Leasehold Valuation Tribunal

2. Leasehold Valuation Tribunal • Enfranchisement of leasehold property • Adjudication of disputes over management of leasehold property

3. Enfranchisement EITHER Acquisition of freehold OR Grant of extended lease • For houses – Leasehold Reform Act 1967 • For flats – Leasehold reform Housing and Urban Development Act 1993

4. Enfranchisement • Houses: • Property must be held on a long lease at a low rent, and • Leaseholder must have been the tenant for the past two years at least, and

5. Enfranchisement • If tenancy entered into before 1 April 1990 RV did not exceed £400 (Gtr London) or £200 (elsewhere), or • If tenancy entered into after 1 April 1990 tenancy qualifies (where R is less than £25000) under formula

6. Enfranchisement (House) • Acquire either freehold, or • Extended lease for a term of fifty years after the expiration of the present lease on the same terms • Save that the rent for the extended term is a ‘modern ground rent’ (i.e. the letting value of the site alone for the uses to which house put since term commenced)

7. Enfranchisement (Flat(s)) • EITHER freehold acquired collectively by qualifying tenants through a nominee purchaser, or • Extended lease acquired individually by a qualifying tenant of his or her flat • New lease in substitution for existing lease at a peppercorn rent for a term expiring ninety years after term date of existing lease

8. Enfranchisement • Problems mostly those of time • But matters before LVT may include: • extent of land to be included in collective enfranchisement • other terms of enfranchisement or of extended leases • costs, and always • the price

9. Management – Service charges • An amount payable directly or indirectly for services, repairs, maintenance, improvements or insurance or the landlord’scosts of management (Section 18 L & T A 1985) • Payable to the extent that it is reasonably incurred and, if for services or the carrying out of works, only if the services or the works (as case may be) are of reasonable standard (Section 19 L & T A 1985) • Finchbourne v Rodrigues [1976] 3 AER 581 CA

10. Management – Service charges Section 27A Landlord & Tenant Act 1985: LVT may determine • amount payable • by whom payable • to whom payable • when payable • how it is payable

11. Management – Service charges Some Problem areas: Accounting (new notification and accounts provisions not yet fully in force) Insurance commissions Lease provisions Summaries of costs Time limits on recovery – Section 20B Limitations

12. Management – Administration charges Schedule 11 CLARA Relates (only) to amounts payable in addition to rent for: • Applications for and grants of approvals under lease • Provision of information or documents • In respect of a failure by a tenant to make a payment under his lease by the due date, or • in connection with breach or alleged breach of covenant • Payable only so far as charge is reasonable

13. Management- Administration Charges • Problems: • Primarily arise from statutory definition – tendency to confuse with service charges, but need for separate application.

14. Management – Section 20 Notices LVT jurisdiction enables it to grant waiver in respect of need to serve section 20 notices in respect of work carried out since 31 October 2003.

15. Management – Section 20 Notices Problems • Complicated transitional provisions in respect of work carried out at around time of change of jurisdiction from CC to LVT – CC still has jurisdiction to grant waiver under section 20(9) in respect of earlier work. • Separate application • Cases of urgency • Situation when it becomes apparent during a service charge hearing that a necessary notice was not served!

16. Management – Appointment of Manager/Receiver Grounds: • Breach of obligation owed to tenant • Unreasonable service charges • Unreasonable variable administration charges • Failure to hold service charge monies on trust (in a designated account) • Failure to comply with a management code designated under S. 87 LRHUDA 1993

17. Management – Appointment of Manager/Receiver AND That it is just and convenient to make the Order (the mere fact that grounds to make an Order exist do not necessarily mean that it is appropriate to make one) OR Where LVT is satisfied that other circumstances exist that make it just and convenient for the Order to be made

18. Management – Appointment of Manager/Receiver Principle This is a problem solving jurisdiction. Problems Failure to give (or to give proper) preliminary notice Need for “tailored” individual and appropriate Order in each case Ongoing contracts / outstanding contributions Protection of Manager/Receiver Provision for his costs

19. Management – Variation of Leases Variation without agreement where lease of a flat fails to make proper provision for: • Repair or maintenance of flat, block or other common parts • Insurance of block • Repair or maintenance of installations necessary to ensure reasonable standard of accommodation • Provision or maintenance of any services necessary to ensure reasonable standard of accommodation

20. Management – Variation of Leases • Recovery by one party from another of expenditure incurred or to be incurred by him for the benefit of another party or other parties • Computation of a service charge payable under the lease • Any other matters prescribed by the Secretary of State (presently none have been prescribed)

21. Management – Variation of Leases Voluntary variation if: In a block of less than nine flats not more than one of all the parties to the leases dissents, or In a block of nine or more flats, 75% of parties agree, and not more than 10% object

22. Management – Variation of Lease Problems: • No case law • Very individual approach • Applicants must provide drafts of proposed variation • Does S 35(4) really mean that provision for computation is not satisfactory only if the total recoverable does not add to 100%? • Field of variation without consent is very narrow.

23. Right to Manage LVT has six jurisdictions: • Determining disputes about qualification and eligibility for RTM. • Determining that RTM company is entitled to right to manage when landlord cannot be traced. 3. Determining costs incurred by landlord in LVT proceedings if LVT has dismissed application

24. Right to Manage • Determining amount of uncommitted service charges to be paid to RTM company by landlord, third party or an LVT appointed manager • Determining disputes over the grant of approvals 6. Determining that a new RTM may arise within four years after a previous RTM has ceased to be exercisable

25. Right to Manage Problems: Lie primarily in the definitions used to identify qualification Especially in the definition of premises to which the provisions apply – section 72 CLARA Surprisingly few applications to determine amount of uncommitted funds to be handed over

27. Management – Forfeiture LVT has jurisdiction to determine whether or not a breach of covenant has occurred prior to any order for forfeiture of the lease on the grounds of such breach. Forfeiture order made by County Court of basis of LVT’s factual finding No real problems to date, but not yet frequently invoked

28. Insurance • A tenant may apply to the LVT to challenge the Landlord’s choice of insurer where lease requires tenant to insure, but to do so with a Company nominated by the landlord. (Para 8 of Schedule to LTA 1985) • Very rarely invoked.

29. Estate management • LVT can adjudicate on reasonableness of estate management charges (section 19 Leasehold reform Act 1967 and section 159 CLARA) • No recorded cases anywhere to date.

30. Summary • Enfranchisement (Flats or Houses) • Service charges • Administration charges • Dispensation with section 20 notice • Appointment of Manager/Receiver • Variation of Leases • Right to Manage • Forfeiture • Challenge to nominated insurer • Estate Management charges