Leasehold and Freehold Reform Act 2024

Prospective

Part 3 E+W Determining the market value

Compulsory use of the standard valuation method E+W

5 (1) The standard valuation method (see Part 5 of this Schedule) must be used to determine the market value of the relevant freehold or notional lease for the purposes of this Schedule.

(2) But this Schedule does not require the standard valuation method to be used to determine the market value of—

(a) the relevant freehold or notional lease if all of the property comprised in that freehold or lease is property for which the standard valuation method is not compulsory, or

(b) any part or parts of the relevant freehold or notional lease which comprise property for which the standard valuation method is not compulsory.

(3) Paragraphs 6 to 13 contain provision about the kinds of property for which the standard valuation method is not compulsory.

(4) Paragraphs 6 to 8 apply in relation to any kind of freehold enfranchisement or lease extension.

(5) Paragraphs 9 to 13 specify the kinds of freehold enfranchisement or lease extension to which they apply.

Commencement Information

I1 Sch. 4 para. 5 not in force at Royal Assent, see s. 124(3)

Tenant holding over or unexpired term of 5 years or less E+W

6 The standard valuation method is not compulsory for the property comprised in a current lease if—

(a) the tenant is holding over under the Local Government and Housing Act 1989 at the valuation date, or

(b) the term date of the current lease is within the period of five years beginning at the valuation date.

Commencement Information

I2 Sch. 4 para. 6 not in force at Royal Assent, see s. 124(3)

Home finance plan leases E+W

7 (1) The standard valuation method is not compulsory for the property comprised in a current lease if it is an excepted home finance plan lease at the valuation date.

(2) An “excepted home finance plan lease” is a home finance plan lease within the meaning of section 2(9) of the LR(GR)A 2022 which meets any further specified conditions as mentioned in section 2(8)(b) of that Act.

Commencement Information

I3 Sch. 4 para. 7 not in force at Royal Assent, see s. 124(3)

Market rack rent leases E+W

8 (1) The standard valuation method is not compulsory for the property comprised in a current lease if it is a market rack rent lease at the valuation date.

(2) If section 3(3) of the LRA 1967 applies to the current lease (successive leases treated as a single lease), sub-paragraph (1) is to apply only if the one of those leases which is in effect at the valuation date is a market rack rent lease.

(3) A “market rack rent lease” is a lease which—

(a) was granted—

(i) for no premium, or

(ii) for a premium which was low relative to the value of the freehold of the property with vacant possession at the time of the grant,

(b) was granted at a market rack rent, and

(c) the parties entered into with the intention that the rent would be a market rack rent.

(4) In this paragraph “market rack rent” means a rent which was, or was reasonably close to, a market rack rent at the time of the grant.

Commencement Information

I4 Sch. 4 para. 8 not in force at Royal Assent, see s. 124(3)

Property included in the acquisition of a freehold house under section 2(4) of the LRA 1967 E+W

9 (1) This paragraph applies only to—

(a) the transfer of a freehold house under the LRA 1967, or

(b) the grant of an extended lease of a house under the LRA 1967.

(2) The standard valuation method is not compulsory for any parts of the property comprised in the newly owned premises that are included by virtue of section 2(4) of the LRA 1967 (separately let property enjoyed with the house).

Commencement Information

I5 Sch. 4 para. 9 not in force at Royal Assent, see s. 124(3)

Leases already extended under the old law in the LRA 1967 E+W

10 (1) This paragraph applies only to—

(a) the transfer of a freehold house under the LRA 1967, or

(b) the grant of an extended lease of a house under the LRA 1967.

(2) The standard valuation method is not compulsory for the property comprised in the current lease if that lease is a pre-commencement lease granted under section 14 of the LRA 1967.

(3) A lease granted under section 14 of the LRA 1967 is a “pre-commencement” lease unless it is granted in accordance with sections 14 and 15 of the LRA 1967 as amended by sections 33(1) and 34 of this Act (under which a lease will be extended by 990 years at a peppercorn rent on payment of a premium).

Commencement Information

I6 Sch. 4 para. 10 not in force at Royal Assent, see s. 124(3)

Business tenancies E+W

11 (1) This paragraph applies only to—

(a) the transfer of a freehold house under the LRA 1967, or

(b) the grant of an extended lease of a house under the LRA 1967.

(2) The standard valuation method is not compulsory for the property comprised in the current lease if that lease is a tenancy to which Part 2 of the Landlord and Tenant Act 1954 applies (see section 1(1ZC) of the LRA 1967).

Commencement Information

I7 Sch. 4 para. 11 not in force at Royal Assent, see s. 124(3)

Acquisition of a freehold house under the LRA 1967: shared ownership leases E+W

12 (1) This paragraph applies only to the transfer of a freehold house under the LRA 1967.

(2) The standard valuation method is not compulsory for any property comprised in the newly owned premises if it, or any part of it, is demised by a shared ownership lease.

Commencement Information

I8 Sch. 4 para. 12 not in force at Royal Assent, see s. 124(3)

Collective enfranchisement: property other than relevant flats etc and appurtenant property E+W

13 (1) This paragraph applies only to a collective enfranchisement.

(2) The requirement under paragraph 5(1) to use the standard valuation method applies only in relation to property comprised in the newly owned premises that is—

(a) a relevant flat, or

(b) appurtenant property leased with a relevant flat.

(3) Accordingly, the standard valuation method is not compulsory for any other property comprised in the newly owned premises.

(4) A flat is a “relevant flat” for the purposes of this paragraph if the flat is—

(a) demised to a qualifying tenant, or

(b) demised to a person who is not a qualifying tenant, but only because of section 5(5) and (6) of the LRHUDA 1993 (a person who is the tenant of three or more flats in the building).

(5) But a flat is not a relevant flat if—

(a) it, or any part of it, is demised by a lease which the nominee purchaser could acquire, but is not acquiring, under paragraph 2(5) of Schedule A1 to the LRHUDA 1993 (acquisition of intermediate leases);

(b) it, or any part of it, is demised by a shared ownership lease.

(6) Appurtenant property is “leased with” a relevant flat for the purposes of this paragraph if—

(a) the appurtenant property and the relevant flat are leased under the same lease (including where, under section 7(6) of the LRHUDA 1993, two or more leases are treated as a single lease), and

(b) by virtue of that lease, the tenant is a qualifying tenant or, but for the impediment referred to in sub-paragraph (4)(b), would be a qualifying tenant.

(7) By virtue of paragraph 1(1)(c) of Schedule 6, the references in this paragraph to a flat, a qualifying tenant, appurtenant property or a shared ownership lease have the same meanings that they have in Chapter 1 of Part 1 of the LRHUDA 1993 (see, respectively, sections 101(1), 5, 1(7) and 101(1) of that Act).

Commencement Information

I9 Sch. 4 para. 13 not in force at Royal Assent, see s. 124(3)

Voluntary use of the standard valuation method E+W

14 This Schedule does not prevent the standard valuation method from being used to determine the market value of property comprised in the relevant freehold or notional lease for which the standard valuation method is not compulsory.

Commencement Information

I10 Sch. 4 para. 14 not in force at Royal Assent, see s. 124(3)

Property that is “subject to the standard valuation method” E+W

15 Property comprised in the relevant freehold or notional lease is “subject to the standard valuation method” if—

(a) this Part of this Schedule requires the standard valuation method to be used in relation to the property, or

(b) the standard valuation method is to be used (otherwise than where its use is required by this Part of this Schedule) in relation to the property.

Commencement Information

I11 Sch. 4 para. 15 not in force at Royal Assent, see s. 124(3)