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Overview of the Landlord and Tenant Act 1987 for Leaseholders

Summary

1. This Act has remains very important to Leaseholders in relation to Service Charges.

2. Some parts of the Landlord and Tenant Act 1987 made significant changes to the earlier Landlord and Tenant Act 1985. These changes have already been taken into account in the section of our Legal Guide entitled Landlord and Tenant Act 1985 so we have not described them in this section of the Legal Guide.

3. Other than the amendments it makes to the Landlord and Tenant Act 1985, this Act is particularly important to Leaseholders in three respects:

i.. It sets out the circumstances under which an Application may be made to a First Tier Tribunal to vary an existing lease.

ii. It places a legal obligation on Landlords to hold Leaseholders’ Service Charge contributions in trust.

iii. The Act makes it a legal requirement for Landlords to provide their name and a correspondence address on Service Charge bills, estimates and related notices.

Relevant Parts of the Landlord and Tenant Act 1987 for Service Charge Payers

All these sections remain in force today, with the exceptions of sections 42A and 42B which were never brought into force except in so far as they confer rights for the Government to make relevant regulations:

Section 35 (Right to Apply to Vary a lease)

This section states that a leaseholder, or their landlord, has the right to apply to a First Tribunal to vary a lease on the basis that the lease is defective in terms of the either the way the Service Charge is calculated, or that it does not allow for proper management of the building in some other way.

Section 36 (Application to Vary Other Residents’ Leases)

This sections states that if an Application to vary a lease is made under Section 35, a further Application may also be made to vary other leases affected by the same issue.

Section 37 (Application to Vary Leases by a Majority of Leaseholders)

This section allows for an Application to be made to vary several leases at the same time if all or nearly all of the Leaseholders consent to the variation.

Section 38 (Court Order to Vary Leases)

This section allows a Lease to be varied by a Court Order, or an Order by a Tribunal. Where such an Order is made, Court or Tribunal may also decide to award compensation to either the Leaseholder or Landlord if they consider either party will experience a financial loss as a consequence of the Order to vary the terms of the lease.

Section 40 (Application to Vary Insurance Provisions for Houses)

This section allows for an Application to be made to a First Tier Tribunal to vary the provisions of a lease dealing with insurance. This section does not apply to leases for flats.

Section 42 (Service Charge Contributions to be Held in Trust)

This section states that any monies paid as Service Charge contributions must be held in a separate fund or funds, and that such monies are only to be used to pay for those costs related to the things which the Service Charge is intended to fund.

Section 42A (Service charge Contributions to be Held in a Designated Account)

This section, which is yet to brought in force except in so far as confers rights for the Government to make relevant regulations, states that monies paid for Service Charges must be held in a designated bank account, and that a Leaseholder contributing towards the Service Charge must be allowed access to documents relating to that bank account.

Section 42B (Penalties for Failure to Comply with Section 42A)

This section, which is yet to be brought into force, states that failure by a landlord to hold Service Charge contributions in a designated bank account, or to allow access to documents relating to that bank account, is an offence punishable by a fine.

Section 47 (Landlord’s name and address to be included in Demands for Payment)

This section makes it a legal obligation to state the name and address of the person or organisation to whom the service charge is payable (known as the ‘Landlord’ in the lease) on a demand for payment. This applies even if that demand is sent by a third party, such as a managing agent, acting on behalf of a Landlord.

Section 48 (Landlords to Provide an Address for Service of Notices)

This section makes it a legal obligation for a Landlord to inform a leaseholder in writing of a correspondence address in England or Wales where legal notices may be sent to them.

Click on the link to read more about The Landlord and Tenant Act 1987