Definitions

A Right to Buy (RTB) lease under the Housing Act 1985 (the Act) will look like most other leases and will contain covenants and rights granted to the leaseholder. A general overview on living in leasehold flats is contained in our online advice guide.

However unlike most other leases, the essential covenants and terms are imposed under the provisions of Part 3 of Schedule 6 of the Housing Act 1985. These are referred to as implied covenants in the Schedule. A brief outline of some of the more significant implied covenants follows.

Ground rent

Ground rent must not exceed £10 per year for the whole term.

Lease term

A Right to Buy lease term is 125 years from the date the first lease in the building was granted. So the first tenant in the building to exercise the Right to Buy from 8 August 1980 gets a 125 year lease. If another leaseholder purchases their flat 10 years later they would get a lease with 115 years. Also if the landlord, council or housing association does not own the freehold but rather owns a head lease, the lease term granted to the tenant will be for a term equivalent to the landlord’s lease term less 5 days. If the landlord has less than 50 years on any head lease a tenant will not have a right to buy. See paragraph 4 Schedule 5 of the Housing Act 1985.

Common use of premises and facilities

Where a tenant has been able to use facilities and premises as part of their tenancy they will enjoy the same rights once they become a leaseholder.

Landlord’s implied covenants

To maintain the structure: to maintain the structure and exterior of the building and make good any defects to the structure. Also to maintain any services enjoyed by the leaseholder to a reasonable level and keep in repair any installation in respect of those services. An example of services may be lifts serving the building.

To reinstate: the landlord is under an obligation to reinstate the building if it is damaged or destroyed by an insurable risk such as fire, flood and tempest. Be aware that the landlord is not under an obligation to insure the building. However the vast majority of councils and housing associations actually insure their buildings and their Right to Buy leases will contain a landlord’s covenant to take out a buildings insurance policy.

Any deviation from these implied covenants must be approved by a county court. However if your landlord only owns a head lease they are not required to enter into obligations incompatible with the terms of that head lease.

Leaseholder’s implied covenants

Repair: to keep the interior of the flat in a state of good repair.

Where the property is a flat, the leaseholder has an obligation to keep the interior of the flat in a good state of repair.

The leaseholder is under an obligation to pay service charges to the landlord where the landlord incurs costs in relation to the landlord’s implied obligations detailed above.

• Covenants: are legally binding obligations by the leaseholder and the landlord.
• Rights granted: for instance, allows the leaseholder to enter and leave the flat through the common parts.
• Lease term: is the number of years granted.
• Unexpired lease term: is the number of years remaining on the lease.
• Head lease: held by the freeholder, who may sublet the entire building, for example, to a housing association who in turn lease individual flats. The head lease will always be longer than the leases on individual flats.
• Demise: the physical extent of the property owned by the leaseholder.
• Tempest: violent storm.
• District Valuer: a government officer who values land and buildings for the purposes of council tax.
• Secure tenancy: a weekly or monthly tenancy on a council flat or house.
• Indemnity: a promise to pay another’s costs or perform a specific action.
• Quarter day: 25 March, 25 June, 29 September and 25 December. These are historically the days in the year when rent is due in England and Wales.
• Forfeiture: the process where a landlord obtains possession of a leasehold property due to a breach of covenant by the leaseholder.
• Relief from forfeiture: where a judge refuses to make an order to forfeit the lease where the leaseholder has made good the breach of covenant complained of.