtue of section 7A of that Act,”.
In Schedule 13 to the Local Government Act 1985 (residuary bodies)—
in paragraph 14(aa), at the end insert “, where it applies by virtue of section 7A or 32(5) of that Act”;
omit paragraph 17.
In the Housing Act 1985—
in section 115 (meaning of “long tenancy”)—
for subsection (2)(c) substitute— ;
after subsection (2) insert— ;
omit section 175 (determination of price payable on enfranchisement under LRA 1967 where tenancy created under right to buy).
In section 26 of the LTA 1985 (exception to service charge restrictions for public authority tenants)—
for subsection (3)(c) substitute— ;
after subsection (3) insert—
In Schedule 4 to the Housing and Planning Act 1986 (shared ownership leases), in paragraph 11 (transitional provisions and savings)—
in sub-paragraph (1), at the end insert “, subject to sub-paragraphs (1A) and (2)”;
for sub-paragraph (2) substitute—
In Schedule 17 to the Housing Act 1988 (minor and consequential amendments)—
omit paragraph 40;
omit paragraph 68.
In paragraph 5 of Schedule 10 to the Local Government and Housing Act 1989 (security of tenure for long residential leases)—
in sub-paragraph (4), for the words from “unless” to the end substitute ;
after sub-paragraph (4) insert—
In Schedule 13 to the Local Government (Wales) Act 1994, in paragraph 24—
omit paragraph (b);
in paragraph (c), at the end insert “, where it applies by virtue of section 7A or 32(5) of that Act”.
In the Housing Act 1996—
omit section 109 (collective enfranchisement: valuation);
omit section 110 (lease extension for flats: valuation);
in Schedule 10 (consequential amendments)—
in paragraph 6, omit sub-paragraph (4);
omit paragraph 18;
in Schedule 11 (compensation for postponement of termination in connection with ineffective claims)—
in paragraph 2, omit sub-paragraph (2);
in paragraph 3, omit sub-paragraph (2).
In the CLRA 2002—
omit section 126 (collective enfranchisement: valuation date);
omit section 127 (collective enfranchisement: freeholder’s share of marriage value);
omit section 128 (collective enfranchisement: disregard of marriage value for very long leases);
in section 130 (lease extension for flats: residence test), omit subsection (2);
omit section 132 (lease extension for flats: personal representatives);
omit section 134 (lease extension for flats: valuation date);
omit section 135 (lease extension for flats: freeholder’s share of marriage value);
omit section 136 (lease extension for flats: disregard of marriage value for very long leases);
in Schedule 13 (leasehold valuation tribunals), omit paragraph 15.
In the Finance Act 2003—
in Schedule 4 (stamp duty land tax: chargeable consideration), for paragraph 16C substitute— ;
in Schedule 17A (leases: further provision), in paragraph 10 (tenants’ obligations etc that do not count as chargeable consideration), for sub-paragraph (1)(f) substitute— .
In section 1181 of the Companies Act 2006 (access to constitutional documents of RTE and RTM companies)—
in the heading, omit “RTE and”;
in subsection (1), omit paragraph (a);
in subsection (4), omit the definition of “RTE companies”.
In section 84 of the Enterprise and Regulatory Reform Act 2013 (redress schemes: property management work), in subsection (10), omit the words from “or which” to the end.
In Schedule 3 to the Immigration Act 2014 (excluded residential tenancy agreements), in paragraph 13(2)(a), omit the words from “or which” to the end.
In section 88 of the Consumer Rights Act 2015 (duty of letting agents to publicise fees: supplementary provisions), in subsection (1), in the definition of “long lease”, omit paragraph (a)(ii) and the “or” preceding it.
In Schedule 10 to the Housing and Planning Act 2016 (leasehold enfranchisement and extension: calculations)—
omit paragraph 4;
omit paragraph 5.
In section 28 of the Tenant Fees Act 2019 (interpretation), in subsection (1), in the definition of “long lease”, omit paragraph (b) and the “or” preceding it.
In Schedule 8 to the BSA 2022 (remediation costs), in paragraph 6 (permitted maximum)—
in sub-paragraph (5), omit “total” in each place it occurs;
in sub-paragraph (8)—
for “total” substitute “tenant’s”;
Right to vary lease to replace rent with peppercorn rent
This Schedule has effect for the purpose of conferring on the tenant under a qualifying lease the right to have any obligation under the lease to pay rent varied so that the whole or part of the rent payable becomes and will remain a peppercorn rent.
That right has effect and is exercisable subject to, and in accordance with, the following provisions of this Schedule.
In this Schedule “qualifying lease” means—
a qualifying lease of a house, or
a qualifying lease of a flat.
But a lease is not a qualifying lease if—
the unexpired term of the lease is less than 150 years, or
the lease is an excepted lease for the purposes of the LR(GR)A 2022 under—
section 2(6) to (7B) of that Act (community housing leases), or
section 2(8) to (11) of that Act (home finance plan leases).
A lease is a “qualifying lease of a house” for the purposes of this Schedule if the tenant—
is, by virtue of the lease, entitled to acquire an extended lease under the LRA 1967, or
is not so entitled, but only—
because a requirement in section 1 of the LRA 1967 for the tenancy to be at a low rent is not met,
because a requirement in section 1(1)(a)(i) or (ii) of the LRA 1967 for the house and premises or the tenancy to be above a certain value is not met, or
by virtue of a Crown interest (see section 33 of that Act).
A lease is a “qualifying lease of a flat” for the purposes of this Schedule if the tenant—
is, by virtue of the lease, entitled to acquire an extended lease under the LRHUDA 1993, or
is not so entitled, but only by virtue of a Crown interest (see section 94 of that Act).
If only some of the property demised by a qualifying lease is qualifying property, the right to a peppercorn rent applies only in relation to so much of the rent which relates to the qualifying property (and, accordingly, any rent which relates to the other property demised by the qualifying lease is not affected by this Schedule).
For that purpose, property demised by a lease is “qualifying property” if the entitlement to acquire an extended lease referred to in sub-paragraph (3) or (4) does arise, or would arise (but for the impediment referred to in sub-paragraph (3)(b) or (4)(b)), in relation to that property by virtue of the qualifying lease.
If the qualifying lease is a shared ownership lease, the right to a peppercorn rent applies only in relation to rent payable in respect of the tenant’s share in the demised premises (and, accordingly, any rent which is payable in respect of the landlord’s share in the demised premises is not affected by this Schedule).
For that purpose, if the qualifying lease does not reserve separate rents in respect of the tenant’s share in the demised premises and the landlord’s share in the demised premises, any rent reserved is to be treated as reserved in respect of the landlord’s share.
In this paragraph—
“shared ownership lease” means a lease of premises—
granted on payment of a premium calculated by reference to a percentage of the value of the premises or of the cost of providing them, or
under which the tenant (or the tenant’s personal representatives) will or may be entitled to a sum calculated by reference, directly or indirectly, to the value of the premises;
in relation to a shared ownership lease—
“tenant’s share” means the tenant’s initial share in the premises demised by the lease, plus any additional share or shares in those demised premises which the tenant has acquired;
“landlord’s share” means the share in the premises demised by the lease which is not comprised in the tenant’s share.
A claim by a tenant to exercise the right to a peppercorn rent is made by the tenant giving notice of the claim (a “rent variation notice”) to—
the landlord under the qualifying lease, and
any other party to the qualifying lease.
But a rent variation notice is of no effect if it is given at a time when— which relates to the qualifying lease has effect.
a lease extension notice,
a lease enfranchisement notice, or
another rent variation notice,
Paragraph 4 makes provision about the suspension of a rent variation notice.
A rent variation notice must state whether the right to a peppercorn rent applies—
to all of the rent under the qualifying lease, or
in accordance with paragraph 2(5), only to rent which relates to qualifying property demised by the qualifying lease.
If the notice states that the right applies only to rent which relates to qualifying property, the rent variation notice must also describe that qualifying property.
A rent variation notice must also specify—
the premium which the tenant is proposing to pay for the rent reduction, and
any other variations which need to be made to the lease in consequence of the reduction of the rent in accordance with this Schedule.
A rent variation notice— as if it were an estate contract.
is registrable under the Land Charges Act 1972, or
may be the subject of a notice under the Land Registration Act 2002,
Where a rent variation notice is given, the rights and obligations of the tenant are assignable with, but are not capable of subsisting apart from, the qualifying lease or that lease so far as it demises qualifying property (see paragraph 2(5) and (6)); and, if the qualifying lease or that lease so far as it demises qualifying property is assigned—
with the benefit of the notice, any reference in this Schedule to the tenant is to be construed as a reference to the assignee;
without the benefit of the notice, the notice is to be deemed to have been withdrawn by the tenant as at the date of the assignment.
If a rent variation notice is the subject of a registration or notice of the kind mentioned in sub-paragraph (7), the notice is binding on— and any reference in this Schedule to the landlord is to be construed accordingly.
any successor in title to the whole or part of the landlord’s interest under the qualifying lease, and
any person holding any interest granted out of the landlord’s interest;
This paragraph applies if conditions A and B are met.
Condition A is met if—
a rent variation notice is current at the time when a collective enfranchisement notice is given, or
a collective enfranchisement notice is current at the time when a rent variation notice is given.
Condition B is met if—
the rent variation notice relates to premises to which the claim for collective enfranchisement relates, and
the tenant under the lease to which the rent variation notice relates is not a participating tenant in relation to the claim for collective enfranchisement.
The operation of the rent variation notice is suspended during the currency of the claim for collective enfranchisement; and so long as it is so suspended no further notice may be given, and no application may be made, under this Schedule with a view to resisting or giving effect to the tenant’s claim for a peppercorn rent.
Where the operation of the rent variation notice is suspended by virtue of this paragraph, the landlord must, not later than the end of the relevant response period, give the tenant a notice informing the tenant of—
the suspension,
the date on which the collective enfranchisement notice was given, and
the name and address of the nominee purchaser for the time being appointed in relation to the claim for collective enfranchisement.
The landlord must give that notice—
as soon as is reasonably practicable, if a rent variation notice is current when a collective enfranchisement notice is given, or
before the end of the period for responding specified in the rent variation notice in accordance with paragraph 5(7), if a collective enfranchisement notice is current when a rent variation notice is given.
Where, as a result of the claim for collective enfranchisement ceasing to be current, the operation of the rent variation notice ceases to be suspended by virtue of this paragraph—
the landlord must, as soon as possible after becoming aware of the circumstances by virtue of which the claim for collective enfranchisement has ceased to be current, give the tenant a notice informing the tenant that the operation of the rent variation notice is no longer suspended as from the date when the claim for collective enfranchisement ceased to be current;
any time period for performing any action under this Schedule (including the response period) which was running when the rent variation notice was suspended begins to run again, for its full duration, from and including the date when the claim for collective enfranchisement ceased to be current.
In this paragraph— “claim for collective enfranchisement” means the claim to which the collective enfranchisement notice relates; “collective enfranchisement notice” means a notice under section 13 of the LRHUDA 1993 (notice of claim to exercise right to collective enfranchisement).
This paragraph applies if the landlord is given a rent variation notice by the tenant.
Before the end of the response period, the landlord must give the tenant a notice (a “counter-notice”) which states either— and which also specifies an address in England and Wales at which notices may be given to the landlord under this Schedule.
that the landlord admits that, on the relevant date, the tenant had the right to a peppercorn rent, or
that, for reasons specified in the notice, the landlord does not admit that the tenant had that right on that date,
If the counter-notice admits the tenant’s right, the admission is binding on the landlord as to the tenant’s right to a peppercorn rent, unless the landlord shows that misrepresentation or concealment of material facts induced the landlord to make the admission.
If the counter-notice admits the tenant’s right, the counter-notice must also state either— and must also give the landlord’s response to the proposed premium, and any other consequential variations to the lease, specified in the rent variation notice in accordance with paragraph 3(6).
that the landlord admits that the right applies to the rent in respect of which the right is claimed, or
that, for reasons specified in the notice, the landlord does not admit that the right applies to that rent,
The “rent in respect of which the right is claimed” is—
all of the rent under the qualifying lease, if the rent variation notice includes a statement under paragraph 3(4)(a), or
the rent which relates to the property described in the rent variation notice in accordance with paragraph 3(5), if it includes a statement under paragraph 3(4)(b).
If the counter-notice admits that the right applies to the rent in respect of which the right is claimed, the admission is binding on the landlord as to that rent, unless the landlord shows that misrepresentation or concealment of material facts induced the landlord to make the admission.
The “response period” is a period (for the landlord to give counter-notice) specified in the rent variation notice which begins with the day on which the notice is given.
The rent variation notice may not specify a period of less than two months or more than six months.
This paragraph applies if the landlord is given a rent variation notice by the tenant.
If the landlord gives the tenant a counter-notice before the end of the response period which disputes— the landlord or tenant may apply to the appropriate tribunal to determine the matters in dispute.
that the tenant had the right to a peppercorn rent,
that the right applies to the rent in respect of which it is claimed,
the amount of the premium which the tenant is proposing to pay, or
the consequential variations of the lease proposed by the tenant,
Any application under sub-paragraph (2) must be made before the end of the period of 6 months beginning with the day after the day on which the counter-notice is given.
If the landlord does not give the tenant a counter-notice before the end of the response period, the tenant may apply to the appropriate tribunal to determine—
whether the tenant has the right to a peppercorn rent,
what rent that right applies in respect of,
the amount of the premium which the tenant is to pay, or
the variations of the lease that are to be made.
Any application under sub-paragraph (4) must be made before the end of the period of 6 months beginning with the day after the last day of the response period.
This paragraph applies if a rent variation notice becomes enforceable.
The landlord and the tenant, and any other party to the qualifying lease, must, upon the payment of the required premium by the tenant to the landlord, vary the qualifying lease by making the required peppercorn rent variation.
A rent variation notice is “enforceable” from the time when the landlord admits or the appropriate tribunal determines—
that the tenant has the right to a peppercorn rent, and
all the terms on which the lease is to be varied, including what premium is payable (whether or not any shares of the premium that may be payable under paragraph 8(9) have been determined).
The “required peppercorn rent variation” is the variation of the lease as admitted by the landlord or determined by the appropriate tribunal (see sub-paragraph (3)(b)).
The “required premium” is the value of the right to receive rent over the remaining term of the qualifying lease.
Except in the case of a lease falling within paragraph 8, 10 or 11 of Schedule 4 (market rack rent lease, lease already renewed under the LRA 1967 or business tenancy), that value is an amount equal to the term value of the lease as determined in accordance with paragraph 25 of Schedule 4.
In this paragraph “relevant property” means the property demised by the qualifying lease to which the right to a peppercorn rent applies (see paragraph 2(6)).
This paragraph applies if, at the time when a rent variation notice is given, there are one or more qualifying intermediate leases.
For the purposes of this paragraph a lease is a “qualifying intermediate lease” if—
the lease demises the whole or a part of the property to which the rent variation notice relates,
the lease is immediately superior to—
the lease to which the rent variation notice relates, or
one or more other leases that are themselves qualifying intermediate leases,
relevant rent is payable under the lease, and
that relevant rent is more than a peppercorn rent.
The landlord or the tenant under a qualifying intermediate lease may, by giving notice to the relevant landlord or landlords before the variation of the lease to which the rent variation notice relates, require the rent payable under the qualifying intermediate lease to be reduced in accordance with sub-paragraphs (6) to (8).
If— the rent payable under the other qualifying intermediate lease or leases is also to be reduced in accordance with sub-paragraphs (6) to (8).
under sub-paragraph (3) the rent under a lease is required to be reduced in accordance with this paragraph, and
that lease is superior to one or more other qualifying intermediate leases,
The landlord and tenant under a qualifying intermediate lease must vary the lease—
to give effect to a reduction of the rent in accordance with sub-paragraphs (6) to (8), and
to remove any terms of the lease which provide for an increase in the rent, or part of the rent, so reduced.
If the whole of the rent under a qualifying intermediate lease is relevant rent, the rent under that lease is to be reduced to a peppercorn rent.
If only part of the rent under a qualifying intermediate lease is relevant rent—
that part of the rent is to be reduced to zero, and
the total rent is to be reduced accordingly.
But the amount of the reduction in a person’s rental liabilities as tenant is limited to the amount of the reduction in that person’s rental income as landlord; and here—
“reduction in a person’s rental liabilities as tenant” means the reduction in accordance with sub-paragraph (6) or (7) of the rent payable by the person as tenant under the qualifying intermediate lease;
“reduction in that person’s rental income as landlord” means the amount (or total amount) of the relevant reduction (or reductions) in rent payable to that person as landlord of one or more other reduced rent leases.
Each eligible landlord is entitled to be paid a share of the required premium (see paragraph 7).
An eligible landlord’s share of the required premium is to be determined using this formula— required premium × loss suffered by the eligible landlord total losses suffered by all eligible landlords where the loss suffered by an eligible landlord is the loss which that landlord suffers as a result of the relevant reduction in the rent of the lease by virtue of which they are an eligible landlord (taking into account any relevant reduction in the rent of a lease of which they are the tenant).
In this paragraph— “eligible landlord” means the landlord of a lease whose rent is subject to a relevant reduction; “reduced rent lease” means— the lease to which the rent variation notice relates, or a qualifying intermediate lease; “relevant landlord” means— the landlord under the qualifying lease, and any superior landlord who must be given a copy of the rent variation notice in accordance with paragraph 16 or 17; “relevant reduction” means— in relation to the lease to which the rent variation notice relates, a reduction resulting from that tenancy being varied in accordance with the other provisions of this Schedule; in relation to a qualifying intermediate lease, a reduction resulting from this paragraph; “relevant rent” means rent that has been, or would properly be, apportioned to the whole or a part of the property to which the rent variation notice relates.
The appropriate tribunal may determine any matter arising under paragraph 8 (reduction of rent under intermediate leases on grant of a new lease), including what rent under an intermediate lease is apportioned to the qualifying property (see paragraph 2(6)).
In relation to paragraph 8—
if the landlord under a qualifying intermediate lease cannot be found or their identity cannot be ascertained, the appropriate tribunal may make such order as it thinks fit, including—
an order dispensing with the requirement to give notice under paragraph 8(3) to that landlord, or
an order that such a notice has effect and has been property served even though it has not been served on that landlord;
the appropriate tribunal may make an order appointing a person to vary a lease in accordance with paragraph 8 on behalf of the landlord or tenant;
if the appropriate tribunal makes a determination that a notice under paragraph 8(3) was of no effect, it may—
determine whether another landlord or tenant could have given such a notice, and
if it determines that they could have done so, order that paragraph 8 is to apply as if they had done so.
The variation of a lease on behalf of a party in consequence of an order under sub-paragraph (2)(b) has the same force and effect (for all purposes) as if it had been executed by that party.
This paragraph applies if the qualifying lease is not varied in accordance with paragraph 7(2).
The appropriate tribunal may, on an application made by the tenant or the landlord, make—
such order as it thinks fit with respect to the making of that variation of the qualifying lease, or
an order declaring that the rent variation notice is to cease to have effect.
An order under this paragraph may appoint a person to execute the variation of the lease on behalf of a party to the variation; and a variation executed in consequence of such an order has the same force and effect (for all purposes) as if it had been executed by that party.
Any application for an order under sub-paragraph (2) must be made within the period of four months beginning with the day on which the rent variation notice becomes enforceable (within the meaning of paragraph 7).
On an application made by the tenant under a qualifying lease, the appropriate tribunal may make a determination that the landlord under, or another party to, a qualifying lease cannot be found or their identity cannot be ascertained.
The following provisions of this paragraph apply if the appropriate tribunal makes such determination.
The appropriate tribunal may make such order as it thinks fit including—
an order dispensing with the requirement to give notice under paragraph 3 to that landlord or other party, or
an order that such a notice has effect and has been properly served even though it has not been served on that landlord or other party.
If the appropriate tribunal is satisfied that the tenant has the right to a peppercorn rent, the tribunal may make such order as it thinks fit with respect to the variation of the qualifying lease to give effect to that right.
An order under sub-paragraph (4) may appoint a person to execute the variation of the lease on behalf of a party to the variation; and a variation executed in consequence of such an order has the same force and effect (for all purposes) as if it had been executed by that party.
Before making a determination or order under this paragraph, the appropriate tribunal may require the tenant to take such further steps by way of advertisement or otherwise as the tribunal thinks proper for the purpose of tracing the person in question.
If, after an application is made under this paragraph and before the lease is varied to give effect to the right to a peppercorn rent, the landlord or other party is traced—
no further proceedings shall be taken with a view to a lease being varied in accordance with this paragraph,
the rights and obligations of all parties shall be determined as if the tenant had, at the date of the application, duly given the rent variation notice, and
the appropriate tribunal may give such directions as it thinks fit as to the steps to be taken for giving effect to the right to a peppercorn rent, including directions modifying or dispensing with any of the requirements of this Schedule or any regulations.
A rent variation notice ceases to have effect from the time when—
the tenant gives notice to the landlord, before the lease is varied in pursuance of the rent variation notice, that the tenant withdraws the notice (a “notice of withdrawal”);
the qualifying lease to which the notice relates is varied in accordance with the notice so that any rent under it is a peppercorn rent;
a lease enfranchisement notice or lease extension notice which relates to the qualifying lease is given;
any order setting aside the notice is made by the appropriate tribunal or a court;
the appropriate tribunal determines on an application under paragraph 6 that the tenant does not have the right to a peppercorn rent;
the period of six months mentioned in paragraph 6(3) or (5) ends, where the application mentioned there could be made, but is not made before the end of that period;
the period of four months mentioned in paragraph 10(4) ends, where the application mentioned there could be made, but is not made before the end of that period;
it ceases to have effect in accordance with any legislation applying to this Schedule by virtue of paragraph 20 or regulations under paragraph 21(3).
If a rent variation notice ceases to have effect, the landlord is under no obligation under this Schedule in respect of the notice as it previously had effect, except for any obligation arising under any provision of the LRHUDA 1993 that applies by virtue of paragraph 20.
A tenant is not liable for any costs incurred by any other person as a result of the tenant’s exercise of the right to a peppercorn rent, except as referred to in—
sub-paragraph (4),
paragraph 14 (liability where claim ceases to have effect), and
paragraph 15 (liability where tenant obtains the variation of the lease).
A former tenant is not liable for any costs incurred by any other person as a result of the former tenant’s claim to the right to a peppercorn rent, except as referred to in sub-paragraphs (4) and (5).
A lease, transfer, contract or other arrangement is accordingly of no effect to the extent it would provide to the contrary.
A tenant or former tenant is liable for costs incurred by another person in connection with proceedings before a court or tribunal if—
the court or tribunal has power under this Schedule or another enactment to order that the tenant or former tenant pay those costs, and
the court or tribunal makes such an order.
A former tenant is liable for costs incurred by a successor in title to the extent agreed between the former tenant and that successor in title.
In this paragraph and paragraphs 14 and 15— “claim” includes an invalid claim; “former tenant” means a person who was a tenant making a claim to the right to a peppercorn rent, but is no longer a tenant.
A tenant is liable to the landlord for a prescribed amount in respect of non-litigation costs if the tenant’s claim ceases to have effect by virtue of paragraph 12(1), unless it ceases to have effect by virtue of—
paragraph 12(1)(b), or
paragraph 12(1)(h) because of the application of section 55 of the LRHUDA 1993.
For the purposes of this paragraph—
“prescribed” means prescribed by, or determined in accordance with, regulations made—
in relation to England, by the Secretary of State;
in relation to Wales, by the Welsh Ministers;
“non-litigation costs” are costs that are or could be incurred by a landlord as a result of a claim under this Schedule other than in connection with proceedings before a court or tribunal;
where a claim ceases to have effect by virtue of a person who was a tenant assigning their lease without assigning the claim under paragraph 3(8), “tenant” includes that person.
A statutory instrument containing regulations under this paragraph is subject to the negative procedure.
A tenant is liable to the landlord for the amount referred to in sub-paragraph (2) if—
the tenant makes a claim to the right to a peppercorn rent,
the rent is reduced in consequence of the claim,
the premium payable by the tenant for the variation of the lease is less than a prescribed amount,
the landlord incurs costs as a result of the claim,
the costs are incurred other than in connection with proceedings before a court or tribunal,
the costs incurred by the landlord are reasonable, and
the costs are more than the premium payable.
The amount is the difference between—
the premium payable by the tenant, and
the costs incurred by the landlord, or, if those costs exceed a prescribed amount, that prescribed amount.
In this paragraph “prescribed” means prescribed by, or determined in accordance with, regulations made—
in relation to England, by the Secretary of State;
in relation to Wales, by the Welsh Ministers.
A statutory instrument containing regulations under this paragraph is subject to the negative procedure.
This paragraph applies if the landlord is given a rent variation notice by the tenant.
The landlord must give a copy of the rent variation notice to any person whom the landlord believes is a superior landlord.
But that duty does not apply if the landlord has been notified under paragraph 17(5)(b) that a copy of the rent variation notice has been given to that person.
The landlord must comply with that duty as soon as reasonably practicable after—
being given the rent variation notice, or
forming the belief that a person is a superior landlord (if that is after the rent variation notice was given).
If the landlord gives a copy of the rent variation notice to a person under sub-paragraph (2), the landlord must, together with the copy, give that person the names of—
all of the persons to whom the landlord has given a copy of the notice under this paragraph, and
any other persons that the landlord is aware have been given a copy of the notice.
If the landlord fails to comply with a duty in this paragraph, the landlord is liable in damages for any loss suffered by any other person as a result of the failure.
This paragraph applies if a superior landlord is given a copy of a rent variation notice under paragraph 16 or this paragraph.
The superior landlord (the “forwarding landlord”) must give a copy of the rent variation notice to any person whom the forwarding landlord believes is a superior landlord.
But that duty does not apply if the forwarding landlord has been notified under paragraph 16 or this paragraph that a copy of the rent variation notice has been given to that person.
The forwarding landlord must comply with that duty as soon as reasonably practicable after—
being given the copy of the rent variation notice, or
forming the belief that a person is a superior landlord (if that is after the copy of the rent variation notice was given).
If the forwarding landlord gives a copy of the rent variation notice to a person under sub-paragraph (2), the forwarding landlord—
must, together with the copy, give that person the names of—
all of the persons to whom the forwarding landlord has given a copy of the notice under this paragraph, and
any other persons that the forwarding landlord is aware have been given a copy of the notice;
must notify the landlord that the forwarding landlord has given the copy to that person.
If the forwarding landlord fails to comply with a duty in this paragraph, the forwarding landlord is liable in damages for any loss suffered by any other person as a result of the failure.
This paragraph applies if there are one or more qualifying intermediate leases of property to which a rent variation notice relates.
The following are binding on the other landlords and on their interests in the property to which the rent variation notice relates or any other property—
any notice given under this Schedule by the immediate landlord to the tenant,
any agreement for the purposes of this Schedule between the immediate landlord and the tenant, and
any determination of the appropriate tribunal under this Schedule in proceedings between the immediate landlord and the tenant.
The immediate landlord is not liable to any of the other landlords for any loss or damage caused by any act or omission in the exercise or intended exercise of the authority given by sub-paragraph (2) if the immediate landlord acts in good faith and with reasonable care and diligence.
In this paragraph— “immediate landlord” means the immediate landlord under the lease to which the rent variation notice relates (and to which the rent variation notice must be given); “other landlord” means the landlord under a qualifying intermediate lease of property to which the rent variation notice relates; “qualifying intermediate lease” has the meaning given in paragraph 8.
This paragraph applies if—
there are one or more qualifying intermediate leases of property to which a rent variation notice relates, and
notice is given under paragraph 8(3).
The immediate landlord must conduct the response to the tenant’s claim for a rent reduction on their own behalf and on behalf of the affected other landlords, including by—
agreeing the terms of variation of the qualifying lease,
agreeing the amount of the required premium,
receiving the whole of the required premium and (where it is so received) holding the required premium for themselves and the affected other landlords pending determination of the shares of the required premium in accordance with paragraph 8(9), and
conducting all proceedings arising out of the rent variation notice (whether the proceedings are for resisting or giving effect to the claim).
If the immediate landlord receives the whole of the required premium, the immediate landlord’s written receipt for payment of that premium is a complete discharge to the tenant.
Sub-paragraphs (2)(c) and (3) do not apply if the price payable is required to be paid into the tribunal by virtue of sub-paragraph (6)(c).
The immediate landlord is not liable to any of the affected other landlords for any loss or damage caused by any act or omission in compliance or intended compliance with the duty under sub-paragraph (2) if the immediate landlord acts in good faith and with reasonable care and diligence.
Any affected other landlord may—
apply to the appropriate tribunal for directions as to the manner in which the immediate landlord is to exercise the authority given by sub-paragraph (2);
be separately represented in any proceedings in which the amount of the required premium is being determined;
by giving notice to the tenant and the immediate landlord, require the tenant to pay into the tribunal the whole of the required premium.
Each of the affected other landlords must make such contribution as is just to costs and expenses which are properly incurred by the immediate landlord in connection with the claim by the tenant under this Schedule but which are not recoverable or recovered from the tenant.
The appropriate tribunal—
may determine any matter arising in relation to the amount of any costs payable by virtue of sub-paragraph (7), and
where it has determined such an amount of costs, may make an order requiring a person to pay those costs.
The court or the appropriate tribunal may order any affected other landlord to pay to the immediate landlord the costs, or a contribution to the costs, incurred by the immediate landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (6)(c) if—
that affected other landlord imposed the requirement, and
the immediate landlord shows that it was unreasonable for that affected other landlord to impose the requirement.
The court or the appropriate tribunal may order the immediate landlord to pay to any affected other landlord the costs, or a contribution to the costs, incurred by that affected other landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (6)(c) if—
that affected other landlord imposed the requirement, and
that affected other landlord shows that the requirement was imposed because of unreasonable conduct by the immediate landlord.
In this paragraph— “affected other landlord” means the landlord under a qualifying intermediate lease of which the rent is to be reduced in accordance with paragraph 8 (whether by virtue of paragraph 8(3) or (4)); “immediate landlord” means the immediate landlord under the lease to which the rent variation notice relates (and to which the rent variation notice must be given); “qualifying intermediate lease” has the meaning given in paragraph 8; “required premium” means the required premium payable under paragraph 7.
The provisions of the LRHUDA 1993 set out in the first column of the table below (the “applied provisions”) are to apply for the purposes of this Schedule (whether in its application to a house or flat).
In its application by virtue of this paragraph, an applied provision has effect subject to—
any specific modification set out in the second column of the entry in the table below which relates to that provision, and
the general modifications set out in sub-paragraph (3) (so far as they are applicable to the provision).
A reference of a kind set out in the first column of an entry in the following table in an applied provision (however expressed) has effect as a reference of the kind set out in the second column of that entry—
The Secretary of State may by regulations make provision for giving effect to the rights of a tenant under this Schedule.
Regulations under sub-paragraph (1) may (in particular) make provision about notices under this Schedule, including provision about—
the giving of notices under this Schedule;
the form of notices under this Schedule;
information to be included in notices under this Schedule.
The regulations may (in particular) provide that notice which does not comply with provision made in the regulations—
is not a notice under this Schedule, or
is to cease to have effect.
The Secretary of State may, by regulations, amend paragraph 20 so as to—
change the provisions of the LRHUDA 1993 which are applied by that paragraph;
provide for, or change, the modifications subject to which a provision applied by that paragraph has effect.
A statutory instrument containing regulations under this paragraph is subject to the negative procedure.
In this paragraph “notice under this Schedule” means—
a rent variation notice;
a counter-notice;
a notice of withdrawal.
In this Schedule— “appropriate tribunal” means— in respect of property wholly in Wales, a leasehold valuation tribunal; in respect of other property, the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal; “counter-notice” has the meaning given in paragraph 5; “landlord” is to be read subject to paragraph 3(9); “lease enfranchisement notice” means a notice under— section 8 of the LRA 1967 (notice of desire to acquire freehold of house), or section 13 of the LRHUDA 1993 (notice of claim to exercise right to collective enfranchisement); and a lease enfranchisement notice under section 13 of the LRHUDA 1993 relates to the qualifying lease if the tenant under the lease is one of the participating tenants in relation to the claim under the notice; “lease extension notice” means a notice under— section 14 of the LRA 1967 (notice of desire to extend lease of house), or section 42 of the LRHUDA 1993 (notice of claim to exercise right to acquire new lease of flat); “notice” means notice in writing; “notice of withdrawal” has the meaning given in paragraph 12; “peppercorn rent” has the same meaning as in the LR(GR)A 2022 (see section 4(3) of that Act); “peppercorn rent variation” means the variation of a lease as mentioned in paragraph 1(1); “qualifying lease”, “qualifying lease of a flat” and “qualifying lease of a house” have the meanings given in paragraph 2; “relevant date”, in relation to a claim to exercise the right to a peppercorn rent, means the date on which the rent variation notice is given; “rent” (except in the expression “low rent”) has the same meaning as in the LR(GR)A 2022 (see section 22(2) and (3) of that Act); “rent variation notice” has the meaning given in paragraph 3; “response period” has the meaning given in paragraph 5; “right to a peppercorn rent” means the right conferred by this Schedule as described in paragraph 1; “tenant” is to be read subject to paragraph 3(8).
For the purposes of this Schedule an order of the appropriate tribunal becomes final—
if not appealed against, on the expiry of the time for bringing an appeal, or
if appealed against and not set aside in consequence of the appeal, at the time when the appeal and any further appeal is disposed of—
by the determination of it and the expiry of the time for bringing a further appeal (if any), or
by its being abandoned or otherwise ceasing to have effect.
Part 4: consequential amendments
Amendments consequential on section 68
The LTA 1985 is amended in accordance with paragraphs 2 to 13.
In section 5 (information to be contained in rent books)—
in subsection (3)—
in the words before paragraph (a), for “Secretary of State” substitute “appropriate authority”;
in paragraph (b), omit the words from “which shall” to the end;
after subsection (3) insert—
In section 10B(8) (regulations under section 10A), for the words from “may not be made” to the end substitute “is subject to the affirmative procedure”.
In section 20 (consultation requirements)—
in subsection (4), for “Secretary of State” substitute “appropriate authority”;
in subsection (5), for “Secretary of State” substitute “appropriate authority”.
In section 20ZA (consultation requirements: supplementary)—
in subsection (3), for “Secretary of State” substitute “appropriate authority”;
in subsection (4), for “Secretary of State” substitute “appropriate authority”;
in subsection (7), omit the words from “which shall” to the end;
after subsection (7) insert—
In section 20E(4) (regulations under section 20D) for the words from “annulment” to the end substitute “the negative procedure”.
In section 20F(7) (limitation of service charges: excluded costs for higher risk buildings), for the words from “annulment” to the end substitute “the negative procedure”.
In section 29 (meaning of “recognised tenants’ association”)—
in subsection (5), for “Secretary of State” substitute “appropriate authority”;
in subsection (6)(b), omit the words from “which shall” to the end;
after subsection (6) insert—
In section 29A (tenants’ associations: power to request information about tenants), in subsection (7), for the words from “annulment” to the end substitute “the negative procedure”.
In section 30D(9) (liability for building safety costs), for the words from “may not be made” to the end substitute “is subject to the affirmative procedure”.
In section 31 (reserve power to limit rents)—
in subsection (1), for “Secretary of State” substitute “appropriate authority”;
in subsection (4), omit the words from “which shall” to the end;
after subsection (4) insert—
In section 35 (application to Isles of Scilly)—
in subsection (2), omit the words from “which shall” to the end;
after subsection (2) insert—
In paragraph 7(5) of the Schedule (right to notify insurers of possible claim), for “Secretary of State” substitute “appropriate authority”.
Other consequential amendments
The LTA 1985 is amended in accordance with paragraphs 15 to 17.
In section 23A (effect of change of landlord)—
in subsection (4)—
omit paragraph (b) and the “but” preceding it;
omit paragraph (c).
In section 26 (exception for tenants of certain public authorities)—
in subsection (1)—
after subsection (1) insert—
In Schedule 5 to the Housing and Planning Act 1986 (miscellaneous amendments), omit paragraph 9(2).
In Schedule 2 to the LTA 1987 (amendments to the LTA 1985)—
omit paragraph 1 and the italic heading preceding it;
omit paragraph 5 and the italic heading preceding it;
omit paragraph 6 and the italic heading preceding it.
In Schedule 11 to the Local Government and Housing Act 1989 (minor and consequential amendments), omit paragraph 91.
In section 83 of the Housing Act 1996 (determination of reasonableness of service charges), omit subsection (4).
In Schedule 1 to the Housing Grants, Construction and Regeneration Act 1996 (consequential amendments), omit paragraph 12.
In the CLRA 2002—
omit section 152 (statements of account);
omit section 153 (notice to accompany demands for service charges);
omit section 154 (inspection etc of documents);
in section 160 (third parties with management responsibilities), omit subsection (4)(d);
in Schedule 7 (amendment of references to landlords)—
omit paragraph 4(4);
omit paragraph 5(4);
in Schedule 9 (meaning of service charge and management), omit paragraph 7;
in Schedule 10 (minor and consequential amendments)—
omit paragraph 1;
omit paragraph 3;
omit paragraph 4;
omit paragraph 6;
omit paragraph 8;
omit paragraph 9;
omit paragraph 10;
omit paragraph 11;
omit paragraph 12;
omit paragraph 13.
In Schedule 15 to the Housing Act 2004 (minor and consequential amendments), omit paragraph 32 and the italic heading preceding it.
In the Housing and Regeneration Act 2008 (service charges)—
in Schedule 12, omit paragraphs 1 to 10;
in Schedule 16, omit the entry for the LTA 1985.
In Schedule 9 to the Crime and Courts Act 2013, in paragraph 52(2) (amendment of references to county court), in the entry for the LTA 1985, omit “section 20C(2), and”.
In the Housing (Wales) Act 2014 (anaw 7), in the English language text and in the Welsh language text, omit section 128 (exception from offence for social housing).
In the Housing and Planning Act 2016, omit section 131 (limitation of administration charges: costs of proceedings).
In the BSA 2022—
in section 112 (implied terms in leases), omit subsections (4) and (7);
in Schedule 8 (remediation costs), omit paragraph 17.
Redress schemes: financial penalties
Before imposing a financial penalty on a person under section 105, an enforcement authority must give the person notice of its proposal to do so (a “notice of intent”).
The notice of intent must be given before the end of the period of 6 months beginning with the first day on which the enforcement authority has sufficient evidence of the conduct to which the financial penalty relates.
But if the person is continuing to engage in the conduct on that day, and the conduct continues beyond the end of that day, the notice of intent may be given—
at any time when the conduct is continuing, or
within the period of 6 months beginning with the last day on which the conduct occurs.
The notice of intent must set out—
the date on which the notice of intent is given,
the amount of the proposed financial penalty,
the reasons for proposing to impose the penalty, and
information about the right to make representations under paragraph 2.
A person who is given a notice of intent may make written representations to the enforcement authority about the proposal to impose a financial penalty.
Any representations must be made within the period of 28 days beginning with the day after the day on which the notice of intent was given to the person (“the period for representations”).
After the end of the period for representations the enforcement authority must—
decide whether to impose a financial penalty on the person, and
if it decides to do so, decide the amount of the penalty.
If the enforcement authority decides to impose a financial penalty on the person, it must give a notice to the person (a “final notice”) imposing that penalty.
The final notice must require the penalty to be paid within the period of 28 days beginning with the day after the day on which the notice was given.
The final notice must set out—
the date on which the final notice is given,
the amount of the financial penalty,
the reasons for imposing the penalty,
information about how to pay the penalty,
the period for payment of the penalty,
information about rights of appeal, and
the consequences of failure to comply with the notice.
An enforcement authority that gives a notice of intent or final notice may at any time—
withdraw the notice of intent or final notice, or
reduce an amount specified in the notice of intent or final notice.
The power in sub-paragraph (1) is to be exercised by giving notice in writing to the person to whom the notice was given.
A person to whom a final notice is given may appeal to the First-tier Tribunal against—
the decision to impose the penalty, or
the amount of the penalty.
An appeal under this paragraph must be brought within the period of 28 days beginning with the day after the day on which the final notice is given to the person.
If a person appeals under this paragraph, the final notice is suspended until the appeal is finally determined, withdrawn or abandoned.
An appeal under this paragraph—
is to be a re-hearing of the enforcement authority’s decision, but
may be determined having regard to matters of which the enforcement authority was unaware.
On an appeal under this paragraph the First-tier Tribunal may quash, confirm or vary the final notice.
The final notice may not be varied under sub-paragraph (5) so as to impose a financial penalty of more than the enforcement authority could have imposed.
This paragraph applies if a person fails to pay the whole or any part of a financial penalty which, in accordance with this Schedule, the person is liable to pay.
The enforcement authority which imposed the financial penalty may recover the penalty or part on the order of the county court as if it were payable under an order of that court.
Where an enforcement authority imposes a financial penalty under section 105, it may apply the proceeds towards meeting the costs and expenses (whether administrative or legal) incurred in, or associated with, carrying out any of its functions under this Part of this Act.
Any proceeds of a financial penalty imposed under section 105 by an enforcement authority other than the Secretary of State which are not applied in accordance with sub-paragraph (1) must be paid to the Secretary of State.
Part 6: amendments to other Acts
The Local Government Act 1974 is amended in accordance with paragraphs 2 to 5.
Section 33 (consultation between Local Commissioner and other Commissioners and Ombudsmen) is amended as follows.
In subsection (1)—
before paragraph (ba) insert— ;
in the words after paragraph (c)—
for “or Ombudsman” substitute “, Ombudsman or head of leasehold and estate management redress”;
before “the Public Services Ombudsman (Wales) Act 2005” insert “the leasehold and estate management redress scheme,”.
In subsection (2)—
before “the Public Services Ombudsman for Wales” insert “the head of leasehold and estate management redress,”;
for “Commissioner or that Ombudsman” substitute “person”.
Before subsection (4) insert—
In subsection (4)—
for “or (3B)” substitute “, (3B) or (3C)”;
for “or the new homes ombudsman scheme” substitute “, the new homes ombudsman scheme or a leasehold and estate management redress scheme”.
Section 33ZA (collaborative working between Local Commissioners and others) is amended as follows.
In subsection (1)—
in paragraph (c), omit the final “or”;
at the end of paragraph (d), insert .
In subsection (1A) for “or (d)” substitute “, (d) or (e)”.
After subsection (1A) insert—
In subsection (3)—
in paragraph (c), omit the final “or”;
at the end of paragraph (d), insert ;
in the words after paragraph (d), for “or (d)” substitute “, (d) or (e)”.
In section 33ZB (arrangements for provision of administrative and other services), in subsection (4)—
in paragraph (e), omit the final “and”;
at the end of paragraph (f), insert
In section 34 (interpretation) in subsection (1), at the appropriate places insert— .
Paragraph 10A of Schedule 2 to the Housing Act 1996 (housing complaints: collaborative working with Local Commissioners) is amended as follows.
In sub-paragraph (1)—
for “or the new homes ombudsman” substitute “, the new homes ombudsman or an individual who investigates complaints under a leasehold and estate management redress scheme”;
for the words from “that Commissioner” to the end substitute “any one or more of them”.
After sub-paragraph (1) insert—
In sub-paragraph (3)—
for “or the new homes ombudsman” substitute “, the new homes ombudsman or an individual who investigates complaints under a leasehold and estate management redress scheme (or two or more of them)”;
for the words from “that Commissioner” to the end substitute “them”.
In sub-paragraph (4) for “a Local Commissioner, the new homes ombudsman (or both)” substitute “one or more persons”.
After sub-paragraph (5) insert—
In paragraph 3(5) of Schedule 3 to the BSA 2022—
in paragraph (c), omit the final “or”;
at the end of paragraph (d) insert .