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Leasehold and Freehold Reform Act 2024

Contents

Schedule 1: Leasehold houses

Parts 1 & 2: Categories of permitted lease for tribunal and self-certification

  1. This schedule contains two Parts; Part 1 provides details of permitted lease categories where tribunal certification is required, and Part 2 provides details of permitted lease categories where self-certification applies.
  2. Paragraphs 1 to 4 are contained within Part 1 of the Schedule and paragraphs 5 to 9 are contained within Part 2.
  3. Paragraph 1 details that a lease granted out of a historic leasehold estate, is a lease granted out of a leasehold estate acquired by the vendor before 22 December 2017, or a lease granted out of an agreement for lease entered into before 22 December 2017.
  4. Paragraph 2 states that the permitted lease definition for community housing leases may include Community Land Trusts, co-operatives, or a lease of a description that meets any further conditions specified in regulations by the Secretary of State. These regulations are subject to the negative procedure.
  5. Paragraph 3 provides the permitted lease definition for retirement housing leases. This lease is a retirement housing lease (a) if it is a term of the lease that the house may only be occupied by persons of the minimum age, (b) that minimum age is not less than 55, and (c) the house demised by the lease must be part of a retirement development or scheme in which the leases of all the houses in that development or scheme also contain the same terms.). Paragraph 3 states that further conditions may be specified in regulations by the Secretary of State and these regulations are subject to the negative procedure.
  6. Paragraph 4 details the scope of the permitted lease definition for National Trust to a lease of a house where the house comprised in the lease is (a) a property or part of property which is vested inalienably in the National Trust for Place of Historic Interest of Natural Beauty under Section 21 of the National Trust Act 1907, or (b) is inalienable by the Natural Trust under Section 8 of the National Trust Act 1939.
  7. Paragraph 4A (1) provides that a lease granted out of a freehold estate by the Crown is a permitted lease. Paragraph 4A defines the ‘Crown’ as Crown private estates (2a), the Duchy of Lancaster (2a), or the Duchy of Cornwall (2b).
  8. Paragraph 5 defines leases agreed before commencement of the Act as a lease granted out of an agreement for lease entered into before Section 1 (Ban on grant or assignment of certain long residential leases of houses) comes into force.
  9. Paragraph 6 details the permitted lease definition for shared ownership leases, as being a shared ownership lease that meets conditions A to D. Subparagraph (2) details that conditions C and D do not to be met if the shared ownership lease is of a description specified for this purpose in regulation made by the Secretary of State. These regulations are subject to the negative procedure.
  10. Paragraph 7 details the permitted lease definition for home finance plan leases. Subparagraph (1) refers to a lease that (a) is a home finance plan and (b) meets any further conditions specified in regulations made by the Secretary of State, with Subparagraph (5) confirming that regulations made under sub-paragraph (1)(b) are subject to the negative procedure.
  11. Paragraph 8 defines an extended lease, as an extended lease that falls within any of cases A to C detailed in the schedule.
  12. Paragraph 9 details the permitted lease definition for agricultural leases as a lease where the house is comprised in (a) an agricultural holding within the meaning of the Agricultural Holdings Act 1986 which is held under a tenancy to which that Act applies, or (b) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995.

Schedule 2: Financial penalties

  1. The Schedule details the processes that must be followed when an enforcement authority imposes a penalty. It includes the types of notices to be served, the right to appeal and treatment of penalties.
  2. Paragraphs 1, 4, and 5 state the information that must be contained in any notice served by an enforcement authority relating to a penalty, while paragraph 2 states the time limits for issuing a notice of intent.
  3. Paragraphs 3 and 6 set out the right for a recipient of an enforcement authority’s notice to make written representation and to make an appeal to the appropriate tribunal (First-tier Tribunal in England, Leasehold Valuation Tribunal in Wales).
  4. Paragraphs 7, 8 and 9 deal with the recovery and proceeds of penalties, and paragraph 10 confers a power on the Secretary of State to amend regulations on the manner for providing a notice.
  5. Paragraph 11 contains an interpretation for the Schedule.

Schedule 3 - Eligibility for enfranchisement and extension: specific cases

  1. Paragraph 1 repeals the Sections of the LRA 1967 and the LRHUDA 1993 that allow a landlord to defend a lease extension claim (for a house or a flat) or a collective enfranchisement claim because they intend to redevelop the property.
  2. Paragraph 2 repeals the power in the LRA 1967 for the landlord to defeat a freehold acquisition or lease extension claim and retake possession of the property so that the landlord or their family can reside in it.
  3. Paragraph 3 repeals the power in the LRA 1967 for a Minister to certify that property belonging a public authority is needed for development and thereby prevent a tenant of the property bringing a lease extension or freehold acquisition claim.
  4. Paragraphs 4 and 5 amend the LRA 1967 and the LRHUDA 1993 respectively to make provision for an exemption for a tenant whose landlord is a certified community housing provider from (a) the right to acquire the freehold under the LRA 1967 and (b) qualifying for the right to collective enfranchisement under the LRHUDA 1993. The amendments insert a new Section 4B into the LRA 1967 and a new Section 8B into the LRHUDA 1993 which set out when and how a person may obtain a certificate from the tribunal which will make them a "certified community housing provider". These Sections also make provision for the cancellation of community housing certificates.
  5. Paragraph 6 removes the limitations in the LRA 1967 and the LRHUDA 1993 that prevent a sublessee from claiming a lease extension if their sublease was granted by an intermediate leaseholder out of a lease that had itself been extended under the relevant Act.
  6. Paragraph 7 repeals and replaces Section 32 of the LRA 1967 with new Sections 32 and 32ZA. New Section 32 provides that tenants of inalienable National Trust property ("National Trust tenants") have the right to a 990-year lease extension (unless they have a protected National Trust tenancy) but continue to have no right to acquire the freehold of their property. Where a National Trust tenant exercises the right to a 990-year lease extension, new Section 32(8) requires the new tenancy to contain a "buy-back term" which gives the National Trust the right to buy back the lease in certain circumstances. Under new Section 32(5), some National Trust tenants with protected National Trust tenancies – who therefore do not have the right to a 990-year lease extension – continue to have the right to a 50-year lease extension under the LRA 1967 as it existed prior to amendment by the Act. New Section 32ZA sets out when a tenancy is a protected National Trust tenancy.
  7. Paragraph 8 repeals and replaces Section 95 of the LRHUDA 1993 with new Sections 95 and 95A. New Section 95 provides that tenants of inalienable National Trust property have the right to a 990-year lease extension (unless they have a protected National Trust tenancy) but continue to have no right to acquire the freehold of their property. Where a National Trust tenant exercises the right to a 990-year lease extension, new Section 95(5) requires the new lease to contain a "buy-back term" which gives the National Trust the right to buy back the lease in certain circumstances. New Section 95A sets out when a lease is a protected National Trust tenancy.
  8. Paragraphs 9 to 39 make consequential amendments of the LRA 1967 and the LRHUDA 1993 that are necessary because of the repeals and amendments in paragraphs 1, 2, 3 and 6.

Schedule 4 - Determining and sharing the market value

Part 1: Introduction

  1. Paragraph 1 provides that Schedule 4 must be followed when calculating the market value element of the price for any enfranchisement claim (namely, acquiring the freehold of a house, extending the lease of a house, acquiring the freehold of a block of flats or extending the lease of a flat). Paragraph 1 also provides that Schedule 4 sets out how to divide the price into shares where loss is suffered by multiple landlords.

Part 2: The Market Value

  1. Paragraph 2 sets out that the price (under Schedule 4) in a freehold acquisition claim (under either the LRA 1967 or the LRHUDA 1993) is the open market value of acquiring the freehold of the premises subject to the claim.
  2. Paragraph 3 sets out that the price (under Schedule 4) in a lease extension claim (under either the LRA 1967 or the LRHUDA 1993) is the open market value of acquiring a notional lease with the following length: 990 years plus the years remaining on the leaseholder’s lease when they claim the lease extension. The notional lease is for a peppercorn ground rent and is over the premises which are subject to the lease extension claim. It must also be assumed that the leaseholder’s existing lease will continue (on its current terms) until its expiry. Specific provision is made for where the leaseholder is holding over under the Local Government and Housing Act 1989.
  3. Paragraph 4 provides that Part 3 and 4 of Schedule 4 set out how the price is to be determined, and that the price in respect of different parts of the premises can be calculated in different ways.

Part 3: Determining the Market Value

  1. Paragraph 5 sets out that, in general, the standard valuation method must be used to determine the value of acquiring the relevant freehold or notional lease. However, the standard valuation method is not required to be used where the property (or parts of the property) fall into paragraphs 6 to 13: kinds of property for which the standard valuation method is not compulsory.
  2. Paragraph 6 sets out that the standard valuation method is not compulsory if, when the enfranchisement claim is made, the lease has five years or less remaining until its term date, or if the leaseholder is holding over under the Local Government and Housing Act 1989. (Under paragraphs 1(1) and 2 of Schedule 6, "term date" has the same meaning as in the LRA 1967 and the LRHUDA 1993, subject to the modification in paragraph 1(2) of Schedule 6.)
  3. Paragraph 7 sets out that the standard valuation method is not compulsory for property comprised in a lease that is an excepted home finance plan lease, as defined by the Leasehold Reform (Ground Rent) Act 2022.
  4. Paragraph 8 sets out that the standard valuation method is not compulsory if the lease is a "market rack rent lease". A market rack rent lease is defined as a lease which was granted for no (or a very low) premium, was granted at a market rack rent, and which the parties intended to be at a market rack rent.
  5. Paragraph 9 sets out that the standard valuation method is not compulsory for parts of the property which are included in the enfranchisement claim under Section 2(4) of the LRA 1967 (property that was originally let to the leaseholder, but which is no longer owned by the leaseholder at the date of the enfranchisement claim).
  6. Paragraph 10 sets out that the standard valuation method is not compulsory where there has been a pre-commencement lease extension of a house for 50 years at a modern ground rent.
  7. Paragraph 11 sets out that the standard valuation method is not compulsory where there is a freehold acquisition or lease extension claim under the LRA 1967 in respect of a business tenancy (to which Part 2 of the Landlord and Tenant Act 1954 applies).
  8. Paragraph 12 sets out that the standard valuation method is not compulsory where there is a freehold acquisition of a house by a shared ownership leaseholder under the 1967 Act. A 1967 Act freehold acquisition of a house by a shared ownership leaseholder is only possible if the shared ownership lease does not meet the criteria in Section 33B of the LRA 1967.
  9. Paragraph 13 sets out that, in a collective enfranchisement, the standard valuation method only applies to a relevant flat (and appurtenant property leased with a relevant flat). A relevant flat is a flat demised to (a) a qualifying tenant or (b) a person who would be a qualifying tenant but for Section 5(5) and (6) of the LRHUDA (which exclude a tenant from being a qualifying tenant where they own the leases of three or more flats in the same building). However, a flat will not be a relevant flat where it is let to an intermediate leaseholder whose lease is not being acquired, or where it is let to a shared ownership leaseholder.
  10. Paragraph 14 provides that the standard valuation method can still be used to determine the value of the relevant freehold or notional lease, even when it is not compulsory to do so.
  11. Paragraph 15 explains that property is subject to the standard valuation method if the method is required to be used or is used voluntarily.

Part 4: Assumptions and Other Matters Affecting Determination of Market Value

  1. Paragraph 16 provides that, with the exception of paragraph 22, Part 4 applies to the determination of the price regardless of whether the standard valuation method is being used. Paragraph 16(2) provides that certain matters (under paragraph 22) must only be taken into account when the standard valuation method is being used.
  2. Paragraph 17 sets out assumptions 1 and 2. Paragraph 17(1) explains that these assumptions must be made when determining the value of the relevant freehold or notional lease.
  3. Paragraph 17(2) sets out assumption 1, under which various leases are treated for valuation purposes as merged with the freehold (in freehold acquisition claims) or with the interest of the person granting the lease extension (in lease extension claims). The leases which fall within assumption 1 are those which, under the LRA 1967 or the LRHUDA 1993, are (a) acquired or surrendered in a freehold acquisition claim, or (b) surrendered or deemed surrendered and regranted in a lease extension claim. The effect of assumption 1 is that the presence of intermediate leases in a property will not generally have an effect on the price.
  4. Paragraph 17(3) sets out assumption 2, which has the effect of ensuring that marriage value and hope value do not form part of the price. Marriage value is the additional value that may arise when the landlord’s and leaseholder’s separate interests are joined into single ownership. Hope value is the additional value that may arise from the potential for marriage value to be realised in the future.
  5. Paragraph 17(4) provides that other assumptions can be made when determining the market value, so long as they are consistent with assumptions 1 and 2.
  6. Paragraph 18 sets out that assumption 3 applies when calculating the price in a freehold acquisition claim under the LRA 1967 and a lease extension claim under the LRA 1967 or LRHUDA 1993. This assumption has two parts:
    1. First, it must be assumed that the leaseholder has complied with the repairing obligations in their lease. As a result, a leaseholder’s property which has fallen into disrepair (in breach of the repairing obligations in the lease) will not be devalued, and so the price will not be reduced by reason of their breach.
    2. Secondly, it must be assumed that the leaseholder (or previous leaseholders) has not made any improvements to their property. As a result, the price will not be increased because the leaseholder has, at their own expense, made improvements to their property so that it is more valuable.
  7. Paragraph 18(3) provides that in the case of a freehold acquisition of a house under the LRA 1967, if Section 3(3) of that Act applies (successive leases treated as a single lease), assumption 3 applies only to the lease that is in effect at the valuation date.
  8. Paragraph 18(4) allows other assumptions to be made when determining the market value provided, they are consistent with assumption 3. Paragraph 18(5) defines the term "tenant’s repairing obligation", for the purposes of assumption 3.
  9. Paragraph 19 sets out that assumptions 4 and 5 are to be used when calculating the price for a collective enfranchisement claim. Paragraph 19(2) sets out that assumption 4 has two parts:
    1. First, it must be assumed that the leaseholder has complied with the repairing obligations in their lease. As a result, a leaseholder’s property which has fallen into disrepair (in breach of the repairing obligations in the lease) will not be devalued, and so the price will not be reduced by reason of their breach.
    2. Secondly, it must be assumed that the participating leaseholder (or previous leaseholders) has not made any improvements to their property. As a result, the price will not be increased because the leaseholder has, at their own expense, made improvements to their property so that it is more valuable.
  10. Paragraph 19(3) sets out assumption 5, under which it must be assumed that the freehold being acquired in the collective enfranchisement is subject to any leasebacks that will be granted under Section 36 of the LRHUDA 1993 as part of the claim.
  11. Paragraph 19(4) allows other assumptions to be made when determining the market value provided, they are consistent with assumptions 4 and 5. Paragraph 19(5) sets out some relevant definitions.
  12. Paragraph 20 sets out that the price must be increased or reduced to reflect certain specified matters (when they arise) when determining the market value. Those specified matters include any defects in title to the relevant freehold or statutory lease, and any property rights that burden or benefit that title.
  13. Paragraph 21 applies where a leaseholder has a right to hold over under the Local Government and Housing Act 1989, but is not currently doing so. In these cases, the right to hold over is to be taken into account in determining the market value, but only if (a) the lease has five years or less remaining until its term date, and (b) the right to hold over is likely to be exercised by the leaseholder. (Under paragraphs 1(1) and 2 of Schedule 6, "term date" has the same meaning as in the LRA 1967 and the LRHUDA 1993, subject to the modification in paragraph 1(2) of Schedule 6.)
  14. Paragraph 22 covers two situations:
    1. In a lease extension claim (under either the LRA 1967 or the LRHUDA 1993), where the standard valuation method is being used and the terms of the extended lease are different the terms of the leaseholder’s existing lease, the price must be increased or decreased to reflect the effect of the change in terms where necessary.
    2. In a collective enfranchisement claim, where a qualifying tenant is also the owner of the immediately superior lease of their flat, the standard valuation method applies to the superior lease rather than the inferior lease.
  15. Paragraph 23 applies to freehold acquisition claims under the LRA 1967 and lease extension claims under both the LRA 1967 and LRHUDA 1993, where the qualifying tenant owns an intermediate lease (superior to their qualifying lease) which will be surrendered as part of their claim. In these cases, the sum produced by the application of the rest of Schedule 4 must be reduced to take account of the fact that the tenant already owned that intermediate lease. The reduced sum will be the market value.

Part 5: The Standard Valuation Method

  1. Paragraph 24 introduces the standard valuation method set out in Part 5. The standard valuation method consists of steps 1 to 3, and there are two alternative versions of step 2 (depending on whether the claim being made is a freehold acquisition or lease extension claim).
  2. Paragraph 25 sets out step 1: the determination of the "term value". The term value is the capital value of the landlord’s right to receive ground rent for the remainder of the lease. The term value must be calculated in accordance with the provisions in Part 7 of Schedule 2. The rent that is to be used when calculating the term value is set out in paragraph 26. Paragraph 25 makes clear that where the ground rent in the lease is nil or a peppercorn, the term value is nil.
  3. Paragraph 25 also makes provision for calculating the term value in respect of collective enfranchisements, as well as for where a leaseholder has two (or more) leases over the property that is subject to the enfranchisement claim (which are a "deemed single lease" under Section 3(6) of the LRA 1967 or Section 7(6) of the LRHUDA 1993): the term value must be calculated for each constituent lease.
  4. Paragraph 26 sets out the rent which must be used when calculating the term value under paragraph 25, and a ground rent cap which applies in certain circumstances. For any periods where the actual rent in the lease is higher than the "notional rent", the term value must be calculated using the notional rent (rather than that actual rent). The notional rent is an annual rent of 0.1% of the open market value of the freehold (for LRA 1967 claims) or of the share of the freehold (for LRHUDA 1993 claims) of the relevant premises.
  5. Despite the ground rent cap, the actual rent must be used to calculate the term value in two exceptional circumstances: where the tenant did not pay a premium for their lease; and where the seller can show that the lease was specifically negotiated to be at a high ground rent, in order to compensate for a corresponding reduction to the premium.
  6. If the lease being valued is a shared ownership lease, paragraph 26 sets out that the rent that is to be used for the calculation of the term value under paragraph 25 is the rent payable on the tenant’s share.
  7. Paragraph 26(2) also limits the rent that is relevant to calculating the term value to rent which is payable only in respect of property that is subject to the standard valuation method. For example:
    A leaseholder has a single lease of a house and a neighbouring field. Under the lease, the leaseholder pays £60 ground rent per year. £50 is ground rent for the house, and £10 is ground rent for the field.

    The leaseholder extends the lease of the house, but not of the neighbouring field. The property that is subject to the standard valuation method consists only of the house. As a result, the ground rent taken into account in calculating the term value is £50 per year.

  8. Paragraphs 27 and 28 set out the two versions of Step 2, for freehold acquisitions and lease extensions respectively.
  9. Paragraph 27 sets out step 2 for freehold acquisition claims (of houses or blocks of flats): the determination of the "reversion value". The reversion value is the market value of the premises subject to the standard valuation method, deferred until the expiry of the leaseholder’s lease. Paragraph 27(2) requires the reversion value to be calculated by establishing the market value of the freehold (for LRA 1967 claims) or the share of the freehold (for LRHUDA 1993 claims) and reducing it through the reversion value formula (in which the applicable deferment rate must be used). There will be a separate reversion value for each qualifying tenant’s lease in a collective enfranchisement.
  10. Like paragraph 25, paragraph 27 provides that where the leaseholder has two (or more) leases that constitute a deemed single lease, there will be a separate reversion value for each of those leases.
  11. Paragraph 28 sets out step 2 for lease extension claims (of houses or flats): the determination of the "reversion value". The reversion value is the market value of a 990-year lease granted at a peppercorn ground rent and on the same terms as the extended lease, deferred until the end of the term of the qualifying tenant’s lease. Where the lease being valued is a shared ownership lease, the amount determined under step 2 must be reduced in proportion to the share of the property owned by the tenant. Paragraph 28 also makes provision for deemed single leases.
  12. Paragraph 29 sets out step 3 for all calculations being carried out following the standard valuation method. Under Step 3, the term value and the reversion value must be added together. In the case of a collective enfranchisement, all the term values and all the reversion values must be added together. Paragraph 29(4) provides that the step 3 amount (adjusted, if necessary, in accordance with paragraph 20 and 22) is the market value to be paid for the part (or parts) of the property that are valued using the standard valuation method. Paragraph 29(5) provides that further sums may be payable in respect of the other parts of the premises (which are not subject to the standard valuation basis).

Part 6: Entitlement Of Eligible Persons to Shares of the Market Value

  1. Part 6 is concerned with the apportionment of the price which has been determined under Parts 1 to 5 of Schedule 4. It provides that the price should be paid on a pro rata basis to all persons whose interests have been devalued or lost as a result of the enfranchisement claim.
  2. Paragraph 30 provides that where there are two or more eligible persons, each is entitled to be paid a share of the price. The share that each person is entitled to is determined using the formula provided, which involves taking the market value (calculated under Parts 1 to 5 of Schedule 4) and multiplying it by the total of that person’s loss divided by the total losses suffered by all the eligible persons.
  3. Paragraph 31 defines an eligible person for freehold acquisition claims (or houses or blocks of flats) as a person who has had the whole (or part) of their interest acquired in the claim. The paragraph also sets out that the eligible person’s qualifying transaction is the acquisition (in whole or in part) of their interest.
  4. Paragraph 32 defines an eligible person for the purposes of lease extension claims, as a person: (1) who has granted the extended lease out of (the whole or part of) their interest; (2) who has had their interest deemed surrendered and regranted as a result of the claim; or (3) who is the landlord under an intermediate lease which is varied as a result of the lease extension under paragraph 12A of Schedule 3 to the LRA 1967 or paragraph 12 of Schedule 11 to the LRHUDA 1993. The paragraph also sets out that the eligible person’s "qualifying transaction" is the grant of the extended lease or, where applicable, the variation of the intermediate lease.
  5. Paragraph 33 sets out how to determine what loss is suffered by an eligible person. Subparagraph (1) provides that their loss is the combination of any loss they suffer as a result of their qualifying transaction, and any other loss they suffer resulting from the reduction in value of any of the interests they own as a result of the enfranchisement claim. For example:
    A qualifying tenant of a flat extends their lease by 990 years. Their immediate landlord (the "intermediate leaseholder") has 150 years remaining on their lease. The extended lease is granted by the freeholder, and the intermediate leaseholder’s lease is deemed surrendered and granted (and is subject to the extended lease).

    The intermediate leaseholder is an eligible person, as their interest has been deemed surrendered and regranted. The qualifying transaction is the deemed surrender and regrant of their intermediate lease.

    The loss they have suffered as a result of the deemed surrender and regrant is: (1) the qualifying tenant will no longer pay any ground rent to them (as the extended lease is granted for a peppercorn); and (2) they will not recover possession of the property at the end of the qualifying tenant's lease (as the extended lease is now longer than their intermediate lease).

    The freeholder is also an eligible person as the extended lease has been granted out of their interest. The qualifying transaction is the grant of the extended lease out of their interest. The loss they have suffered is that they will not recover possession of the property following the expiry of the intermediate lease in 150 years, but only have a right to possession when the extended lease expires (in 990 years or more).

  6. Subparagraph (2) provides that no marriage value or hope value is taken into account when each eligible person's loss is calculated, by requiring assumption 2 to be made in that calculation. Assumption 2 is set out at paragraph 17 of Schedule 4. Marriage value is the additional value that may arise when the landlord’s and the leaseholder’s separate interests are joined into single ownership. Hope value is the additional value that may arise from the potential for marriage value to be realised in the future.
  7. Subparagraph (3) sets out that an eligible person cannot increase the value of their interest (and so increase the amount of loss they suffer) by entering into any transaction after the qualifying tenant's claim is made which involves the creation or transfer of interests (or any alteration of the terms of interests) superior to the qualifying tenant's interest.
  8. Paragraph 34 defines specified terms used in Part 6 of Schedule 2.

Part 7: Determining the Term Value

  1. Paragraph 35 provides that Part 7 is used to work out step 1 of the standard valuation method: determination of the term value.
  2. Paragraph 36 is used to determine the term value where the ground rent that the leaseholder must pay is not subject to a rent review. The prescribed capitalisation rate, ground rent that the leaseholder pays, and length of time (in years) until the lease expires must be entered into the formula at paragraph 36(3). Where the ground rent is more than the "notional rent", the notional rent not the actual rent must be used in the formula. Paragraph 26 sets out that the notional rent is 0.1% of the open market value of the freehold (for LRA 1967 claims) or of the share of the freehold (for LRHUDA 1993 claims) of the relevant premises.
  3. Paragraph 37 is used to determine the term value where the ground rent that the leaseholder must pay is subject to a rent review, and it is clear from the terms of the lease when and by what amount the ground rent will change. Paragraph 37(3) sets out the formula to be used to work out the term value in respect of the ground rent that is payable until the first rent review (after the date of the claim). Paragraph 37(5) sets out the formula to be used for all subsequent rent review periods. Where the ground rent is more than the "notional rent", the notional rent not the actual rent must be entered into the relevant formula.
  4. Paragraph 38 is used to determine the term value where the ground rent that the leaseholder must pay is subject to a rent review, and the lease does not otherwise fall under paragraph 37 (so the outcome of the rent review cannot be determined at the time of the claim). Paragraph 38(2) sets out the formula that must be used to determine the term value of these leases. The rent must be calculated on the basis that there will be one rent review, and the rent will thereafter remain unchanged. Paragraph 38 also sets out how to determine the amount by which the ground rent will change for two types of rent review provisions. Where neither is applicable to the lease being valued, the paragraph requires that amount to be determined in accordance with the terms of the lease. Where the ground rent is more than the "notional rent", the notional rent not the actual rent must be entered into the formula at paragraph 38(2).
  5. Paragraph 39 defines a number of terms used in Part 7 of Schedule 2.

Schedule 5 - Other compensation

  1. Schedule 5 sets out when and to whom other compensation is payable in addition to the price determined under Schedule 4.
  2. Paragraph 1 provides that other compensation can be claimed in any freehold acquisition or lease extension claim.
  3. Paragraph 2(1) provides that the qualifying tenant must pay a person reasonable compensation where that person has an interest in property which is not subject to the freehold acquisition or lease extension claim and which is devalued by that claim. The qualifying tenant must also pay reasonable compensation for any other loss or damage to that person’s other property that is caused by the claim. Subparagraph (2) provides that the loss or damage can include the loss of development value (in the property subject to the claim), to the extent that this loss is referable to that person’s other property. Subparagraph (3) provides that, in determining the amount of compensation payable in a collective enfranchisement claim, it does not matter if the freeholder could have reduced their loss by requiring a leaseback to be granted to them but chose not to do so. Subparagraph (4) sets our relevant definitions of paragraph 2.

Schedule 6 – Schedule 4 and Schedule 5: Interpretation

  1. Schedule 6 sets out the definitions of many terms used in Schedules 4 and 5.

Schedule 7 – Amendments consequential on Sections 35 to 37 and Schedules 4 to 6

  1. Paragraphs 1 to 6 of Schedule 7 amend the LRA 1967 and the LRUHDA 1993 to make two changes, which apply where multiple landlords are affected by an enfranchisement claim (and make consequential amendments to the provisions of the LRA 1967 and the LRUHDA 1993 governing the redemption of mortgages).
  2. First, where the overall price for the freehold or extended lease and all other relevant terms have been agreed between the tenant (or nominee purchaser) and the landlord who is responsible for the claim, the amendments ensure that the tenant (or nominee purchaser) can insist that the landlord completes the transfer or grant. The transfer or grant must take place even if the share of the price due to each individual landlord has not yet been agreed or determined.
  3. Secondly, the amendments ensure that the landlord responsible for the claim can receive the entire price, which they will hold on behalf of themselves and all other affected landlords. The amendments remove the power of other landlords to insist on being paid their share of the price directly. But they provide a new protection for other landlords by giving them the power to insist that the whole price must be paid into the Tribunal rather than to the landlord responsible for the claim.
  4. Paragraphs 7 to 29 make minor amendments to the LRA 1967 and the LRHUDA 1993 as a consequence of the valuation scheme in Sections 35 to 37 and Schedules 4 to 6.

Schedule 8 – Leasehold enfranchisement and extension: Miscellaneous amendments

Part 1: LRA 1967 and LHURDA 1993: General

  1. Paragraph 1 repeals Section 18 of the LRHUDA 1993 (which requires the disclose of certain agreements on a collective enfranchisement, which are relevant to payment of marriage or hope value) and makes two consequential amendments.
  2. Paragraph 2 removes the restrictions in the LRA 1967 and the LRHUDA 1993 on the extent to which a tenant whose lease has been extended can enjoy various kinds of statutory security of tenure.
  3. Given the removal of the restrictions on the enfranchisement rights of sublessees and rights to security of tenure in paragraph 2 of Schedule 8, paragraph 3 of Schedule 8 removes the obligation to state in an extended lease that is has been extended under the LRA 1967 or the LRHUDA 1993 (as applicable).
  4. Paragraph 4, sub-paragraph (1), adjusts the periods in which a landlord can apply to terminate a lease of a house that has been extended under the LRA 1967 for the purposes of redevelopment (and on payment of compensation to the tenant). The new periods take account of the change from 50-year to 990-year lease extensions – see Section 33. The landlord can apply to retake possession:
  5. in the last 12 months of the term of the tenant’s original lease (before it was replaced by the new extended lease);
    1. in the last five years of each 90-year period of the 990-year extension; and
    2. in the last five years of each 90-year period of any further 990-year extension.
  6. Sub-paragraph (2) makes the same adjustment to the periods for exercising break rights under the LRHUDA 1993 in relation to an extended lease of a flat.
  7. Paragraph 5 repeals provisions of the 1967 Act that have become redundant due to other repeals.
  8. Paragraph 6 repeals provisions of the LRA 1967 that concern the interaction between enfranchisement claims under the Act and the approval of estate management schemes under Section 19. As estate management schemes can no longer be approved, these provisions are obsolete.
  9. Paragraph 7 inserts new Section 36A into the LRA 1967, and amends paragraph 5(2) of Schedule 4A to the LRA 1967, to make unified provision for the whole of the LRA 1967 clarifying the scope of the powers under the Act to make order or regulations.
  10. Paragraph 8 repeals parts of paragraph 11 of Schedule 1 to the LRA 1967 (which lets intermediate leaseholders surrender their leases in certain circumstances during a lease extension claim) and replaces it by inserting a new paragraph 12A into Schedule 1 to the LRA 1967. Paragraph 12A enables the reduction of rent under intermediate leases as part of a lease extension claim over a house. Where a leaseholder obtains a lease extension under the LRA 1967, any rent payable for the house and premises under their lease will be reduced to a peppercorn (see Section 34(3)). Paragraph 12A provides that a tenant or landlord under a "qualifying intermediate lease" has a right to require that the rent for the house and premises under that intermediate lease, and any inferior qualifying intermediate leases, be reduced as a result of the lease extension.
  11. Paragraph 12A(1) to (7) sets out when this right applies, and provides a definition of "qualifying intermediate lease". Sub-paragraph (2) provides that, if the qualifying lease being extended is a shared ownership lease, the rent under superior leases can only be reduced if some of the rent under the qualifying lease was payable in respect of the leaseholder’s share of the house and premises, because only rent payable on that share becomes a peppercorn rent on a lease extension.
  12. Paragraph 12A(8) and (9) set out the amount by which the rent under the qualifying intermediate lease or leases is reduced, and paragraph 12A(10) provides a limit on any such reduction: an intermediate leaseholder’s rental obligation to their landlord cannot be reduced under this paragraph by more than the reduction in the rent they receive from their tenant.
  13. Paragraph 12A(11) defines a number of the terms used in the paragraph.
  14. The following example illustrates the effect that paragraph 12A has on the rents under a chain of leases and the operation of the limit in paragraph 12A(10).
    The qualifying tenant ("QT") of a house pays their landlord ("IL3") £100 each year in ground rent. There are a series of further intermediate leaseholders ("IL2", and "IL1") above IL3 but below the freeholder ("FH") in the chain. The rent each of them owes to their landlord is as follows.

    QT pays IL3: £100 per year

    IL3 pays IL2: £50 per year

    IL2 pays IL1: £100 per year

    IL1 pays FH: £75 per year

    QT makes a lease extension claim under the LRA 1967. FH gives notice to the other intermediate landlords that they must reduce the rent under their leases in accordance with paragraph 12A. Following the grant of the extended lease to QT and the variation of the ILs’ leases, the rental obligations will be as follows.

    QT pays IL3: peppercorn ground rent

    IL3 pays IL2: peppercorn ground rent

    <

    IL2 pays IL1: £50 per year

    IL1 pays FH: £25 per year

    Despite the reduction of QT’s and IL3’s rent to a peppercorn, two intermediate leaseholders (IL2 and IL1) still have ground rents after the reduction. As IL2’s rental income from IL3 is reduced by £50 per year, their rental liability to IL1 cannot be reduced by more than £50. And as IL1’s rental income is consequently reduced by £50, their rental liability to FH cannot be reduced by more than £50.

  15. Paragraph 9 inserts a new paragraph 12 into Schedule 11 to the LRHUDA 1993, which makes equivalent provision to new paragraph 12A inserted by paragraph 8, enabling the reduction of rent under intermediate leases as part of a lease extension claim over a flat.

Part 2: Shared ownership leases and the LRA 1967

  1. Paragraphs 10 to 12 amend the LRA 1967 to give shared ownership leaseholders lease extension rights. The amendment made by paragraph 12 ensures that shared ownership leaseholders do not need to have a tenancy at a low rent or meet any of the financial criteria in Section 1(1)(a) of the LRA 1967 in order to qualify for the lease extension right.
  2. Paragraph 13 inserts a new Section 33B into the LRA 1967 which sets out four conditions which, if met, will mean that a shared ownership leaseholder will be excluded from freehold acquisition rights. The conditions relate to the terms of the shared ownership lease, specifically the provision it makes for allowing the leaseholder to staircase to 100% and acquire the freehold.
  3. Paragraph 14 inserts a new paragraph 12B into Schedule 1 to the LRA 1967 which makes provision about the sharing of future staircasing payments between the shared ownership provider and superior landlords in circumstances where a shared ownership leaseholder’s lease extension is granted by a landlord superior to the shared ownership provider.
  4. Paragraph 15 inserts a new definition of "shared ownership lease" and related terms into the LRA 1967.

Part 3: Shared ownership leases and the LRHUDA 1993

  1. Paragraphs 16, 17 and 19 amend the LRHUDA 1993 to give shared ownership leaseholders lease extension rights.
  2. Paragraph 18 inserts a new Section 5A into the LRHUDA 1993 which sets out four conditions which, if met, will mean that a shared ownership leaseholder will not be a qualifying tenant for the purposes of a collective enfranchisement claim. The conditions relate to the terms of the shared ownership lease, specifically the provision they make for allowing the leaseholder to staircase to 100%.
  3. Paragraph 20 makes an amendment to Section 77 of the LRHUDA 1993 that is consequential on the definition of "shared ownership lease" being inserted into Section 101 of the LRHUDA 1993 (see paragraph 23).
  4. Paragraph 21 inserts a new paragraph 3A into Schedule 9 to the LRHUDA 1993, under which the nominee purchaser is required as part of a collective enfranchisement claim to grant a leaseback of a shared ownership leaseholder’s flat to the freeholder if they are the shared ownership provider.
  5. Paragraph 22 inserts a new paragraph 10A into Schedule 11 to the LRHUDA 1993 which makes provision about the sharing of future staircasing payments between the shared ownership provider and superior landlords in circumstances where a shared ownership leaseholder’s lease extension is granted by a landlord superior to the shared ownership provider.
  6. Paragraph 23 inserts a new definition of "shared ownership lease" and related terms into the LRHUDA 1993.

Part 4: Other legislation

  1. Paragraph 24 repeals provisions of the CLRA 2002 that have not been commenced. They would have required, in collective enfranchisement claims, the freehold to be acquired by a Right to Enfranchise company.

Schedule 9 – Part 2: Consequential amendments to other legislation

  1. Schedule 9 sets out amendments of other legislation that are consequential upon the provisions of Part 2.

Schedule 10 – Right to vary lease to replace rent with peppercorn rent

  1. Paragraph 1 explains the purpose of Schedule 10, which is to confer on a qualifying tenant the right to buy out their ground rent ("the right to a peppercorn rent"). The exercise of the right involves a variation of the tenant’s lease permanently to replace the (relevant part of the) rent with a peppercorn rent.
  2. Paragraph 2, sub-paragraphs (1) to (4) set out that tenants who qualify for a lease extension under the LRA 1967 or LRHUDA 1993 also have a right to a peppercorn rent.
  3. However, under sub-paragraph (2), the tenant must have at least 150 years left on their lease to qualify. Additionally, community housing leases and home finance plan leases, which were excepted by the Leasehold Reform (Ground Rent) Act 2022, do not qualify for the right to a peppercorn rent.
  4. Under sub-paragraphs (3)(b) and (4)(b), tenants who do not have a lease extension right because they have a tenancy of Crown land, or because they do not satisfy the low rent or rateable value tests in the LRA 1967, can still qualify to claim a peppercorn rent.
  5. Under sub-paragraphs (5) and (6), the right to a peppercorn rent only applies to the part of the rent relating to the property that would be included in a lease extension under the LRA 1967 or LRHUDA 1993. If a qualifying lease also includes additional property, the tenant cannot reduce the rent relating to that additional property to a peppercorn. For example, if a tenant has a long residential lease of a house plus neighbouring farmland, they can reduce the part of their rent that relates to the house to a peppercorn but cannot reduce any part of their rent that relates to the farmland.
  6. Under sub-paragraphs (7) and (8), if the qualifying lease is a shared ownership lease, the right to a peppercorn rent only applies to the rent payable under the lease in respect of the tenant’s share in the property (so any rent paid by the shared ownership leaseholder in respect of the landlord’s share is not affected by a claim for a peppercorn rent). Sub paragraph (9) outlines key definitions.
  7. Paragraph 3(1) provides that the right to a peppercorn rent is exercised by serving a "rent variation notice" on the landlord and any other party to the lease (for example, a management company). However, under sub-paragraph (2), a claim for a peppercorn rent cannot be made if the tenant is making or participating in an ongoing lease extension or freehold acquisition claim in relation to the property. Sub-paragraph (3) introduces paragraph 4, which makes provision about the suspension of a rent variation notice.
  8. If the right to a peppercorn rent only applies to some property let under the tenant’s lease, sub-paragraphs (4) and (5) state that the tenant must identify the relevant property in their rent variation notice. Under sub-paragraph (6), the notice must also state what premium the tenant proposes to pay and what other variations may be needed to the lease as a consequence of the reduction in rent (for example, the removal of a rent review clause).
  9. Sub-paragraphs (7) to (9) deal with how a claim for a peppercorn rent can be protected so it will continue to be effective if the landlord disposes of their interest in the property, and how a tenant can assign an ongoing claim if they sell their lease.
  10. Paragraph 4 addresses cases in which a tenant of a flat makes a claim for a peppercorn rent, but other tenants in the building bring (or are already bringing) a collective enfranchisement claim to acquire the block of flats. Paragraph 4 provides for the claim for a peppercorn rent to be suspended until the collective enfranchisement claim is completed.
  11. Paragraph 5 requires the landlord to reply to the tenant’s notice with a counter-notice before the end of the response period specified in the tenant’s notice. The landlord must be given at least two months to respond. The counter-notice must explain whether or not the landlord admits that the tenant had the right to a peppercorn rent on the relevant date, and whether or not they admit that the right applies to the portion of the rent in respect of which the right is claimed. The landlord must also respond to the proposed premium and any other consequential variations which the tenant wants to make to the lease.
  12. Paragraph 6 applies where the landlord raises a dispute in their counter-notice or where the landlord fails to give a counter-notice. Sub-paragraphs (1) and (2) allow the landlord or the tenant to apply to the tribunal to resolve the issue if the landlord’s counter-notice disputes whether the tenant has the right to a peppercorn rent, what rent that right applies to, the premium or any consequential amendments of the lease. Sub-paragraph (4) allows the tenant to apply to the tribunal to determine their claim if the landlord fails to give a counter-notice. In either case, the application must be made within six months of the counter-notice or the date on which the counter-notice should have been given.
  13. Paragraph 7 applies if the landlord admits or the tribunal determines that the tenant has a right to a peppercorn rent and all the terms of the variation of the lease (including the premium) are agreed or determined. (However, where there are several landlords, their individual shares of the premium do not have to have been determined.) The rent variation notice is then "enforceable". Under sub-paragraph (2), on payment of the premium, the landlord and tenant must execute the variation of the tenant’s lease. Under sub-paragraph (4), the variation must put in the place the peppercorn rent agreed with the landlord or, where appliable, determined by the tribunal.
  14. Sub-paragraphs (5) and (6) specify what premium is payable in exchange for the variation of the lease. The premium is the value of the landlord’s right to receive the rent that is replaced with a peppercorn rent. Subject to the three specified exceptions, the premium is the same as the "term" portion of the premium payable on a lease extension under paragraph 25 of Schedule 4.
  15. Paragraph 8 enables the reduction of rent under intermediate leases where a tenant is exercising the right to a peppercorn rent. Paragraph 8 matches the equivalent provisions that apply to lease extensions – see paragraphs 8 and 9 of Schedule 8. It allows the landlord or tenant under a relevant intermediate lease to give notice requiring the variation of their lease, and all inferior intermediate leases, to reduce their rent. The reduction in rent will account for the loss in rental income from the qualifying tenant. Under sub-paragraph (8), an intermediate leaseholder’s rental obligation to their landlord cannot be reduced under this paragraph by more than the reduction in the rent they receive from their tenant. Under sub-paragraphs (9) and (10), a landlord under an intermediate lease who suffers loss due to the variation of their lease is entitled to a share of the premium proportional to their loss.
  16. Paragraph 9 gives the tribunal the power to resolve disputes about the variation of intermediate leases under paragraph 8. It also empowers the tribunal to ensure that rent variation notices can be validly served where a landlord is missing, and, where necessary, to order that variations of intermediate leases can be executed by a person appointed by the tribunal.
  17. Paragraph 10 explains that, where a qualifying lease is not varied in accordance with paragraph 7, the landlord or tenant can apply to the tribunal. The application must be made within four months. The Tribunal–
    1. can order that the rent variation notice is to cease to have effect; or
    2. can make a suitable order to ensure the variation takes place. The tribunal’s power includes ordering that the variation of the lease should be executed by a person appointed by the tribunal in place of the landlord.
  18. Paragraph 11 deals with cases in which the landlord under the qualifying lease (or a third party to the lease) is missing. It enables the tribunal to make an order dispensing with any requirement to serve the rent variation notice on the landlord or third party. It also gives the tribunal the power to order that the variation of the qualifying lease should be executed by a person appointed by the tribunal in place of the landlord or third party.
  19. Paragraph 12(1) sets out the circumstances in which a rent variation notice ceases to have effect – for example where the notice is withdrawn (sub-paragraph (a)), where the tribunal decides the right is not exercisable (sub-paragraph (e)), or where a time limit for applying to the tribunal expires (sub-paragraphs (f) and (g)). If the notice ceases to have effect, then, under sub-paragraph (2), the landlord is under no further obligation to deal with the claim.
  20. Paragraph 13 contains the general costs rule that applies to claims for a peppercorn rent. The tenant (or a former tenant) is not liable for any costs incurred by another person because of such a claim. Sub-paragraph (3) prevents arrangements to the contrary; however, sub-paragraph (5) ensures a former tenant and their successor in title may agree how to split their costs. The general rule does not apply to litigation costs awarded by the court or tribunal (see sub-paragraph (4)).
  21. Paragraphs 14 and 15 set out two exceptions to the general costs rule in paragraph 13. These exceptions parallel those which apply to enfranchisement claims under Part 2, Sections 38 and 39.
  22. Under paragraph 14, a tenant will be liable to pay the landlord a prescribed amount of costs if their claim ceases to have effect under paragraph 12. However, these costs are not payable if the claim ceases to have effect (a) because it succeeds, or (b) due to the application of Section 55 of LHRUDA 1993 where the tenant’s house or flat is subject to compulsory purchase.
  23. Under paragraph 15, a tenant will be liable to pay the landlord an amount in costs if the premium payable under paragraph 7 for the variation of their lease is less than a prescribed amount. Where the costs incurred by the landlord are reasonable and do not exceed the prescribed amount, the tenant will be liable to pay the difference between the premium payable and the reasonable costs incurred. Where the costs incurred by the landlord are reasonable and do exceed the prescribed amount, the tenant is liable to pay the difference between the premium payable and the prescribed sum.
  24. Paragraph 16 makes provision for the landlord to serve copies of a rent variation notice on superior landlords, who may be entitled to claim a reduction in their rents under paragraph 8. If the landlord fails to serve copies of the notice on superior landlords (of whom the landlord is aware), the landlord may be liable to the superior landlords for damages for any losses suffered due to the failure to serve.
  25. Paragraph 17 requires superior landlords to serve copies of the rent variation notice on any other superior landlords of whom they are aware, unless they have been informed that those landlords have already been served. Superior landlords may be liable for damages for any losses caused because of a failure to comply with this obligation.
  26. Paragraph 18 applies where there are superior landlords who could require reduction of their rents in according with paragraph 8. The qualifying tenant’s immediate landlord (who is served with the rent variation notice under paragraph 3) is given authority to deal with the qualifying tenant’s claim for a peppercorn rent. Any agreement by the immediate landlord or determination of the tribunal is binding on the superior landlords.
  27. Paragraph 19 applies where a superior landlord has served a notice seeking reduction of the rent under their intermediate lease under paragraph 8. The immediate landlord has authority to deal with the qualifying tenant’s claim for a peppercorn rent on behalf of the relevant superior landlords. The immediate landlord may receive the premium on behalf of themselves and the other landlords and hold it pending determination of their shares under paragraph 8(9) and (10). However, any of the relevant superior landlords may require the qualifying tenant to pay the entirety of the premium into court. The superior landlords must make such contribution as is just to the immediate landlord’s costs of dealing with the claim for a peppercorn rent.
  28. Paragraph 20 sets out which provisions of the LRHUDA 1993 apply for the purposes of Schedule 10, and how these provisions may have a modified effect in relation to claims under Schedule 10.
  29. Paragraph 21 contains a power which enables regulations to be made for the purpose of giving effect to the rights of the tenant under Schedule 10. In particular, sub-paragraphs (2) and (3) explain that the regulations may make provision about notices, and sub-paragraph (4) explains that regulations may be used to amend paragraph 20.
  30. Paragraph 22 sets out the definitions for the purposes of Schedule 10.

Schedule 11 – Part 4: consequential amendments

Part 1: Amendments consequential on Section 66

  1. This Schedule, introduced by Section 70, sets out consequential amendments to reflect the insertion of Part 3 of the Act.
  2. Part 1 details amendments consequential on Section 68, with amendments being made to the LTA 1985 according to paragraphs (2) to (13).
  3. New paragraph 2(a) makes amendments to subsection (3) of Section 5 (information to be contained in rent books). Paragraph 2(b) inserts a new subsection (4) so that "a statutory instrument containing regulations under this Section is subject to the negative procedure".
  4. New paragraph 3 amends Section 10B (8) to substitute "may not be made" with "is subject to the affirmative procedure".
  5. New paragraph 4 seeks to substitute "Secretary of State" with "appropriate authority" under subsections (4) and (5) of Section 20 of the 1985 Act. New paragraph 5 substitute "Secretary of State" with "appropriate authority" under subsections (3) and (4) of Section 20ZA of the 1985 Act, omits the words from "which shall" to the end in subsection (7) and after subsection (7) inserts "a statutory instrument containing regulations under this Section is subject to the negative procedure".
  6. New paragraphs 6, 7 and 9 seek to amend Section 20E (4), Section 20F (7), Section 29A subsection (7) by substituting from "annulment" to the end with "the negative procedure".
  7. New paragraph 8 amends Section 29 of the 1985 Act in three ways: in subsection (5) substitute "Secretary of State" with "appropriate authority"; in subsection (6), omits the words from "which shall" to the end; and after subsection (6) insert a new subsection (7) "A statutory instrument containing regulations under subsection (5) is subject to the negative procedure".
  8. New paragraph 10 amends Section 30D (9) of the 1985 Act to substitute "may not be made" to the end with "is subject to the affirmative procedure".
  9. New paragraph 11 amends Section 31 of the 1985 Act substitute "Secretary of State" with "appropriate authority" under subsection (1), omits the words from "which shall" to the end in subsection (4), and after subsection (4) inserts "a statutory instrument containing regulations under this Section is subject to the negative procedure".
  10. New paragraph 12 amends Section 35 of the 1985 Act by omitting the words from "which shall" to the end in subsection (2), and after subsection (2) inserting "a statutory instrument containing regulations under this Section is subject to the negative procedure".
  11. New paragraph 13 amends paragraph 7(5) of the Schedule to the 1985 Act to substitute "Secretary of State" with "appropriate authority".

Part 2: Other consequential amendments

  1. Part 2 of Schedule 11 makes other consequential amendments to account for the new measures in Part 3 of the Act.
  2. New paragraph 15 makes changes to Section 23A of the 1985 Act by: (a) in subsection (1) replacing "section 21 to 23" with "sections 21D to 21H"; (b) in subsection (4) for "sections 21 to 23 and any regulations under Section 21" substituting "sections 21D to 21H and any regulations under those Sections", omit paragraph (b) and the "but" preceding it; an omitting paragraph (c).
  3. New paragraph 16 makes changes to Section 26 of the 1985 Act.
  4. New paragraph 17 substitute "Sections 18 to 25A do not apply" for the words from "Sections 18 to 25" to "do not apply" in Section 27 of the 1985 Act.
  5. New paragraph 18 omits paragraph 9(2) in Schedule 5 to the Housing and Planning Act 1986.
  6. New paragraph 19 seeks to omit paragraphs 1, 5 and 6 along with the italic heading preceding the paragraphs from Schedule 2 of the 1987 Act.
  7. New paragraph 20 omits paragraph 91 from Schedule 11 of the Local Government and Housing Act 1989.
  8. New paragraph 21 omits subsection (4) from Section 83 of the Housing Act 1996.
  9. New paragraph 22 omits paragraph 12 from Schedule 1 of the Housing Grants, Construction and Regeneration Act 1996.
  10. New paragraph 23 seeks to omit a number of provisions from the 2002 Act, including Sections 152-154, Section 160 (4)(d), paragraphs 4(4) and 5(4) of Schedule 7, paragraph 7 of Schedule 9, and various parts of Schedule 10.
  11. New paragraph 24 omits paragraph 32 and the italic heading preceding it from Schedule 15 to the Housing Act 2004.
  12. New paragraph 25 seeks to omit paragraphs 1 to 10 of Schedule 12 and omit the entry for the LTA1985 in Schedule 16 to the Housing and Regeneration Act 2008.
  13. New paragraph 26 omits "section 20C(2), and" from Schedule 9 to the Crime and Courts Act 2013.
  14. New paragraph 27 omits Section 128 from the Housing (Wales) Act 2014, in both the English and Welsh language texts of the Act, while new paragraph 29 omits subsection (4) and (7) to Section 112, and paragraph 17 from Schedule 8 to the Building Safety Act 2022.

Schedule 12: Redress schemes: Financial penalties

  1. Paragraph 1 deals with the procedure to be followed where an enforcement authority is considering imposing a financial penalty. Subparagraph (1) requires the enforcement authority to give the person notice of their intention to impose a financial penalty (a "notice of intent"). Subparagraph (2) sets the time limits for issuing a notice of intent – which is before the end of a 6 month period of the enforcement authority first being notified of the conduct which relates to the financial penalty. However, if the conduct continues to persist beyond that period, subparagraph (3) allows the enforcement authority to issue a notice of intent at any time that the conduct is continuing, or within the period of 6 months beginning with the last day on which the conduct occurs.
  2. Subparagraph (4) sets out the information that must be included in a notice of intent. This includes 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).
  3. Paragraph 2(1) provides that a person who has been issued with a notice of intent may make written representations to the enforcement authority about the measure to impose a financial penalty. Subparagraph (2) sets out these representations must be made within a 28 day period beginning on the day after the date on which the notice of intent was given to them (the "period for representations").
  4. Paragraph 3 deals with the actions the enforcement authority must take at the end of the period for representations. Under subparagraph (1), it must decide whether to impose a financial penalty, and if so, the amount of the financial penalty to be imposed.
  5. Paragraph 3(2) provides that if the enforcement authority decides to impose a financial penalty, it must give notice to the person of that decision (a "final notice").
  6. Paragraph 3(3) sets out that the final notice must require the penalty to be paid within a 28-day period, beginning with the day after the day on which the notice was given.
  7. Paragraph 3(4) provides that the final notice must include the following information: 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.
  8. Paragraph 4 makes clear that an enforcement authority can, at any point, withdraw either a notice of intent or final notice, or reduce an amount specified in either the notice of intent or final notice. This decision must be provided in writing to the person to whom the notice was given.
  9. Paragraph 5 sets out the process a person who wants to appeal a final notice needs to take. Subparagraph (1) sets out that a person who has received a final notice may make an appeal to the First-tier Tribunal against the decision to impose the penalty, or the amount of the penalty imposed. Subparagraph (2) makes clear an appeal must be brought within 28 days of the day on which the final notice is given to the person.
  10. Subparagraph (3) provides that if an appeal is made, the final notice is suspended until the appeal is determined, withdrawn, or abandoned.
  11. Under subparagraph (4), an appeal is to be a re-hearing of the enforcement authority’s decision, however the tribunal may determine the appeal having regard to matters of which the enforcement authority was not aware.
  12. Subparagraphs (5) and (6) provide that the Tribunal may quash, confirm, or vary the final notice on appeal. However, the Tribunal may not vary the final notice so as to impose a financial penalty more than the enforcement authority could have imposed under Section 106.
  13. Paragraph 6 applies where a person fails to pay either all or part of a financial penalty that has been imposed. Subparagraph (2) provides that 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 the court.
  14. Under paragraph 7(1), an enforcement authority may use the financial penalty towards meeting its costs and expenses (whether administrative or legal) incurred in, or associated with, any of its functions under this Part of the Act. Subparagraph (2) sets out that any additional proceeds imposed by an enforcement authority other than the Secretary of State must be paid to the Secretary of State.

Schedule 13: Part 6: Amendments to other Acts

Local Government Act 1974

  1. This Section of Schedule 13 amends the Local Government Act 1974 (LGA 1974) as set out in paragraphs 2 to 5 of this Schedule.
  2. Paragraph 2(2) to (5) of Schedule 13 makes changes to LGA 1974 Section 33 (consultation between Local Commissioner and other Commissioners and Ombudsmen).
  3. The effect of these changes is to allow a Local Commissioner (as defined by the LGA 1974) to consult the head of leasehold and estate management redress if they think that matter(s) that are subject to their investigation include a matter that could be the subject of investigation under a leasehold and estate management redress scheme, and, if necessary, inform the person who initiated the complaint how to initiate a complaint under the leasehold and estate management redress scheme.
  4. In addition, the changes provide that the head of leasehold and estate management redress must consult with the appropriate Local Commissioner if they form the opinion that a complaint under the leasehold and estate management redress scheme relates partly to a matter that could be the subject of an investigation under Part III of the LGA 1974. If the head of leasehold and estate management redress considers necessary, they must inform the complainant of how to initiate a complaint under Part III of the LGA 1974.
  5. Where a Local Commissioner consults the head of leasehold and estate management redress, or is consulted by them, they may consult them about anything relating to the matter, including the conduct of an investigation; or the form, content and publication of a report of the investigation.
  6. Paragraph 3(2) to (5) of the schedule makes changes to the LGA 1974, Section 33ZA (collaborative working between Local Commissioners and others).
  7. The effect of these changes is to allow a Local Commissioner to conduct an investigation under Part III of the LGA 1974 jointly if, when they are conducting an investigation, the Local Commissioner forms this opinion that the matter(s) in the investigation include a matter within the jurisdiction of an individual who investigates complaints under a leasehold and estate management redress scheme.
  8. Subsection (1B) (inserted by paragraph 3(4) of Schedule 13) clarifies that a matter is "within the jurisdiction" of an individual who investigates complaints under a leasehold and estate management redress scheme if it is a matter which could be the subject of an investigation under that scheme.
  9. If a Local Commissioner forms the opinion that a complaint being investigated by an individual who investigates complaints under a leasehold and estate management redress scheme relates partly to a matter within their jurisdiction, the Local Commissioner may conduct a joint investigation with them.
  10. Paragraph 4(a) and (b) of Schedule 13 amends LGA 1974, Section 33ZB (arrangements for provision of administrative and other services), subsection (4).
  11. The effect of these changes is to provide for the administrator of a leasehold and estate management redress scheme to enter into arrangements involving the Commission for Local Administration in England (as defined by LGA 1974) for the provision of administrative, professional or technical services.
  12. Paragraph 5 of Schedule 13 makes changes to LGA 1974, Section 34 (interpretation of Part 3), subsection (1). The change defines the meanings of "leasehold and estate management redress scheme" and "head of leasehold and estate management redress".

Housing Act 1996

  1. This Section of Schedule 13 makes changes to the Housing Act 1996 (HA 1996), Schedule 2, paragraph 10A (housing complaints: collaborative working with Local Commissioners) as set out in paragraph 6(2) to (6) of this Schedule.
  2. The effect of these changes is to allow a housing ombudsman (as defined in HA 1996) to conduct a joint investigation with an individual who investigates complaints under a leasehold and estate management redress scheme if the housing ombudsman conducting an investigation forms the opinion that the complaint relates partly to a matter within the jurisdiction of the redress scheme.
  3. Sub-paragraph (1A) (inserted by paragraph 6(3) of Schedule 13) clarifies that a matter is "within the jurisdiction" of an individual who investigates complaints under a leasehold and estate management redress scheme if it is a matter which could be the subject of an investigation under that scheme.
  4. In addition, if a housing ombudsman forms the opinion that a complaint which is being investigated by an individual who investigates complaints under a leasehold and estate management redress scheme relates partly to a matter within the jurisdiction of the housing ombudsman, they may conduct a joint investigation with them.
  5. Paragraph 6(6) of Schedule 13 clarifies the definition of "leasehold and estate management redress scheme" in Schedule 2, paragraph 10A of the HA 1996.

Building Safety Act 2022

  1. Paragraph 7 of Schedule 13 makes changes to Schedule 3 (Cooperation and Information Sharing) of the Building Safety Act 2022 (BSA 2022) as set out in paragraph 7(a) and (b).
  2. This provides for a leasehold and estate management redress scheme (as defined in Part 6 of the Leasehold and Freehold Reform Act) to be included as a "relevant scheme" the Building Safety Regulator (as defined in the BSA 2022) must cooperate with in the exercise of any building function of the regulator and any relevant function of the redress scheme. It also allows for the Building Safety Regulator to disclose information to a redress scheme, and for the redress scheme to disclose information to the regulator, in connection with any building functions of the regulator or any relevant functions of the redress scheme.

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