Back to the top

Practice Guide 27 – The leasehold reform legislation

Updated: April 2013

Update

This edition of the guide replaces the July 2012 edition. A new section 8.1 has been added to cover situations where a there is a restriction in the register and the right to manage has been acquired by a right to manage company.

Scope of this guide

This guide gives advice on the land registration aspects of the exercise of rights under leasehold reform legislation. The guide is aimed at conveyancers and you should interpret references to ‘you’ accordingly. Land Registry staff will also use the guide and it contains some information specifically for their use.

1 Abbreviations and terms used

This guide deals with the relevant legislation contained in:

the Leasehold Reform Act 1967, as amended by the Commonhold and Leasehold Reform Act 2002 (1967 Act)
the Leasehold Reform, Housing and Urban Development Act 1993, as amended by the Commonhold and Leasehold Reform Act 2002 (1993 Act)
the Landlord and Tenant Act 1987 (1987 Act)
the Land Registration Act 2002 (LRA 2002)
the Land Registration Rules 2003 (LRR 2003)
the Land Registration (Amendment) (No 2) Rules 2005.

In this guide:

‘conveyancer’ means an authorised person within the meaning of s.18, Legal Services Act 2007 who is entitled to provide the conveyancing services referred to in paragraphs 5(1)(a) and (b) of Schedule 2 to that Act, or a person carrying out those activities in the course of their duties as a public officer. It also includes an individual or body who employs or has among their managers such an authorised person who will undertake or supervise those conveyancing activities (r.217A, LRR 2003)
‘CRE’ followed by a number means a Land Registry computerised register entry code
‘prescribed clauses lease’ means any lease, granted on or after 19 June 2006, which is required by r.58A, LRR 2003 to contain the prescribed clauses set out in Schedule 1A, LRR 2003
'RTM' means right to manage.

2 Scope and further information

Note that the following are outside the scope of this guide.

The amendments and provisions of the Commonhold and Leasehold Reform Act 2002 not in force at 1 May 2003.
The extension of leases by agreement – see Practice Guide 28 – Extension of leases.
The enfranchisement of places of worship under the Places of Worship (Enfranchisement) Act 1920.
Deeds of enlargement under section 153 of the Law of Property Act 1925.

In relation to leasehold enfranchisement and extension of leases of houses and flats, the Department for Communities and Local Government and the Welsh Assembly Government publish booklets covering various aspects of the legislation and procedures for exercising rights.

Land Registry publishes a range of guides. Some are referred to in the relevant sections. The following contain information relevant to a variety of applications covered by this guide and should be consulted as necessary.

Practice Guide 19 – Notices, restrictions and the protection of third party interests in the register gives more detailed information on applications for the entry and removal of these entries.
Practice Guide 46 – Land Registry forms gives details of the forms that must be used for various applications.
Practice Guide 64 – Prescribed clauses leases gives more detailed information about prescribed clauses leases.

These can be obtained free of charge from Customer Support (see Contact details), or you can download them from our website.

3 Fees

Calculate fees in accordance with the current Land Registration Fee Order.

4 Preliminaries

4.1 Search of the index map

A tenant interested in acquiring the freehold reversion of their property or extending their lease should discover at the outset whether the title to the reversionary interest, or interests, is registered.

Do this by applying for an official search of the index map. The procedure is described in Practice Guide 10 – Official searches of the index map .

It is inadvisable to apply for an official copy of the register without knowing the title number, as described in Practice Guide 11 – Inspection and applications for official copies, as this could result in an unwanted official copy being supplied.

The lessor’s title number, if shown on the register of the applicant’s title, is not always up to date. That title may of course be inspected – see section 4.2 Inspection of register of superior registered titles but check the schedule of notices of leases carefully to ensure that it includes the applicant’s lease. It is not enough to check the property register description as that too may be out of date if land has been removed from the title.

Land Registry portal customers may be able to obtain all or some of the relevant title numbers by means of the property or postal description, but this is not a substitute for an official search of the index map.

4.2 Inspection of register of superior registered titles

Anyone may apply for an official copy of the entries on the register, the title plan and any documents referred to in the register that are kept by the registrar. These facilities are described in Practice Guide 11 – Inspection and applications for official copies.

5 Houses: enfranchisement and extension of leases under the Leasehold Reform Act 1967

5.1 Generally

The 1967 Act confers on a tenant of a house for the last two years under a long tenancy at a low rent the right to either:

acquire, on enfranchisement, the freehold, or
obtain an extended lease of the house and premises expiring 50 years after the date on which the existing term is due to expire – s.1AA, 1967 Act (as amended).

There is an additional right to enfranchisement in relation to tenancies that fail the low rent test. ‘House’ does not include flats in a horizontally divided building and ‘premises’ includes any garage, outhouse, garden, yard and appurtenances, let and occupied, and used for the purpose of the house (s.2(1) to (3), 1967 Act). ‘Long tenancy’ means any tenancy originally granted for a term exceeding 21 years whether or not it is determinable by notice or re-entry (s.3, 1967 Act (as amended)).

Business tenants of a house must meet a residency requirement and hold under a tenancy originally granted for 35 years or more.

The personal representatives of a deceased tenant now have limited rights of enfranchisement.

There are further conditions and exceptions that apply in particular circumstances.

Even if the original lease included the mines and minerals they will not be included in the enfranchisement if the landlord requires them to be excepted and provision is made for support of the property (s.2(6), 1967 Act). A note of any exception will be entered in the register.

There are a variety of statutory provisions that apply to enfranchisement under the 1967 Act. If the deed or the application does not contain a clear statement, such as that set out below, the registrar will be unable to recognise it. There are a large number of applications to register the purchase of reversions and new leases entirely unconnected with the 1967 Act. If the applicant wishes to ensure that the application is completed quickly and accurately without requisitions:

in the case of transfers, conveyances or other leases a statement along the following lines should appear prominently in the deed:

"This [transfer] [conveyance] [lease] is made under the provisions of the Leasehold Reform Act 1967.", or

in the case of a prescribed clauses lease, clause LR5.2 should refer to the 1967 Act.

The low-rent test in respect of the right to enfranchise (but not the right to a lease extension) does not apply to long leases in England granted on or after 7 September 2009 unless arising from an agreement for lease made prior to 7 September 2009¹.

¹ S.300 of the Housing and Regeneration Act 2008 which came into force on 7 September 2009.

5.2 Protection of claims by notice

When a tenant has given notice of their desire to have the freehold or to have an extended lease, that notice may be protected as if it were an estate contract. If the reversionary title(s) affected are registered, this may be done by application for the entry of a notice under s.34, LRA 2002. The tenant’s right cannot constitute an interest that overrides within Schedules 1 or 3, LRA 2002.

An application for an agreed notice should be made in form AN1 together with a certified copy of the notice (which will be filed at Land Registry). We will make the following entry in the charges register:

"Notice entered pursuant to section 5(5) of the Leasehold Reform Act 1967 that a notice dated _______ has been served under that Act by _______ of _______

NOTE: Copy filed."

(There is no CRE for this entry.)

Alternatively, application may be made for a unilateral notice by applying in form UN1.

If any of the reversionary titles affected are unregistered, the notice may be protected by a class C (iv) entry at the Land Charges Department.

5.3 Enfranchisement

On completion of the acquisition of the freehold title, application should be made in the usual way for registration of the transfer, if the title is already registered, or for the first registration of the land, if it is not.

If the tenant’s or any superior leasehold interest is to be merged in the freehold, a request for merger should be included in the application, as described in Appendix 1 Merger of leases on acquisition of the freehold.

Where a deed of substituted security transferring a legal charge on a merged lease to the freehold is lodged, the charge will normally be registered against the freehold title. If the charge is only to be noted, lodge form AN1 or UN1, depending on whether the application is for an agreed or a unilateral notice.

NB: Where two or more charges are being registered their priorities must be clearly apparent. The following special provisions apply on the acquisition of the freehold of the house and will be reflected on the register.

5.3.1 Rights and burdens passing under the 1967 Act

S.10(2), 1967 Act provides that certain rights that affect the leasehold interest shall automatically continue on enfranchisement for and against the freehold but without prejudice to any rights that may be expressly granted or reserved.

The rights passing under s.10(2) that take effect "so far as the landlord is capable of granting them" are rights of support, rights of access of light and air and rights to the passage, use or maintenance of the usual common services, such as water, gas or other piped fuel, drainage, electricity, telephone and so on.

Entries will always be made in the register in respect of the land transferred, whether or not the lease is merged:

In the property register

"The land _______ has the benefit of such easements and rights as the ____ dated _____ referred to in the Charges Register has had the effect of granting by virtue of section 10(2)(i) of the Leasehold Reform Act 1967____."²

"The land _____ has the benefit of such easements and rights as the _____

dated ____ referred to above has had the effect of granting by virtue of section 10(2)(i) of the Leasehold Reform Act 1967_____."³

² CRE AK211 contains fields in the order *1*, *2*, *3*, *9*.

³ CRE AK130 contains fields in the order *1*, *2*, *3*, *9*.

If the conveyance or transfer expressly excludes or restricts any of the appurtenant rights, which would otherwise be deemed to pass by statutory implication, this will be reflected at the end of the above entry.

In the charges register

"The land _____ is subject to such easements and rights as by a ____ dated _____ made between _____it was made subject to by virtue of section 10(2)(ii) of the Leasehold Reform Act 1967."⁴

"The land _____ is subject to such easements and rights as by the ____ dated _____ referred to above it was made subject to by virtue of section 10(2)(ii) of the Leasehold Reform Act 1967."⁵

⁴ CRE CK795 contains fields in the order *1*, *2*, *3*, *4*.

⁵ CRE CK355 contains fields in the order *1*, *2*, *3*.

No reference will normally be made to any deed (whether it be the lease or otherwise) that contains a grant or reservation of rights granted by virtue of s.10(2) of the 1967 Act. If, however, specific application is made, an entry will be made on the following lines:

"In relation to the effect of section 10(2)(i) [or (ii)] of the Leasehold Reform Act 1967 a lease/transfer/deed dated ______ made between _____ granted/reserved the following rights [or rights of drainage, or as the case may be]."

(There is no CRE for this entry.)

If the conveyance or transfer expressly excludes or restricts any of the appurtenant rights, which would otherwise be deemed to pass by statutory implication, an entry of this provision will be made in the property register.

If the conveyance or transfer contains new easements or restrictive covenants under s.10(3) and (4), 1967 Act, entries relating to them will be made in the register in accordance with normal practice.

Applicants should ensure that either:

if the reversion over which the easement is granted is registered in the name of the landlord but under a different title to that of the house, application is also made against the servient title, or
where the land is unregistered that good title is deduced.

Where a transfer of part of a registered title is made pursuant to the 1967 Act, the rights created under s.10(2) will call for entries to be made on the transferor’s title as well.

Where the transferor’s title comprises no more than three properties, specific entries on the lines of those referred to above will be made, but where it comprises more properties an entry in the following terms will be made in the property register:

"Such transfers of the parts edged and numbered in green on the title plan as were made under the Leasehold Reform Act 1967 took effect with the benefit of and subject to easements and other rights as prescribed by section 10(2) of that Act."⁶

⁶ CRE AK164 contains no fields.

5.3.2 Discharge of charges on landlord’s estate (whether registered or unregistered)

No difficulty will arise if any registered or noted charge, or any mortgage against the landlord’s title, can be discharged or released in the normal way when the tenant acquires the freehold. However, the 1967 Act provides additional mechanisms for the discharges of charges or mortgages where necessary, which may mean that the conventional evidence or receipt may be inappropriate. The following paragraphs describe what evidence will be accepted in these cases.

The purchasing tenant may have paid sufficient money to the landlord’s mortgagee direct in order to discharge the land from the mortgage (s.12, 1967 Act). If the mortgagee has accepted payment of the whole or a sufficient part of the purchase money in full discharge of the property from their mortgage, a copy of the receipt, so worded, must be lodged with the application.
If the money has been paid into court under s.13, 1967 Act, the tenant must supply a copy of the affidavit, which they will have made for that purpose, and also a copy of the court’s official receipt.

We may serve a notice after the application for registration has been lodged. The notice will be served on the registered mortgagee and any other party appearing by the register to have an interest in the mortgage, and will give details of:

the mortgage
the applicants and the nature of the application
the intended closure of the relevant part of the title if the transfer is of part
how any objection to the application can be made.

If no reply to the notice is received within the time allowed, registration will be completed free from any reference to the charge. If the mortgagee shows prima facie grounds for objection in reply to the notice (for example, because an insufficient part of the purchase money has been paid into court), it may be agreed that the entry of the mortgage will remain on the register of the purchaser’s title until proper evidence of a full discharge is produced, or the matter is otherwise settled.

5.3.3 Landlord’s estate subject to a rentcharge

The transfer or conveyance will normally take effect subject to any pre-existing rentcharges affecting the title⁷. However, where the rentcharge is more than the amount payable as rent under the lease, the tenant can require the landlord to discharge the house and premises from the rentcharge to the extent of the excess. Where difficulties arise in paying the redemption price, provision is made for payment into court (s.11(4), 1967 Act). The evidence we require for the discharge of the rentcharge will be similar to that mentioned in section 5.3.2 Discharge of charges on landlord’s estate (whether registered or unregistered).

The landlord may either:

procure a release of the rentcharge from the rentcharge owner. The normal conveyancing evidence will be required including the production of any relevant certificates, or
require, subject to the reasonable consent of the tenant⁸, that the rentcharge shall be charged exclusively on other land so as to exonerate the land conveyed or else that it shall be apportioned. The normal conveyancing evidence of formal or informal exoneration or apportionment must be produced.

⁷ Ss.8(2) and (4)(b), 1967 Act (as amended by the Rentcharges Act 1977, s.17(1); Schedule 1, paragraph 4).

⁸ S.11(1), 1967 Act (as amended by the Rentcharges Act 1977, s.17(1); Schedule 1, paragraph 4(2)).

5.4 Extended leases

Because the 1967 Act allows individual leaseholders to acquire the freehold of their properties, few applications for registration of extended leases under that Act have been received. However, since the provisions are still available for use, and if used can create difficulties for us, applications for registration of such leases are dealt with in the following paragraphs.

5.4.1 Registration of new lease – Land Registry requirements

On completion of the acquisition of a new lease granted in substitution for an existing lease pursuant to s.14, 1967 Act, make an application for registration of the lease. If necessary, also lodge an application to give effect on the register to the deemed surrender of the existing lease, which will have taken place by operation of law.

Appendix 2 – Applications for registration of extended leases explains Land Registry’s requirements in connection with these applications.

5.4.2 Entries in the register

Where appropriate, the following entry will be made on the new title.

"The land is subject to such rights as may be subsisting in favour of the persons interested under a Charge dated _____ and made between _____of the leasehold interest under a Lease dated ______ in substitution of which, pursuant to the Leasehold Reform Act 1967, the registered lease was granted."⁹

⁹ CRE CK889 contains fields in the order *3*, *4*, *3*.

If it is not possible to make the type of entry described above (for example, because the original lease is unregistered and no evidence as to any mortgages affecting it has been produced), the following entry will be made.

"The land is subject to such rights as may be subsisting in favour of the persons interested under any charge of the leasehold interest under a Lease dated _____ in substitution for which pursuant to the Leasehold Reform Act 1967, the registered lease was granted."¹⁰

¹⁰ CRE CK179 contains field *3*.

5.5 Sub-leases

There are complicated provisions in Schedule 1, 1967 Act to determine which lessor is to act as reversioner on behalf of all the lessors where there are sub-leases.

It is important to note that the sub-lessee does not necessarily have to serve the notice under s.5, 1967 Act on all persons interested (see paragraph 8 of Schedule 3, 1967 Act).

5.6 Miscellaneous

5.6.1 Consent by Charity Commissioners not required

Where the landlord’s title is held by a charity then the transfer or lease will not be affected by any restriction in the register in Form E to Schedule 4, LRR 2003. However, any disposition of registered or unregistered land must contain the appropriate statement and where the lease is a prescribed clauses lease, the statement must be included in clause LR5.1.

5.6.2 Rights of future development and pre-emption

On enfranchisement or extension of a lease, certain landlords, including local authorities and the Commission for the New Towns, may require the tenant to enter into:

covenants to restrain the tenant from developing or clearing the land in case the lessor may need it for future development
a covenant that they will not grant a tenancy of the property without the consent of the landlord and that they will not sell it without first offering it to the landlord.

We will make an appropriate entry in the register if a conveyance, transfer, or extended lease contains covenants of this nature (paragraph 1(3) of Schedule 4, 1967 Act as amended).

6 Flats: enfranchisement and extension of leases of flats under the Leasehold Reform, Housing and Urban Development Act 1993

6.1 Generally

Part I of the 1993 Act gives qualifying tenants of flats either:

a collective right to buy the freehold of the block (collective enfranchisement) if the flats are contained in premises that satisfy certain conditions, or
an individual right to a new lease expiring 90 years after the termination of an existing lease.

Neither of these rights can be exercised when the National Trust owns any interest or when the flat is within the precinct of a cathedral. A precinct is defined under the Care of Cathedrals Measure 1990 by reference to the plans kept by the Cathedrals Fabric Commission for England. Where the Crown is not the immediate landlord but is a superior landlord, then, in some cases, there will be a right to a new lease (s.94, 1993 Act).

6.2 Tenants’ right to collective enfranchisement

6.2.1 Generally

This is the right of tenants to acquire the freehold of their block whether or not the landlord wishes to sell.

The 1993 Act lays down a framework within which negotiations take place with the aim of entering into a contract for sale in the normal way. The 1993 Act does not contain any provision for the grant of statutory easements, unlike the 1967 Act described in section 5 Houses: enfranchisement and extension of leases under the Leasehold Reform Act 1967. Instead, the 1993 Act says that the parties must include, in the conveyance or transfer, any necessary easements, such as rights of support, so the parties have to decide what is required in their particular situation.

In acquiring the freehold any intermediate lease between the tenants’ leases and the freehold is also acquired. This means that even if the tenants already have a flat management company holding an intermediate lease, that lease will be acquired under s.2(1), 1993 Act. It would not appear that there is any way this can be avoided since s. 2(1)(a) and (2) appear to be mandatory.

In these circumstances the tenants should perhaps consider not using the procedure in the 1993 Act.

Where tenants acquire the premises outside the legislation, by independent negotiation, the provisions of the 1993 Act do not apply.

It is, therefore, a requirement that the conveyance or transfer must contain a statement in the following terms where the 1993 Act procedure is used.

"This conveyance [or transfer] is executed for the purposes of Chapter I of Part I of the Leasehold Reform, Housing and Urban Development Act 1993."¹¹

¹¹ S.34(10), 1993 Act and r.196, LRR 2003.

Chapter I of Part I of the 1993 Act confers on qualifying tenants of flats the right to have the freehold of the premises, in which the flats are contained, acquired on their behalf by a person appointed by them for the purpose.

A person so appointed is known as the nominee purchaser (s.1, 1993 Act).

A person is a qualifying tenant if they are a tenant under a long lease for a term exceeding 21 years.

6.2.2 Protection of tenants’ rights – notices

The procedures whereby qualifying tenants assert their collective rights to have the freehold acquired are outside the scope of this guide. See section 6.4 Notices for the procedure for protecting a notice of claim to exercise such rights.

6.2.3 Completion of acquisition

When all matters have been agreed between the parties, or otherwise resolved, a binding contract is entered into for the acquisition of the freehold and superior leasehold interests by the nominee purchaser with the reversioner (s.34(2) and paragraph 6(1)(b)(ii) of Schedule 1, 1993 Act). Precisely who is the reversioner may be complex, particularly where there are intermediate leasehold titles.

The acquisition is then completed by a conveyance or transfer of the freehold to the nominee purchaser, subject only to such incumbrances as may have been agreed or determined. The 1993 Act makes provision for the kind of matters that should be included in any sale, without being prescriptive as to their exact content. Where the purchase involves the acquisition of a superior leasehold interest, title will need to be deduced, if it is not registered, to all interests acquired, as will title to land over which any party grants easements in favour of the land acquired by the nominee purchaser. Where the leasehold or freehold interests, or any adjacent land over which easements are granted, are registered, application against the respective titles is required.

If the freeholder is granting easements and the land over which they are being granted is held in lease by a leaseholder, part of whose interest is also being sold to the nominee purchaser, for the easements to be effective as against that leaseholder the leaseholder will have to be a party to the grant of the freehold easements so that they are binding on it during the term of the lease. This will involve an entry being made on the leaseholder’s title so that subsequent owners will have notice of the rights.

The conveyance or transfer is effective to overreach any incumbrances that are capable of being overreached (s.34(3), 1993 Act), which means most incumbrances that would be overreached on a sale at arm’s length. The main exception is some rentcharges that are covered below. Mortgages on the freehold or intermediate titles are also discussed later.

The person who executes the transfer or conveyance will normally be the freeholder, whom the 1993 Act designates as the reversioner. Where there are intermediate leasehold titles the reversioner will act on behalf of the other landlords in the transfer or conveyance and execute the deed on their behalf, although they should be described as being parties to the deed for the purpose of the sale and any concurrence to the grant of easements or other rights (paragraph 6(1)(iii) of Schedule 1, 1993 Act). However, the other landlords can opt out of this procedure and can transfer or convey the interest themselves, as indeed can the nominee purchaser (paragraph 7 of Schedule 1, 1993 Act).

Where an intermediate leasehold title is unregistered, it would be advisable for a note of any transfer of part or grant of an easement to be endorsed on the lease.

The registrar will assume, where an intermediate landlord is described as party to the transfer, that no opt out has taken place. However, if the transfer is silent, a requisition will be raised requiring a separate transfer, conveyance or assignment of the intermediate interest.

Where the reversioner, being the person making the transfer to the nominee purchaser, is shown on the title as the registered proprietor of the freehold, or is shown as having the legal estate in fee simple absolute in an unregistered title, no further evidence as to the power of the reversioner to convey the block will be needed. Where, however, the court has appointed any other person to be the reversioner, a certified copy of the court order will be required. A person so appointed acts as if they were the freehold reversioner (Schedule 1, Part I, 1993 Act).

6.2.4 Registration of nominee purchaser

The nominee purchaser can be any person or persons (which includes a company) appointed by the participating tenants. Although the 1993 Act calls the purchaser a ‘nominee’ it may well be the case that they are not, in fact, a nominee at law. If a company or other body corporate is used as a vehicle to buy the land it seems likely that the company will be beneficially entitled with the qualifying tenants exercising their rights through their shareholding. Whether the nominee purchaser is a true nominee, or perhaps some other type of trustee, an application for a suitable restriction should accompany the application for registration of the nominee purchaser.

NB: The registrar will not enter a restriction unless one is applied for appropriately or the LRA 2002 or the LRR 2003 otherwise require it.

In almost all cases, the existing tenants’ leases will be incumbrances to which the sale is subject. Counterparts of these leases, and any new lease back, must be produced with the application if they are not already noted as incumbrances in the charges register of the title affected by the sale.

Subject to the points mentioned in this section, the application should be made in the usual way in form AP1 or FR1 depending on whether the reversioner’s title is registered or unregistered. Applications for merger of an intermediate lease with the freehold should be dealt with in accordance with Appendix 1 – Merger of leases of acquisition of the freehold.

6.2.5 Unpaid vendor’s lien

A vendor’s lien is capable of arising on the transfer to the nominee purchaser, where an amount remains outstanding in any of the following categories (s.32(2), 1993 Act).

The price payable.
Amounts due from tenants (not just those who are participating in the purchase) in respect of their leases or under or in respect of agreements collateral thereto.
Any amount payable to the vendor by virtue of s.18(2), 1993 Act (where the valuation has been reduced by a failure of the nominee purchaser to reveal the existence of a relevant agreement or shareholding).
Any costs payable by the nominee purchaser (s.33, 1993 Act).

The lien is not capable of substantive registration, but can be the subject of an application for protection by way of notice in the register. However, since the lien does not arise automatically, but depends upon the circumstances of the particular case, we will take no action except on receipt of a specific application to note the lien.

6.2.6 Discharge of mortgages on the landlord’s estate (and any leaseholder’s estate that is being acquired) on transfer to the nominee purchaser (whether registered or unregistered)

It is preferable for any registered or noted charge or any mortgage against the landlord’s title or any intermediate lessee’s title to be discharged, cancelled or receipted in the normal way when the tenant acquires the freehold. This is because, despite the provisions of s.35, 1993 Act referred to below, it will never be clear that its provisions apply, unless the money has been paid into court, because of the severely limiting effect of paragraph 2 of Schedule 8, 1993 Act (Duty of nominee purchaser to redeem mortgages).

Unless a form DS1, form DS3, Electronic Discharge, application to cancel a notice, or evidence of payment into court is produced with the application the registrar will either requisition for a statutory declaration or statement of truth serve notice, where possible, on the person having the benefit of the mortgage or charge.

The following describes what evidence will be satisfactory for our purposes and what action we will take.

Under the 1993 Act the transfer or conveyance has the effect of discharging all the land acquired, including any intermediate leasehold interest, from any charge on it (s.35(1), 1993 Act) without the mortgagee or chargee having to execute the transfer or conveyance or becoming parties to the conveyance. The parties can, however, agree that the land will be subject to the mortgage. If the parties intend this to happen then the transfer or conveyance should make this absolutely clear, otherwise the charges may be cancelled.

The nominee purchaser may have paid sufficient money to the landlord’s chargee direct in order to discharge the land from the charge. If the chargee has accepted payment of the whole, or a sufficient part of the purchase money, in full discharge of the property from the charge, a copy of the receipt must be lodged with the application.

If the money has been paid into court under s.35 of, and Schedule 8 to, the 1993 Act, the purchaser must supply a copy of the affidavit or statement of truth which they will have made to the court for that purpose, and also a copy of the court’s official receipt. We may serve notice of the application on the registered chargee and any other person appearing by the register to be interested in the charge.

It will give details of:

the charge
the applicants and the nature of the application
the intended closure of the relevant part of the title where it is a transfer of part
how any objection to the application can be made.

If no reply to the notice is received within the time allowed, registration will be completed free from any reference to the charge.

If the chargee shows prima facie grounds for objection in reply to the notice, for example, because an insufficient part of the purchase money has been paid into court, it may be agreed that the entry of the charge will remain on the register of the purchaser’s title until proper evidence of a full discharge is produced or the matter is otherwise settled.

6.2.7 Landlord’s estate subject to a rentcharge

The transfer or conveyance will normally take effect subject to any preexisting rentcharge affecting the title (s.34(6), 1993 Act). The landlord may either:

procure a release of the rentcharge from the rentcharge owner. The normal conveyancing evidence will be required, or
require, subject to the reasonable consent of the tenant (s.34(8), 1993 Act), that the rentcharge shall be charged exclusively on other land so as to exonerate the land conveyed or else that it shall be apportioned. The normal conveyancing evidence of formal or informal exoneration or apportionment must be produced.

6.2.8 Lease back to the former freeholder

On acquiring the freehold in the whole of the building the nominee purchaser is required in certain circumstances to grant leases back to the former freeholder of those units or flats in the building not leased by the qualifying tenants and which they are not acquiring. Such leases will be for terms of 999 years at a peppercorn rent (s.36 of, and Schedule 9 to, the 1993 Act).

The application for registration of such a lease must be made in form AP1 or FR1 depending on whether the reversioner’s title is registered. Furthermore, the position with regard to the status of the lease will differ depending on whether or not the freehold is already registered.

Registered freehold

The new lease will be a disposition of registered land and will, therefore, take effect in equity only until registered. It would seem that the potential lessee is a purchaser within the meaning of r.131, LRR 2003 in order to be able to make a protecting search. Since the 1993 Act provides that the nominee purchaser must grant the lease back, the transaction is one where any contemporaneous mortgagee of the freehold will be subject to the right to a new lease. An official search will secure the priority to which the intended lessee is entitled.

The lessee should also make the nature of the transaction clear in a letter accompanying the application for registration.

This is because since the lessee has no control over the timing of the application for registration of the freehold disposal, it is possible that the application for registration of the lease will be made before that of the freehold. It will then appear that the freeholder is attempting to grant a lease to themselves, which is not possible, and we would reject the application. Where this ‘mistiming’ occurs we will hold the leasehold application, but when we receive the application for the freehold transfer it will be entered on the day list of pending applications and the leasehold application will then be reentered on the day list after the transfer so that the priorities are correct.

Unregistered land

Where the freehold is unregistered it will be subject to first registration and the new lease will take effect as a legal estate whether or not the purchaser makes the application for registration before the new lease application is lodged. Again, it would be helpful if there could be an accompanying letter setting out the circumstances. When the freehold application is lodged the application should reveal the existence of the lease back and the counterpart should be lodged with the application.

The usual conveyancing evidence of the freehold title will be required, including the appropriate Land Charges searches.

6.2.9 Vesting orders

Chapter I of Part I, 1993 Act gives power to the court to make vesting orders where:

the terms of acquisition are in dispute
there is a failure to enter into a contract (s.24, 1993 Act), or
the reversioner fails to give a counter-notice (s.25, 1993 Act) or cannot be found or identified (s.26, 1993 Act).

As to the protection of such orders see sections 6.4.2 Vesting orders made under ss.26(1) or 50(1), 1993 Act (where the relevant landlord cannot be found or identified) and 6.4.3 Orders made under ss.24, 25, 48 or 49, 1993 Act (where there is a dispute).

6.2.10 Variation of flat leases

Nothing in the collective enfranchisement procedure has any effect on the length of the tenants’ leases. Where the tenants wish to take advantage of their new found freedom to ‘extend’ their leases they may do so by agreement, or possibly by exercising rights under Chapter II of Part I, 1993 Act. They should, however, be aware of the traps the law contains in this area and note Land Registry’s requirements in connection with the voluntary extension of leases as set out in Practice Guide 28 – Extension of leases.

6.3 Right of a tenant to acquire a new lease

Chapter II of Part I, 1993 Act confers on a qualifying tenant of a flat for the last two years an individual right to acquire a new lease of the flat on payment of a premium determined in accordance with a statutory formula.

NB: A person is a qualifying tenant if they are (subject to certain exceptions) a tenant under a long lease of a flat (s.39(3), 1993 Act). The right is suspended if the tenants collectively seek to buy the freehold.

As a result of the decision in Cadogan & Ors v 26 Cadogan Square Ltd, Howard de Walden Estates Ltd v Aggio & Ors [2008] UKHL 44, a head lessee is entitled, under the 1993 Act, to an extended lease of an individual flat which comprises part of the land demised by the head lease. This guide should be read and interpreted accordingly.

6.3.1 Procedure on tenant’s claim to new lease

The procedures whereby a qualifying tenant asserts their claim to a new lease are beyond the scope of this guide except that the procedure for protecting a notice of claim to exercise such a right is discussed in section 6.4 Notices.

6.3.2 Terms of the new lease

The new lease, which takes effect in substitution for the existing lease, will be for a term expiring 90 years after the term date of the existing lease at the rent of a peppercorn (s.56(1), 1993 Act). The new lease is to be on the same terms as the existing lease but with such modifications as may be required or appropriate (s.57, 1993 Act).

Although the right is a right to have a new lease of the land demised to the tenant, under the existing lease it is clear that variations in extent and in the rights granted are permitted (s.57(1), 1993 Act). Very careful examination of the extents of any existing flats and of the terms of easements will, therefore, be required to ensure that the landlord has power to grant the new lease. It is quite likely that some new leases will not be of the same extent since over a long period there are informal arrangements between tenants that ‘vary’ the terms of their leases in practice. This may cause problems on the grant of new leases, for example the switching of use of car parking spaces, dustbin areas and other common facilities. Landlords will need to ensure that the extent granted and the terms of the new lease (including any easements) are compatible with any other leases that exist.

6.3.3 Statement to be contained in new lease

The lease must contain a statement in the following terms:

"This lease is granted under section 56 of the Leasehold Reform, Housing and Urban Development Act 1993." (s.57(11), 1993 Act and r.196, LRR 2003).

Where the lease is a prescribed clauses lease this statement must be inserted in clause LR5.1 or reference made to the clause, paragraph or schedule in the lease that contains this statement in full.

If the lease does not contain such a statement the registrar will assume that it is not made pursuant to the 1993 Act. Although there is no prescribed form of statement where the lease is granted under s.93(4), 1993 Act (leases granted on terms approved by the court) it would be helpful if it did contain such a statement because of the consequences that flow from that section as mentioned in the following paragraphs. In those circumstances a certified copy of the court order under that section should also be produced.

6.3.4 Reversionary titles

If the qualifying tenant’s immediate landlord does not have a sufficient interest (ie is not the freeholder and does not have a leasehold interest of sufficient duration to enable such landlord to grant a new lease) then the new lease will be granted by the nearest landlord whose interest is sufficient, and they will be the ‘competent landlord’ for the purposes of the 1993 Act (s.40(1) and (2), 1993 Act). The intermediate landlord’s title may be registered but the competent landlord’s title unregistered.

The early identification of the competent landlord is important in order to determine what evidence of their title to grant the lease is required (see Appendix 2 – Applications for registration of extended leases).

This raises certain problems in relation to an existing intermediate lease.

The competent landlord’s title

The new lease will be a disposition by the competent landlord. If the competent landlord’s title is registered, the following note will be made in the schedule of notice of leases.

"NOTE: The lease was made under the provisions of section 56 or 93(4) of the Leasehold Reform, Housing and Urban Development Act 1993."

(There is no CRE for this entry.)

If a lease that includes the flat is noted on the competent landlord’s title then an additional entry will be made against it along the following lines.

"The lease dated _____ to _______ [referred to above] was deemed to have been surrendered and regranted following the grant of a lease or leases under section 56 or 93(4) of the Leasehold Reform, Housing and Urban Development Act 1993 with the effect provided for by paragraph 10 of Schedule 11 to that Act."

(There is no CRE for this entry.)

Applicants and their advisers will need to consider what conveyancing evidence and memoranda, if any, should be endorsed on or placed with the deeds.

Intermediate leasehold title(s)

The 1993 Act makes special provision for the situation where there are intermediate leases (s.40(3) of, and Schedule 11 to, the 1993 Act).

An intermediate lessor has a reversionary interest which does not have enough years left to grant a new lease. There may be more than one intermediate lessor. The right to grant the new lease is vested only in the competent landlord but the 1993 Act provides that any intermediate lease is deemed to have been surrendered and regranted. This is a device to ensure that the integrity of intermediate leases of the whole block and any service charge arrangements contained in them are preserved. The registrar has concluded that this provision does not have the effect of actually effecting a surrender and regrant that would require intermediate lessees to apply for the closure of their title and an application to register it again. The intermediate lessor is bound by the terms of the new lease as it is granted pursuant to a statutory power. Notice that the new lease has been registered should be served on any registered intermediate lessor.

An entry will be made in the property register along the following lines.

"The registered lease is deemed to have been surrendered and regranted following the grant of a lease or leases under section 56 or 93(4) of the Leasehold Reform, Housing and Urban Development Act 1993 with the effect specified in paragraph 10 of Schedule 11 to that Act."

(There is no CRE for this entry.)

Any lease granted under these provisions will be noted in the schedule of notice of leases and a note to the entry will be made along the following lines.

"NOTE: This lease was granted under the provisions of section 56 or 93(4) of the Leasehold Reform, Housing and Urban Development Act 1993 and the provisions of paragraph 10 of Schedule 11 to that Act apply."

(There is no CRE for this entry.)

The only circumstance where these provisions in relation to intermediate leases do not apply is where an intermediate lease is owned by the tenant or is held on trust for them (paragraph 10(3) of Schedule 11, 1993 Act). Where this is the case the tenant’s application will need to make this clear and include an application to close (perhaps as to part) any registered title affected, since the effect of the grant of the new lease is to bring about the immediate surrender of the intermediate lease.

6.3.5 Registration of new lease – Land Registry requirements

When a new lease is acquired in substitution for an existing lease, pursuant to s.56, 1993 Act, make an application for registration of the lease. If necessary also lodge an application to give effect to the deemed surrender of the existing lease, which will have taken place by operation of law. Appendix 2 – Application for registration of extended leases explains our requirements in connection with these applications.

6.3.6 Entries in the register

The following entry will be made in the property register immediately after the entry relating to the registered lease.

"The registered lease was granted under the provisions of section 56 or 93(4) of the Leasehold Reform, Housing and Urban Development Act 1993."

(There is no CRE for this entry.)

The reason for this entry is that under s.56, 1993 Act, if the registered proprietor grants a new long lease out of the title, the subtenant has no right to claim a new lease from the competent landlord under that act.

Where a charge is brought forward from the surrendered leasehold estate, its date of registration will be that of the application to register the new lease. The following entry will be made on the registration or reregistration of the charge.

"This charge, [which] takes effect against this title under the provisions of section 58(4) of the Leasehold Reform, Housing and Urban Development Act 1993, [was formerly registered against title number(s)_____ ]"

(There is no CRE for this entry.)

If the charge is merely being noted, there will be an entry on similar lines.

"This charge, [which] takes effect against this title under the provisions of section 58(4) of the Leasehold Reform, Housing and Urban Development Act 1993, [was formerly noted against title number(s)______ ]"

(There is no CRE for this entry.)

Unless postponed, all charges and other entries brought forward will have the same priority as they had on the old title¹².

¹² See s.58A, 1993 Act, inserted by the Housing Act 1996.

6.3.7 Possession of lease and certificate where mortgagee held deeds of surrendered lease

Where a new lease takes effect, subject to a mortgage and the mortgage is at that time entitled to possession of title documents relating to the surrendered lease, the mortgagee becomes similarly entitled to possession of the documents of title relating to the new lease. In such a case, the tenant is bound to deliver the new lease to the mortgagee within one month of the date on which it is received from Land Registry following its registration.

6.3.8 Vesting orders

The court has power to make vesting orders where the terms of acquisition are in dispute or there is failure to enter into a lease (s.48, 1993 Act) or where the reversioner fails to give a counter-notice (s.49, 1993 Act) or cannot be found or identified (s.50, 1993 Act). As to the protection of such orders see sections 6.4.2 Vesting orders made under s.26(1) or 50(1), 1993 Act and 6.4.3 Orders made under ss.24, 25, 48 or 49, 1993 Act (where there is a dispute).

6.4 Notices

6.4.1 Notice of claim to exercise right of collective enfranchisement or right to a new lease

The extended period over which negotiations will often take place under the 1993 Act makes it very desirable that the rights of the parties are protected in the register. The general rule is that registration by the tenants or tenant will be against the title of the freeholder or, in the case of a tenant claiming a new lease, against the competent landlord, who may or may not be the freeholder. However, it may also be desirable to register against other persons as well and this section considers when this might be done.

Any right of a tenant arising from a notice given under s.13, 1993 Act (notice by qualifying tenants of flats of claim to exercise the right of collective enfranchisement) or s.42, 1993 Act (notice by qualifying tenant of a flat of claim to exercise the right to a new lease) (‘the 1993 Act notice’) is not an interest with overriding status within the meaning of the LRA 2002 but may be protected on the register by a notice as if it were an estate contract (s.97(1), 1993 Act).

If an application is made to enter an agreed notice under r.81, LRR 2003, the evidence in support should normally consist of a certified copy of the notice (which will be filed).

The entry in the charges register will be as follows.

"Notice entered pursuant to section 97(1) of the Leasehold Reform, Housing and Urban Development Act 1993 that a notice dated ______ has been served under section 13 [or 42] of that Act by ________ of ______.

NOTE: Copy filed."

(There is no CRE for this entry.)

If the application is for a unilateral notice the statement or conveyancer’s certificate given in form UN1 will need to state that a notice was served by or on behalf of the beneficiary on the registered proprietor (who should be named) in accordance with ss.13 or 42, 1993 Act on a stated date.

6.4.2 Vesting orders made under ss.26(1) or 50(1), 1993 Act (where the relevant landlord cannot be found or identified)

The LRA 2002 applies to such an order as it applies to an order affecting land that is made by the court for the purpose of enforcing a judgment (s.97(2)(a), 1993 Act). You can, therefore, apply for such an order or application to the court for such an order to be protected by notice. A person who has applied for such an order who applies for a restriction in Form N to Schedule 4, LRR 2003 and a person who has obtained an order who applies for a restriction in Form L or N is regarded as having sufficient interest to apply for the restriction (rr.93(q) and (o), LRR 2003 respectively).

6.4.3 Orders made under ss.24, 25, 48 or 49, 1993 Act (where there is a dispute)

There are no express provisions in the 1993 Act relating to the protection of such an order or an application to the court for such an order. However, in view of its nature, such an order or application to the court for such an order can be protected by a notice.

6.4.4 Protection against persons other than the freeholder or competent landlord

Collective enfranchisement

The 1993 Act provides that, after any initial notice has been served and registered, the freeholder cannot "make any disposal severing his interest in the premises or" in any property specified in the notice nor may they grant certain leases. Similarly, any intermediate lessee cannot grant certain leases, although the leasehold interest itself can be sold or mortgaged (s.19(1), 1993 Act). Any such grant or disposal that contravenes s.19(1) is void.

Where the registrar is uncertain whether or not a disposition is caught by these provisions, they will require a certificate to be given by the solicitors to the freeholder or intermediate lessee (as the case may be) that the transaction is not one to which the 1993 Act applies. This includes any disposition by a mortgagee under any power of sale. For these reasons, the registrar considers that the nominee purchaser should apply against all titles affected by the notice, not just that of the reversioner. Where any interest is not registered, a land charge should be registered.

Individual new flat leases

A tenant’s notice severely restricts the right of the landlord and competent landlord to terminate the tenant’s lease (Schedule 12, 1993 Act). Since it would seem undesirable for a purchaser from an intermediate lessee to be unaware of the position of the tenant, such a tenant should consider protecting the notice on any intermediate landlord’s title, or at the Land Charges Department.

Generally

The 1993 Act makes considerable provision for the service of notices or counter notices. Most of these would not seem to be pending land actions. However, where there are specific applications to the court or to a tribunal, it would seem that they very well may be, for example an application to the court to defeat a tenant’s claim on the grounds of redevelopment under s.47(1), 1993 Act. In those cases, reversioners, intermediate landlords and tenants should consider carefully against whom the registration should be made.

6.4.5 Cancellation generally

Application for cancellation should be made in either form CN1 or UN4 and an application to remove a unilateral notice should be made in form UN2. In accordance with normal Land Registry practice, there will be no automatic cancellation of notices where an application is received to register a transfer of the freehold or new lease. Where the notice under the 1993 Act was protected by a caution, a withdrawal in form WCT should be lodged.

6.4.6 Later application to register a disposition where a notice made under s.13, 1993 Act is protected in the register

Any application to register a disposition must include a certificate that the disposition is not one involving a disposal or grant of a lease within s.19(1), 1993 Act. (This requirement also applies to a transfer by a mortgagee in exercise of their power of sale.) It does not matter whether the disposition is dated before or after the notice in the register.

Once you have supplied this certificate, we will then serve notice of your application on the beneficiary of the unilateral notice or the applicant for the agreed notice. If we receive no objection to the notice, we will complete the registration, but will not cancel the entry of the s.13 notice on the register.

6.4.7 Later application for agreed or unilateral notice where a notice made under s.13, 1993 Act is protected in the register

We will generally ignore a s.13 notice where the later application is one to enter a unilateral or agreed notice. The exception to this general rule is where we have had to satisfy ourselves as to the validity of the applicant’s claim under s.34(3)(c), 1993 Act. In that case, where it appears that the application may be to register a notice protecting an interest arising under a disposition falling with s.19(1), 1993 Act, we will require a certificate and serve notice as referred to in section 6.4.6 Later application to register a disposition where a notice made under s.13, 1993 Act is protected in the register.

7 Flats: rights of tenants of flats under the Landlord and Tenant Act 1987

7.1 Generally

The 1987 Act gives certain rights to tenants of flats as against their landlord that continue to exist alongside the more general provisions of the 1993 Act. In certain cases, as mentioned in section 7.2 Notices, the rights may require an entry to be made in the register if the title to the lease or to the reversion is registered. As mentioned in section 7.4 Variation of leases the terms of the lease may also be varied.

7.2 Notices

7.2.1 Tenant’s right of first refusal to purchase the reversion

A landlord of a building containing flats must not dispose or contract to dispose of an interest in those premises unless they have served a notice of their intention on the tenants giving them collectively a right of first refusal (ss.1(1), 4A and 5(1), 1987 Act).

There are detailed definitions of what is meant by the landlord, a disposal, the premises and a qualifying tenant, and there are prescribed procedures that must be followed from the serving of the initial notice to the stage where the landlord disposes of their interest to the tenants or becomes free to dispose of it elsewhere.

It is also clearly stated in connection with these procedures that any reference to an offer is a reference to an offer made subject to contract, and any reference to the acceptance of an offer is a reference to its acceptance subject to contract (s.20(2), 1987 Act). There is, in those circumstances, no interest capable of being protected on the register. However, once a contract has been entered into, the tenants can protect their interest by applying for the entry of a notice on the landlord’s title or an entry at the Land Charges Department in the usual way.

Where a landlord has disposed of an interest in the premises in contravention of the tenants’ right of first refusal, the tenants have additional rights, including, where applicable, the right to take the benefit of the contract, the right to compel the purchaser to sell to them or, in the case of a surrender, the right to a new lease¹³. The notice by which the right is exercised does not itself give an interest that can be protected on the register but when a binding contract has been entered into in pursuance of a purchase notice, the tenants’ interest may be protected by a notice in the usual way.

¹³ Ss.11, 11A, 12A-D, 13-14, 16-17 of, and part I of Schedule 1 to, the 1987 Act.

7.2.2 Appointment of managers (of the block of flats)

A tenant of a building containing flats may apply to the court for the appointment of a manager if the landlord has failed to manage the premises in accordance with their obligations or the service charges are unreasonable (s.21, 1987 Act). The court may then, if it thinks fit, make an order appointing a manager to carry out functions in connection with management or functions of a receiver. Any such order will be registrable as an order appointing a receiver or sequestrator of land¹⁴. In the case of registered land this requires protection by the registration of a restriction. This jurisdiction has been transferred to leasehold valuation tribunals¹⁵.

¹⁴ S.24(8), 1987 Act; s.87(2)(a), LRA 2002.

¹⁵ S.86, Housing Act 1996. As to leasehold valuation tribunals see s.52A, 1987 Act.

7.2.3 Compulsory acquisition by tenants of their landlord’s interest

Where a landlord of a building containing flats is in breach of their obligations to their tenants in regard to the maintenance or management of the premises, the court may, on the application of the tenants, make an acquisition order (ss.25, 28 and 29, 1987 Act). If it decides to make an order, the court will provide for a person nominated by the tenants to be entitled to acquire the landlord’s interest in the premises on such terms as may be agreed, or, failing agreement, on such terms as a leasehold valuation tribunal may determine (ss.30 and 31, 1987 Act).

An application for an acquisition order is registrable as a pending land action so that, in the case of registered land, it may be protected by a notice. When an acquisition order has been made, it will be registrable as an order affecting land made by the court for the purpose of enforcing a judgment and, in the case of registered land, it may also be protected by the entry of a notice. A person who has applied for an acquisition order under s.28, 1987 Act who applies for a restriction in Form N to Schedule 4, LRR 2003 and a person who has similarly obtained an acquisition order and applies for a restriction in Form L or N is regarded as having sufficient interest to apply for the restriction (rr.93(o) and (n), LRR 2003 respectively).

7.3 Registration following an acquisition order

This section deals with applications for first registration of unregistered land following an acquisition order made under the 1987 Act, and applications for registration of the tenants’ nominee where an acquisition order is made in respect of land that is already registered.

7.3.1 First registration

Make the application in the usual way on form FR1. Where there has been no transfer the application should be accompanied by:

an office copy of the court order, duly stamped
confirmation of the payment into court
any available evidence of the former landlord’s title.

If no documentary evidence of the title is available, it is open to you to apply for a possessory title, supported by a statutory declaration or statement of (see Practice Guide 73 – Statements of truth) by a person having the necessary knowledge of the facts – normally a director or the secretary or solicitor or licensed conveyancer of the applicant company. Since they may not be aware of disputes between the former landlord and third parties, they may only be able to speak as to the period for which the applicant has held the land.

7.3.2 Registration of nominee as proprietor

Make the application in the usual way in form AP1. Where there has been no transfer the application should be accompanied by an office copy of the court order, duly stamped, and confirmation of the payment into court.

Notice of the application will be served on the registered proprietor and any other persons appearing from the register to be interested in the title. If no objection is received the registration will be completed, if necessary under a new title number.

7.4 Variation of leases

Any party to a long lease of a flat may apply to the court for an order varying the lease on the grounds that the lease fails to make satisfactory provision with respect to repair, maintenance, the provision of services, insurance, the recovery of expenses or the computation of service charges (s.35, 1987 Act). The court may then make an appropriate order that will be binding on the parties to the lease and any other persons concerned (ss.38 and 39, 1987 Act).

The entry of the variation order on the register of the titles affected will be dealt with in the same way as a deed of variation.

8 The Commonhold and Leasehold Reform Act 2002 and the right to manage

Part 2, Chapter 1 of the Commonhold and Leasehold Reform Act 2002 (CLRA 2002) came into force on 30 September 2003. It provides for the management functions of the landlord (and certain third parties) to be exercisable by a RTM company in place of the landlord. An RTM company is a special company limited by guarantee, the membership of which is restricted to qualifying tenants. A qualifying tenant is generally a tenant under a long lease.

The CLRA 2002 contains detailed procedures that the RTM company must comply with before it can acquire the RTM. The right becomes exercisable from the acquisition date, as set out in s.90, CLRA 2002.

S.98, CLRA 2002 provides that the RTM company (where it has acquired the RTM) takes over the landlord’s functions relating to approvals under the leases, including a consent required under a restriction in the register. In the case of alienation, structural alterations and user, the RTM company must give the landlord 30 days’ notice before it grants the approval. In all other cases, it must give 14 days’ notice. During that notice period the landlord has the opportunity to object (see s.99, CLRA 2002). All tenant covenants other than those relating to re-entry or forfeiture are potentially exercisable by the RTM company (see s.100, CLRA 2002).

S.104, CLRA 2002 amended the Land Registration Act 1925 to allow for notices to be entered and cautions to be lodged in respect of the RTM. As this suggests that the RTM is not an adverse right affecting the landlord’s title to the estate, we take the view that applications to protect an RTM company by way of entry of an agreed notice or unilateral notice (in the case of a registered estate), or registration of a caution against first registration (in the case of an unregistered estate), in form AN1, UN1 or CT1 under the Land Registration Act 2002 (which is not similarly amended by the CLRA 2002) are not appropriate.

R.79A, LRR 2003 does, however, allow for application to be made in form AP1 for an entry to be made in the proprietorship register to record the acquisition of the RTM by an RTM company. Such an application must be accompanied by evidence to satisfy the registrar that:

the applicant is an RTM company
the right to manage is in relation to the premises comprised in the registered estate
the registered proprietor of the registered estate is the landlord under a lease of the whole or part of the registered estate, and
the right to manage the premises has been acquired, and remains exercisable, by the RTM company.

Such evidence may be made by way of a conveyancer’s certificate.

The entry does not guarantee that the RTM has been acquired or that, if acquired, it remains exercisable, but it does highlight to those proposing to deal with the landlord that there is a RTM company which claims to have acquired the RTM in respect of the premises concerned.

8.1 Restriction in the register where a RTM company acquires the RTM

A restriction on the title to a leasehold estate may require the consent of, or certificate by, a landlord or a management company. S.98(7), CLRA 2002 provides that “an approval required to be obtained by virtue of a restriction entered on the register of title kept by the Chief Land Registrar is, so far as relating to a long lease of the whole or any part of the premises, to be treated for the purposes of this Chapter as an approval under the lease”.

Where the RTM has been acquired by a RTM company, the consent or certificate required by the restriction, where this is required in respect of the landlord’s management functions, must be given by the RTM company.

The disposition for registration, provided it is caught by the restriction, should be accompanied by a conveyancer’s certificate confirming that:

X [the person named in the restriction] is landlord [or state other] under the lease dated [insert details] made between [insert details]
Y[the RTM company giving the consent or certificate required by the restriction] is:
- a right to manage company, and
- has acquired the right to manage in respect of X’s [landlord] management functions under the lease, and
the notice required by s.98, CLRA 2002 was given by Y in respect of the [consent or certificate, as appropriate] required under the terms of the restriction and the requisite notice period has elapsed without an objection having been made.

9 Enquiries and comments

If you have a particular concern that is not covered by this guide, please contact Land Registry in advance of the transaction – see Contact details. If the transaction is particularly complex, it may be better to make your enquiry in writing at the Land Registry office that will process your application.

If you have any comments or suggestions about our guides, please send them to:

Central Operations Group
Land Registry
Trafalgar House
1 Bedford Park
Croydon
CR0 2AQ

(DX 8888 Croydon 3)

You can obtain further copies of this and all our guides free of charge from Customer Support (see Contact details) or you can download them from our website in English or Welsh.

Appendix 1 – Merger of leases on acquisition of the freehold

When a person is entitled, in the same capacity, to the leasehold and any superior leasehold and the freehold titles to a property, the leasehold titles will be merged if the registered proprietor or their practitioner makes an application for merger and any entries on the inferior title(s) that would prevent merger are cancelled or removed.

The mechanics of the application depend on the circumstances of the case, as explained below. If you cannot produce the lease for any reason (for example where the lease is not in the lessee’s possession because it affects also other land) a short letter stating the reason for its non-production should be lodged.

Merger of registered leases

When the freehold title is already registered, the request for closure of the leasehold title(s) may be made in panel 4 of form AP1, which should refer to the title numbers of the titles to be closed.

When the freehold title is the subject of an application for first registration, the request for merger should be made in panel 5 of form FR1 and in addition form AP1 should be lodged for closure of the leasehold title(s). The lease should accompany the application. The registered leasehold title can only be closed when all entries on the register have been satisfactorily dealt with.

Any restriction on the register must normally be withdrawn by means of a form RX3 signed by the restrictioner or their conveyancer, unless a corresponding restriction is to be entered against the freehold title.

A restriction in favour of a chargee will be cancelled automatically when the title is closed (and re-entered on the new title if the charge is to be registered against it).

A Form A restriction on dispositions by a sole proprietor will also be cancelled automatically on closure of the title.

An inhibition resulting from an injunction or restraint order may prevent the closure of the title, or a restriction may be entered on the freehold title, depending on the terms of the court order on which the entry is founded. It may be cancelled on production of an official copy of the court order that puts an end to the original order.

Application should be made for the cancellation or removal of any notice on forms CN1, UN4 or UN2 as appropriate.

Evidence to support certain applications is listed below.

When a registered charge appears on the title a discharge of the charge, or a deed of substituted security, must be produced.

Where a noted charge appears on the title it must be produced with a receipt endorsed or other evidence of discharge, or a deed of substituted security.

A creditor’s notice on the leasehold title will normally be entered on the freehold title. If no longer required, the notice may be cancelled on application accompanied by an office copy of the court order dismissing or withdrawing the petition in bankruptcy or rescinding or annulling the subsequent bankruptcy order.

A bankruptcy inhibition registered under the Land Registration Act 1925, or a restriction registered under s.86, LRA 2002, may be cancelled on production of an official copy of the court order under which the bankruptcy order was rescinded or annulled.

A (matrimonial) homes rights notice that no longer affects the title may be withdrawn by means of an application in form HR4. If not withdrawn or cancelled, the notice will be carried forward onto the freehold title.

A notice of an access order under the Access to Neighbouring Land Act 1992 may be cancelled on production of the appropriate evidence, and if not cancelled will likewise be carried forward onto the freehold title.

A caution may be withdrawn by means of form WCT.

Merger of unregistered lease noted against a registered superior title

Make the application in form CN1, supported by the lease and all deeds and documents relating to the leasehold title. The documents lodged should include an up-to-date land charges search.

Merger of unregistered lease not noted against a registered superior title

If the superior title is being registered or is the subject of an application in form CN1, the lease should be referred to in the application.

If the superior title is already registered and the lease is not noted against it, no application for merger is required. In either case the original lease and all deeds and documents relating to the title to it should be lodged. The documents lodged should include an up-to-date land charges search.

Appendix 2 – Applications for registration of extended leases

Registration of new lease

The application for registration of the new lease should be made in form FR1 if the reversionary title is unregistered, or form AP1 if the reversionary title is registered.

The application should be accompanied by:

the lease being registered, and (if you wish us to return the original) a certified copy
stamp duty land tax certificate, if required
evidence of the lessor’s title to grant the lease, if required
consent of lessor’s mortgagee, if required
any consent required by a restriction affecting the lessor’s title
particulars of any leases intermediate between the lessor’s title and the new lease (see section 6.3.4 Reversionary titles, Intermediate leasehold titles)
application to give effect to the deemed surrender of the existing lease and any intermediate lease held by or in trust for the applicant
application for any necessary restriction or notice on the title to the new lease
fees.

The new lease may either be a complete, full-length lease, or it may be drawn by reference to the terms of the lease being surrendered. Avoid using a deed of variation. The effect of the procedure may appear to be the variation of the length of the term of the original lease but this is not the case. The new lease takes effect in substitution for the existing lease.

Lessor’s title

If the lessor’s title is unregistered, an examined abstract or epitome of the lessor’s title, and a current search in Land Charges Department, should be obtained and lodged with the application, with a view to the grant of an absolute leasehold title. Normally an absolute leasehold title can be granted only if the lessor’s title and any superior titles have previously been approved by Land Registry on an application for first registration or are lodged with the application.

Consent of lessor’s mortgagee

If there is a restriction in favour of the lessor’s mortgagee on the lessor’s title, the mortgagee’s consent must be lodged to comply with s.41(1), LRA 2002, unless the registrar makes an order to disapply the restriction under s.41(2).

Even if there is no such restriction on the lessor’s title, the consent of the lessor’s mortgagee (and any other person interested in the mortgage) should be lodged where the old lease:

was granted on or after 1 November 1993 (for applications under the 1993 Act) or 1 January 1968 (for applications under the 1967 Act)
was made subsequent to the date of the lessor’s mortgage, and
would not have been binding on the persons interested in the mortgage (ie it was outside the mortgagor’s leasing powers and they did not concur in it).

Where, however, the consent is not lodged, the following entry will be made in the property register of the new title:

"The title to the lease is, during the subsistence of the charge dated ….. in favour of ….. affecting the landlord’s title (and to the extent permitted by law, any charge replacing or varying this charge or any further charge in respect of all or part of the sum secured by this charge), subject to any rights that may have arisen by reason of the absence of chargee’s consent, unless the lease is authorised by section 99 of the Law of Property Act 1925."

This entry will not be made if a copy of the mortgage deed is lodged together with confirmation that the granting of the lease was permitted by the terms of the mortgage (by referring to the relevant clause in the deed) and that the mortgagee’s consent was not required.

In other cases the power of the lessor to grant the lease cannot be questioned on account of the existence of a mortgage on its title.

Application to give effect to the deemed surrender of the existing lease

The form of this application will depend on whether the existing lease is registered, whether the surrendered lease is noted on any reversionary title, and whether the application is under the 1967 Act or the 1993 Act.

If the applicant’s existing leasehold title is registered, application should be made to give effect to the surrender of the existing lease by closing that title. If the applicant’s leasehold title is not registered but notice of it is entered on any reversionary title, you must make an application for the cancellation of the notice.

Even if the surrendered lease is neither registered nor noted on any reversionary title, it is still necessary for the surrendered lease and the applicant’s title to it to be lodged, together with a current Land Charges Department search. Any mortgages affecting the lease should also be lodged.

Any mortgagees of the applicant’s existing lease should be contacted prior to completion of the new lease and the necessary arrangements made.

Any other interest affecting the existing lease should also be carefully considered.

If it is protected in the register of the existing lease but does not affect the new lease, lodge an application for the withdrawal of the restriction, or notice of deposit or intended deposit, or the cancellation of the notice. If it, or a corresponding interest, affects the new lease, an application to protect it by means of a suitable entry in the register should be included in, or accompany, the application to register the new lease.

Closure of existing leasehold title

Make the application to close the applicant’s existing title on form AP1 and describe the application in panel 4 as ‘Closure of leasehold title’. The original lease should accompany the application.

Cancellation of notice of existing lease on reversionary title (when existing lease is unregistered)

Make the application in form CN1. The surrendered lease and the applicant’s title to it should be lodged, together with a current Land Charges Department search. Any mortgages affecting the lease should also be lodged.

Arrangements with mortgagees

Where the new lease is being granted under the 1993 Act, any charges on the surrendered lease will transfer automatically. The applicant should apply for registration of the charge in panels 4 and 10 of form AP1 or panels 5 and 10 of form FR1, the form used depending on whether the reversioner’s title is registered. It is only necessary to arrange for the charge to be lodged if the surrendered lease is unregistered. If the charge is to be protected by notice only, and the reversioner’s title is registered, you should complete either form AN1 or UN1, as appropriate.

Where, however, the new lease is being granted under the 1967 Act, a mortgage does not transfer automatically to the new lease and should, therefore, either be discharged and replaced, or transferred to the new lease by deed. If the mortgage is discharged, the discharged mortgage and evidence of discharge and the new mortgage, if any, with a certified copy if the new mortgage is to be registered, should be lodged with the application. If a deed of substituted security is used, the mortgage should be lodged together with the deed and, if the mortgage is to be registered against the new title, a certified copy.

If the mortgagee’s cooperation cannot be secured, Land Registry will endeavour to serve a special notice on them, and any other person appearing to be interested in the mortgage, giving details of:

the mortgage
the applicants and the nature of the application
the intended closure of the title to the existing lease (if registered)
the intended cancellation of the notice of the existing lease on a superior title (if the existing lease is not registered but is noted on such a title)
the effect of the application, if completed, on the mortgage
how any objection to the application can be made; and requesting the lodging of the original mortgage.

If there is no response to the notice, the application will be completed. In the case of a lease granted under the 1993 Act, the mortgage may be registered or noted against the new title in the normal way. In the case of a lease granted under the 1967 Act, a special entry will be made, as described in section 5.4.2 Entries in the register.

If, in response to the notice, the recipient lodges the original mortgage, it will either be registered or noted. If notice has to be served in respect of more than one subsisting mortgage, separate entries will be made in the register according to the respective priorities of the mortgages concerned.

Other entries on existing leasehold title

A restriction in favour of a chargee will be cancelled automatically when the old title is closed (and re-entered on the new title if the charge is registered against it). A form A restriction against dispositions by a sole proprietor will also be cancelled on closure of the title. A voluntary restriction in the register of the old title must normally be withdrawn by means of a form RX4 signed by the restrictioner or their conveyancer, unless a corresponding restriction is applied for against the new lease.

Application should be made for the cancellation or removal of any notices other than one protecting a monetary charge, on forms CN1, UN4 or UN2 as appropriate.

Evidence to support certain applications is set out below. A creditor’s notice will normally be entered on the new title. If no longer required, application should be accompanied by an office copy of the court order dismissing or withdrawing the petition in bankruptcy or rescinding or annulling the subsequent bankruptcy order. A bankruptcy restriction may be cancelled on production of an official copy of the court order under which the bankruptcy order was rescinded or annulled.

A homes rights notice that no longer affects may be withdrawn by means of an application in form HR4. If not withdrawn or cancelled, the notice will be carried forward onto the new title.

A notice of an access order under the Access to Neighbouring Land Act 1992 requires production of the appropriate evidence, and if not cancelled will be carried forward onto the new title.

A caution may be withdrawn by means of a form WCT.

An inhibition resulting from an injunction or restraint order may prevent the closure of the title or a restriction may be entered on the freehold title, depending on the terms of the court order on which the entry is founded. It may be cancelled on production of an official copy of the court order that puts an end to the original order.

We will consider any entry affecting the old title that is not withdrawn or cancelled and is not carried forward onto, or replaced by a corresponding entry on, the new title on a case-by-case basis. In some cases it may be possible to deal with the matter by the service of notice.

Protection of interests affecting the new lease

As with all applications for registration of a lease, full particulars of all third party interests affecting the lease must be entered in the appropriate panel of the application form AP1/FR1 and separate applications made for their entry on the register where appropriate. In addition to this, any restriction required must be applied for in form RX1.

Land Registry advisory policy

We offer advice to our customers through our publications and Customer Support information and through the day-to-day handling of applications.

We provide factual information including official copies of registers, title plans and documents, searches and details of our forms and fees.

We provide procedural advice to explain how the land registration system works and how to make applications correctly. This includes:

advice in advance of an application, where this is requested
where an application is defective, advice as to the nature of the problem and what options, if any, are available to put it right
an approval service for estate layout plans and certain other land registration documents.

There are limits to the advice that we will provide. We will not provide legal advice.

This means that:

we will not approve the evidence to be produced in support of a registration application before we receive the application
apart from procedural advice, we will not advise on what action to take
we will not recommend a professional adviser but can explain how to find one.

We provide advice only about real cases, not about theoretical circumstances. We will not express a view on questions where the law is complex or unclear except where the question arises on a live registration application.

In providing this factual information and procedural advice we will:

be impartial
recognise that others may be affected by what we say
avoid any conflict of interest.

Contact details

For customer enquiries and to request this publication in an alternative format please contact Customer Support at customersupport@landregistry.gsi.gov.uk or telephone 0844 892 1111, or 0844 892 1122 for a Welsh-speaking service, from Monday to Friday between 8am and 6pm. Calls cost 3p a minute on a BT standard tariff, in addition to the current set up/connection charge. Calls from other tariffs, service providers and mobile phones may cost more. We do not receive any revenue from these calls.

To obtain copies of this and all our other guides, free of charge:

view/download guides in English and Welsh at www.landregistry.gov.uk
contact Customer Support.

Information in this guide

The information in this publication is for the purpose of providing general guidance about Land Registry's procedures and policies. It is intended only as a guide and does not cover every situation that may arise. It also does not limit Land Registry's ability to use its discretion when appropriate to do so, within the land registration legislation.

Chief Land Registrar

Not to be reproduced without permission from The Forms Unit, Land Registry (under the delegated authority from the Controller of HMSO), Trafalgar House, 1 Bedford Park, Croydon CR0 2AQ