PART 2 continued CHAPTER 1 continued
(1) Where trustees are the qualifying tenant of a flat contained in any premises, their powers under the instrument regulating the trusts include power to be a member of a RTM company for the purpose of the acquisition and exercise of the right to manage the premises.
(2) But subsection (1) does not apply where the instrument regulating the trusts contains an explicit direction to the contrary.
(3) The power conferred by subsection (1) is exercisable with the same consent or on the same direction (if any) as may be required for the exercise of the trustees' powers (or ordinary powers) of investment.
(4) The purposes—
(a) authorised for the application of capital money by section 73 of the Settled Land Act 1925 (c. 18), and
(b) authorised by section 71 of that Act as purposes for which moneys may be raised by mortgage,
include the payment of any expenses incurred by a tenant for life or statutory owner as a member of a RTM company.
(1) Where a claim to acquire the right to manage any premises is made by the giving of a claim notice, except as otherwise provided by this Chapter—
(a) the procedure for giving effect to the claim notice, and
(b) the rights and obligations of all parties in any matter arising in giving effect to the claim notice,
shall be such as may be prescribed by regulations made by the appropriate national authority.
(2) Regulations under this section may, in particular, make provision for a person to be discharged from performing any obligations arising out of a claim notice by reason of the default or delay of some other person.
(1) Any notice under this Chapter—
(a) must be in writing, and
(b) may be sent by post.
(2) A company which is a RTM company in relation to premises may give a notice under this Chapter to a person who is landlord under a lease of the whole or any part of the premises at the address specified in subsection (3) (but subject to subsection (4)).
(3) That address is—
(a) the address last furnished to a member of the RTM company as the landlord’s address for service in accordance with section 48 of the 1987 Act (notification of address for service of notices on landlord), or
(b) if no such address has been so furnished, the address last furnished to such a member as the landlord’s address in accordance with section 47 of the 1987 Act (landlord’s name and address to be contained in demands for rent).
(4) But the RTM company may not give a notice under this Chapter to a person at the address specified in subsection (3) if it has been notified by him of a different address in England and Wales at which he wishes to be given any such notice.
(5) A company which is a RTM company in relation to premises may give a notice under this Chapter to a person who is the qualifying tenant of a flat contained in the premises at the flat unless it has been notified by the qualifying tenant of a different address in England and Wales at which he wishes to be given any such notice.
(1) In this Chapter—
“appurtenant property”, in relation to a building or part of a building or a flat, means any garage, outhouse, garden, yard or appurtenances belonging to, or usually enjoyed with, the building or part or flat,
“copy”, in relation to a document in which information is recorded, means anything onto which the information has been copied by whatever means and whether directly or indirectly,
“document” means anything in which information is recorded,
“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling,
“flat” means a separate set of premises (whether or not on the same floor)—
which forms part of a building,
which is constructed or adapted for use for the purposes of a dwelling, and
either the whole or a material part of which lies above or below some other part of the building,
“relevant costs” has the meaning given by section 18 of the 1985 Act,
“service charge” has the meaning given by that section, and
“unit” means—
a flat,
any other separate set of premises which is constructed or adapted for use for the purposes of a dwelling, or
a separate set of premises let, or intended for letting, on a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies.
(2) In this Chapter “lease” and “tenancy” have the same meaning and both expressions include (where the context permits)—
(a) a sub-lease or sub-tenancy, and
(b) an agreement for a lease or tenancy (or for a sub-lease or sub-tenancy),
but do not include a tenancy at will or at sufferance.
(3) The expressions “landlord” and “tenant”, and references to letting, to the grant of a lease or to covenants or the terms of a lease, shall be construed accordingly.
(4) In this Chapter any reference (however expressed) to the lease held by the qualifying tenant of a flat is a reference to a lease held by him under which the demised premises consist of or include the flat (whether with or without one or more other flats).
(5) Where two or more persons jointly constitute either the landlord or the tenant or qualifying tenant in relation to a lease of a flat, any reference in this Chapter to the landlord or to the tenant or qualifying tenant is (unless the context otherwise requires) a reference to both or all of the persons who jointly constitute the landlord or the tenant or qualifying tenant, as the case may require.
(6) In the case of a lease which derives (in accordance with section 77(5)) from two or more separate leases, any reference in this Chapter to the date of the commencement of the term for which the lease was granted shall, if the terms of the separate leases commenced at different dates, have effect as references to the date of the commencement of the term of the lease with the earliest date of commencement.
In this Chapter the expressions listed below are defined by the provisions specified.
| Expression | Interpretation provision |
|---|---|
| Approval (and approving) | Section 98(7) |
| Appurtenant property | Section 112(1) |
| Acquisition date | Sections 74(1)(b) and 90 |
| Claim notice | Section 79(1) |
| Contractor party | Section 91(2)(b) |
| Copy | Section 112(1) |
| Counter-notice | Section 84(1) |
| Date of the commencement of the term of a lease | Section 112(6) |
| Determination date | Section 91(5) |
| Document | Section 112(1) |
| Dwelling | Section 112(1) |
| Existing management contract | Section 91(3) |
| Flat | Section 112(1) |
| Landlord | Section 112(3) and (5) |
| Lease | Section 112(2) to (4) |
| Letting | Section 112(3) |
| Long lease | Sections 76 and 77 |
| Manager party | Section 91(2)(a) |
| No dispute about entitlement | Section 90(3) |
| Notice of invitation to participate | Section 78 |
| Notice of withdrawal | Section 86(1) |
| Premises to which this Chapter applies | Section 72 (and Schedule 6) |
| Qualifying tenant | Sections 75 and 112(4) and (5) |
| Relevant costs | Section 112(1) |
| Relevant date | Section 79(1) |
| Right to manage | Section 71(2) |
| RTM company | Sections 71(1) and 73 |
| Service charge | Section 112(1) |
| Tenancy | Section 112(2) |
| Tenant | Section 112(3) and (5) |
| Tenant covenant | Section 100(4) |
| Unit | Section 112(1) |
This Chapter amends the right to collective enfranchisement which is conferred by Chapter 1 of Part 1 of the 1993 Act.
In section 4(1) of the 1993 Act (right not to apply in case of premises having non-residential parts with floor area exceeding 10 per cent. of total), for “10 per cent.” substitute “25 per cent.”.
In section 4 of the 1993 Act (premises in the case of which right does not apply), insert at the end—
“(5) This Chapter does not apply to premises falling within section 3(1) if the freehold of the premises includes track of an operational railway; and for the purposes of this subsection—
(a) “track” includes any land or other property comprising the permanent way of a railway (whether or not it is also used for other purposes) and includes any bridge, tunnel, culvert, retaining wall or other structure used for the support of, or otherwise in connection with, track,
(b) “operational” means not disused, and
(c) “railway” has the same meaning as in any provision of Part 1 of the Railways Act 1993 (c. 43) for the purposes of which that term is stated to have its wider meaning.”
(1) In section 5(1) of the 1993 Act (which provides that a qualifying tenant is a tenant under a long lease which is at a low rent or for a particularly long term), omit “which is at a low rent or for a particularly long term”.
(2) In section 69(1)(b) of the 1993 Act (estate management schemes), for “by virtue of the amendments of that Chapter made by paragraph 3 of Schedule 9 to the Housing Act 1996 (c. 52)” substitute “in circumstances in which, but for section 117(1) of the Commonhold and Leasehold Reform Act 2002 and the repeal by that Act of paragraph 3 of Schedule 9 to the Housing Act 1996, they would have been entitled to acquire it by virtue of the amendments of that Chapter made by that paragraph”.
(1) Section 10 of the 1993 Act (premises with a resident landlord) is amended as follows.
(2) For subsection (1) (requirements that premises not be or form part of purpose-built block of flats and that they have been occupied for at least twelve months as only or principal home of owner of freehold or a family member) substitute—
“(1) For the purposes of this Chapter any premises falling within section 3(1) are premises with a resident landlord at any time if—
(a) the premises are not, and do not form part of, a purpose-built block of flats;
(b) the same person has owned the freehold of the premises since before the conversion of the premises into two or more flats or other units; and
(c) he, or an adult member of his family, has occupied a flat or other unit contained in the premises as his only or principal home throughout the period of twelve months ending with that time.”
(3) For subsection (4) (premises held on trust) substitute—
“(4) Where the freehold of any premises is held on trust, subsection (1) applies as if—
(a) the requirement in paragraph (b) were that the same person has had an interest under the trust (whether or not also a trustee) since before the conversion of the premises, and
(b) paragraph (c) referred to him or an adult member of his family.”
In section 13(2)(b) of the 1993 Act (persons by whom initial notice must be given), omit sub-paragraph (i) (initial notice to be given by at least two-thirds of qualifying tenants of flats contained in premises).
In section 13(2) of the 1993 Act, omit the words following paragraph (b) (which require at least one-half of the qualifying tenants by whom the initial notice is given to satisfy the residence condition).
(1) Section 13 of the 1993 Act is amended as follows.
(2) In paragraph (b) of subsection (2), after “given by” insert “a RTE company which has among its participating members”.
(3) After that subsection insert—
“(2ZA) But in a case where, at the relevant date, there are only two qualifying tenants of flats contained in the premises, subsection (2)(b) is not satisfied unless both are participating members of the RTE company.”
After section 4 of the 1993 Act insert—
(1) A company is a RTE company in relation to premises if—
(a) it is a private company limited by guarantee, and
(b) its memorandum of association states that its object, or one of its objects, is the exercise of the right to collective enfranchisement with respect to the premises.
(2) But a company is not a RTE company if it is a commonhold association (within the meaning of Part 1 of the Commonhold and Leasehold Reform Act 2002).
(3) And a company is not a RTE company in relation to premises if another company which is a RTE company in relation to—
(a) the premises, or
(b) any premises containing or contained in the premises,
has given a notice under section 13 with respect to the premises, or any premises containing or contained in the premises, and the notice continues in force in accordance with subsection (11) of that section.
(1) Before the execution of a relevant conveyance to a company which is a RTE company in relation to any premises the following persons are entitled to be members of the company—
(a) qualifying tenants of flats contained in the premises, and
(b) if the company is also a RTM company which has acquired the right to manage the premises, landlords under leases of the whole or any part of the premises.
(2) In this section—
“relevant conveyance” means a conveyance of the freehold of the premises or of any premises containing or contained in the premises; and
“RTM company” has the same meaning as in Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002.
(3) On the execution of a relevant conveyance to the RTE company, any member of the company who is not a participating member ceases to be a member.
(4) In this Chapter “participating member”, in relation to a RTE company, means a person who is a member by virtue of subsection (1)(a) of this section and who—
(a) has given a participation notice to the company before the date when the company gives a notice under section 13 or during the participation period, or
(b) is a participating member by virtue of either of the following two subsections.
(5) A member who is the assignee of a lease by virtue of which a participating member was a qualifying tenant of his flat is a participating member if he has given a participation notice to the company within the period beginning with the date of the assignment and ending 28 days later (or, if earlier, on the execution of a relevant conveyance to the company).
(6) And if the personal representatives of a participating member are a member, they are a participating member if they have given a participation notice to the company at any time (before the execution of a relevant conveyance to the company).
(7) In this section “participation notice”, in relation to a member of the company, means a notice stating that he wishes to be a participating member.
(8) For the purposes of this section a participation notice given to the company during the period—
(a) beginning with the date when the company gives a notice under section 13, and
(b) ending immediately before a binding contract is entered into in pursuance of the notice under section 13,
is of no effect unless a copy of the participation notice has been given during that period to the person who (in accordance with section 9) is the reversioner in respect of the premises.
(9) For the purposes of this section “the participation period” is the period beginning with the date when the company gives a notice under section 13 and ending—
(a) six months, or such other time as the Secretary of State may by order specify, after that date, or
(b) immediately before a binding contract is entered into in pursuance of the notice under section 13,
whichever is the earlier.
(10) In this section references to assignment include an assent by personal representatives, and assignment by operation of law where the assignment is to a trustee in bankruptcy or to a mortgagee under section 89(2) of the Law of Property Act 1925 (c. 20) (foreclosure of leasehold mortgage); and references to an assignee shall be construed accordingly.
(1) The Secretary of State shall by regulations make provision about the content and form of the memorandum of association and articles of association of RTE companies.
(2) A RTE company may adopt provisions of the regulations for its memorandum or articles.
(3) The regulations may include provision which is to have effect for a RTE company whether or not it is adopted by the company.
(4) A provision of the memorandum or articles of a RTE company has no effect to the extent that it is inconsistent with the regulations.
(5) The regulations have effect in relation to a memorandum or articles—
(a) irrespective of the date of the memorandum or articles, but
(b) subject to any transitional provisions of the regulations.
(6) The following provisions of the Companies Act 1985 (c. 6) do not apply to a RTE company—
(a) sections 2(7) and 3 (memorandum), and
(b) section 8 (articles).”
(1) After section 12 of the 1993 Act insert—
(1) Before making a claim to exercise the right to collective enfranchisement with respect to any premises, a RTE company must give notice to each person who at the time when the notice is given—
(a) is the qualifying tenant of a flat contained in the premises, but
(b) neither is nor has agreed to become a participating member of the RTE company.
(2) A notice given under this section (a “notice of invitation to participate”) must—
(a) state that the RTE company intends to exercise the right to collective enfranchisement with respect to the premises,
(b) state the names of the participating members of the RTE company,
(c) explain the rights and obligations of the members of the RTE company with respect to the exercise of the right (including their rights and obligations in relation to meeting the price payable in respect of the freehold, and any other interests to be acquired in pursuance of this Chapter, and associated costs),
(d) include an estimate of that price and those costs, and
(e) invite the recipients of the notice to become participating members of the RTE company.
(3) A notice of invitation to participate must either—
(a) be accompanied by a copy of the memorandum of association and articles of association of the RTE company, or
(b) include a statement about inspection and copying of the memorandum of association and articles of association of the RTE company.
(4) A statement under subsection (3)(b) must—
(a) specify a place (in England or Wales) at which the memorandum of association and articles of association may be inspected,
(b) specify as the times at which they may be inspected periods of at least two hours on each of at least three days (including a Saturday or Sunday or both) within the seven days beginning with the day following that on which the notice is given,
(c) specify a place (in England or Wales) at which, at any time within those seven days, a copy of the memorandum of association and articles of association may be ordered, and
(d) specify a fee for the provision of an ordered copy, not exceeding the reasonable cost of providing it.
(5) Where a notice given to a person includes a statement under subsection (3)(b), the notice is to be treated as not having been given to him if he is not allowed to undertake an inspection, or is not provided with a copy, in accordance with the statement.
(6) A notice of invitation to participate shall not be invalidated by any inaccuracy in any of the particulars required by or by virtue of this section.”
(2) In section 13 of the 1993 Act, after subsection (2ZA) (inserted by section 121(3)) insert—
“(2ZB) The initial notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before.”
Schedule 8 (amendments consequential on sections 121 to 123) has effect.
(1) In subsection (1) of section 17 of the 1993 Act (access by reversioner or other relevant landlord for purposes of valuation), insert at the end “or if it is reasonable in connection with any other matter arising out of the claim to exercise the right to collective enfranchisement”.
(2) For the sidenote of that section substitute “Rights of access.”
(1) In Schedule 6 to the 1993 Act (purchase price payable), for “the valuation date” (in each place) substitute “the relevant date”.
(2) In section 18(1) of the 1993 Act (duty to disclose existence of agreements affecting premises etc.), for “valuation date for the purposes of Schedule 6” substitute “time when a binding contract is entered into in pursuance of the initial notice”.
In paragraph 4(1) of Schedule 6 to the 1993 Act (freeholder’s share of marriage value), for the words after “freeholder’s share of the marriage value is” substitute “50 per cent. of that amount”.
(1) Paragraph 4 of Schedule 6 to the 1993 Act is amended as follows.
(2) In sub-paragraph (2) (meaning of marriage value), insert at the beginning “Subject to sub-paragraph (2A),”.
(3) After that sub-paragraph insert—
“(2A) Where at the relevant date the unexpired term of the lease held by any of those participating members exceeds eighty years, any increase in the value of the freehold or any intermediate leasehold interest in the specified premises which is attributable to his potential ability to have a new lease granted to him as mentioned in sub-paragraph (2)(a) is to be ignored.”
This Chapter amends the right of tenants of flats to acquire new leases which is conferred by Chapter 2 of Part 1 of the 1993 Act.
(1) Section 39 of the 1993 Act (the right) is amended as follows.
(2) In subsection (2)(a) (requirement that tenant is qualifying tenant of flat on the relevant date), for “is” substitute “has for the last two years been”.
(3) Omit subsections (2)(b), (2A) and (2B) (requirement that tenant has occupied flat as only or principal home for three years).
In section 39(3) of the 1993 Act (which applies for the purposes of Chapter 2 of Part 1 of the 1993 Act the definition of qualifying tenant in Chapter 1 of that Part), omit paragraphs (c) and (d) (leases at a low rent and leases for a particularly long term).
(1) In section 39 of the 1993 Act, after subsection (3) insert—
“(3A) On the death of a person who has for the two years before his death been a qualifying tenant of a flat, the right conferred by this Chapter is exercisable, subject to and in accordance with this Chapter, by his personal representatives; and, accordingly, in such a case references in this Chapter to the tenant shall, in so far as the context permits, be to the personal representatives.”
(2) In section 42 of the 1993 Act (notice by qualifying tenant of claim to exercise right), before subsection (5) insert—
“(4A) A notice under this section may not be given by the personal representatives of a tenant later than two years after the grant of probate or letters of administration.”
In section 94 of the 1993 Act (Crown land), for subsection (2) substitute—
“(2) Chapter 2 applies as against a landlord under a lease from the Crown if—
(a) a sub-tenant is seeking a new lease under that Chapter and the landlord, or a superior landlord under a lease from the Crown, is entitled to grant such a new lease without the concurrence of the appropriate authority, or
(b) the appropriate authority notifies the landlord that, as regards any Crown interest affected, it will grant or concur in granting such a new lease.”
In Schedule 13 to the 1993 Act (premium and other amounts payable by tenant on grant of new lease), for “the valuation date” (in each place) substitute “the relevant date”.
In paragraph 4(1) of Schedule 13 to the 1993 Act (landlord’s share of marriage value), for the words after “landlord’s share of the marriage value is” substitute “50 per cent. of that amount”.
(1) Paragraph 4 of Schedule 13 to the 1993 Act (meaning of marriage value) is amended as follows.
(2) In sub-paragraph (2), insert at the beginning “Subject to sub-paragraph (2A),”.
(3) After that sub-paragraph insert—
“(2A) Where at the relevant date the unexpired term of the tenant’s existing lease exceeds eighty years, the marriage value shall be taken to be nil.”