it is a long lease of a dwelling,
Explanatory notes to the Bill, prepared by the Ministry of Housing, Communities and Local Government, have been ordered to be published as HL Bill 1—EN.
Lord Greenhalgh has made the following statement under section 19(1)(a) of the Human Rights Act 1998:
In my view the provisions of the Leasehold Reform (Ground Rent) Bill [HL] are compatible with the Convention rights.
A
bill
to
Make provision about the rent payable under long leases of dwellings; and for connected purposes.
B e it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
In this Act a “regulated lease” means a lease which meets the
following
conditions—
it is a long lease of a dwelling,
it is granted on or after the relevant commencement day,
otherwise
than in pursuance of a contract made before that day,
and
when it is granted, it is not an excepted lease.
The “relevant commencement day”, in relation to a lease, is the day
on which
this Act comes fully into force in relation to leases of
that kind (see section
25
).
For the purposes of
subsection (1)
(b)
“contract” does not include an option
or right of
first refusal.
In this Act references to the grant of a lease include the case
where, by virtue
of any variation of a lease, there is a deemed
surrender and regrant.
A lease is an excepted lease if—
the terms of the lease expressly permit premises demised by the
lease
to be used for purposes which are business purposes (and
do not
require any further consent from the landlord for such
use),
the nature of the business purposes permitted by the lease is
such that
the use of premises demised by the lease as a dwelling
significantly
contributes to the business purposes, and
at or before the time the lease is granted, the landlord and
tenant (or
prospective landlord and tenant) each give the other
a written notice
to the effect that they intend premises demised
(or to be demised) by
the lease to be used, and to continue to
be used, for the purposes
mentioned in paragraph
(a)
.
The Secretary of State may by regulations make further provision
about the
form and content of notices under
subsection (1)
(c)
.
“Business” includes a trade, profession or employment, but does not
include
a home business within the meaning of Part 2 of the Landlord
and Tenant
Act 1954 (see section 43ZA of that Act).
A lease is an excepted lease if it is granted under Part 1 of the
Leasehold
Reform Act 1967 (tenant of leasehold house entitled to
extended lease).
A lease is an excepted lease if—
it is a community housing lease, and
it meets any further conditions specified in regulations made by
the
Secretary of State.
A lease is a community housing lease if—
the landlord under the lease is a community land trust within the
meaning of section 79 of the Housing and Regeneration Act 2008,
or
it is a lease of a dwelling in a building within paragraph 2B of
Schedule 14 to the Housing Act 2004 (buildings controlled or
managed
by co-operative societies), disregarding sub-paragraph
(3)(b) of that
paragraph.
A lease is an excepted lease if—
it is a home finance plan lease, and
it meets any further conditions specified in regulations made by
the
Secretary of State.
A lease is a home finance plan lease if—
it is granted pursuant to an arrangement which is a
regulated home
reversion plan for the purposes of Chapter 15A of
Part 2 of the
Financial Services and Markets Act 2000 (Regulated
Activities) Order
2001 (S.I. 2001/544), or
it is granted by a finance provider to a home buyer pursuant to a
rent
to buy arrangement.
A “rent to buy arrangement” is an arrangement in relation to which
the
following conditions are met—
a person (the “finance provider”) buys a qualifying interest, or
an
undivided share of a qualifying interest, in land, and
the arrangement provides for the obligation of another person
(the
“home buyer”) to buy the interest bought by the finance
provider over
the course of, or at the end of, a specified
period.
A “qualifying interest in land” means an estate in fee simple
absolute or a
term of years absolute, whether subsisting at law or
in equity.
The landlord under a regulated lease must not require the tenant to
make a
payment of a prohibited rent.
For the purposes of subsection
(1)
, a landlord requires a tenant to make a
payment of a
prohibited rent where the landlord, or a person acting on behalf
of
the landlord, does either or both of the following in relation to
the
payment—
asks the tenant for the payment;
having received the payment, fails to refund it to the tenant
before
the end of the period of 28 days beginning with the day
after its
receipt.
In this section —
references to a landlord include a person who has ceased to be a
landlord, and
references to a tenant include—
a person who has ceased to be a tenant;
a person acting on behalf of a tenant;
a person who has guaranteed the payment of rent by a tenant.
In this Act “prohibited rent” means any rent, to the extent that it
exceeds the
permitted rent (see
sections
4
to
6
).
The permitted rent is a peppercorn rent.
In this Act a “peppercorn rent” means an annual rent of one peppercorn.
This
section
applies to a regulated lease which is a relevant
shared ownership
lease.
The permitted rent is—
in respect of the tenant’s share in the demised premises, a
peppercorn
rent;
in respect of the landlord’s share in the demised premises, any rent.
A shared ownership lease is a lease—
granted on payment of a premium calculated by reference to a
percentage of the value of the demised premises or the cost of
providing them, or
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 those premises.
A relevant shared ownership lease is a shared ownership lease where
the
tenant’s share in the demised premises is less than 100%.
The tenant’s share in the demised premises is the tenant’s initial
share in the
demised premises, plus any additional share or shares
in the demised premises
which the tenant has acquired.
The landlord’s share in the demised premises is the share in the
demised
premises which is not comprised in the tenant’s share.
Where a shared ownership 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.
This section does not apply to a regulated lease if section 6 applies to it.
This section applies where—
the tenant under a pre-commencement lease is granted a new lease
(a “replacement lease”) of some or all of the premises demised
by the
pre-commencement lease,
the term of the replacement lease begins before the end of the
term
of the pre-commencement lease, and
the replacement lease is a regulated lease.
The permitted rent under the replacement lease is—
in respect of the excepted period, a rent not exceeding the rent
that
would have been payable under the pre-commencement lease in
respect
of that period;
in respect of the regulated period, a peppercorn rent.
The “excepted period” is the period which—
begins with the first day of the term of the replacement lease, and
ends with the last day of the term of the pre-commencement lease.
The “regulated period” is the period which—
begins immediately after the excepted period, and
ends with the last day of the term of the replacement lease.
Where—
the tenant under a lease to which
subsection (2)
applies is granted a
new lease of some
or all of the premises demised by that lease,
the term of the new lease begins before the end of the term of
the
pre-commencement lease, and
the new lease is a regulated lease,
subsections (2)
to
(4)
apply to the new lease, reading references
to the
replacement lease as references to the new lease.
Where the pre-commencement lease is a relevant shared ownership
lease,
subsection (2)
(a)
applies as if after “payable” there were inserted “in
respect
of the tenant’s share in the demised premises”.
Where a lease to which
subsection (2)
applies is a relevant shared ownership
lease—
that subsection applies as if after “replacement lease” there
were
inserted “in respect of the tenant’s share in the demised
premises”,
and
the permitted rent in respect of the landlord’s share in the
demised
premises is any rent.
In this section —
“pre-commencement lease” means a long lease of a dwelling which
is
granted before the day which is the relevant commencement day
in
relation to the replacement lease;
references to the end of the term of the pre-commencement lease
are
to what would have been the end of the term of the
pre-commencement lease if the replacement lease had not been
granted.
This
section
applies where any term of a regulated lease to
which a section
specified in column 1 of the table applies reserves
a prohibited rent.
The term has effect as if, in place of the prohibited rent, it
reserved the rent
specified in column 2 of the table.
Where the prohibited rent is reserved in respect of a period
specified in
column 3 of the table, or a share in the demised
premises specified in column
4 of the table, or both, the term is
treated as reserving the rent specified in
column 2 of the table in
respect of that period, that share, or that period and
that share.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
|
Section |
Rent treated as reserved |
Period for which rent reserved |
Share in demised premises |
|
Section 4 (general rule) |
peppercorn rent |
||
|
Section 5 (shared ownership leases) |
peppercorn rent |
tenant’s share |
|
|
Section 6 (replacement leases) |
maximum permitted rent |
excepted period |
|
|
Section 6 (replacement leases) |
peppercorn rent |
regulated period |
For the purposes of this section, the terms of a regulated lease
include the
terms of any contract relating to the lease.
Terms used in
this
section
and in
sections
4
to
6
have the same meaning in
this
section
as in those sections.
Every local weights and measures authority in England or Wales—
must enforce section 3 in its area, and
may enforce that section elsewhere in England or Wales.
A district council that is not a local weights and measures authority
may
enforce
section
3
in England (both inside and outside the council’s
district).
For the purposes of
subsection (1)
(a)
a breach of
section
3
occurs in the area
in which the premises demised by the
lease are located (and where the
premises are located in more than
one area, the breach is taken to have
occurred in each of those
areas).
In this Act, “enforcement authority” means—
a local weights and measures authority in England or Wales, or
a district council that is not a local weights and measures authority.
The amount of the financial penalty under
subsection (1)
is to be such amount
as the authority
determines but—
is not to be less than £500 (the “minimum amount”), and
is not to be more than £5,000 (the “maximum amount”).
Where the same landlord has committed more than one breach of section
3
(1)
in relation to the same lease, only one financial
penalty may be imposed on
the landlord in respect of all of those
breaches committed in the period—
before the imposition of the penalty, and
In subsection
(3)
, the “landlord” includes a person who has ceased to
be a
landlord.
In such a case, the amount of the penalty—
is not to be less than the sum of the penalties that would be
imposed
if a separate penalty of the minimum amount were imposed
on the
person for each of the breaches, and
is not to be more than the sum of the penalties that would be
imposed
if a separate penalty of the maximum amount were imposed
on the
person for each of the breaches.
The Secretary of State may by regulations amend the amounts for the
time
being set out in subsection
(2)
.
The power in
subsection (9)
may be exercised only where the Secretary
of
State considers it expedient to do so to reflect changes in the
value of money.
Subsection (2)
applies where an enforcement authority is
satisfied on the
balance of probabilities that—
a tenant has made a payment of a prohibited rent under a
regulated
lease, and
The enforcement authority may order any one of the following persons
to
pay to the tenant the amount that has not been refunded—
the landlord under the lease at the time the payment was made;
the landlord under the lease at the time the enforcement
authority
makes the order;
where the payment was made to a person acting on behalf of the
landlord under the lease, that person.
Subsection (2) does not apply if—
the tenant has made an application under
section
13
for the recovery
of the rent;
an enforcement authority has previously made an order under this
section in relation to the payment.
Where part or all of two or more payments of a prohibited rent made
by a
tenant under the same lease have not been refunded, the
enforcement authority
may make a single order under subsection
(2)
in respect of all the prohibited
rent that has not
been refunded.
Where an enforcement authority orders a person to pay an amount under
section
10
, the authority may include provision in the order for
interest to be
payable on that amount in accordance with this
section.
Where the amount ordered to be paid relates to a single payment of a
prohibited rent, interest is payable on the amount from the day on
which the
payment was made until the day on which the amount is
paid.
Where the amount ordered to be paid relates to more than one payment
of
a prohibited rent, interest is payable on so much of the amount
as relates to
a particular payment from the day on which that
particular payment was
made until that part of the amount is paid.
The rate of interest is the rate for the time being specified in
section 17 of the
Judgments Act 1838.
The total amount of interest payable under provision made under this
section
must not exceed the amount ordered to be paid under
section
10
.
An enforcement authority must have regard to any guidance issued by
the
Secretary of State about the exercise of its functions under
this Act.
For the investigatory powers available to an enforcement authority
for the
purposes of enforcing this Act, see Schedule 5 to the
Consumer Rights Act
2015 (investigatory powers of enforcers etc).
In paragraph 10 of Schedule 5 to the Consumer Rights Act 2015 (duties
and
powers to which Schedule 5 applies), at the appropriate place,
insert “
section
8
of the Leasehold Reform (Ground Rent) Act 2021;”.
The Schedule contains provision about—
the procedure for imposing a financial penalty under
section
9
or
making an order under
section
10
,
the time limits for doing so,
rights of appeal,
the recovery of a financial penalty imposed or an amount ordered
to
be paid, and
the retention of sums received.
Subsection (2) applies where—
a tenant has made a payment of a prohibited rent under a
regulated
lease, and
The tenant may apply to the First-tier Tribunal for an order under
this section
(a “recovery order”).
A recovery order is an order requiring the person specified in the
application
to pay to the tenant, before the end of the period of 28
days beginning with
the day after that on which the order is made,
the amount of prohibited rent
that has not been refunded.
The persons who may be specified in the application are—
the landlord under the lease at the time the payment was made,
the landlord under the lease at the time the application is made, or
where the payment was made to a person acting on behalf of the
landlord under the lease, that person.
Where part or all of two or more payments of a prohibited rent made
by a
tenant under the same lease have not been refunded, the
First-tier Tribunal
may make a single recovery order in respect of
all the prohibited rent that
has not been refunded.
The First-tier Tribunal may not make a recovery order if an
enforcement
authority has made an order under
section
10
in respect of the prohibited
rent that has not been
refunded.
This section is without prejudice to any other remedy available to
the tenant
for recovering a payment of a prohibited rent.
Where the First-tier Tribunal orders a person to pay an amount under
section
13
, the
First-tier Tribunal may include in the order provision for interest
to
be payable on the amount in accordance with this section.
Where the amount ordered to be paid relates to a single payment of a
prohibited rent, interest is payable on the amount from the day on
which the
payment was made until the day on which the amount is
paid.
Where the amount ordered to be paid relates to more than one payment
of
a prohibited rent, interest is payable on so much of the amount
as relates to
a particular payment from the day on which that
particular payment was
made until that part of the amount is
paid.
The rate of interest is the rate for the time being specified in
section 17 of the
Judgments Act 1838.
The total amount of interest payable under provision made under this
section
must not exceed the amount ordered to be paid under section
13
.
The landlord or tenant under a regulated lease may apply to the
First-tier
Tribunal for a declaration as to the effect of
section
7
on the terms of the
lease.
An application may be made under subsection
(1)
in respect of two or more
regulated leases where—
the landlord under each of the leases is the same person, and
the application is made by—
the landlord, or
the tenant under one of the leases with the consent of the
tenant
under each of the other leases,
For the purposes of this section, the terms of a regulated lease
include the
terms of any contract relating to the lease.
Where the tenant is the registered proprietor of the leasehold estate
relating
to the lease—
the landlord must, if the First-tier Tribunal so directs, apply
to the
Chief Land Registrar (and pay the appropriate fee) for
the declaration
to be entered in the registered title;
the tenant may apply to the Chief Land Registrar (and pay the
appropriate fee) for the declaration to be entered in the
registered title.
An enforcement authority may help a tenant—
to make an application under section 13 for a recovery order;
to make an application under
section
15
for a declaration as to the
effect of section
7
on
the terms of a regulated lease (within the meaning
of those
sections);
to recover an amount that the First-tier Tribunal orders to be
paid
under a recovery order.
For example, the enforcement authority may help by conducting
proceedings
or giving advice.
a person acting on behalf of a tenant,
a person who has guaranteed the payment of rent by a tenant, and
Schedule 11 to the Commonhold and Leasehold Reform Act 2002
(administration charges) is amended as follows.
For the heading of Part 1 substitute “Administration charges”.
“No administration charge payable for certain rents
2A(1)
No administration charge is payable for, in connection with or in
respect of, the payment of a relevant rent.
(2)A “relevant rent” is a rent (or any part of a rent) which, by virtue
of the Leasehold Reform (Ground Rent) Act 2021, is permitted only
to be a peppercorn rent.
(3)
Before paragraph 3 insert the heading “Application for order varying lease”.
In paragraph 3(1)—
omit the “or” at the end of paragraph (a);
(c)an administration charge specified in the lease is not
payable because of paragraph 2A .”;
In section 24 of the Landlord and Tenant Act 1987 (appointment of
manager
by tribunal)—
in subsection (2)(aba) after “charges” insert “or prohibited
administration charges”;
at the end of subsection (2B) insert “, and “prohibited
administration
charge” means an administration charge which is
not payable because
of paragraph
2A
of that Schedule.”
Part 5 of the Housing Act 1985 (right to buy) is amended as follows.
In section 127(3)(c) (assumptions to be made on valuation of
dwelling) after
“£10 per annum” insert “or, if the lease would be a
regulated lease within
the meaning of the Leasehold Reform (Ground
Rent) Act 2021, the rent
permitted by that Act”.
In paragraph 11 of Schedule 6 (terms of lease granted pursuant to
right to
buy) after “£10 per annum” insert “or, if the lease is a
regulated lease within
the meaning of the Leasehold Reform (Ground
Rent) Act 2021, the rent
permitted by that Act”.
The Secretary of State may by regulations make provision that is
consequential
on this Act.
The provision that may be made by regulations under
subsection (1)
includes
provision amending an Act
(including an Act passed in the same session as
this Act).
A power to make regulations under any provision of this Act includes
power
to make—
consequential, supplementary, incidental, transitional or saving
provision;
different provision for different purposes.
Regulations under this Act are to be made by statutory instrument.
A statutory instrument containing regulations under this Act is
subject to
annulment in pursuance of a resolution of either House of
Parliament, subject
to
subsection (4)
.
A statutory instrument containing (whether alone or with other
provision)
regulations under
section
20
which amend an Act may not be made unless
a draft of
the instrument has been laid before, and approved by a resolution
of, each House of Parliament.
This section does not apply to regulations under section 25 .
In this Act a “long lease” means—
a lease granted for a term certain exceeding 21 years, whether or
not
it is (or may become) terminable before the end of that term
by notice
given by or to the tenant or by re-entry or forfeiture
or otherwise;
a lease for a term fixed by law under a grant with a covenant or
obligation for perpetual renewal, other than a lease by
sub-demise
from one which is not a long lease;
a lease taking effect under section 149(6) of the Law of Property
Act
1925 (leases terminable after a death, marriage or civil
partnership).
In this Act—
“
dwelling” means a building or part
of a building occupied or intended
to be occupied as a separate dwelling, together with any yard, garden,
outhouses and
appurtenances belonging to it or usually enjoyed with
it;
“
lease”—
means a lease at law or in equity (and references to the
grant
of a lease are to be construed accordingly);
includes a sub-lease;
does not include a mortgage term;
“
rent” includes anything in the
nature of rent, whatever it is called.
In this Act—
“
grant”, in relation to a lease, is
to be read in accordance with
section
1
(4)
and
subsection (2)
;
This Act applies to Crown land.
Land is Crown land if there is or has at any time been an interest or
estate
in the land—
comprised in the Crown Estate,
belonging to Her Majesty in right of the Duchy of Lancaster,
belonging to the Duchy of Cornwall, or
belonging to a government department or held on behalf of Her
Majesty for the purposes of a government department.
This Act extends to England and Wales.
The following provisions come into force on the day this Act is passed—
Except as provided by
subsection (1)
this Act comes into force on such day
as
the Secretary of State may by regulations appoint.
Different days may be appointed for different purposes (including for
different
kinds of leases).
The day appointed for the coming into force of this Act in relation
to leases
of retirement homes must be no earlier than 1 April
2023.
A lease is a lease of a retirement home if—
it is a term of the lease that the premises demised by the lease
may
be occupied only by persons who have attained a minimum age,
and
that minimum age is not less than 55.
The Secretary of State may by regulations make transitional or saving
provision
in connection with the coming into force of any provision
of this Act.
The power to make regulations under
subsection (6)
includes power to make
different provision
for different purposes (including for different kinds of
leases).
Regulations under this section are to be made by statutory instrument.
This Act may be cited as the Leasehold Reform (Ground Rent) Act 2021.
This Schedule applies in relation to—
the imposition by an enforcement authority of a financial
penalty
under
section 9
, and
the making of an order by an enforcement authority under
section
10
.
Before imposing a financial penalty on a person, or making an
order against
a person, the enforcement authority must serve
on the person notice of its
intention to do so (a “notice of
intent”).
A single notice of intent may be served on a person in
respect of both a
penalty and an order.
The notice of intent must set out—
the date on which the notice is served,
the amount of the proposed financial penalty or the terms
of the
proposed order,
the reasons for imposing the penalty or making the order, and
information about the right to make representations under
paragraph
4
.
A notice of intent may not be served in respect of a breach
of
section 3
(1)
after the earlier of the following—
the end of the period of 6 years beginning with the day
the breach
occurs, and
the end of the period of 6 months beginning with the day
on which
evidence comes to the knowledge of the
enforcement authority
which the authority considers
sufficient to justify serving the notice.
A person who receives a notice of intent may, within the period
of 28 days
beginning with the day on which the notice of intent
was served, make
written representations about the proposal.
After the end of the period mentioned in
paragraph 4
, the enforcement
authority must—
decide whether to impose a financial penalty or make an order, and
if it decides to do so, decide the amount of the penalty
or the terms
of the order.
If the enforcement authority decides to impose a penalty or
make an order,
it must serve a further notice on the person
(a “final notice”) imposing the
penalty or making the order.
A single final notice may be served on a person in respect of
both a penalty
and an order.
A final notice imposing a penalty or making an order must
require the
penalty to be paid, or the order to be complied
with, before the end of the
period of 28 days beginning with
the day after that on which the final
notice is served.
The final notice must set out—
the date on which the final notice is served,
the amount of the penalty or the terms of the order,
the reasons for imposing the penalty or making the order,
information about how to pay the penalty or comply with the order,
information about rights of appeal, and
the consequences of failure to comply with the notice.
The enforcement authority may at any time—
withdraw a notice of intent or final notice,
reduce an amount specified in a notice of intent or final notice, or
amend a notice of intent or final notice to remove—
the proposal to impose, or the imposition of, a penalty;
the proposal to make, or the making of, an order.
The power in
sub-paragraph (1)
is to be exercised
by giving notice in
writing to the person on whom the notice
was served.
A person on whom a final notice is served may appeal to the
First-tier
Tribunal against—
the decision to impose the penalty or make the order,
the amount of the penalty, or
the terms of the order.
An appeal under this paragraph must be brought before the end
of the
period of 28 days beginning with the day after that
on which the final
notice is served.
If an appeal is brought under this paragraph, the final
notice is suspended
so far as it relates to the matter which
is the subject of the appeal until the
appeal is finally
determined, withdrawn or abandoned.
An appeal under this paragraph—
is to be a re-hearing of the authority’s decision, but
may be determined having regard to matters of which the
authority
was unaware.
On an appeal under this paragraph the First-tier Tribunal may
quash,
confirm or vary the notice.
The final notice may not be varied so as to make it impose a
financial
penalty of less than the minimum financial penalty
or more than the
maximum financial penalty that could have
been imposed in the final notice
by the enforcement
authority.
This paragraph applies if a person who is liable to pay a
financial penalty
under
section 9
does not pay the whole or any part of
the penalty in
accordance with the final notice imposing it.
The enforcement authority that imposed the financial penalty
may recover
the penalty or part on the order of the county
court as if it were payable
under an order of that
court.
In proceedings before the county court for the recovery of a
financial penalty
or part of a financial penalty, a
certificate which is—
signed by the chief finance officer of the authority that
imposed the
penalty, and
states that the amount due has not been received by a
date specified
in the certificate,
is evidence of that fact.
A certificate to that effect and purporting to be so signed
is to be treated
as being so signed unless the contrary is
proved.
In this paragraph, “chief finance officer” has the same
meaning as in section
5 of the Local Government and Housing
Act 1989.
This paragraph applies if a person who is ordered to pay an
amount under
section 10
does not pay the whole or any part of
that amount, or any
interest payable on that amount, in
accordance with the final notice making
the order.
The person to whom the amount or part or interest is payable
may recover
it on the order of the county court as if it
were payable under an order of
that court.
An enforcement authority may help a person to make an
application for
an order under
paragraph 9
(2)
.
An enforcement authority may, for example, help the person by
conducting
proceedings or giving advice.
Where an enforcement authority imposes a financial penalty under
this
Act, it may apply the proceeds towards meeting the costs
and expenses
(whether administrative or legal) incurred in, or
associated with, carrying
out its enforcement functions (under
this Act or otherwise) in relation to
residential leasehold
property.
Any proceeds of a financial penalty imposed under this Act which
are not
applied in accordance with paragraph
11
must be paid to the Secretary of
State.
A
bill
to
Make provision about the rent payable under long leases of dwellings; and for connected purposes.
Ordered to be Printed, .
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