Leasehold and Freehold Reform Act 2024

Meaning of “qualifying lease” and exclusion of certain rent from the right to vary

2 (1) In this Schedule “qualifying lease” means—

(a) a qualifying lease of a house, or

(b) a qualifying lease of a flat.

(2) But a lease is not a qualifying lease if—

(a) the unexpired term of the lease is less than 150 years, or

(b) the lease is an excepted lease for the purposes of the LR(GR)A 2022 under—

(i) section 2(6) to (7B) of that Act (community housing leases), or

(ii) section 2(8) to (11) of that Act (home finance plan leases).

(3) A lease is a “qualifying lease of a house” for the purposes of this Schedule if the tenant—

(a) is, by virtue of the lease, entitled to acquire an extended lease under the LRA 1967, or

(b) is not so entitled, but only—

(i) because a requirement in section 1 of the LRA 1967 for the tenancy to be at a low rent is not met,

(ii) because a requirement in section 1(1)(a)(i) or (ii) of the LRA 1967 for the house and premises or the tenancy to be above a certain value is not met, or

(iii) by virtue of a Crown interest (see section 33 of that Act).

(4) A lease is a “qualifying lease of a flat” for the purposes of this Schedule if the tenant—

(a) is, by virtue of the lease, entitled to acquire an extended lease under the LRHUDA 1993, or

(b) is not so entitled, but only by virtue of a Crown interest (see section 94 of that Act).

(5) If only some of the property demised by a qualifying lease is qualifying property, the right to a peppercorn rent applies only in relation to so much of the rent which relates to the qualifying property (and, accordingly, any rent which relates to the other property demised by the qualifying lease is not affected by this Schedule).

(6) For that purpose, property demised by a lease is “qualifying property” if the entitlement to acquire an extended lease referred to in sub-paragraph (3) or (4) does arise, or would arise (but for the impediment referred to in sub-paragraph (3)(b) or (4)(b)), in relation to that property by virtue of the qualifying lease.

(7) If the qualifying lease is a shared ownership lease, the right to a peppercorn rent applies only in relation to rent payable in respect of the tenant’s share in the demised premises (and, accordingly, any rent which is payable in respect of the landlord’s share in the demised premises is not affected by this Schedule).

(8) For that purpose, if the qualifying lease does not reserve separate rents in respect of the tenant’s share in the demised premises and the landlord’s share in the demised premises, any rent reserved is to be treated as reserved in respect of the landlord’s share.

(9) In this paragraph—

(a) “shared ownership lease” means a lease of premises—

(i) granted on payment of a premium calculated by reference to a percentage of the value of the premises or of the cost of providing them, or

(ii) under which the tenant (or the tenant’s personal representatives) will or may be entitled to a sum calculated by reference, directly or indirectly, to the value of the premises;

(b) in relation to a shared ownership lease—

(i) “tenant’s share” means the tenant’s initial share in the premises demised by the lease, plus any additional share or shares in those demised premises which the tenant has acquired;

(ii) “landlord’s share” means the share in the premises demised by the lease which is not comprised in the tenant’s share.