Commonhold and Leasehold Reform Bill -
Amendments to be debated in the House of Lords
- continued
House of Lords

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After Clause 139
 
  
BY THE LORD CHANCELLOR
 
     Insert the following new Clause-- 
     ("  .  For section 21 of the 1985 Act (request for summary of relevant costs) substitute--Statements of account.
 Regular statements of account.     21.--(1)  The landlord must supply to each tenant by whom services charges are payable, in relation to each accounting period, a written statement of account dealing with--
    (a)  service charges of the tenant and the tenants of dwellings associated with his dwelling,
    (b)  relevant costs relating to those service charges,
    (c)  the aggregate amount standing to the credit of the tenant and the tenants of those dwellings--
          (i)  at the beginning of the accounting period, and
          (ii)  at the end of the accounting period, and
    (d)  related matters.
    (2)  The statement of account in relation to an accounting period must be supplied to each such tenant not later than six months after the end of the accounting period.
 
    (3)  Where the landlord supplies a statement of account to a tenant he must also supply to him--
    (a)  a certificate of a qualified accountant that, in the accountant's opinion, the statement of account deals fairly with the matters with which it is required to deal and is sufficiently supported by accounts, receipts and other documents which have been produced to him, and
    (b)  a summary of the rights and obligations of tenants of dwellings in relation to service charges.
    (4)  The Secretary of State may make regulations prescribing requirements as to the form and content of--
    (a)  statements of account,
    (b)  accountants' certificates, and
    (c)  summaries of rights and obligations.
    (5)  The Secretary of State may make regulations prescribing exceptions from the requirement to supply an accountant's certificate.
 
    (6)  If the landlord has been notified by a tenant of an address in England and Wales at which he wishes to have supplied to him documents required to be so supplied under this section, the landlord must supply them to him at that address.
 
    (7)  And the landlord is to be taken to have been so notified if notification has been given to--
    (a)  an agent of the landlord named as such in the rent book or similar document, or
    (b)  the person who receives the rent on behalf of the landlord;
and where notification is given to such an agent or person he must forward it as soon as may be to the landlord.
 
    (8)  For the purposes of this section a dwelling is associated with another dwelling if the obligations of the tenants of the dwellings under the terms of their leases as regards contributing to relevant costs relate to the same costs.
 
    (9)  In this section "accounting period" means such period--
    (a)  beginning with the relevant date, and
    (b)  ending with such date, not later than twelve months after the relevant date,
as the landlord determines.
 
    (10)  In the case of the first accounting period in relation to any dwellings, the relevant date is the later of--
    (a)  the date on which services charges are first payable under a lease of any of them, and
    (b)  the date on which section (Statements of account) of the Commonhold and Leasehold Reform Act 2001 comes into force,
and, in the case of subsequent accounting periods, it is the date immediately following the end of the previous accounting period.
 
    (11)  Regulations under subsection (4) may make different provision for different purposes.
 
    (12)  Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
 
 Withholding of service charges.     21A.--(1)  A tenant may withhold payment of a service charge if--
    (a)  the landlord has not supplied a document to him by the time by which he is required to supply it under section 21, or
    (b)  the form or content of a document which the landlord has supplied to him under that section (at any time) does not conform exactly or substantially with the requirements prescribed by regulations under subsection (4) of that section.
    (2)  The maximum amount which the tenant may withhold is an amount equal to the aggregate of--
    (a)  the service charges paid by him in the accounting period to which the document concerned would or does relate, and
    (b)  so much of the aggregate amount required to be dealt with in the statement of account for that accounting period by section 21(1)(c)(i) as stood to his credit.
    (3)  An amount may not be withheld under this section--
    (a)  in a case within paragraph (a) of subsection (1), after the document concerned has been supplied to the tenant by the landlord, or
    (b)  in a case within paragraph (b) of that subsection, after a document conforming exactly or substantially with the requirements prescribed by regulations under section 21(4) has been supplied to the tenant by the landlord by way of replacement of the one previously supplied.
    (4)  If, on an application made by the landlord to a leasehold valuation tribunal, the tribunal determines that the landlord has a reasonable excuse for a failure giving rise to the right of a tenant to withhold an amount under this section, the tenant may not withhold the amount after the determination is made.
 
    (5)  Where a tenant withholds a service charge under this section, any provisions of the tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it."")
 
     Insert the following new Clause-- 
     ("  .  For section 22 of the 1985 Act (request to inspect documents supporting summary of relevant costs) substitute--Inspection etc. of documents.
 Inspection etc. of documents.     22.--(1)  A tenant may by notice in writing require the landlord--
    (a)  to afford him reasonable facilities for inspecting accounts, receipts or other documents relevant to the matters which must be dealt with in a statement of account required to be supplied to him under section 21 and for taking copies of or extracts from them, or
    (b)  to take copies of or extracts from any such accounts, receipts or other documents and either send them to him or afford him reasonable facilities for collecting them (as he specifies).
    (2)  If the tenant is represented by a recognised tenants' association and he consents, the notice may be served by the secretary of the association instead of by the tenant (and in that case any requirement imposed by it is to afford reasonable facilities, or to send copies or extracts, to the secretary).
 
    (3)  A notice under this section may not be served after the end of the period of six months beginning with the date by which the tenant is required to be supplied with the statement of account under section 21.
 
    (4)  But if--
    (a)  the statement of account is not supplied to the tenant on or before that date, or
    (b)  the statement of account so supplied does not conform exactly or substantially with the requirements prescribed by regulations under section 21(4),
the six month period mentioned in subsection (3) does not begin until any later date on which the statement of account (conforming exactly or substantially with those requirements) is supplied to him.
 
    (5)  A notice under this section is duly served on the landlord if it is served on--
    (a)  an agent of the landlord named as such in the rent book or similar document, or
    (b)  the person who receives the rent on behalf of the landlord;
and a person on whom such a notice is so served must forward it as soon as may be to the landlord.
 
    (6)  The landlord must comply with a requirement imposed by a notice under this section within the period of twenty-one days beginning with the day on which he receives the notice.
 
    (7)  To the extent that a notice under this section requires the landlord to afford facilities for inspecting documents--
    (a)  he must do so free of charge, but
    (b)  he may treat as part of his costs of management any costs incurred by him in doing so.
    (8)  The landlord may make a reasonable charge for doing anything else in compliance with a requirement imposed by a notice under this section."")
 
  
Clause 140
 
  
BY THE LORD CHANCELLOR
 
     Page 62, line 22, at end insert--
        ("(  )  But the tenant is not to be taken to have agreed or admitted any matter by reason only of having paid the whole or any part of an amount alleged to be payable by way of service charge.")
 
  
After Clause 140
 
  
BY THE LORD CHANCELLOR
 
     Insert the following new Clause-- 
     ("  .--(1)  After section 42 of the 1987 Act insert--Service charge contributions to be held in separate account.
 Service charge contributions to be held in designated account.     42A.--(1) The payee must hold any sums standing to the credit of any trust fund in a designated account at a relevant financial institution.
 
    (2)  An account is a designated account in relation to sums standing to the credit of a trust fund if--
    (a)  the relevant financial institution has been notified in writing that sums standing to the credit of the trust fund are to be (or are) held in it, and
    (b)  no other funds are held in the account,
and the account is an account of a description specified in regulations made by the Secretary of State.
 
    (3)  Any of the contributing tenants, or the sole contributing tenant, may by notice in writing require the payee--
    (a)  to afford him reasonable facilities for inspecting documents evidencing that subsection (1) is complied with and for taking copies of or extracts from them, or
    (b)  to take copies of or extracts from any such documents and either send them to him or afford him reasonable facilities for collecting them (as he specifies).
    (4)  If the tenant is represented by a recognised tenants' association and he consents, the notice may be served by the secretary of the association instead of by the tenant (and in that case any requirement imposed by it is to afford reasonable facilities, or to send copies or extracts, to the secretary).
 
    (5)  A notice under this section is duly served on the payee if it is served on--
    (a)  an agent of the payee named as such in the rent book or similar document, or
    (b)  the person who receives the rent on behalf of the payee;
and a person on whom such a notice is so served must forward it as soon as may be to the payee.
 
    (6)  The payee must comply with a requirement imposed by a notice under this section within the period of twenty-one days beginning with the day on which he receives the notice.
 
    (7)  To the extent that a notice under this section requires the payee to afford facilities for inspecting documents--
    (a)  he must do so free of charge, but
    (b)  he may treat as part of his costs of management any costs incurred by him in doing so.
    (8)  The payee may make a reasonable charge for doing anything else in compliance with a requirement imposed by a notice under this section.
 
    (9)  Any of the contributing tenants, or the sole contributing tenant, may withhold payment of a service charge if he has reasonable grounds for believing that the payee has failed to comply with the duty imposed on him by subsection (1); and any provisions of his tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.
 
    (10)  In this section--
    recognised tenants' association" has the same meaning as in the 1985 Act, and
    relevant financial institution" has the meaning given by regulations made by the Secretary of State;
and expressions used both in section 42 and this section have the same meaning as in that section.
 
 Failure to comply with section 42A.     42B.--(1)  If a person fails, without reasonable excuse, to comply with a duty imposed on him by or by virtue of section 42A he commits an offence.
 
    (2)  A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 4 on the standard scale.
 
    (3)  Where an offence under this section committed by a body corporate is proved--
    (a)  to have been committed with the consent or connivance of a director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in such a capacity, or
    (b)  to be due to any neglect on the part of such an officer or person,
he, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly.
 
    (4)  Where the affairs of a body corporate are managed by its members, subsection (3) applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.
 
      (5)  Proceedings for an offence under this section may be brought by a local housing authority (within the meaning of section 1 of the Housing Act 1985)." 
     (2)  In section 53(2)(b) of the 1987 Act (regulations subject to negative procedure), insert at the end "or 42A".")1985 c. 68.
     Insert the following new Clause-- 
     ("  .  Schedule (Service charges: minor and consequential amendments) (minor and consequential amendments about service charges) has effect.")Service charges: minor and consequential amendments.
 
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