Leasehold Law

The Landlord and Tenant Acts are monumental rule books

They are not laws in the sense that most of us see the law – the moral sense, of distinguishing right from wrong.

Here are two examples from among many. In the Government notes issued with the 2002 rule book called ‘Commonhold and Leasehold Reform Act ’ (CLRA).

Section 115: Non Residential Premises

‘Section 115 amends section 4(1) of the 1993 Act to enable premises where the proportion of the internal floor area used for non-residential purposes is up to 25% to qualify for the right. This replaces the present limit of 10%’

Question: Who chose the 10% figure and who changed it to 25% and on what basis?

Section 151: Consultation about Service Charges

‘A qualifying long term agreement is an agreement entered into by or on behalf of the Landlord or a superior landlord for a term of more than twelve months’

Question: In what real way might an eleven month agreement differ from twelve, and not need a consultation?

The very best information on the present rules are the rules themselves published by the Stationery Office (0845 7 023474) or www.tso.co.uk and the ‘Explanatory Notes’ published with it.

Ongoing changes in the rules are documented in ‘Woodfall’s ‘Law of Landlord and Tenant’. Used by legal professionals and usually found on open shelves in reference libraries. Costs several hundred pounds to buy.

Each new instalment of the rules (or ‘change in the law’) encourages an avalanche of information. It is impossible to absorb all this, and the stranglehold of the professionals is reinforced. We need one Act of Parliament which consolidates all the rules. This has been requested and refused.

Now systematic information processing is impossible.

Leasehold ‘Ownership’

Lawyers refer to leasehold as a ‘legal fiction’

The legal fiction is this: that it is possible to separate ‘ownership’ of a building and ownership of the land on which it is built .

Physically we cannot separate them. On paper however they can actually be sold to different people.

The freeholder buys the land. The leaseholder only buys a lease in part of the building erected on it. Because it is the freeholder’s building, they have the power to:

  • engage experts, and charge the leaseholder
  • decide on contractors, and charge the leaseholder
  • fix administration fees, and charge the leaseholder
  • engage a managing agent, and charge the leaseholder

The system is extraordinary, but once it is acknowledged that the building does NOT actually belong to the leaseholder, only the lease belongs to the leaseholder – hence the name ‘leaseholder’- the legal position is then established.

Since 1954 there have been no fewer than sixteen Acts of Parliament attempting to regulate the residential long leasehold system. The seventeenth Act, the latest, is the 2002 Commonhold and Leasehold Reform Act.

We now have more problems than ever with leasehold because these Acts have not fundamentally changed the relationship of the parties. They have attempted to regulate and control the consequences.

View a copy a copy of the Leaseholders Guide by Shula Rich

Read the Leaseholders Guide by Shula Rich