Commonhold and Leasehold Reform Act 2002

• Commonhold
• Right to Manage (RTM)
• The liability to pay and the reasonableness of charges under the Right to Manage
• Determination of alleged breach in connection with forfeiture
• Appeals against withholding of service charges

• Under the Commonhold and Leasehold Reform Act 2002, a Section 20 Consultation is required for ‘qualifying long term agreements’. Leaseholders must be consulted:
  • before contracts over 12 months are entered into,
  • or if any one Leaseholder would have to contribute £100 or more in the 12 months. ¹⁾

• introduces a requirement that ground rent is not payable unless it has been demanded by giving the tenant a prescribed notice,
• and prevents the application of any provisions of a lease relating to late or non-payment (e.g. additional charges) if the rent is paid within 30 days of the demand being issued.
• It also introduces additional restrictions on the commencement of forfeiture proceedings for breaches of covenants or conditions of a lease.
• It modifies section 81 of the Housing Act 1996 to prohibit the commencement of forfeiture proceedings, including the issue of a notice under section 146 of the Law of Property Act 1925, in respect of non-payment of service charges or administration charges unless the charge has been agreed or admitted by the tenant, or a court or FTT has determined that it is reasonable and due. It also prohibits the commencement of forfeiture proceedings for other breaches unless a court or FTT has determined that a breach has occurred.
• There is also a new provision which would prohibit forfeiture proceedings unless the amount outstanding exceeded a prescribed sum or the amount, or any part of it, had been outstanding for more than a prescribed period.
• There is a power to prescribe the content of a notice which must accompany service and administration charge demands.
• Furthermore, there is a new power to prescribe additional or different requirements which must be met before the right of re-entry or forfeiture may be exercised.

Service Charge or Administration Charge demands must be accompanied by a summary of rights and obligations. The Leaseholder can withhold payment if this requirement is not complied with in relation to the demand.

See below references for the specific wording.

• Commonhold And Leasehold Reform Act 2002 Explanatory Notes
• LEASE: Summaries of rights and obligations – Service Charges – England
• LEASE: Summaries of rights and obligations – Administration Charges – England