Leasehold and Freehold Reform Act 2024

31 Acquisition of intermediate interests in collective enfranchisement

(1) The LRHUDA 1993 is amended as follows.

(2) In section 1 (the right to collective enfranchisement), for subsection (2)(b) substitute—

“(b) Schedule A1 has effect with respect to the acquisition of certain leasehold interests.”

(3) Before Schedule 1 insert—

Section 1(2)(b)

“Schedule A1 Acquisition of intermediate interests on collective enfranchisement

Application of this Schedule

1 (1) This Schedule applies where the right to collective enfranchisement is exercised in relation to premises (“the relevant premises”).

(2) Paragraphs 2(4), 4(1) and (2) and 5(1) and (2) require the nominee purchaser to acquire the whole or part of certain intermediate leases.

(3) Paragraphs 2(5) and 3(2) enable the nominee purchaser to acquire the whole or part of certain intermediate leases.

(4) Any reference in this Act to the acquisition by the nominee purchaser of the whole or part of a lease under this Schedule is a reference to its acquisition by the nominee purchaser on behalf of the participating tenants.

Acquisition of a lease that is superior to the lease of a qualifying tenant

2 (1) This paragraph applies to a lease (the “superior lease”) that is superior to a lease of a qualifying tenant (the “inferior lease”) if, and to the extent that, the superior lease demises relevant residential property (whether or not either lease also demises any other property of any kind).

(2) Residential property demised by the superior lease is “relevant” if it—

(a) is also demised by the inferior lease, and

(b) has the required connection with the collective enfranchisement.

(3) Residential property demised by the inferior lease has the required connection with the collective enfranchisement if—

(a) the residential property is a flat or part of a flat, and the tenant under the inferior lease is a qualifying tenant by virtue of the inferior lease demising that flat or part, or

(b) the property is appurtenant property, and the tenant under the inferior lease is a qualifying tenant by virtue of the inferior lease demising the related flat.

The “related flat” is the flat to which the appurtenant property relates.

(4) If the tenant under the inferior lease is a participating tenant, the nominee purchaser must acquire—

(a) the superior lease, if all of the property demised by it is relevant residential property, or

(b) the superior lease to the extent that it demises relevant residential property.

(5) If the tenant under the inferior lease is not a participating tenant, the nominee purchaser may acquire—

(a) the superior lease, if all of the property demised by it is relevant residential property, or

(b) the superior lease to the extent that it demises relevant residential property.

(6) But if the superior lease demises two or more flats, the nominee purchaser may either—

(a) make the acquisition permitted by sub-paragraph (5), or

(b) acquire the superior lease to the extent that it demises one or more of those flats and any appurtenant property relating to the flat or flats acquired.

(7) The whole or a part of a superior lease is not to be acquired under this paragraph if—

(a) the superior lease is immediately superior to the inferior lease,

(b) the term of the superior lease ends after the term of the inferior lease, and

(c) the qualifying tenant is also the tenant under the superior lease.

(8) This paragraph is subject to paragraph 6.

Acquisition of a lease of common parts or section 1(3)(b) addition

3 (1) This paragraph applies to a lease if, and to the extent that, the property demised by the lease consists of common parts of the relevant premises or a section 1(3)(b) addition.

(2) If the necessity test is met, the nominee purchaser may acquire—

(a) the lease, if all the property demised by it is common parts of the relevant premises or a section 1(3)(b) addition (or both),

(b) the lease to the extent that it demises common parts of the relevant premises or a section 1(3)(b) addition (or both), or

(c) a smaller portion of the lease than is allowed by paragraph (a) or (b).

(3) The necessity test is met if the acquisition of common parts or a section 1(3)(b) addition under sub-paragraph (2) is reasonably necessary for the proper management or maintenance of those common parts or that addition on behalf of the participating tenants.

(4) A lease or a part of a lease which demises common parts or a section 1(3)(b) addition is not to be acquired under this paragraph if the tenant under the lease grants for the remainder of the term of the lease such rights over the common parts or section 1(3)(b) addition as will enable the proper management or maintenance of it on behalf of the participating tenants.

(5) This paragraph is subject to paragraph 6.

(6) In this paragraph “section 1(3)(b) addition” means property—

(a) of the kind described in section 1(3)(b) (property which there is an entitlement to use in common with other tenants), and

(b) of which the freehold is to be acquired on the collective enfranchisement under section 1(2)(a).

Acquisition of leases superior to a lease being acquired under paragraph 2(5) or 3

4 (1) This paragraph applies if the nominee purchaser acquires the whole, or a part, of a lease under paragraph 2(5) or 3 (the “inferior lease”).

(2) The nominee purchaser must also acquire any lease or leases superior to the inferior lease if, and to the extent that, the superior lease or leases demise property that is demised by the inferior lease or the part acquired.

Acquisition of leases superior to a lease being acquired under section 21(4)

5 (1) If—

(a) the nominee purchaser acquires the whole of a lease under section 21(4) (the “inferior lease”), and

(b) some or all of the property that is demised by the inferior lease is paragraph 2(5) or 3(1) property,

the nominee purchaser must also acquire any lease or leases superior to the inferior lease if, and to the extent that, the superior lease or leases demise paragraph 2(5) or 3(1) property that is demised by the inferior lease.

(2) If—

(a) the nominee purchaser acquires a part of a lease under section 21(4) (the “inferior lease”), and

(b) some or all of the property that is demised by part of the inferior lease that is acquired is paragraph 2(5) or 3(1) property,

the nominee purchaser must also acquire any lease or leases superior to the inferior lease if, and to the extent that, the superior lease or leases demise paragraph 2(5) or 3(1) property that is demised by the part of the inferior lease acquired.

(3) Property is “paragraph 2(5) or 3(1) property” if—

(a) under paragraph 2(5) the nominee purchaser is entitled to acquire the whole of a lease, or a part of a lease, which demises the property, or

(b) under paragraph 3 the nominee purchaser is entitled, or would be entitled if the necessity test were met, to acquire the whole of a lease, or a part of a lease, which demises the property.

No entitlement to acquire property with certain public sector interests

6 (1) This paragraph applies to a lease if—

(a) the tenant is a public sector landlord,

(b) some or all of the property demised by the lease is residential property that is also demised by a public sector occupational tenancy, and

(c) either—

(i) the lease is immediately superior to the public sector occupational tenancy, or

(ii) a public sector landlord is the tenant under every other lease which is inferior to the lease and superior to the public sector occupational lease and which demises any of the residential property that is also demised by the public sector occupational tenancy.

(2) The lease is not to be acquired under this Schedule if, and to the extent that, it demises the residential property that is also demised by the public sector occupational tenancy.

(3) Where this paragraph applies to a lease in a case that is within sub-paragraph (1)(c)(ii), this paragraph also applies (by virtue of sub-paragraph (1)) to every other intermediate lease referred to in that sub-paragraph.

(4) In this paragraph “public sector occupational tenancy” means—

(a) a secure tenancy,

(b) an introductory tenancy,

(c) a secure contract, or

(d) an introductory standard contract.

Severance

7 If the nominee purchaser is required or entitled to acquire only part of a lease under this Schedule, the lease is to be severed to enable that part to be acquired.

Application of this Schedule to different parts of the same lease

8 Different parts of the same lease may be acquired in accordance with this Schedule (whether under the same or different provisions).

Interpretation

9 In this Schedule—

• “appurtenant property”, in relation to a flat, means any garage, outhouse, garden, yard and appurtenances belonging to, or usually enjoyed with, the flat;

• “residential property” means—

  (a)

  the whole or a part of a flat in the relevant premises, or

  (b)

  property that is appurtenant property in relation to a flat in the relevant premises.”

(4) Omit section 2 (acquisition of leasehold interests).

(5) In section 9 (the reversioner and other relevant landlords), in subsections (2) and (2A), for “section 2(1)(a) or (b)” substitute “Schedule A1”.

(6) In section 13 (notice by qualifying tenants of claim to exercise right), in subsection (3)(c), for sub-paragraph (i) substitute—

“(i) any leasehold interest which it is proposed to acquire under or by virtue of Schedule A1, and”.

(7) In section 19 (effect of initial notice as respects subsequent transactions by freeholder etc), in subsection (1)(a)(ii), for “by virtue of section 2(1)(a) or (b)” substitute “under or by virtue of Schedule A1”.

(8) In section 21 (reversioner’s counter-notice), in subsection (3), after paragraph (b) insert—

“(ba) if (in a case where any property specified in the initial notice under section 13(3)(c)(i) is property falling within paragraph 3 of Schedule A1) any such counter-proposal relates to the grant of rights in pursuance of paragraph 3(4) of Schedule A1, specify the nature of those rights and the property over which it is proposed to grant them;”

(9) In section 26 (applications where relevant landlord cannot be found), in subsection (1)(i), for “section 2(1)” substitute “Schedule A1”.

(10) In Schedule 3 (initial notice: supplementary provisions), in paragraph 15 (inaccuracies or misdescription in initial notice)—

(a) for the heading substitute “initial notice: inaccuracies or misdescription and variation”;

(b) in sub-paragraph (2)(a), for “or 2” substitute “or Schedule A1”;

(c) after sub-paragraph (2), insert—

“(2A) The notice may, with the permission of the appropriate tribunal, be amended so as to—

(a) include a lease which the nominee purchaser has become required to acquire under paragraph 2(4) of Schedule A1 by virtue of the tenant under the lease becoming a participating tenant;

(b) exclude a lease which the nominee purchaser has ceased to be required to acquire under paragraph 2(4) of Schedule A1 by virtue of the lease no longer being held by a participating tenant;”.