Commonhold and Leasehold Reform Act 2002
The Commonhold and Leasehold Reform Act 2002 is the fifth of the five Acts relating to leasehold management. Although it took the provisions already contained in the Leasehold Reform Housing and Urban Development Act 1993 and extended them, it was a landmark act in two major areas.The first phase of the Act commenced on the 26th July 2002 and introduced a new way of purchasing residential property, that of Commonhold. This combined elements of freehold and leasehold and was set to no only give consumers a third choice of housing tenure but a change of the management of blocks of flats. Unfortunately for the consumer it never took off.
The second major right granted to leaseholders was that of Right to Manage, introduced in s71 (Part 2 Chapter 1) of this Act in September 2003 and hailed as a great right for leaseholders. Why? Because it allows them to replace current managing agents with one of their own choosing. Not only this, there is no premium payable and no need to go to court to prove ‘fault’ on the part of the freeholder. Smaller developments can choose to self manage.
This was the most radical attempt at addressing the problems caused by negligent and incompetent managing agents which has been inherent since the tenure of long leasehold was created.
s74: RTM companies: membership and regulations
s75: Qualifying tenants
s76: Long leases
s77: Long leases: further provisions
s81: Claim notice: supplementary
s85: Landlords etc, not traceable
s86: Withdrawal of claim notice
s87: Deemed withdrawal
s88: Costs: general
s89: Costs where claim ceases
s90: The acquisition date
s94: Duty to pay accrued uncommitted service charges
s96: Management function under leases
s97: Management functions: supplementary
s98: Functions relating to approvals
s99: Approvals: supplementary
s100: Enforcement of tenant covenants
s101: Tenant covenants: monitoring and reporting
s102: Statutory functions
s103: Landlords’ contribution to service charges
s105: Cessation of management
s106: Agreements excluding or modifying right
s107: Enforcement of obligations
s108: Application to crown
s109: Powers of trustees in relation to right
s110: Power to prescribe procedure
113: Index of defined expressions
PHASE 2 of the Act came into effect on the 30th September 2003 and ‘improves’ the definition of service charges (s150) and widens the scope of the FTT as follows:
- Determining the liability to pay service charges (s155),
- Determining the reasonableness of administration charges payable under a lease (s158, Schedule 11), lease variations (s163)
- Determining charges payable under Estate Management Schemes (s159).
Part 2 of Phase 2 came in on 31st October 2003 and improves the rights for leaseholders paying variable service charges to be consulted about long term agreements and qualifying works.
PHASE 3 of the Act commenced on 25th February 2005 and provides the following:
- Fixes the valuation date for collective enfranchisement of flats at the date that the initial notice is served (s134).
- Freeholders of houses are now prevented from insisting that leaseholders use a particular insurance company nominated or approved by them to insure their house (s164).
This phase also saw s104 of the 2002 Act repealed. Whilst it amended s21 of the Land Registration Act 1925 to allow for notice to be entered in the register in respect of the Right to Manage, the Land Registration Act 1925 has itself been replaced by the Land Registration Act 2002 making s104 of the Commonhold and Leasehold Reform Act 2002 redundant.