Commonhold and Leasehold Reform Act 2002

1
Commonhold and Leasehold Reform Act 2002

• Steve Norris

2
Commonhold and Leasehold Reform Act 2002

• Received Royal Ascent on 1st May 2002
• Various commencement orders have brought in the
  various sections of the Act since Royal Ascent
• Two main sections
• Commonhold
• Leasehold Reform
• This presentation will describe briefly both
  sections, then highlight the ramifications for
  insurance

3
Commonhold and Leasehold Reform Act 2002

• Commonhold
• Previously only two ways to hold land
• Freehold
• Leasehold - confers ownership for a temporary
  period subject to lease conditions
• Commonhold combines the security of freehold
  ownership with covenants which could be made to
  apply to each owner of an interdependent property
  e.g. Block of Flats
• The Act markes provisons for the
• Registration process
• Definition of a unit
• Constitution and operation of the Commonhold
  Association
• Winding up of a Commonhold Association
• Commonhold take up has not been good

4
Commonhold and Leasehold Reform Act 2002

• Leasehold Reform
• The Act provides
• Leasehold with a new no-fault right to manage
  their flats
• The eligibility criteria and procedures for
  exercising the right
• Amended rules for collective enfranchisment under
  the Leasehold Reform, Housing and Urban
  Development Act 1993
• An extension of the Right to Apply to LVTS

5
Commonhold and Leasehold Reform Act 2002

• Why is this Act important for insurers?
• Section 164 (Commencement Order No 4 2004)
• Provided new rights for Leaseholders of houses
  who are required by the terms of their lease to
  insure with an insurer nominated or approved by
  the Landlord
• LVT REMIT widened
• LVTs have adjudicated on
• Levels of commission
• Reasonableness of premiums
• Reasonableness of sums insured
• Management Associations under Commonhold and
  Right to Manage flat owners are new customers
  for us