The Housing Act 1996 wasn’t a new Act as it only made amendments to the 1993 Act such as:

  1. Making it easier or leaseholders to challenge unreasonable service charges by taking their freeholders to the LVT (which is now the First Tier Tribunal). If they are ruled as fair then they are payable, if they stay in dispute then under s81 of the Act (restriction of termination of tenancy for failure to pay service charges), until it has been established that the charges are reasonable (by agreement, admission of the leaseholder or by the decision of a court or tribunal), the freeholder is prevented from forfeiting the lease. However, under s82 of the Act (notice under s146 of the Law of Property Act 1925: restrictions on and relief against forfeiture of leases and underleases)  the landlord would be indicating that whilst he has elected to forfeit the lease, such a notice has to contain certain information drawing to the attention of the tenant the effect and provisions of s81.
  2. The Right of First Refusal (introduced in the Landlord and Tenant Act 1985) is strengthened by making it a summary offence to sell the freehold to a third-party without having first offered it to the flat owners and a fine of up to £5,000 can be imposed on freeholders who fail to comply. Where a property has been sold without offering leaseholders the right to buy, the new freeholder also has the responsibility to offer leaseholders the option of purchase. If they fail to do so then that too is now a criminal offence, and can lead to a fine of £2,500. A majority of leaseholders must vote “yes” for the right of first refusal to be exercised.
  3. The rights of leaseholders to collectively enfranchise (buy the freehold) are further extended.
  4. Companies can no longer sell properties to an associated company, and then sell the equity stake or replace the board of directors, as the law previously allowed them to do.
  5. Leaseholders are able to appoint a surveyor to get landlords to give access to buildings, accounts and other documents, in turn enforceable by court order. This is a direct follow-on from the right of leaseholders to get a management audit in the 1993 Act.
  6. A common ground for complaint was where the freeholder’s manager chose to take out unnecessarily expensive insurance (for the commission) or give building work to associated companies which then overcharged. Under this legislation, courts can appoint a new manager where service or repair charges are excessive.

The fifth main Act of Parliament relating to block management is that of the Commonhold and Leasehold Reform Act 2002. An overview can be found here.



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