PART V THE RIGHT TO BUY

Provisions affecting future disposals

156 Liability to repay is a charge on the premises.

(1)

The liability that may arise under the covenant required by section 155 is a charge on the dwelling-house, taking effect as if it had been created by deed expressed to be by way of legal mortgage.

F1(2)

Subject to subsections (2A) and (2B), the charge has priority as follows—

(a)

if it secures the liability that may arise under the covenant required by section 155(2), immediately after any legal charge securing an amount advanced to the secure tenant by an approved lending institution for the purpose of enabling him to exercise the right to buy;

(b)

if it secures the liability that may arise under the covenant required by section 155(3), immediately after the mortgage—

(i)

which is required by section 151B (mortgage for securing redemption of landlord’s share), and

(ii)

which, by virtue of subsection (2) of that section, has priority immediately after any legal charge securing an amount advanced to the secure tenant by an approved lending institution for the purpose of enabling him to exercise the right to acquire on rent to mortgage terms.

(2A)

The following, namely—

(a)

any advance which is made otherwise than for the purpose mentioned in paragraph (a) or (b) of subsection (2) and is secured by a legal charge having priority to the charge taking effect by virtue of this section, and

(b)

any further advance which is so secured,

shall rank in priority to that charge if, and only if, the landlord by written notice served on the institution concerned gives its consent; and the landlord shall so give its consent if the purpose of the advance or further advance is an approved purpose.

(2B)

The landlord may at any time by written notice served on an approved lending institution postpone the charge taking effect by virtue of this section to any advance or further advance which—

(a)

is made to the tenant by that institution, and

(b)

is secured by a legal charge not having priority to that charge;

and the landlord shall serve such a notice if the purpose of the advance or further advance is an approved purpose.

(3)

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F3(3A)

The covenant required by section 155 (covenant for repayment of discount) does not, by virtue of its binding successors in title of the tenant, bind a person exercising rights under a charge having priority over the charge taking effect by virtue of this section, or a person deriving title under him; and a provision of the conveyance or grant, or of a collateral agreement is void in so far as it purports to authorise a forfeiture, or to impose a penalty or disability, in the event of any such person failing to comply with that covenant.

(4)

The approved lending institutions for the purposes of this section are—

the F4Relevant Authority,

F5(4ZA)

In subsection (4) “the Relevant Authority” does not include the Regulator of Social Housing but does include the Homes and Communities Agency.

F6(4ZB)

In subsection (4) “the Relevant Authority” also includes the Greater London Authority.

  • F7an authorised deposit taker

  • an authorised insurer

  • F8 an authorised mortgage lender. F9. . ..

F10(4A)

The approved purposes for the purposes of this section are—

(a)

to enable the tenant to make an interim or final payment,

(b)

to enable the tenant to defray, or to defray on his behalf, any of the following—

(i)

the cost of any works to the dwelling-house,

(ii)

any service charge payable in respect of the dwelling-house for works, whether or not to the dwelling-house, and

(iii)

any service charge or other amount payable in respect of the dwelling-house for insurance, whether or not of the dwelling-house, and

(c)

to enable the tenant to discharge, or to discharge on his behalf, any of the following—

(i)

so much as is still outstanding of any advance or further advance which ranks in priority to the charge taking effect by virtue of this section,

(ii)

any arrears of interest on such an advance or further advance, and

(iii)

any costs and expenses incurred in enforcing payment of any such interest, or repayment (in whole or in part) of any such advance or further advance.

(4B)

Where different parts of an advance or further advance are made for different purposes, each of those parts shall be regarded as a separate advance or further advance for the purposes of this section.

(5)

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(6)

F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .