Leasehold Reform, Housing and Urban Development Act 1993 – Lease extension – Lessee serving section 42 notice on claimant freeholder claiming lease extension – Notice served more than two years after lessee completing purchase of flat but less than two years after registration of title – Whether lessee a qualifying tenant for two years prior to service of notice – Whether section 39(2) concerning only period during which lessee registered with legal title – Claim allowed
In June 2007, the defendant contracted to purchase a leasehold interest in a flat. Pursuant to a term of the contract, the vendor served a notice on the claimant freeholder in July 2007, under section 42 of Chapter II of the Leasehold Reform, Housing and Urban Development Act 1993, claiming a new lease of the flat. The sale was completed shortly thereafter. The claimant served a counternotice, claiming that the vendor had no right to a new lease since she had not, at the relevant time, been a qualifying tenant for the necessary period of two years required by section 39(2) of the 1993 Act. It applied to the court for a declaration to that effect, pursuant to section 46 of the Act.
The claimant’s case depended on the fact that, although the vendor had purchased the flat in June 2005, more than two years before the service of her section 42 notice, she had not been registered as lessee until September 2005. It contended that the vendor had not become a qualifying tenant until the date of registration of her title, since the Act was concerned only with the legal title and not with the equitable rights that she had acquired on exchange of contracts. It argued that section 101(2) of the Act, which provided that an agreement for a lease or tenancy qualified as a tenancy for the purposes of Part I of the Act, did not support the contrary view but merely set out a specific exception to the general rule, which, unlike the situation under consideration, created no risk of a conflict with the section 5(3) requirement that no more than one person could be regarded as a qualifying tenant of a particular flat at any one time.
Held: The claim was allowed.
On the face of the statutory provisions, the system set out in Chapter II of the 1993 Act depended on the requirement that there should be only one qualifying tenant at any one time. This suggested that, subject to specific exceptions, only the legal owners on both sides, namely the landlord and the tenant, were to take part in the process and had the rights and obligations to do so. The provision in section 101(2) for agreements for leases did not derogate from the general principle that a tenant became a tenant only on acquiring the legal ownership of the lease. In that regard, a distinction could be made between the vertical transactions contemplated by section 101(2) and the horizontal transaction involved in a sale of the leasehold interest by the lessee. The requirement for the tenant to have been a qualifying tenant for two years before the relevant date was intended to be a simple test, and was met with sufficient clarity if registration was required throughout that period. To hold otherwise would damage the overall structure of the Act and create a risk that there might be more than one qualifying tenant. The declaration sought by the claimant was granted.
Anthony Radevsky (instructed by CMS Cameron McKenna LLP) appeared for the claimant; Andrew Skelly (instructed by Percy Short & Cuthbert) appeared for the defendant.
Sally Dobson, barrister
