|
||
Leasehold Reforms
|
Home Page Contact Us About James Driscoll Commonhold Queen's Speech 2004 Leasehold Reforms Practice Points Tenure |
The Commonhold and Leasehold Reform Act 2002 has changed residential leases. James Driscoll reports
 Part 2 of the Commonhold and Leasehold Reform Act 2042 has introduced major reforms to the residential leasehold system.
From 28 February, another batch of leasehold reforms come into force (Commonhold and Leasehold Reform Act 2002 (Commencement No 5 and Saving and Transitional Provision) Order 2004 (51 no 3056)). These include major new restrictions on forfeiture of leases as well as other provisions dealing with ground rents, house insurance and valuation for collectiveerdranchisement claims. Reforms to forfeiture of leases Long leases utsually allow the landlord to re-enter and forfeit in the event of a lease-holder's breach of a covenan t, or a cond ition of the lease. A landlord must usually serve a forfeiture notice under the well-known provisiores in s 146 of the Law of Properh• Act 1925. In residential leases, the landlord must obtain a court order to enforce forfeiture (Protection From Eviction Act 1977, s 2). Nor can a landlord forfeit for non-payment of a service or administration charge unless the lease-holder has agreed the charges, or they have been determined by the leasehold valuation tribunal (LVT). However, the landlord was able to serve a torteiture notice provided that this referred to these restrictions (Housing Act 1996, ss 81,82). The 2002Act makes three change's:
No forfeiture for small amounts From 28 February, landlords will no longer be able to re-enterer forfeit for failure to pay sums consisting of rent, a service or administration charge (or a combination) unless the sum exceeds the ' prescribed sum' (set at E350) or has been unpaid for a 'prescribed period' (set at three years) (2{102 Aet, s 167(1) and the Rights of Re-entry and Forfeiture (Pre-scribed Sum and Period) (England) Regula Lions 2004 (Si no 3086)). No forfeiture notice Also, from 28 February, a s 146 notice can-not be given for breach of a leaseholder's covenant or condition unless one of the following three conditions is satisfied:
Even then a S.14h notice cannot be served until la days after the determination. Any provision in the lease providing for a different way of proceeding is void. Welcome changes for leaseholders, but how should landlords proceed if there is a serious breach, such as illegal use? Here a landlord max, be best advised to seek an interlocutory injunction in the courts to restrain the breach and seek damages later. The LVT cannot, of course, grant such orders; nor can they make orders for costs, except in very limited cases. But what if the landlord wants to forfeit as well? Is the grant of an interlocutory injunction a 'final determination' (s 168(2)(0)' A breach is 'finally deter-mined' if a decision that has occurred is not challenged, or if it is, thefinding is nit set-aside on any appeal (s 1.69(2)). So it appears that if an injunction is granted and not appealed, or set aside, a 6 146 notice could then be served Forfeiture for service charges Also from 28 February, landlords will no longer be able to forfeit for non-payment of a service charge or an administration charge (emphasis added) carless the charge has been admitted nr deter-mined. As a result, landlords will no longer be able to serve a s 146 forfeiture notice for non-payment of a service or administration charge unless the lease-holder agrees the charge or it has been determined. ('Administration charges' are payable for such matters as grants of approvals or those incurred in enforcing leaseholder's obligations (2002 Act, s 158 and Sched 11)). Even though the determining of these charges lies with the LET, a landlord could seek a money judgment in the county court. Landlords will have to rethink their approach to leasehold management and not rely, as many have, on threatening for-(enure. At present, these restrictions only apply to residential leases. But it may not be tong before they apply to leases gererally 4 the Law Commission's proposals (Consultation on Terminating Tenancies, No 174, 2CC4)) on determining leases are adopted, Other changes
|