Sections Replaced, Amended and Unimplemented
With regard to major works, s151 of the Commonhold and Leasehold Reform Act replaced s20 of the Landlord and Tenant Act 1985 and split it into two parts: qualifying works for works to the building and qualifying long term agreements. It also introduced a new section, 20ZA, all with effect from 31st October 2003 (not Wales). The existing sections 20A, 20B and 20C were not affected.
On the 29th July 2005 the former ODPM (Office of the Deputy Prime Minister) announced that it would not be possible to introduce some of the new proposed accounting measures contained within s152 of the Commonhold and Leasehold Reform Act 2002 (statement of account) without imposing considerable extra costs on social landlords and their leaseholders. Subsequently it would not be commenced pending further consultation which might include new primary legislation. It was accepted that the provision, as drafted, was not fully workable although the Government remained committed to the principle of the annual statement. Commencement was not anticipated before 2007 and the proposals that were being developed to amend the legislation were to ensure that both private and public sector leaseholders received appropriate information that did not incur a disproportionate cost to them.
s153 (notice to accompany demands for service charges) amends that of s21b of the Landlord and Tenant Act 1985 and requires that every demand made for service charges must be accompanied with information on leaseholders rights in relation to those charges and those of administration charges.
If a demand for service charge or administration charges is not accompanied by a summary of the rights and obligations of the leaseholder then leaseholders have the right to withhold payment, and any provisions in the lease relating to non payment or late payment do not have effect as long as the landlord remains in breach of these obligations.
Note: This was under Phase 4 of the Act which came into effect on 1st October 2007
s154 (inspection etc of documents) replaces the request to inspect documents supporting the summary of relevant costs under s22 of the Landlord and Tenant Act 1985. Leaseholders of a recognised tenants association (not individual leaseholders) have the right to inspect documents relating to the service charge as a follow-up to provide more detail on the summary. Within a period of six months from receipt of the summary, the service charge payer (or the secretary) may write to the landlord requiring him to allow access to and inspection of the accounts, receipts and any other documents relevant to the service charge information in the summary and to provide facilities for them to be copied.
Facilities for inspection must be provided within one month of the request, and must be available for a period of two months.
s156 (service charges to be held in a separate designated account) were also not enacted for the same reasons as s152 so it remains as per s42 of the Landlord and Tenant Act 1987 (service charge contributions to be held in trust).
In December 2008, Leasehold Life contacted the CLG asking about the implementation of s152 and s156 and received this in response:
‘Difficulties were encountered in implementing these sections as they stood in the 2002 Act which meant that the primary legislation had to be amended. A consultation paper dealing with these sections was published in July 2007 ‘A Consultation Paper On Regular Statements Of Accounts And Designated Clients Accounts’ (s152 and 156) with a summary of responses being published in January 2008. Changes to the primary legislation have now been amended using the Housing and Regeneration Act 2008. Rather than the clauses relating to ‘a regular statement of account’ they now refer to the ‘provision of information’ and the ‘accountant’s report’ has now been replaced with that of a report by a ‘qualified person’. These amendments are necessary to ensure that the regular statement of account and designated client accounts provisions can work both effectively and efficiently in providing the intended transparency about service charge monies. The detailed requirements for these provision, which are still being worked on, will be introduced through regulations, although at this stage it is not possible to give a date as to when these will come into force
s158 Schedule 11 (administration charges): Landlords used to be able to arbitrarily charge for giving their consent in a number of areas that were not covered by statutory charges imposed by leasehold legislation. Leaseholders had been unable to challenge these payments as to their reasonableness, but such charges came under a new legal category, administration charges.
Whilst they may be considered management fees, they are not defined in Landlord and Tenant law because they are neither service charges nor ground rent.