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IMPROVED RIGHTS FOR LEASEHOLDERS ENSHRINED IN NEW ACT

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Tougher rights for residential leaseholders' in England and Wales, ...
Tougher rights for residential leaseholders' in England and Wales,

including a new right for leaseholders to manage their flats, will

become law in stages from July.

This follows Royal Assent yesterday for the Commonhold and Leasehold

Reform Bill, now to be known as the Commonhold and Leasehold Reform

Act 2002.

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

of flats;

- 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

payment;

- 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

debts;

- 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).

Notes

1. Copies of the Commonhold and Leasehold Reform Act 2002 will be

available from the Stationary Office (telephone: 0870 600 5522, or

e-mail book.orders@theso.co.uk). 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

course.

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

buying properties.

'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

leasehold properties.'

'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

leasehold dyke.

'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.

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