Part I LANDLORD AND TENANT
C1Chapter I COLLECTIVE ENFRANCHISEMENT IN CASE OF TENANTS OF FLATS
Preliminary
1 The right to collective enfranchisement.
1
This Chapter has effect for the purpose of conferring on qualifying tenants of flats contained in premises to which this Chapter applies on the relevant date the right, exercisable subject to and in accordance with this Chapter, to have the freehold of those premises acquired on their behalf—
a
by a person or persons appointed by them for the purpose, and
b
at a price determined in accordance with this Chapter;
and that right is referred to in this Chapter as “the right to collective enfranchisement”.
2
Where the right to collective enfranchisement is exercised in relation to any such premises (“the relevant premises”)—
a
the qualifying tenants by whom the right is exercised shall be entitled, subject to and in accordance with this Chapter, to have acquired, in like manner, the freehold of any property which is not comprised in the relevant premises but to which this paragraph applies by virtue of subsection (3); and
b
section 2 has effect with respect to the acquisition of leasehold interests to which paragraph (a) or (b) of subsection (1) of that section applies.
3
Subsection (2)(a) applies to any property if F1. . . at the relevant date either—
a
it is appurtenant property which is demised by the lease held by a qualifying tenant of a flat contained in the relevant premises; or
b
it is property which any such tenant is entitled under the terms of the lease of his flat to use in common with the occupiers of other premises (whether those premises are contained in the relevant premises or not).
4
The right of acquisition in respect of the freehold of any such property as is mentioned in subsection (3)(b) shall, however, be taken to be satisfied with respect to that property if, on the acquisition of the relevant premises in pursuance of this Chapter, either—
a
there are granted by the F2person who owns the freehold of that property—
i
over that property, or
ii
over any other property,
such permanent rights as will ensure that thereafter the occupier of the flat referred to in that provision has as nearly as may be the same rights as those enjoyed in relation to that property on the relevant date by the qualifying tenant under the terms of his lease; or
b
there is acquired from the F2person who owns the freehold of that property the freehold of any other property over which any such permanent rights may be granted.
5
A claim by qualifying tenants to exercise the right to collective enfranchisement may be made in relation to any premises to which this Chapter applies despite the fact that those premises are less extensive than the entirety of the premises in relation to which those tenants are entitled to exercise that right.
6
Any right or obligation under this Chapter to acquire any interest in property shall not extend to underlying minerals in which that interest subsists if—
a
the owner of the interest requires the minerals to be excepted, and
b
proper provision is made for the support of the property as it is enjoyed on the relevant date.
7
In this section—
“appurtenant property”, in relation to a flat, means any garage, outhouse, garden, yard or appurtenances belonging to, or usually enjoyed with, the flat;
F1. . .
“the relevant premises” means any such premises as are referred to in subsection (2).
8
In this Chapter “the relevant date”, in relation to any claim to exercise the right to collective enfranchisement, means the date on which notice of the claim is given under section 13.
2 Acquisition of leasehold interests.
1
Where the right to collective enfranchisement is exercised in relation to any premises to which this Chapter applies (“the relevant premises”), then, subject to and in accordance with this Chapter—
a
there shall be acquired on behalf of the qualifying tenants by whom the right is exercised every interest to which this paragraph applies by virtue of subsection (2); and
b
those tenants shall be entitled to have acquired on their behalf any interest to which this paragraph applies by virtue of subsection (3);
and any interest so acquired on behalf of those tenants shall be acquired in the manner mentioned in paragraphs (a) and (b) of section 1(1).
2
Paragraph (a) of subsection (1) above applies to the interest of the tenant under any lease which is superior to the lease held by a qualifying tenant of a flat contained in the relevant premises.
3
Paragraph (b) of subsection (1) above applies to the interest of the tenant under any lease (not falling within subsection (2) above) under which the demised premises consist of or include—
a
any common parts of the relevant premises, or
b
any property falling within section 1(2)(a) which is to be acquired by virtue of that provision,
where the acquisition of that interest is reasonably necessary for the proper management or maintenance of those common parts, or (as the case may be) that property, on behalf of the tenants by whom the right to collective enfranchisement is exercised.
4
Where the demised premises under any lease falling within subsection (2) or (3) include any premises other than—
a
a flat contained in the relevant premises which is held by a qualifying tenant,
b
any common parts of those premises, or
c
any such property as is mentioned in subsection (3)(b),
the obligation or (as the case may be) right under subsection (1) above to acquire the interest of the tenant under the lease shall not extend to his interest under the lease in any such other premises.
5
Where the qualifying tenant of a flat is a public sector landlord and the flat is let under a secure tenancy F3or an introductory tenancyF43or a secure contract (or an introductory standard contract), then if—
a
the condition specified in subsection (6) is satisfied, and
b
the lease of the qualifying tenant is directly derived out of a lease under which the tenant is a public sector landlord,
the interest of that public sector landlord as tenant under that lease shall not be liable to be acquired by virtue of subsection (1) to the extent that it is an interest in the flat or in any appurtenant property; and the interest of a public sector landlord as tenant under any lease out of which the qualifying tenant’s lease is indirectly derived shall, to the like extent, not be liable to be so acquired (so long as the tenant under every lease intermediate between that lease and the qualifying tenant’s lease is a public sector landlord).
6
The condition referred to in subsection (5)(a) is that either—
a
b
he is the landlord under a lease which is superior to the secure tenancy F5or, as the case may be, the introductory tenancyF45or the secure contract (or the introductory standard contract) and the tenant under that lease, and the tenant under every lease (if any) intermediate between it and the secure tenancy F5or the introductory tenancyF45or the secure contract (or the introductory standard contract), is also a public sector landlord;
and in subsection (5) “appurtenant property” has the same meaning as in section 1.
7
In this section “the relevant premises” means any such premises as are referred to in subsection (1).
3 Premises to which this Chapter applies.
1
Subject to section 4, this Chapter applies to any premises if—
a
they consist of a self-contained building or part of a building F6. . .;
b
they contain two or more flats held by qualifying tenants; and
c
the total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises.
2
For the purposes of this section a building is a self-contained building if it is structurally detached, and a part of a building is a self-contained part of a building if—
a
it constitutes a vertical division of the building and the structure of the building is such that that part could be redeveloped independently of the remainder of the building; and
b
the relevant services provided for occupiers of that part either—
i
are provided independently of the relevant services provided for occupiers of the remainder of the building, or
ii
could be so provided without involving the carrying out of any works likely to result in a significant interruption in the provision of any such services for occupiers of the remainder of the building;
and for this purpose “relevant services” means services provided by means of pipes, cables or other fixed installations.
4 Premises excluded from right.
1
This Chapter does not apply to premises falling within section 3(1) if—
a
any part or parts of the premises is or are neither—
i
occupied, or intended to be occupied, for residential purposes, nor
ii
comprised in any common parts of the premises; and
b
the internal floor area of that part or of those parts (taken together) exceeds F725 per cent. of the internal floor area of the premises (taken as a whole).
2
Where in the case of any such premises any part of the premises (such as, for example, a garage, parking space or storage area) is used, or intended for use, in conjunction with a particular dwelling contained in the premises (and accordingly is not comprised in any common parts of the premises), it shall be taken to be occupied, or intended to be occupied, for residential purposes.
3
For the purpose of determining the internal floor area of a building or of any part of a building, the floor or floors of the building or part shall be taken to extend (without interruption) throughout the whole of the interior of the building or part, except that the area of any common parts of the building or part shall be disregarded.
F83A
Where different persons own the freehold of different parts of premises within subsection (1) of section 3, this Chapter does not apply to the premises if any of those parts is a self-contained part of a building for the purposes of that section.
4
This Chapter does not apply to premises falling within section 3(1) if the premises are premises with a resident landlord and do not contain more than four units.
F95
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.
4AF29 RTE companies
1
A company is a RTE company in relation to premises if—
a
it is a private company limited by guarantee, and
b
its F34articles of association state 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.
4B RTE companies: membership
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.
4C RTE companies: regulations
1
The Secretary of State shall by regulations make provision about the content and form of the F35articles of association of RTE companies.
2
A RTE company may adopt provisions of the regulations for its F36articles.
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 F37articles 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 F38articles—
a
irrespective of the date of F39the articles, but
b
subject to any transitional provisions of the regulations.
F406
Section 20 of the Companies Act 2006 (default application of model articles) does not apply to a RTE company.
5 Qualifying tenants.
1
Subject to the following provisions of this section, a person is a qualifying tenant of a flat for the purposes of this Chapter if he is tenant of the flat under a long lease F10. . . .
2
Subsection (1) does not apply where—
a
the lease is a business lease; or
b
the immediate landlord under the lease is a charitable housing trust and the flat forms part of the housing accommodation provided by it in the pursuit of its charitable purposes; or
c
the lease was granted by sub-demise out of a superior lease other than a long lease F11. . . , the grant was made in breach of the terms of the superior lease, and there has been no waiver of the breach by the superior landlord;
3
No flat shall have more than one qualifying tenant at any one time.
4
Accordingly—
a
where a flat is for the time being let under two or more leases to which subsection (1) applies, any tenant under any of those leases which is superior to that held by any other such tenant shall not be a qualifying tenant of the flat for the purposes of this Chapter; and
b
where a flat is for the time being let to joint tenants under a lease to which subsection (1) applies, the joint tenants shall (subject to paragraph (a) and subsection (5)) be regarded for the purposes of this Chapter as jointly constituting the qualifying tenant of the flat.
5
Where apart from this subsection—
a
a person would be regarded for the purposes of this Chapter as being (or as being among those constituting) the qualifying tenant of a flat contained in any particular premises consisting of the whole or part of a building, but
b
that person would also be regarded for those purposes as being (or as being among those constituting) the qualifying tenant of each of two or more other flats contained in those premises,
then, whether that person is tenant of the flats referred to in paragraphs (a) and (b) under a single lease or otherwise, there shall be taken for those purposes to be no qualifying tenant of any of those flats.
6
For the purposes of subsection (5) in its application to a body corporate any flat let to an associated company (whether alone or jointly with any other person or persons) shall be treated as if it were so let to that body; and for this purpose “associated company” means another body corporate which is (within the meaning of F41section 1159 of the Companies Act 2006) that body’s holding company, a subsidiary of that body or another subsidiary of that body’s holding company.
6 Qualifying tenants satisfying residence condition.
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 Meaning of “long lease”.
1
In this Chapter “long lease” means (subject to the following provisions of this section)—
a
a lease granted for a term of years certain exceeding 21 years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture or otherwise;
b
a lease for a term fixed by law under a grant with a covenant or obligation for perpetual renewal (other than a lease by sub-demise from one which is not a long lease) or a lease taking effect under section 149(6) of the M2Law of Property Act 1925 (leases terminable after a death or marriage F30or the formation of a civil partnership);
c
a lease granted in pursuance of the right to buy conferred by Part V of the M3Housing Act 1985 or in pursuance of the right to acquire on rent to mortgage terms conferred by that Part of that Act; or
d
a shared ownership lease, whether granted in pursuance of that Part of that Act or otherwise, where the tenant’s total share is 100 per cent. F13or
e
a lease granted in pursuance of that Part of that Act as it has effect by virtue of section 17 of the Housing Act 1996 (the right to acquire)
2
A lease terminable by notice after F31a death, a marriage or the formation of a civil partnership is not to be treated as a long lease for the purposes of this Chapter if—
a
the notice is capable of being given at any time after the death or marriage of F32, or the formation of a civil partnership by, the tenant;
b
the length of the notice is not more than three months; and
c
the terms of the lease preclude both—
i
its assignment otherwise than by virtue of section 92 of the Housing Act 1985 (assignments by way of exchange), and
ii
the sub-letting of the whole of the premises comprised in it.
3
Where the tenant of any property under a long lease F14. . . , on the coming to an end of that lease, becomes or has become tenant of the property or part of it under any subsequent tenancy (whether by express grant or by implication of law), then that tenancy shall be deemed for the purposes of this Chapter (including any further application of this subsection) to be a long lease irrespective of its terms.
4
Where—
a
a lease is or has been granted for a term of years certain not exceeding 21 years, but with a covenant or obligation for renewal without payment of a premium (but not for perpetual renewal), and
b
the lease is or has been renewed on one or more occasions so as to bring to more than 21 years the total of the terms granted (including any interval between the end of a lease and the grant of a renewal),
this Chapter shall apply as if the term originally granted had been one exceeding 21 years.
5
References in this Chapter to a long lease include—
a
b
any period during which the lease was continued under the M6Leasehold Property (Temporary Provisions) Act 1951.
6
Where in the case of a flat there are at any time two or more separate leases, with the same landlord and the same tenant, and—
a
the property comprised in one of those leases consists of either the flat or a part of it (in either case with or without any appurtenant property), and
b
the property comprised in every other lease consists of either a part of the flat (with or without any appurtenant property) or appurtenant property only,
then in relation to the property comprised in such of those leases as are long leases, this Chapter shall apply as it would if at that time—
i
there were a single lease of that property, and
ii
that lease were a long lease;
but this subsection has effect subject to the operation of subsections (3) to (5) in relation to any of the separate leases.
7
In this section—
“appurtenant property” has the same meaning as in section 1;
“shared ownership lease” means a lease—
- a
granted on payment of a premium calculated by reference to a percentage of the value of the demised premises or the cost of providing them, or
- b
under which the tenant (or his personal representatives) will or may be entitled to a sum calculated by reference, directly or indirectly, to the value of those premises; and
- a
“total share”, in relation to the interest of a tenant under a shared ownership lease, means his initial share plus any additional share or shares in the demised premises which he has acquired.
8 Leases at a low rent.
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8A Meaning of “particularly long term”.
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 The reversioner and other relevant landlords for the purposes of this Chapter.
1
Where, in connection with any claim to exercise the right to collective enfranchisement in relation to any premises F17the freehold of the whole of which is owned by the same person, it is not proposed to acquire any interests other than—
a
the freehold of the premises, or
b
any other interests of the person who owns the freehold of the premises,
that person shall be the reversioner in respect of the premises for the purposes of this Chapter.
2
Where, in connection with any such claim F18as is mentioned in subsection (1), it is proposed to acquire interests of persons other than the person who owns the freehold of the premises to which the claim relates, then—
a
the reversioner in respect of the premises shall for the purposes of this Chapter be the person identified as such by Part I of Schedule 1 to this Act; and
b
the person who owns the freehold of the premises F19every person who owns any freehold interest which it is proposed to acquire by virtue of section 1(2)(a),, and every person who owns any leasehold interest which it is proposed to acquire under or by virtue of section 2(1)(a) or (b), shall be a relevant landlord for those purposes.
F202A
In the case of any claim to exercise the right to collective enfranchisement in relation to any premises the freehold of the whole of which is not owned by the same person—
a
the reversioner in respect of the premises shall for the purposes of this Chapter be the person identified as such by Part IA of Schedule 1 to this Act, and
b
every person who owns a freehold interest in the premises, every person who owns any freehold interest which it is proposed to acquire by virtue of section 1(2)(a), and every person who owns any leasehold interest which it is proposed to acquire under or by virtue of section 2(1)(a) or (b), shall be a relevant landlord for those purposes.
3
Subject to the provisions of Part II of Schedule 1, the reversioner in respect of any premises shall, in a case to which subsection (2) F21or (2A) applies, conduct on behalf of all the relevant landlords all proceedings arising out of any notice given with respect to the premises under section 13 (whether the proceedings are for resisting or giving effect to the claim in question).
4
Schedule 2 (which makes provision with respect to certain special categories of landlords) has effect for the purposes of this Chapter.
10 Premises with a resident landlord.
F221
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.
2
F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F254
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.
4A
F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
For the purposes of this section a person is an adult member of another’s family if that person is—
a
the other’s F33spouse or civil partner; or
b
a son or daughter or a son-in-law or daughter-in-law of the other, or of the other’s F33spouse or civil partner, who has attained the age of 18; or
c
the father or mother of the other, or of the other’s F33spouse or civil partner;
and in paragraph (b) any reference to a person’s son or daughter includes a reference to any stepson or stepdaughter of that person, and “son-in-law” and “daughter-in-law” shall be construed accordingly.
6
In this section—
Pt. 1 Ch. 1: power to amend conferred (20.1.2007) by Companies Act 2006 (c. 46), ss. 1181(1)(a), 1300(2); S.I. 2006/3428, art. 3(3) (with arts. 6, 8(2))