A new lease of life: - CentreForum

A New Lease of Life::The Commonhold and Leasehold Reform Act 2002.The Leasehold Reform Act 1967The 1967 Act was the first genuine attempt to address the decliningnature of leasehold contracts, although it applied only to housesand not flats. The Act gave a leaseholder the automatic right tobuy the freehold of their house or to extend their leasehold. Flatswere omitted because they were relatively new and it was morecomplicated to sell freeholds whilst ensuring that positive covenantswere enforced. It was not until 1972 that the first legislation focusingon leasehold flats was passed, giving leaseholders the right to knowhow much they faced in service charges.The Landlord and Tenant Act 1985The Landlord and Tenant Act 1985 established basic ground rulesfor service charges for all leasehold properties, which had beenevolving since the Housing Finance Act 1972. 19 Section 20 of the1985 Act stated that significant capital works (defined as a specificjobs costing more than £250 per lessee or service contracts over oneyear) must follow a period of consultation with the leaseholders.The freeholder retains ultimate discretion and does not have tochoose the cheapest option, but must show that their decision wasreasonable. Sections 21 and 22 of the Act also gave leaseholdersthe right to view a broken down summary of the previous year’sservice charges by applying in writing to the managing agent. Someproperty managers complain however that the Act - especiallySection 20 - is not practical for day-to-day operation, addingunnecessary costs and delays to management.The Landlord and Tenant Act 1987The Landlord and Tenant Act 1987 was passed amid concerns aboutpoor management and rising service charges in flats, which had ledto the Nugee Report. 20 The Report’s principal recommendations wereput into this Act and increased statutory control on the impositionand composition of service charges, which henceforth had to beheld in trust. It gave leaseholders in flats a right of first refusal to buytheir freehold before it was offered on the open market, althoughthis still lagged behind the right of leasehold house owners who19 The process of evolution continued with the Housing Act 1974 and the HousingAct 1980.20 EG Nugee, ‘Report of the Committee of Enquiry on the management of PrivatelyOwned Blocks’, Department of the Environment, 1986.16