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Amendment made: No. 60, in page 71, line 25, leave out Clause 150.[Ms Keeble.]
'required to be supplied under this section.'.
Ms Keeble: This is a minor consequential amendment made in light of new clause 11, which provides for leaseholders to be sent a summary of their rights and obligations in relation to service charges whenever they are sent a service charge demand. New clause 11 also gives the Secretary of State power to prescribe the form and content of such summaries. Clause 151 requires leaseholders to be sent a summary of their rights and obligations in relation to service charges, but these summaries are to be sent out with leaseholders' annual accounting statements, and the Secretary of State would also have power to prescribe their form and content. The amendment makes it clear that the power granted by clause 151 applies only to documents that landlords are required by the clause to supply.
Government amendments Nos. 47 and 51 could be termed the Daejan amendments. Last July, the case of Daejan Properties Ltd. v. London leasehold valuation tribunal was brought before the Court of Appeal. Subsequently, the court ruled that LVTs only have the jurisdiction to decide the reasonableness of disputed service charges that are still unpaid except in certain very limited circumstances. We consider that decision to be most unfortunate from the viewpoint of both leaseholders and landlords. As leaseholders become aware of its effect, they may be inclined to withhold service charges until they are certain that those charges are reasonable, because it may otherwise prove very difficult for them to launch any challenge. In turn, that will create problems for managers of leasehold property, who may find it increasingly difficult to obtain payments in advance and be reluctant to commence work without them.
We have already taken steps to ensure that under clause 151, LVTs will have a clear power to rule on service charges that have already been paid. However, last month we were informed that the London LVT had been refused leave to appeal against the Court of Appeal decision on the Daejan case. In light of that development, we decided to take another look at clause 151 to see whether there was any possibility, however remote, that it might be construed as giving LVTs the jurisdiction to rule only on unpaid service charges. We decided that it might be advisable to table a further amendment to put the matter beyond any possible doubt. Government amendment No. 47 would achieve that end.
Government amendment No. 49 is a drafting amendment. Schedule 11 currently contains a definition of a fixed administration charge, but the only place where the term "fixed administration charge" is used in the Bill is in the definition of "variable administration charge". Therefore, the amendment replaces those definitions with a new definition of variable service charge, thus simplifying the provision. Government amendment No. 59 corrects an error in the drafting of schedule 14.
Amendment made: No. 47, in page 76, line 31, at end insert
'(1A) Subsection (1) applies whether or not any payment has been made.'.[Ms Keeble.]
Amendment made: No. 48, in page 78, line 31, at end insert
'(9A) Nothing in this section applies to the payee if the circumstances are such as are specified in regulations made by the Secretary of State.'.[Ms Keeble.]
Amendment made: No. 49, in page 124, line 23, leave out from "Schedule" to end of line 28 and insert
'"variable administration charge" means an administration charge payable by a tenant which is neither
(a) specified in his lease, nor
(b) calculated in accordance with a formula specified in his lease.'.[Ms Keeble.]
3A (1) A demand for the payment of an administration charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to administration charges.
(2) The appropriate national authority may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.
(3) A tenant may withhold payment of an administration charge which has been demanded from him if sub-paragraph (1) is not complied with in relation to the demand.
'A right of re-entry or forfeiture under any proviso or stipulation in a lease of a dwelling for a breach of covenant or condition in the lease shall not be enforceable by action or otherwise.'.
'( ) Where a forfeiture action is successful, after deduction of all debts any balance shall be paid to the leaseholder.'.
'. In section 146 of the Law of Property Act 1925 (c. 20) (restriction on forfeiture) there is inserted
(4A) Where the court has made an order for forfeiture pursuant to subsections (1) to (4) above, any balance remaining after the payment of the lessee's debts owed to the lessor shall be paid to the lessee".'.
'.(1) This section shall apply to any lease granted for a term of years certain exceeding 21 years, whether or not it is terminable before the end of the term by notice given by or to the tenant or by re-entry, forfeiture or otherwise and whether made before or after the coming into force of this section, where the rent reserved for the time being is less than £1,000 per annum.
(2) In this section a right of forfeiture shall mean a provision in a lease whereby the landlord under a lease has a right to re-enter the premises demised (or part thereof) upon the happening of specified events, whether the right to re-enter is expressed as a condition or as a proviso on breach of covenant or otherwise howsoever.
(3) No landlord may re-enter the premises demised (nor any part thereof) pursuant to a right of forfeiture, insofar as the exercise of the right of forfeiture is based on the non-payment of money.
(4) Where a tenant fails to pay monies payable under the terms of the lease, the person entitled to payment of the said monies shall be entitled to a first legal charge (herein referred to as a "landlord's charge") over the lease for the monies payable and for his reasonable costs and expenses of and in connection with the landlord's charge and the enforcement thereof, such costs and expenses to be payable on the indemnity basis.
(5) Subject to the next subsection, a landlord's charge shall have priority to all charges, underleases and other encumbrances estates easements estoppels and rights of whatever description created by or deriving title from or through the tenant, whether at law or in equity and whether created or existing before or after the coming into force of this Act (hereinafter referred to as "subsidiary interests").
(6) Notwithstanding the previous subsection, no local land charge within the meaning of the Local Land Charges Act 1975 shall be a subsidiary interest.
(7) Subject to the next subsection, a landlord's charge may be enforced in any manner in which a first legal charge may be enforced.
(8) The landlord's charge may only be enforced by sale with leave of the High Court or the County Court.