Ground Rents


Eight months before the much publicised Select Committee on Leasehold was launched on 24th July 2018,another enquiry had been launched on the 16th November 2017; the last evidence for that enquiry came in on the 26th February 2018 and the Committee’s report had been completed in March 2018. The product was a bill, which passed into law in June 2019 as the Tenant Fees Act 2019 and it is probably a wonderful bit of legislation, although, as ever, I shall hold fire and see how it works in practice before praising it too highly. It prohibits the charging of a lot of fees that landlords and managing agents currently charge and restricts the amounts which can be charged in relation to those fees which are permitted and provides a mechanism for varying leases so that terms do not conflict with the provisions of the Act.

While the Tenant Fees Act 2019 does not abolish leasehold, it might have provided remedies for much of what those saddled with burdensome modern long leaseholds find most problematic and as it applies to assured shorthold tenancies, it might have given a silver lining to the Housing Act Trap about which I have written quite a lot. But here is the rub; it is not retrospective and it excludes long leases. So it does none of those things for existing long leaseholders caught in the Housing Act Trap.

It is noteworthy that none of the evidence the Inquiry that lead to the Tenant Fees Act came from anyone affected by the leasehold mis-selling scandal but the Select Committee was the same and had the rolling behemoth of Parliamentary business checked, taken a breath and engaged in some joined-up thinking, it is possible that a much more worthy piece of legislation could have been produced. When the bill was debated, however, across four debates (two in the Commons and two in the Lords) only Maria Eagle raised the issue of long leaseholders and even then neither the long lease exception nor whether the provisions should apply to existing leases was discussed. Lord Shipley even seemed to think that long leaseholders were not afflicted by the same levels of charges and fees.

The Tenant Fees Act.

The key provisions are Sections 1 & 2; Section 1 provides:

(1) A landlord must not require a relevant person to make a prohibited payment to the landlord in connection with a tenancy of housing in England.
(2) A landlord must not require a relevant person to make a prohibited payment to a third party in connection with a tenancy of housing in England.

Section 2 makes similar provisions in relation to managing agents.

Under Section 28 “relevant person” has the meaning given by section 1(9) (and see subsection (2) of this section);

Section 1(9) defines a “relevant person” as
(a) a tenant, or
(b) subject to subsection (10), a person acting on behalf of, or who has guaranteed the payment of rent by, a tenant.

“tenancy” means—
(a) an assured shorthold tenancy other than—
(i) a tenancy of social housing, or
(ii) a tenancy which is a long lease,…

The definition of “tenant” is expressed as one of those irritatingly non-exclusive definitions, so beloved of legislators and, I suspect, pretty much no-one else, in any event
” ‘tenant’ includes—
(a) a person who proposes to be a tenant under a tenancy,
(b) a person who has ceased to be a tenant under a tenancy,
(c) a licensee under a licence to occupy housing,
(d) a person who proposes to be a licensee under a licence to occupy housing, and
(e) a person who has ceased to be a licensee under a licence to occupy housing;

Leasehold Reform, Housing and Urban Development Act 1993
Section 7.— Meaning of “long lease”.
(1) In this Chapter “long lease” means (subject to the following provisions of this section)—
(a) a lease granted for a term of years certain exceeding 21 years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture or otherwise;
(b) a lease for a term fixed by law under a grant with a covenant or obligation for perpetual renewal (other than a lease by sub-demise from one which is not a long lease) or a lease taking effect under section 149(6) of the Law of Property Act 1925 (leases terminable after a death or marriage or the formation of a civil partnership );
(c) a lease granted in pursuance of the right to buy conferred by Part V of the Housing Act 1985 or in pursuance of the right to acquire on rent to mortgage terms conferred by that Part of that Act;
(d) a shared ownership lease, whether granted in pursuance of that Part of that Act or otherwise, where the tenant’s total share is 100 per cent; or …

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