Working party calls for clarification in legislation

Dear Mr Wright

ALEP – Association of Leasehold Enfranchisement Practitioners

Consultation and Possible Legislative Reform

ALEP is an organisation of professionals working in the field of Leasehold Reform and comprises solicitors, surveyors and intermediaries as its members. We are contacting you with regards to consultation regarding some important regulatory and statutory matters. This comes following some significant consultation amongst our members.

As ALEP seeks to represent the interests of professionals engaged in this area, we would be grateful to enquire as to whether your department would like for some of the members of our working party either to meet with you or the Minister, and/or be involved in any future consultation on legislative reform in this area.

We acknowledge that significant legislative time was devoted to this area following the passage of the Commonhold and Leasehold Reform Act 2002 (‘the 2002 Act’).  However, there are certain matters arising from the legislation which seem “illogical” and possibly in need of clarification.

We would welcome the opportunity to be involved in discussing these with you further. 

By way of example, the suggestions of our members as to areas which could be addressed and which appear to be inconsistent are as follows:-

1. Signature of Notices – Technical Points

1.1 An Initial Notice under the provisions of Section 13 or Section 42 of the 1993 Act (as amended) must be signed by the individual tenant personally. 

1.2 There are certain circumstances in which (for instance a client who is under a disability and has given a power of attorney in favour of a third party) may wish for another party to sign on their behalf.  As the law currently stands, this is not possible.  If the tenant cannot sign personally, no claim can be made.

1.3 Likewise, this produces a situation of inconvenience of where clients are located abroad.  It seems highly unusual that someone acting under a power of attorney could, for instance, sign the new lease on behalf of the tenant but that they could not sign the Notice claiming the new Lease itself.

1.4 Similarly, in relation to the signature of Initial Notices by corporate bodies, there is uncertainty as to the capacity in which a company may sign.  Where a company’s constitution does not make the position clear, Notices usually need to be executed as a deed in order to prevent a challenge to their validity.

1.5 Whilst the point raised at 1.2 above is more pressing, 1.4 is also an area of concern.

2. Costs, Security and statutory deposits

2.1 There is a particular anomaly in that whilst a tenant must provide a 10% deposit in respect of the premium that they propose to pay for an extended lease, there is no such requirement in relation to an Initial Notice served claiming the freehold. 

2.2 This lack of harmony seems to work against particularly the smaller landlord. Where a Section 13 notice is served it must be treated seriously and investigated properly, with professional help.

2.3 This causes particular difficulty where for instance, an invalid Notice is served by the flat owners and yet the landlord incurs what could be relatively significant costs in investigating the tenants’ claim.  

2.4 Whilst Section 33 provides that these costs are ultimately recoverable from those serving the notice (subject to the requirements of that section) as a matter of practice there may be some difficulty in recovering what may be smaller sums from those individuals.

2.5 If the landlord were able to hold a deposit on similar terms to that under the 1993 Act regulations for lease extension the perceived imbalance would be addressed.

There are other points which we could raise. However, as this letter is by way of introduction, we will not detail them here and we welcome the opportunity to discuss the above matters with you further. We would welcome the opportunity to meet with you at your convenience. 

As ALEP is an apolitical organisation, copies of this letter have also been sent to the other major parties.

Yours sincerely

Mark Chick

For and on behalf of the

ALEP Working Party