Commonhold & Leasehold Reform Act 2002 The never-ending story

1. Chartered Institute of Housing Commonhold & Leasehold Reform Act 2002The never-ending story Peter Haler

2. Sections awaiting commencement • S121-124 – RTE companies, right to participate • S152 – Statements of account • S153 – Notice to accompany demands • S154 – Inspection of documents • S156 – Separate bank accounts

3. S152 – Statements of account • Landlord must provide annual statement • Service charge account for the leaseholder and “associated dwellings” • Costs and outgoings • Amount standing in credit to leaseholder • Must be certified by an accountant • “deals fairly with matters/sufficiently supported”

4. “Associated dwellings” • “…a dwelling is associated with another dwelling if the obligations of the tenants of the dwellings under the terms of their leases as regards contributing to relevant costs relate to the same costs” • How to separate income within HRA • Global accounting, PFI contracts

5. “Certified by an accountant” • What is the accountant certifying? • What is the value of the certificate? • Cost implications

6. Right to with-hold payment • Statutory right for leaseholder to with-holdpayment of service charges if – • Annual statement not provided in time, or in correct format • Landlord cannot take steps for recovery without remedying default • Application to LVT for “reasonable excuse”

7. Commencement • DCLG acknowledge requires primary legislation to amend provisions • Consultation on draft regs Jan 2007? • Parliamentary session October 2007? • Commencement April 2008?

8. S153 – Summary of rights • “A demand for the payment of a service charge must be accompanied by a summary of the rights and obligation of tenants…” • Right to with-hold payment if not provided • NB! – already in place for Admin charges

9. S153 – Summary of rights • Every demand – or just first demand? • Served on assignment of leases? • Is there power to specify in Regulations? • Do Government see this as desirable? • How to ensure/prove service? • Burdens and environmental impact

10. Commencement • Both summaries drafted, mini-consultations identified minor problems • Regulations to be laid January 2007? • Implementation 1st April 2007?

11. Working with CLRA • Demands for groundrent • Forfeiture/arrears control • S20 consultation • Administration charges • LVT jurisdiction

12. So what’s wrong with S20? • Timescales • Early service of Notice of Intention? • Inability to react to market • Urgent/unforeseen works • Provision of costs in long-term contracts • Different requirements Sch 1/Sch 2 etc

13. S20ZA dispensations • Inability to provide costs (PFI/Sch 2) • London Borough of Southwark – 1752 • London Borough of Barnet – 1458 • Bulk gas supplies, volatile market • London Borough of Camden – 1622 & 2258

14. S20ZA dispensations • Urgent works/services • London Borough of Islington – 2099 • Calthorpe Mansions Management Company – 1971 • Circle 33 – 2168 • Unforeseen works • Grosvenor Estate - 2137

15. S20ZA dispensations • Insurance • Westcountry Housing Association – 2051 • Costs limited to £100 despite savings achieved for leaseholders

16. Administration charges • Demand not recoverable without statement of rights • Ward v AH Field – 1095 • Must be reasonable • Cooke v Muhammad – 1532 • Smith v Abbeyladder – 1511

17. Liability to pay service charge • LVT jurisdiction to interpret lease • Are costs “payable”? (S27A) • Chargeable works interpreted as improvements, not repairs • London Borough of Sutton – 1239

18. Landlord’s neglect • Who pays for repairs arising from previous neglect? • White v Continental Property – 1573A • London Borough of Camden – 1639 • Turn on interpretation of S19 “reasonableness” • Lands Tribunal (White v Continental) • Claimable damages not “payable” under S27A

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