Housing Act 1996
1996 Chapter 52 - continued

 
  CHAPTER III
  LEASEHOLD REFORM
 
Scope of rights
Low rent test: nil rateable values.     105. - (1) In section 4(1) of the Leasehold Reform Act 1967 (meaning of "low rent") -
 
 
    (a) in paragraph (i) (cases where rent limit of two-thirds of rateable value on later of appropriate day and first day of term applies), for the words from "or (where" to "that date" there shall be substituted ", or on or after 1st April 1990 in pursuance of a contract made before that date, and the property had a rateable value other than nil at the date of the commencement of the tenancy or else at any time before 1st April 1990,",
 
    (b) in paragraph (ii) (other cases), for the words from "is entered" to "1990)," there shall be substituted "does not fall within paragraph (i) above,", and
 
    (c) in paragraph (a) (definition of "appropriate day" by reference to section 25(3) of the Rent Act 1977), there shall be inserted at the end "if the reference in paragraph (a) of that provision to a rateable value were to a rateable value other than nil".
      (2) In section 4A of the Leasehold Reform Act 1967 (alternative rent limits for the purposes of section 1A(2) of that Act)-
 
 
    (a) in subsection (1)(b) (cases where rent limit of two-thirds of rateable value on the relevant date applies), for sub-paragraph (ii) there shall be substituted-
 
      "(ii) the property had a rateable value other than nil at the date of commencement of the tenancy or else at any time before 1st April 1990,", and
 
    (b) in subsection (2), for paragraph (b) there shall be substituted-
 
    "(b) "the relevant date" means the date of the commencement of the tenancy or, if the property did not have a rateable value, or had a rateable value of nil, on that date, the date on which it first had a rateable value other than nil;".
      (3) In section 8 of the Leasehold Reform, Housing and Urban Development Act 1993 (leases at a low rent)-
 
 
    (a) in subsection (1)(b) (cases where rent limit of two-thirds of rateable value on the appropriate date applies), for sub-paragraph (ii) there shall be substituted-
 
      "(ii) the flat had a rateable value other than nil at the date of the commencement of the lease or else at any time before 1st April 1990,", and
 
    (b) in subsection (2), for paragraph (b) there shall be substituted-
 
    "(b) "the appropriate date" means the date of commencement of the lease or, if the flat in question did not have a rateable value, or had a rateable value of nil, on that date, the date on which the flat first had a rateable value other than nil;".
Low rent test: extension of rights.     106. Schedule 9 (which makes provision for conferring an additional right to enfranchisement in relation to tenancies which fail the low rent test and for introducing an alternative to the low rent test in the case of the right to collective enfranchisement and the right to a new lease) shall have effect.
 
Collective enfranchisement: multiple freeholders.     107. - (1) In section 3 of the Leasehold Reform, Housing and Urban Development Act 1993 (premises in respect of which the right to collective enfranchisement is exercisable), in subsection (1)(a), the words "and the freehold of the whole of the building or of that part of the building is owned by the same person" shall be omitted.
 
      (2) In section 4 of that Act (premises excluded from the right to collective enfranchisement), after subsection (3) there shall be inserted-
 
 
    "(3A) Where different persons own the freehold of different parts of premises within subsection (1) of section 3, this Chapter does not apply to the premises if any of those parts is a self-contained part of a building for the purposes of that section.".
 
      (3) In section 1(3) of that Act (additional property which may be acquired by tenants exercising the right to collective enfranchisement), the words "the freehold of it is owned by the person who owns the freehold of the relevant premises and" shall be omitted.
 
      (4) Schedule 10 (amendments consequential on this section) shall have effect.
 
 
Valuation
Collective enfranchisement: removal of need for professional valuation of interests to be acquired.     108. In section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 (notice by qualifying tenants of claim to exercise right to collective enfranchisement) subsection (6) (tenants to obtain professional valuation of interests proposed to be acquired before giving notice) shall cease to have effect.
 
Collective enfranchisement: valuation principles.     109. - (1) Schedule 6 to the Leasehold Reform, Housing and Urban Development Act 1993 (purchase price payable by nominee purchaser) shall be amended as follows.
 
      (2) In paragraph 3(1) (freeholder's interest to be valued on the basis that neither the nominee purchaser nor any participating tenant is in the market) for "neither the nominee purchaser nor any participating tenant" there shall be substituted "no person who falls within sub-paragraph (1A)".
 
      (3) After paragraph 3(1) there shall be inserted-
 
 
    "(1A) A person falls within this sub-paragraph if he is-
 
 
    (a) the nominee purchaser, or
 
    (b) a tenant of premises contained in the specified premises, or
 
    (c) an owner of an interest which the nominee purchaser is to acquire in pursuance of section 2(1)(b).".
      (4) In paragraph 7 (value of intermediate leasehold interests) after sub-paragraph (1) there shall be inserted-
 
 
    "(1A) In its application in accordance with sub-paragraph (1), paragraph 3(1A) shall have effect with the addition after paragraph (a) of-
 
    "(aa) an owner of a freehold interest in the specified premises, or"".
      (5) In paragraph 11 (value of other interests) after sub-paragraph (3) there shall be inserted-
 
 
    "(4) In its application in accordance with sub-paragraph (2) above, paragraph 3(1A) shall have effect with the addition after paragraph (a) of-
 
    "(aa) an owner of a freehold interest in the specified premises, or"".
New leases: valuation principles.     110. - (1) Schedule 13 to the Leasehold Reform, Housing and Urban Development Act 1993 (premium and other amounts payable by tenant on grant of new lease) shall be amended as mentioned in subsections (2) to (4) below.
 
      (2) In paragraph 3(2) (landlord's interest to be valued on the basis that the tenant is not buying or seeking to buy) for "the tenant not" there shall be substituted "neither the tenant nor any owner of an intermediate leasehold interest".
 
      (3) In paragraph 4(3) (calculation of marriage value) for paragraph (a) (value of tenant's interest) there shall be substituted-
 
 
    "(a) the value of the interest of the tenant under his existing lease shall be determined in accordance with paragraph 4A;
 
    (aa) the value of the interest to be held by the tenant under the new lease shall be determined in accordance with paragraph 4B;",
and, in paragraph (b), for "that sub-paragraph" there shall be substituted "sub-paragraph (2)".
      (4) After paragraph 4 there shall be inserted-
 
 
"4A. - (1) Subject to the provisions of this paragraph, the value of the interest of the tenant under the existing lease is the amount which at the valuation date that interest might be expected to realise if sold on the open market by a willing seller (with neither the landlord nor any owner of an intermediate leasehold interest buying or seeking to buy) on the following assumptions-
 
 
    (a) on the assumption that the vendor is selling such interest as is held by the tenant subject to any interest inferior to the interest of the tenant;
 
    (b) on the assumption that Chapter I and this Chapter confer no right to acquire any interest in any premises containing the tenant's flat or to acquire any new lease;
 
    (c) on the assumption that any increase in the value of the flat which is attributable to an improvement carried out at his own expense by the tenant or by any predecessor in title is to be disregarded; and
 
    (d) on the assumption that (subject to paragraph (b)) the vendor is selling with and subject to the rights and burdens with and subject to which any interest inferior to the existing lease of the tenant has effect.
      (2) It is hereby declared that the fact that sub-paragraph (1) requires assumptions to be made in relation to particular matters does not preclude the making of assumptions as to other matters where those assumptions are appropriate for determining the amount which at the valuation date the interest of the tenant under his existing lease might be expected to realise if sold as mentioned in that sub-paragraph.
 
      (3) In determining any such amount there shall be made such deduction (if any) in respect of any defect in title as on a sale of that interest on the open market might be expected to be allowed between a willing seller and a willing buyer.
 
      (4) Subject to sub-paragraph (5), the value of the interest of the tenant under his existing lease shall not be increased by reason of-
 
 
    (a) any transaction which-
 
      (i) is entered into after 19th January 1996, and
 
      (ii) involves the creation or transfer of an interest inferior to the tenant's existing lease; or
 
    (b) any alteration after that date of the terms on which any such inferior interest is held.
      (5) Sub-paragraph (4) shall not apply to any transaction which falls within paragraph (a) of that sub-paragraph if-
 
 
    (a) the transaction is entered into in pursuance of a contract entered into on or before the date mentioned in that paragraph; and
 
    (b) the amount of the premium payable by the tenant in respect of the grant of the new lease was determined on or before that date either by agreement or by a leasehold valuation tribunal under this Chapter.
 4B. - (1) Subject to the provisions of this paragraph, the value of the interest to be held by the tenant under the new lease is the amount which at the valuation date that interest (assuming it to have been granted to him at that date) might be expected to realise if sold on the open market by a willing seller (with the owner of any interest superior to the interest of the tenant not buying or seeking to buy) on the following assumptions-
 
 
    (a) on the assumption that the vendor is selling such interest as is to be held by the tenant under the new lease subject to the inferior interests to which the tenant's existing lease is subject at the valuation date;
 
    (b) on the assumption that Chapter I and this Chapter confer no right to acquire any interest in any premises containing the tenant's flat or to acquire any new lease;
 
    (c) on the assumption that there is to be disregarded any increase in the value of the flat which would fall to be disregarded under paragraph (c) of sub-paragraph (1) of paragraph 4A in valuing in accordance with that sub-paragraph the interest of the tenant under his existing lease; and
 
    (d) on the assumption that (subject to paragraph (b)) the vendor is selling with and subject to the rights and burdens with and subject to which any interest inferior to the tenant's existing lease at the valuation date then has effect.
      (2) It is hereby declared that the fact that sub-paragraph (1) requires assumptions to be made in relation to particular matters does not preclude the making of assumptions as to other matters where those assumptions are appropriate for determining the amount which at the valuation date the interest to be held by the tenant under the new lease might be expected to realise if sold as mentioned in that sub-paragraph.
 
      (3) In determining any such amount there shall be made such deduction (if any) in respect of any defect in title as on a sale of that interest on the open market might be expected to be allowed between a willing seller and a willing buyer.
 
      (4) Subject to sub-paragraph (5), the value of the interest to be held by the tenant under the new lease shall not be decreased by reason of-
 
 
    (a) any transaction which-
 
      (i) is entered into after 19th January 1996, and
 
      (ii) involves the creation or transfer of an interest inferior to the tenant's existing lease; or
 
    (b) any alteration after that date of the terms on which any such inferior interest is held.
      (5) Sub-paragraph (4) shall not apply to any transaction which falls within paragraph (a) of that sub-paragraph if-
 
 
    (a) the transaction is entered into in pursuance of a contract entered into on or before the date mentioned in that paragraph; and
 
    (b) the amount of the premium payable by the tenant in respect of the grant of the new lease was determined on or before that date either by agreement or by a leasehold valuation tribunal under this Chapter.".
      (5) This section applies in relation to any claim made after 19th January 1996 by the giving of notice under section 42 of the Act of 1993 unless the amount of the premium payable in pursuance of the claim has been determined, either by agreement or by a leasehold valuation tribunal under Chapter II of the Act of 1993, before the day on which this Act is passed.
 
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