1. This Act is particularly important to Leaseholders in three respects:
i. It gives leaseholders the collective right to buy the freehold of their building even if the landlord is unwilling to sell it. This is known as ‘Collective Enfranchisement’ and there are a number of strict conditions which determine when Leaseholders can exercise this right.
ii. It gives individual leaseholders the right to purchase a 90 year lease extension if certain condition are met.
iii. The Act also gives Leaseholders a right to appoint a qualified accountant or surveyor to carry out a ‘Management Audit’ in relation to their building, or estate, to determine whether the landlord is meeting their obligations under the terms of their leases. This can include a review of whether the Service Charges are being billed correctly.
2. Because this website is primarily focussed on Service Charge issues we only describe the parts of the Act relating to the right for leaseholders to initiate a Management Audit.
Relevant Parts of the Leasehold Reform, Housing and Urban Development Act 1993 for Service Charge Payers
All these sections remain in force today:
Section 76 (Right to a Management Audit)
This section says leaseholders have a right to have a Management Audit carried out on their behalf if it is requested by two or more ‘qualifying tenants’, or by a single leaseholder if there are no other ‘qualifying tenants’ building.
Section 77 (Tenants Qualifying for Right to a Management Audit)
This section defines who counts as a ‘qualifying tenant’.
Section 78 (Purpose of a Management Audit)
This section sets out who can act an ‘Auditor’ in a Management Audit, and what types of things the Auditor can investigate.
Section 79 (Rights of the Auditor in a Management Audit)
This section describes the rights of access to the property and related documentation which are given to the person carrying out the Management Audit.
Section 80 (Exercise of the Right to a Management Audit)
This section sets outs the steps which must be taken before commencing a Management Audit.
Section 81 (Procedure After Giving Notice of a Management Audit)
This section states what a Landlord must do, and how quickly they must do it, after being given written notice that a Leaseholder or Leaseholders intends to exercise their right to have a Management Audit carried out on their behalf.
Section 82 (Management Audits and Superior Landlords)
This section sets out what must happen if a Leaseholder or Leaseholders wish to exercise their right to a Management Audit when their Landlord is not the person or organisation which manages the building and provides the services. This situation occurs where their Landlord (the person or organisation to whom they pay the Service Charge) is themselves a leasehold of the flat in question. This situation commonly occurs where leaseholders have purchased from a Housing Association through a Shared Ownership scheme.
Section 87 (Codes of Management Practice)
This section gives the relevant Secretary of State (Government minister) the power to approve a code of practice for the management of property. Any such code of practice, once approved, may be used as evidence in a court or tribunal.
Click on the link to read more about the Leasehold Reform, Housing and Urban Development Act 1993