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Change Housing Act 1996 “Right of First Refusal”

Comment 3rd September 2010

Law Relating to This Matter

The Housing Act 1996 inserted into the Landlord & Tenant Act 1987 Part 1 was intended to stop the transfer of substantial ownership in a building ("A Relevant Disposal") from taking place without the knowledge and interest of the tenants of the building.  It was further amended in the Commonhold & Leasehold Reform Act 2002.  The Act allows only separate non relevant disposals to different parties to occur without notification.  It is recognised as a badly drafted Act in which a huge loophole exists for unscrupulous parties to circumvent the law in order to achieve precisely what the Act was intended to avoid.

Example:

28 Finchley Road, Westcliff-on-Sea comprises 4 flats.  The owner occupiers with qualifying long leases were informed retrospectively that the freehold of the building had been transferred.  They should have received Section 5 Notices under the Landlord & Tenant Act 1987.  The Landlord avoided this by allowing Superior Leases to be granted to separate companies over each flat thereby creating a vehicle to avoid a "Relevant Disposal" in law.  However to the tenants it was a relevant disposal as all companies are owned by the same family group members.  The Landlord then sent the Section 5 Notices to the newly created Superior tenant companies who accepted that a sale of the freehold would occur.  The freehold was then purchased by another company in the family group.

The wording needs to change so that common interests cannot be separated to create a sham non relevant disposal to the disadvantage of occupying long leaseholders.  Counsel says no law has been broken!

John Lee  

Why does this matter?

The loophole in this law is depriving unknown numbers of tenants throughout the country of their rights and allowing unscrupulous landlords to use this law to their advantage.

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