In section 138 of the Housing Act 1985 (c. 68) (duty of landlord to convey freehold or grant lease), after the subsection (2D) inserted by section 193 of this Act, insert—

“(2E)

Subsection (1) also has effect subject to—

(a)

section 138A(2) (operation of subsection (1) suspended while initial demolition notice is in force), and

(b)

section 138B(2) (subsection (1) disapplied where final demolition notice is served).”

After section 138 of that Act insert—

“138AEffect of initial demolition notice served before completion

(1)

This section applies where—

(a)

an initial demolition notice is served on a secure tenant under Schedule 5A, and

(b)

the notice is served on the tenant before the landlord has made to him such a grant as is required by section 138(1) in respect of a claim by the tenant to exercise the right to buy.

(2)

In such a case the landlord is not bound to comply with section 138(1), in connection with any such claim by the tenant, so long as the initial demolition notice remains in force under Schedule 5A.

(3)

Section 138C provides a right to compensation in certain cases where this section applies.

138BEffect of final demolition notice served before completion

(1)

This section applies where—

(a)

a secure tenant has claimed to exercise the right to buy, but

(b)

before the landlord has made to the tenant such a grant as is required by section 138(1) in respect of the claim, a final demolition notice is served on the tenant under paragraph 13 of Schedule 5.

(2)

In such a case—

(a)

the tenant’s claim ceases to be effective as from the time when the final demolition notice comes into force under that paragraph, and

(b)

section 138(1) accordingly does not apply to the landlord, in connection with the tenant’s claim, at any time after the notice comes into force.

(3)

Section 138C provides a right to compensation in certain cases where this section applies.

138CCompensation where demolition notice served

(1)

This section applies where—

(a)

a secure tenant has claimed to exercise the right to buy,

(b)

before the landlord has made to the tenant such a grant as is required by section 138(1) in respect of the claim, either an initial demolition notice is served on the tenant under Schedule 5A or a final demolition notice is served on him under paragraph 13 of Schedule 5, and

(c)

the tenant’s claim is established before that notice comes into force under Schedule 5A or paragraph 13 of Schedule 5 (as the case may be).

(2)

If, within the period of three months beginning with the date when the notice comes into force (“the operative date”), the tenant serves on the landlord a written notice claiming an amount of compensation under subsection (3), the landlord shall pay that amount to the tenant.

(3)

Compensation under this subsection is compensation in respect of expenditure reasonably incurred by the tenant before the operative date in respect of legal and other fees, and other professional costs and expenses, payable in connection with the exercise by him of the right to buy.

(4)

A notice under subsection (2) must be accompanied by receipts or other documents showing that the tenant incurred the expenditure in question.”