Housing Act 1985

6 (1) The lease shall contain a covenant binding on the tenant and his successors in title to pay to the landlord on demand for the outstanding share an amount determined in accordance with sub-paragraph (2) if, at a time when the tenant’s total share is less than 100 per cent., there is—

(a) a relevant disposal which is not an exempted disposal, or

(b) a compulsory disposal.

(2) The amount payable under the covenant shall be determined by the formula—

where—

P

=

the amount payable under the covenant,

V

=

the value at the time of the disposal (determined in accordance with paragraph 11) of the dwelling-house or, in the case of a compulsory disposal of a part of the dwelling-house, of the part disposed of, and

S

=

the tenant’s total share expressed as a percentage.

(3) Section 156 (liability to repay discount a charge on the premises) applies in relation to the liability that may arise under the covenant required by this paragraph as it applies in relation to the liability that may arise under the covenant required by section 155 (repayment of discount on early disposal).