Commonhold and Leasehold Reform Bill [H.L.] - continued        House of Lords
PART II, LEASEHOLD REFORM - continued

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  CHAPTER II
  COLLECTIVE ENFRANCHISEMENT BY TENANTS OF FLATS
 
Introductory
Amendments of right to collective enfranchisement.     111. This Chapter amends the right to collective enfranchisement which is conferred by Chapter I of Part I of the 1993 Act.
 
 
Qualifying rules
Non-residential premises.     112. In section 4(1) of the 1993 Act (right not to apply in case of premises having non-residential parts with floor area exceeding 10 per cent. of total), for "10 per cent." substitute "25 per cent.".
 
Qualifying leases.     113. In section 5(1) of the 1993 Act (which provides that a qualifying tenant is a tenant under a long lease which is at a low rent or for a particularly long term), omit "which is at a low rent or for a particularly long term".
 
Premises with resident landlord.     114. - (1) Section 10 of the 1993 Act (premises with a resident landlord) is amended as follows.
 
      (2) For subsection (1) (requirements that premises not be or form part of purpose-built block of flats and that they have been occupied for at least twelve months as only or principal home of owner of freehold or a family member), substitute-
 
 
    "(1) For the purposes of this Chapter any premises falling within section 3(1) are premises with a resident landlord at any time if-
 
 
    (a) the premises are not, and do not form part of, a purpose-built block of flats;
 
    (b) the same person has owned the freehold of the premises since before the conversion of the premises into two or more flats or other units; and
 
    (c) he, or an adult member of his family, has occupied a flat or other unit contained in the premises as his only or principal home throughout the period of twelve months ending with that time."
      (3) For subsection (4) (premises held on trust) substitute-
 
 
    "(4) Where the freehold of any premises is held on trust, subsection (1) applies as if-
 
 
    (a) the requirement in paragraph (b) were that the same person has had an interest under the trust (whether or not also a trustee) since before the conversion of the premises, and
 
    (b) paragraph (c) referred to him or an adult member of his family."
Proportion of tenants required to participate.     115. In section 13(2)(b) of the 1993 Act (persons by whom initial notice must be given), omit sub-paragraph (i) (initial notice to be given by at least two-thirds of qualifying tenants of flats contained in premises).
 
Abolition of residence condition.     116. In section 13(2) of the 1993 Act, omit the words following paragraph (b) (which require at least one-half of the qualifying tenants by whom the initial notice is given to satisfy the residence condition).
 
 
Exercise of right
Right exercisable only by RTE company.     117. - (1) Section 13 of the 1993 Act is amended as follows.
 
      (2) In paragraph (b) of subsection (2), after "given by" insert "a RTE company whose membership includes".
 
      (3) After that subsection insert-
 
 
    "(2ZA) But in a case where, at the relevant date, there are only two qualifying tenants of flats contained in the premises, subsection (2)(b) is not satisfied unless both are members of the RTE company."
 
RTE companies.     118. After section 4 of the 1993 Act insert-
 
 
"RTE companies.     4A. - (1) A company is a RTE company in relation to premises if-
 
    (a) it is a private company limited by guarantee, and
 
    (b) its memorandum of association states that its object, or one of its objects, is the exercise of the right to collective enfranchisement with respect to the premises.
      (2) But a company is not a RTE company in relation to premises if another company is already a RTE company in relation to-
 
 
    (a) the premises, or
 
    (b) any premises containing or contained in the premises.
RTE companies: membership.     4B. - (1) Subject as follows, the persons who are entitled to be members of a company which is a RTE company in relation to premises are qualifying tenants of flats contained in the premises.
 
      (2) But if a company which is a RTE company in relation to any premises is also a RTM company in relation to the premises, landlords under leases of the whole or any part of the premises are also entitled to be members of the company.
 
      (3) In this Part "RTM company" has the same meaning as in Chapter I of Part II of the Commonhold and Leasehold Reform Act 2001.
 
      (4) When a conveyance of premises to a RTE company is executed for the purposes of this Chapter, any member of the company who is not a participating member ceases to be a member.
 
      (5) In this Chapter "participating member", in relation to a RTE company which has given a notice under section 13 with respect to any premises, means a person who is a member by virtue of subsection (1) of this section and who-
 
 
    (a) has given a participation notice before the date when the notice was given or during the participation period, or
 
    (b) is a participating member by virtue of either of the following two subsections.
      (6) A member who is the assignee of a lease by virtue of which a participating member was a qualifying tenant of his flat is a participating member if, within the period of 14 days beginning with the date of the assignment, he gives a participation notice to the company.
 
      (7) And if the personal representatives of a participating member are a member, they are a participating member unless, within the period of 56 days beginning with the date of death of the participating member, they give to the company a notice stating that they do not wish to be a participating member.
 
      (8) In this section "participation notice", in relation to a member of a company, means a notice-
 
 
    (a) stating that he wishes to be a participating member, and
 
    (b) containing such other particulars (if any) as may be required to be contained in participation notices by regulations made by the Secretary of State,
       and complying with such requirements (if any) about the form of participation notices as may be prescribed by regulations so made.
 
      (9) For the purposes of this section "the participation period" is the period beginning with the date when the notice under section 13 was given and ending-
 
 
    (a) six months, or such other time as the Secretary of State may by order specify, after that date, or
 
    (b) immediately before a binding contract is entered into in pursuance of the notice under section 13,
       whichever is the earlier.
 
      (10) In this section references to assignment include an assent by personal representatives, and assignment by operation of law where the assignment is to a trustee in bankruptcy or to a mortgagee under section 89(2) of the Law of Property Act 1925 (foreclosure of leasehold mortgage); and references to an assignee shall be construed accordingly.
 
RTE companies: regulations.     4C. - (1) The Secretary of State shall by regulations make provision about the content and form of the memorandum of association and articles of association of RTE companies.
 
      (2) A RTE company may adopt provisions of the regulations for its memorandum or articles.
 
      (3) The regulations may include provision which is to have effect for a RTE company whether or not it is adopted by the company.
 
      (4) A provision of the memorandum or articles of a RTE company has no effect to the extent that it is inconsistent with the regulations.
 
      (5) The regulations have effect in relation to a memorandum or articles-
 
 
    (a) irrespective of the date of the memorandum or articles, but
 
    (b) subject to any transitional provisions of the regulations.
      (6) The following provisions of the Companies Act 1985 do not apply to a RTE company-
 
 
    (a) sections 2(7) and 3 (memorandum), and
 
    (b) section 8 (articles)."
 
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