Housing Act 1996

18 (1) Schedule 6 (purchase price payable by nominee purchaser) shall be amended as follows. E+W

(2) In paragraph 1(1) (interpretation)—

(a) the definition of “the freeholder” shall be omitted, and

F1 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In paragraph 2 (price payable for the freehold of the specified premises), in sub-paragraph (1)—

(a) after “this paragraph,” there shall be inserted “ where the freehold of the whole of the specified premises is owned by the same person ”, and

(b) for “the specified” there shall be substituted “ those ”.

(4) In paragraph 3(1A), after paragraph (b) there shall be inserted—

“(ba) an owner of an interest which the nominee purchaser is to acquire in pursuance of section 1(2)(a), or”.

(5) After paragraph 5 there shall be inserted—

“ Price payable for freehold of part of specified premises E+W

5A (1) Where different persons own the freehold of different parts of the specified premises—

(a) a separate price shall be payable by the nominee purchaser for the freehold of each of those parts, and

(b) sub-paragraph (2) shall apply to determine the price so payable.

(2) Subject to sub-paragraph (3), the price payable by the nominee purchaser for the freehold of part of the specified premises shall be the aggregate of—

(a) the value of the freeholder’s interest in the part as determined in accordance with paragraph 3, modified as mentioned in paragraph 5B, and

(b) the freeholder’s share of the marriage value as determined in accordance with paragraph 4, modified as mentioned in paragraph 5C, and

(c) any amount of compensation payable to the freeholder under paragraph 5.

(3) Where the amount arrived at in accordance with sub-paragraph (2) is a negative amount, the price payable by the nominee purchaser for the freehold of the part shall be nil.

5B (1) In its application in accordance with paragraph 5A(2)(a), paragraph 3 shall have effect with the following modifications.

(2) In sub-paragraph (1)(a)(ii), there shall be inserted at the end “so far as relating to the part of the premises in which the freeholder’s interest subsists”.

(3) In sub-paragraph (1A), after paragraph (a) there shall be inserted—

“(aa) an owner of a freehold interest in the specified premises, or”.

(4) In sub-paragraph (4)—

(a) the words “the whole of” shall be omitted, and

(b) for “2(1)(a)” there shall be substituted “5A(2)(a)”.

5C (1) In its application in accordance with paragraph 5A(2)(b), paragraph 4 shall have effect with the following modifications.

(2) In sub-paragraph (2)—

(a) after “the specified premises” there shall be inserted “so far as relating to the part of the premises in which the freeholder’s interest subsists”,

(b) after “participating tenants”, where it first occurs, there shall be inserted “in whose flats the freeholder’s interest subsists”, and

(c) in paragraph (a), for “the”, where it second occurs, there shall be substituted “those”.

(3) In sub-paragraph (3)—

(a) after “the specified premises” there shall be inserted “so far as relating to the part of the premises in which the freeholder’s interest subsists”, and

(b) in paragraph (a), for “2(1)(a)” there shall be substituted “5A(2)(a)”.

(4) In sub-paragraph (4)(a), after “3(1)”, where it first occurs, there shall be inserted “as applied by paragraph 5A(2)(a)”.”.

(6) For paragraph 8 there shall be substituted—

“8 (1) Where the owner of the intermediate leasehold interest will suffer any loss or damage to which this paragraph applies, there shall be payable to him such amount as is reasonable to compensate him for that loss or damage.

(2) This paragraph applies to—

(a) any diminution in value of any interest of the owner of the intermediate leasehold interest in other property resulting from the acquisition of his interest in the specified premises; and

(b) any other loss or damage which results therefrom to the extent that it is referable to his ownership of any interest in other property.

(3) Without prejudice to the generality of paragraph (b) of sub-paragraph (2), the kinds of loss falling within that paragraph include loss of development value in relation to the specified premises to the extent that it is referable as mentioned in that paragraph.

(4) In sub-paragraph (3) “development value”, in relation to the specified premises, means any increase in the value of the interest in the premises of the owner of the intermediate leasehold interest which is attributable to the possibility of demolishing, reconstructing or carrying out substantial works of construction on, the whole or a substantial part of the premises.”.

(7) In paragraph 9 (owners of intermediate interests entitled to part of marriage value), in sub-paragraph (1), after “where” there shall be inserted “ paragraph 2 applies and ”.

(8) After that paragraph there shall be inserted—

“9A (1) This paragraph applies where paragraph 5A applies and—

(a) the price payable for the freehold of a part of the specified premises includes an amount in respect of the freeholder’s share of the marriage value, and

(b) the nominee purchaser is to acquire any intermediate leasehold interests which subsist in that part.

(2) The amount payable to the freeholder of the part in respect of his share of the marriage value shall be divided between the freeholder and the owners of the intermediate leasehold interests which subsist in that part in proportion to the value of their respective interests in the part (as determined for the purposes of paragraph 5A(2)(a) or paragraph 6(1)(b)(i), as the case may be).

(3) Where an intermediate leasehold interest subsists not only in the part of the specified premises in which the freeholder’s interest subsists (“the relevant part”) but also in another part of those premises—

(a) the value of the intermediate leasehold interest as determined for the purposes of paragraph 6(1)(b)(i) shall be apportioned between the relevant part and the other part of the specified premises in which it subsists, and

(b) sub-paragraph (2) shall have effect as if the reference to the value of the intermediate leasehold interest in the relevant part as determined for the purposes of paragraph 6(1)(b)(i) were to the value of that interest as determined on an apportionment in accordance with paragraph (a).

(4) Where the owner of an intermediate leasehold interest is entitled in accordance with sub-paragraph (2) to any part of the amount payable to the freeholder in respect of the freeholder’s share of the marriage value, the amount to which he is so entitled shall be payable to him by the freeholder.”.

(9) For paragraph 13 there shall be substituted—

“13 (1) Where the owner of any such freehold or leasehold interest as is mentioned in paragraph 10(1) or (2) (“relevant interest”) will suffer any loss or damage to which this paragraph applies, there shall be payable to him such amount as is reasonable to compensate him for that loss or damage.

(2) This paragraph applies to—

(a) any diminution in value of any interest in other property belonging to the owner of a relevant interest, being diminution resulting from the acquisition of the property in which the relevant interest subsists; and

(b) any other loss or damage which results therefrom to the extent that it is referable to his ownership of any interest in other property.

(3) Without prejudice to the generality of paragraph (b) of sub-paragraph (2), the kinds of loss falling within that paragraph include loss of development value in relation to the property in which the relevant interest subsists to the extent that it is referable to his ownership of any interest in other property.

(4) In sub-paragraph (3) “development value”, in relation to the property in which the relevant interest subsists, means any increase in the value of the relevant interest which is attributable to the possibility of demolishing, reconstructing or carrying out substantial works of construction on, the whole or a substantial part of the property.”.

(10) In paragraph 14 (valuation of freehold and intermediate leasehold interests), in sub-paragraph (1)—

(a) in paragraph (a), for “the”, where it second occurs, there shall be substituted “ a ” and for “in accordance with paragraph 3” there shall be substituted “ for the relevant purposes ”,

(b) in paragraph (b), for “in accordance with paragraph 7” there shall be substituted “ for the relevant purposes ”, and

(c) for “the relevant” there shall be substituted “ those ”.

(11) In that paragraph, after sub-paragraph (3) there shall be inserted—

“(3A) Where sub-paragraph (2) applies—

(a) for the purposes of paragraph 5A(2)(a), and

(b) in relation to an intermediate leasehold interest in relation to which there is more than one immediately superior interest,

any reduction in value made under that sub-paragraph shall be apportioned between the immediately superior interests.”.

(12) In that paragraph, in sub-paragraph (5)(a)—

(a) for “the”, where it first occurs, there shall be substituted “ a ”, and

(b) after “2(1)(a)” there shall be inserted “ or, as the case may be, 5A(2)(a) ”.

(13) In paragraph 15 (calculation of marriage value), there shall be inserted at the end—

“(4) References in this paragraph to paragraph 4(2), (3) or (4) extend to that provision as it applies in accordance with paragraph 5A(2)(b).”.

(14) In paragraph 16 (apportionment of marriage value), in sub-paragraph (2), for “the”, where it first occurs, there shall be substituted “ a ”.

(15) In paragraph 17 (adjustment of compensation), in sub-paragraph (4)(a), after “2(1)(c)” there shall be inserted “ , 5A(2)(c) ”.

(16) In that paragraph, there shall be inserted at the end—

“(6) Where any reduction in value under sub-paragraph (2) of paragraph 14 is apportioned in accordance with sub-paragraph (3A) of that paragraph, any amount of compensation payable by virtue of this paragraph shall be similarly apportioned.”.

Textual Amendments

F1 Sch. 10 para. 18(2)(b) and preceding word repealed (28.2.2005 for E., 31.5.2005 for W.) by Commonhold and Leasehold Reform Act 2002 (c. 15), s. 181(1), Sch. 14; S.I. 2004/3056, art. 3(j); S.I. 2005/1353, art. 2(j)