Part 6Other provisions about housing

Chapter 1Secure tenancies

Right to buy: discounts

185Repayment of discount: periods and amounts applicable

(1)

Section 155 of the Housing Act 1985 (repayment of discount on early disposal) is amended in accordance with subsections (2) and (3).

(2)

For subsections (2) and (3) substitute—

“(2)

In the case of a conveyance or grant in pursuance of the right to buy, the covenant shall be to pay the landlord such sum (if any) as the landlord may demand in accordance with section 155A on the occasion of the first relevant disposal (other than an exempted disposal) which takes place within the period of five years beginning with the conveyance or grant.

(3)

In the case of a conveyance or grant in pursuance of the right to acquire on rent to mortgage terms, the covenant shall be to pay the landlord such sum (if any) as the landlord may demand in accordance with section 155B on the occasion of the first relevant disposal (other than an exempted disposal) which takes place within the period of five years beginning with the making of the initial payment.”

(3)

In subsection (3A) (modifications where tenant has served operative notice of delay) for “three years” substitute “ five years ”.

(4)

After section 155 insert—

“155AAmount of discount which may be demanded by landlord: right to buy

(1)

For the purposes of the covenant mentioned in section 155(2), the landlord may demand such sum as he considers appropriate, up to and including the maximum amount specified in this section.

(2)

The maximum amount which may be demanded by the landlord is a percentage of the price or premium paid for the first relevant disposal which is equal to the discount to which the secure tenant was entitled, where the discount is expressed as a percentage of the value which under section 127 was taken as the value of the dwelling-house at the relevant time.

(3)

But for each complete year which has elapsed after the conveyance or grant and before the disposal the maximum amount which may be demanded by the landlord is reduced by one-fifth.

(4)

This section is subject to section 155C.

155BAmount of discount which may be demanded by landlord: right to acquire on rent to mortgage terms

(1)

For the purposes of the covenant mentioned in section 155(3), the landlord may demand such sum as he considers appropriate, up to and including the maximum amount specified in this section.

(2)

The maximum amount which may be demanded by the landlord is the discount (if any) to which the tenant was entitled on the making of—

(a)

the initial payment,

(b)

any interim payment made before the disposal, or

(c)

the final payment if so made,

reduced, in each case, by one-fifth for each complete year which has elapsed after the making of the initial payment and before the disposal.”

(5)

The amendments made by this section do not apply in any case where the tenant’s notice under section 122 of the Act (notice claiming to exercise right to buy) was served before the day on which this section comes into force.

(6)

Subsection (7), however, applies in any such case if the first relevant disposal to which the covenant for repayment of discount applies takes place on or after the day on which this section comes into force.

(7)

In the following provisions—

(a)

section 155(2) and (3) of the Housing Act 1985 (c. 68) (as it has effect without the amendments made by this section), and

(b)

any covenant for repayment of discount,

any reference (however expressed) to a person being liable to pay an amount to the landlord on demand is to be read as a reference to his being liable to pay to the landlord so much of that amount (if any) as the landlord may demand.

(8)

In subsections (6) and (7) “covenant for repayment of discount” means the covenant contained in a conveyance or grant in accordance with section 155 of that Act.