New life of the lease: A new Bill aims to give tenants a better deal and bring wayward freeholders under control. Ian Hunter reports

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The Independent Online
Shortly after Carol Earle bought her flat in Wallington, Surrey, two years ago, she discovered that insurance on the property had lapsed.

'If it had burnt down we would have received no compensation,' says Ms Earle, a legal secretary.

Under the lease it is the responsibility of the landlord to insure the property - but Ms Earle and the other tenants cannot trace theirs.

Leaseholders in Ms Earle's position are being targeted for assistance under a bill provisionally known as the Housing, Land and Urban Development Bill, due to be introduced by the Government in the next session of Parliament.

Among other things, it intends to update and improve the Landlord and Tenant Act 1987.

The Bill is expected to propose a code of practice governing property management. Failure to comply with the code could be used in criminal or civil proceedings to prove liability or negligence. Other provisions would allow tenants to audit service charges.

In addition, bad management or breaches of the lease would be punished, through the strengthening of existing provisions for the compulsory acquisition of the landlord's freehold, and tenants would have the right to purchase their freehold if at least two- thirds want to.

The Government is also committed to introducing commonhold, a new form of ownership for flat-dwellers, although draft legislation for this is not expected to be debated by Parliament before the end of next year.

John Samson, a property specialist with the solicitor Nabarro Nathanson, expects the first Bill to go some way towards improving the lot of leaseholders, although he anticipates arguments over the prices of freeholds.

Until the Bill becomes law, Ms Earle and the rest must grapple with the existing system.

At present, a lease gives the leaseholder a contract with the landlord. If the landlord fails to honour it, the tenant can sue for damages.

Many leases place responsibility for the repair of a property on the freeholder. It is not uncommon for a landlord to delay repairs for up to a year with the excuse that he is trying to sell the freehold. In such a case, damages would normally reflect the cost of carrying out all the repair work.

Tenants can apply for a court order to compel a landlord to comply with the terms of the lease. Failure to obey such an order may lead to a heavy fine or, in extreme cases, imprisonment.

However, Bryan Emden, a partner and property specialist with solicitor Fox Williams, comments: 'The tenant does have certain rights, but enforcing them through the courts is usually a time-consuming and expensive business.

'In the case of long leases, the landlord may be responsible for carrying out repairs, but the lease usually provides him with the right to recover the costs from the tenants. Tenants may in the end find it more cost-effective to do the work themselves and consider withholding service charges that may be due.'

The Landlord & Tenant Act 1987 already provides tenants with an alternative to suing the landlord. They can apply to the court to acquire the freehold compulsorily, but this is time-consuming and complicated. Applicants must show the landlord has breached obligations 'relating to the repair, maintenance, insurance or management of the premises in question'. This option is not open to every tenant, however, and there are intricate qualifying provisions.

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