EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations apply in relation to England.
Part 1 of the Leasehold Reform Act 1967 (c. 88) (“the Act”) enables tenants of leasehold houses to exercise the right to enfranchisement in respect of the landlord’s interest in the house, subject to certain exceptions. Schedule 4A to the Act (which was inserted by Schedule 4 to the Housing and Planning Act 1986 (c. 63)) makes provision for certain shared ownership leases to be excluded from the provisions of Part 1 of the Act. Sections 301 and 302 of the Housing and Regeneration Act 2008 (c. 17) amend Schedule 4A by providing for the other types of shared ownership lease that are described in paragraphs 3A and 4A of that Schedule to be excluded from the provisions of Part 1 of the Act if certain conditions are met.
Paragraph 3A(1) of Schedule 4A provides that a lease other than one falling within paragraph 3 (which deals with housing association leases) is excluded from Part 1 of the Act if it meets certain conditions and does not fall within any prescribed exemptions. Regulations 4 to 7 of these Regulations prescribe additional conditions, circumstances and requirements in relation to leases other than housing association leases.
Regulation 3 defines the term “market value price” which is used for the purpose of ascertaining the amount payable by the landlord or the tenant for shares in a house under these Regulations.
Regulation 4 requires such leases to set out the amount of any rent payable, and the basis for calculating or determining any increase in the rent payable.
Regulation 5 prescribes the requirements as to additional shares that a tenant may purchase in the house, when those shares may be purchased, and the way in which the price for those shares is to be ascertained.
Regulation 6 prescribes the circumstances in which a landlord may require payment by the tenant for outstanding shares in the house, including when there has been a disposal of the house, and the way in which the amount payable for the shares is to be ascertained.
Regulation 7 prescribes the requirements that apply for the purpose of enabling the tenant to acquire the landlord’s interest in the house, including when that interest may be acquired.
Paragraph 4A(1) of Schedule 4A to the Act provides that a lease that does not fall within paragraph 3 or 3A of Schedule 4A is excluded from the provisions of Part 1 of the Act if the lease meets the conditions described in that paragraph and paragraph 4A(2) and does not fall within any prescribed exemptions; and if the house is in a protected area. The Housing (Right to Enfranchise) (Designated Protected Areas) (England) Order 2009 (SI 2009/2098) designates certain areas as protected areas under paragraph 4A(1) of Schedule 4A. Regulations 8 to 10 of these Regulations prescribe additional conditions, circumstances and requirements under paragraph 4A(1) and (2) of Schedule 4A.
Regulation 8(1) prescribes the conditions that must be contained in a lease. A lease must either restrict the shares a tenant may acquire in the house to 80 per cent of the total shares or, where a tenant is able to acquire more than 80 per cent, the lease must provide that where a tenant has acquired more than 80 per cent and wishes to sell any shares, the tenant must sell all of them back to the landlord or to a housing association or registered social landlord nominated by the landlord. If the landlord (or nominated housing association or registered social landlord) fails to purchase the shares within the period required under the conditions of the lease, the lease must enable the tenant to dispose of the shares in such manner as the tenant sees fit. Regulation 8(3)(b) prescribes how the sale price of the shares in the house is to be ascertained. Regulation 8(6) requires the lease granted by a landlord other than a housing association or registered social landlord to set out the amount of any rent payable and the basis for calculating or determining any increase in the rent payable.
Regulations 9 and 10 prescribe requirements relating to the acquisition by the tenant of additional shares in the house and the circumstances in which a landlord may require payment by the tenant for outstanding shares in the house. These mirror the provisions contained in regulations 5 and 6 described above.
An impact assessment has been prepared in respect of these Regulations. It has been deposited in the Library of each House of Parliament and is available from the Department for Communities and Local Government, Eland House, Bressenden Place, London SW1E 5DR or email leaseholdenfranchisement@communities.gsi.gov.uk