Leasehold Reform - Chapter 10 and 11 - Procedure

In this article we will consider the procedural aspects of the area, again the Law Commission has provided significant detail in the criticisms of the current law. Those criticisms look to reform the requirements relating to those individuals who potentially may be able to make an application, such as the estate of the deceased's individuals; and also looks at the notice process and the requirements of those notice processes; particularly as regards content and service.  They also look at the issues concerning making a claim, should the notice process fail. Ultimately their conclusions are that the process is far too complicated, to inconsistent, and far too costly.

In their new regime, the Law Commission has considered whether or not there should be a single procedure. If this were to be adopted, then there would be a standard form which would be prescribed for the use of the parties, being an Information Notice, and a Claim Notice, which would enable the terms of the acquisition to be attended to. There would then be a standard form response notice, similar to that which we have now, but would be much clearer in terms of their denial or agreement to the possible acquisition terms.

The Law Commission wish to make it much harder for the validity of a Claim Notice to be disputed, but do acknowledge that there can be the ability for the Response Notice to now be challenged on its validity (albeit again this would be extremely limited). If a Notice is disputed, or alternatively the terms cannot be agreed, there will still be an ability to make a claim to a Tribunal. That process however would be simplified as a direct result of the simplified version of the Notices.

Some of the disputes however that have been considered, are those arguments usually raised by landlord's regarding the validity of Notices. The Comission have looked at the signature process and considered whether or not signatures should be removed completely.  However, they recognise that that in itself could cause issues. Their proposals therefore are that anyone can sign, but only with a statement of truth confirming that specified checks have been carried out before they have served documentation.

They are also of the opinion that a Claim Notice should still be endorsed with certain information in relation to the leaseholders, and particularly should be endorsed with the name of each leaseholder bringing the claim, their address, and details of their lease. A claim for collective enfranchisement should also state the number of flats in the building, and those who are participating. Of course it must also show however those individuals who are not participating, as with the current regime.

The content of the notice has not however received much scrutiny. The Law Commission have provided full details of those items which should be included, and ultimately they are not too far removed from the Initial Claim Notice that is already served.  However, the information will be presented in a simplified form, whuch will no doubt be easier to complete by the leaseholders themselves.

The Law Commission then revisit their idea that an invitation to participate should be served. The Commission are of the opinion that this ultimately could discourage any division in freehold units, and also to encourage more people to progress, therefore making the process more affordable.

The Law Commission then look at the circumstances where there is no immediate landlord, either because they are absent, or because the Claim Notice is not responded to. In those circumstances, the Law Commission is of the opinion that the application should now be directed immediately to the Tribunal, who can then attend to the hearing order process, as well as valuation, in one hearing.

What is more concerning however, is that in this process, the Law Commission are seeking to remove the penalty on those freeholders who do not reply. Presently if the freeholder does not reply they lose the ability to challenge the Claim Notice. However, the Law Commission believes that they should retain the ability to make representations.

If a landlord does not reply then the proposals are that matters should be referred to the Tribunal as they would be required to now; but ultimately the landlord can apply to be a party to those proceedings even though they have not presently progressed in relation to the procedure. They in turn can make representations, but ultimately they will still remain bound by the Tribunal. They believe that this will reduce some of the costs, as the landlord will not automatically be required to respond to the Claim Notice, but rather can simply attend the Tribunal and make representations at that time. We are not certain as to whether this will necessarily rectify the situation.

Looking then at the time limits for a procedure, the Law Commission are of the opinion that the procedure thus far is currently too protracted. They have therefore reduced the time for responding to a First Notice to six weeks, with all other matters being reduced to a matter of either 14 or 21 days. This will reduce the current average duration for a formal procedure of 12 to 18 months.

Finally, the Law commission are of the opinion, that in circumstances where there has been the issue of a Notice prior to someone’s acquisition, they no longer have to be formally assigned the benefit of the Notice. If that Notice has been served in relation to that property and an individual acquires it, the benefit of the Notice will be automatically transferred to that individual. This will ensure that there can be no disparity in position between landlord and tenant.

If you have any questions concerning the consultation, or indeed leasehold generally, please contact this firm's Real Estate Department on 01702 338338 or llancaster@paulrobinson.co.uk