including a new right for leaseholders to manage their flats, will
become law in stages from July.
Reform Bill, now to be known as the Commonhold and Leasehold Reform
Housing minister Sally Keeble said the new Act was the result of
support for a major overhaul of the leasehold system in England and
Wales and gave leaseholders more rights over their homes.
She said it would also provide leaseholders with a strong package of
safeguards against forfeiture - making this in effect a sanction of
last resort against wilful non-payers.
The new Act includes provisions which will:
- introduce a new form of tenure called commonhold which will provide
a better system for the future ownership and management of blocks
- give leaseholders of flats the right to manage their block and make
it easier to enfranchise and obtain longer leases;
- give leaseholders protection against unreasonable administration
charges and unreasonable charges for improvements;
- require landlords to give written notice of ground rents before
taking any action - or imposing any penalties - as a result of late
- require landlords to satisfy a court or tribunal that a lease has
been breached before taking any action - or imposing any penalties
- as a result of an alleged breach;
- prevent landlords from forfeiting leases as a result of trivial
- prevent landlords from insisting that leaseholders of houses use a
particular insurance company to insure their house;
- make it easier for leaseholders and other interested parties to
vary their leases;
- widen the right to seek the appointment of a new manager;
- introduce new accounting requirements and a new right for
leaseholders to withhold service charges where certain information
is not provided; and
- make changes to the provisions governing Leasehold Valuation
Tribunals to enable them to provide a more effective and efficient
service in future.
The new Act will also extend the jurisdictions of Leasehold Valuation
Tribunals (LVTs), providing leaseholders and landlords increased and
easy access to a low-cost network of dedicated tribunals.
The tribunals currently form part of the Rent Assessment Panels,
which - with effect from 7 June 2002 - will change their name to the
Residential Property Tribunal Service (RPTS).
1. Copies of the Commonhold and Leasehold Reform Act 2002 will be
available from the Stationary Office (telephone: 0870 600 5522, or
e-mail email@example.com). Initial guidance on the provisions
of the Bill will be available from the DTLR. This will be provided on request
or via our website at: www.dtlr.gov.uk
2. The Act will not have effect immediately. The various provisions
in the Act must first be brought into force by a series of
Commencement Orders. The government plans to issue the first
Commencement Order in July, which will bring some (but not all) of
the provisions into effect. We will announce further details in due
3. A number of the provisions in the Bill require secondary
legislation. The government will consult on proposals for
regulations in due course.
4. The Residential Property Tribunal Service (formerly Rent
Assessment Panels) will be launched at the national members'
conference in Birmingham on 7 June 2002.
NEW COMMONHOLD SCHEME TO BENEFIT OWNERS OF FLATS AND OTHER INTERDEPENDENT UNITS
Property owners in England and Wales will have improved rights under
the provisions of the Commonhold and Leasehold Reform Act, which
received Royal Assent yesterday.
The Act creates a new scheme for the ownership of flats and other
interdependent units, called commonhold, and a wide range of measures
to improve the rights and conditions of leaseholders. Under the
commonhold provisions, property owners would own the freehold of
their homes and have an interest in an organisation that would own
and manage the common parts of the development they live in.
Baroness Scotland, parliamentary secretary in the Lord Chancellor's
Department, responsible for the commonhold provisions in the Act,
said: 'Commonhold offers a new and attractive option for people
'We anticipate that commonhold will become the standard for new build
residential and commercial developments where there are
interdependent units and common parts. As a unit is owned freehold,
we expect that the residential ones will in time, become more
desirable and will trade at a premium compared with equivalent
'The keystone of commonhold is community. Commonhold will put control
of the management of the commonhold development into the hands of the
commonhold community as a whole. We are providing unit-holders with a
freehold interest in their unit and the opportunity to play a
significant role in shaping the commonhold community in which they
live or work.
'Commonhold is designed not so much to tackle the fundamental flaws
of long leasehold as we know it but to provide a robust and effective
alternative to it. But I hope it has become apparent that commonhold
is intended to do much more than merely plug the holes in the long
'We firmly believe that commonhold will become the preferred standard
for properties where there are interdependent units and common parts.
In the long term, commonhold will be an effective and successful
replacement for long leasehold imparting its own unique benefits to
unit holders. Though we know that the problems faced by long
residential leaseholders are very serious and those faced by
commercial tenants are of a very different nature, we have come to
believe that commonhold can help the non-residential sector too.'
The Act contains the following clauses covering commonhold:
- setting up and managing commonhold developments;
- obtaining consents of people with an interest in the land;
- defining units and common parts and setting down who is responsible
for what in terms of maintenance, and how that is to be paid for;
- drawing up documents governing the development which would have a
high level of consistency across all commonhold developments;
- termination of a commonhold;
- an ombudsman scheme to which commonhold disputes may be referred.