Leaseholders
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January 1998
Changes Affecting Long Leaseholders
Changes introduced by the Local Government and Housing Act 1989 concerning the position of long leases that are due to expire, began to come into effect during January 1998.
Under the Act, a landlord wishing to terminate a long lease due to expire after 14 January 1999 has to offer a full monthly assured tenancy for the property, or apply to the Court for possession on specified grounds. As landlords can serve Notices up to twelve months in advance, new prescribed forms had to be available from 15 January 1998. Regulations prescribing the forms to be used under the new procedure came into force on that date.
The 1989 Act provisions replaced the system under Part I of the Landlord and Tenant Act 1954, which provided for the new tenancy to be a regulated tenancy under the Rent Act 1977. Leaseholders who came within the 1989 Act are still able to remain in possession on the same terms and rent until the landlord takes action to terminate the tenancy. The protection afforded by the 1989 Act is available to holders of long leases at low rent: a long lease is one originally granted for more than twenty-one years. Where the lease was entered into before 1 April 1990, a low rent is less than two-thirds of the rateable value on 31 March 1990. For most leases entered into from 1 April 1990, the maximum rent payable to qualify as a low rent is £1,000 a year in Greater London or £250 a year elsewhere.
July 1998
Tribunals May Settle Earlier
Disputes
Housing Minister Hilary Armstrong announced that a further Commencement Order under the Housing Act 1996 had been made, which would take effect on 11 August 1998. From that date a Court has the discretion to allow service charge disputes which started before 1st September 1997 to be transferred to Leasehold Valuation Tribunals, where the Court considers that the interests of justice would best be served.
Information Notes
The Housing Act 1996 enabled disputes over the reasonableness of service charges to be determined by Leasehold Valuation Tribunals (LVTs) rather than the Courts. LVTs are expert bodies which can deal with disputes relatively informally. Each party bears its own costs and leaseholders can, therefore, avoid the risk of high and uncertain costs associated with Court proceedings. Leaseholders or landlords can apply direct to a LVT or a Court can transfer to a LVT an issue about the reasonableness of service charges which arises in a case it is dealing with.
A Commencement Order brought these provisions into effect from 1 September 1997, except for proceedings which had already started before that date.
Following concern about the position of leaseholders who were excluded for this reason, the Government announced on 2nd June 1998that it was consulting interested parties on a proposal to make a further Commencement Order, which would give the Courts discretion to transfer service charge disputes to LVTs where proceedings started before 1st September 1997.
The Government has decided to make such an Order. It took effect from 11 August 1998 but does not apply retrospectively and does not affect cases which have already been settled between the parties, or concluded in the Courts, by this date. Leaseholders who are involved in proceedings which started before 1 September 1997 should take legal advice on the implications of this change.
November 1998
Overhaul of Leasehold System
Proposed
The Government launched a consultation paper, proposing major changes to the leasehold system in England and Wales, as a first step in an overhaul of the system.
Proposals in the consultation paper included:
The Government also announced plans to introduce a new form of tenure for flats - commonhold - which enables individual flat owners in a block to own and manage the whole building collectively from the outset. The Lord Chancellor's Department is to consult separately on this.
December 1998
Ombudsman: Mediation is Best Way of
Resolving Matters
The Independent Housing Ombudsman upheld complaints by an elderly leaseholder against Sanctuary HA, although he did not find maladministration. The inquiry concerned administration of the service charge account, consultation with residents and accounting arrangements for the sinking fund.
The Ombudsman’s report noted that the case was a good example of the breakdown of communications, which could occur between a landlord and a lessee due to cumulative errors of administration. The errors were not in themselves serious but demonstrated a lack of attention to detail.
The report also noted the efforts made by the Association to correct matters and that the complainant had not suffered major financial loss in consequence of the errors. On balance, the Ombudsman considered it necessary to voice criticism of the errors. With regard to resolving matters, he recommended that the terms of a mediation agreement already negotiated should be implemented and used as the basis for progressing, despite the past refusal of the complainant to sign it.
Investigation No. 71058 (Sanctuary HS).
December 1998
Ombudsman: Complaint About Scheme
Administration
The complainant, a lessee in a scheme for the elderly, had raised a number of detailed matters relating to the day-to-day administration of the scheme. In particular, she objected to the withdrawal of recognition of the residents’ association, of which she was Chair.
The Ombudsman’s report considered that the main issues for investigation relate to the breakdown of the relationship between the complainant and the Housing Society, its relationship with the residents’ association and a failed mediation.
In conclusion, the report did not uphold the complaints and noted that the complainant must take a large part of the blame for the breakdown in the relationship.
Investigation No. 60482 (Otter HS [a subsidiary of Beaver HS]).
|April 1999
Ombudsman: Delay in Releasing Survey
Findings
In 1994 the complainant sought to sell the leasehold of a flat. Southwark LBC was the freeholder of the house, which was divided into two flats - the other being let by the Council.
A prospective purchaser withdrew an offer following a survey. Therefore, in November 1994 the complainants asked the Council for any information it had on structural problems.
In the meantime, they took the flat off the market.
The Council had commissioned structural surveys of the house, which were carried out in July and August 1994. Works identified from the surveys were completed before the complainants made their inquiry. The Council did not provide information about the survey or the works until November 1995. The property was then put back on the market and sold in a reasonably short time.
Ombudsman, Edward Osmotherly, finds that the Council's delay was maladministration and that this caused the complainants injustice.
The Council has already paid compensation of £400 to the complainants and the Ombudsman recommends that it pays them a further £1,600 - comprising a proportion of their costs and losses and recognition of the time and trouble to which they were put.
Investigation No. 97/A/2811 (Southwark LBC).
December 1999
Leasehold Reform
Proposals for major improvements to residential leaseholders' rights, including a new automatic right for leaseholders of flats to take over the management of their building, were announced by Housing Minister, Nick Raynsford. The proposals seek to redress the imbalance between landlords and leaseholders, as well as ensure that all homeowners enjoy the same degree of security and control over their homes.
The main proposals are:
The proposals demonstrate a clear intention to raise standards of property management and to introduce changes to accounting rules to achieve greater transparency and clarity. Service charge monies will need to be kept in designated client accounts, whilst the responsibilities of auditors would be clarified.
The Government confimed that it will also consult further on ways of regulating those who manage property, and legislate if further legal controls are seen to be needed. The Government's programme included publishing a draft Bill in the current session on proposals for Commonhold and Leasehold reform. A summary of the proposals that are likely to be included in the draft Bill has also been published.
December 1999
More Help for Council Leaseholders
Housing Minister, Nick Raynsford, said Government research has shown that the great majority of the 200,000 people who had bought council flats, most of them under the Right to Buy, consider it good value for money. However, some flats, especially in blocks of non- traditional construction, were costly to maintain and some leaseholders face large bills for repairs or improvements.
He went on to say that the Government has already provided help in several ways. For example, it has issued Directions allowing, and in some cases requiring, councils and other social landlords to reduce charges which exceed £ 10,000 in any five-year period. It has provided substantial financial help to councils to reduce these bills, and has offered them financial help to buy back flats and houses from owners who can no longer cope.
The Government now planned to take three further steps:
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