UK: The Introduction of Further Protection and Rights for Long Residential Leaseholders

The Commonhold and Leasehold Reform Act 2002 received Royal Assent in May 2002. Since that date, various Commencement Orders have brought its provisions into force in four stages. This month the Office of the Deputy Prime Minister has announced that the next phase of the provisions in the 2002 Act will come into force on 28 February 2005 with the result that long leaseholders will have further improved protection and rights.

• Landlords will have to send tenants a written demand for the payment of ground rent. Until this has been issued in a prescribed form and served on tenants, they will not be liable to pay ground rent and therefore landlords will not be able to impose penalties for late payment or take enforcement action. The date for payment must be between 30 and 60 days after giving notice and not before the date specified in the Lease.

• Landlords will have to satisfy a Leasehold Valuation Tribunal, Court or Arbitral Tribunal that a disputed breach of a covenant or condition in the Lease has occurred before they will be able to take any forfeiture action. Therefore, unless a tenant has admitted a breach, two sets of proceedings will be required; the first to establish the breaches, and the second to forfeit the Lease and obtain an order for possession after service of a Notice pursuant to the Law of Property Act 1925.
• Landlords will be prevented from forfeiting Leases as a result of small debts consisting of ground rent, service charges, or administration charges (or a combination of these) where the debt does not exceed £350.00, unless all or any part of the sum has been outstanding for more than 3 years.

• Landlords will be prevented from insisting that leaseholders of houses use a particular insurance company nominated or approved by them to insure their premises.

• The valuation date for claims for the collective enfranchisement of flats will be fixed at the date the initial notice is served. The objective of this provision is to avoid unnecessary arguments and to remove the possibility of delaying tactics being used by either party which may otherwise to try to benefit financially.

The Housing Minister, Keith Hill, has said that the latest reforms will provide long awaited protection and certainty for leaseholders and "they will prevent certain abuses from taking place, and will recognise the majority stake that a leaseholder normally has in their house by giving them the right to take out their own building insurance".

There are further provisions of the 2002 Act which will be implemented at a later stage, on a date to be notified:

• There will be a requirement that the right to collectively enfranchise premises be exercised by tenants through a company set up for that purpose.
• Accounting requirements will be imposed on landlords requiring them to keep service charge monies for each group of service charge payers in separate, designated accounts, and provide an annual statement of account together with other relevant information. A consultation exercise was conducted recently upon the content of the relevant regulations. The responses are currently being analysed.

© RadcliffesLeBrasseur

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.