The Housing (Preservation of Right to Buy) Regulations 1989

• (b) where the dwelling-house is a flat, to keep the interior of the dwelling-house in such repair.

Service charges and other contributions payable by the tenant

16A

• (1) The lease may require the tenant to bear a reasonable part of the costs incurred by the landlord–

• (a) in discharging or insuring against the obligations imposed by the covenants implied by virtue of paragraph 14(2) (repairs, making good structural defects, provision of services, etc.), or

• (b) in insuring against the obligations imposed by the covenant implied by virtue of paragraph 14(3) (rebuilding or reinstatement, etc.),

and to the extent that by virtue of paragraph 15(3) (effect of provision of superior lease) such obligations are not imposed on the landlord, to bear a reasonable part of the costs incurred by the landlord in contributing to costs incurred by a superior landlord or other person in discharging or, as the case may be, insuring against obligations to the like effect.

• (2) Where the lease requires the tenant to contribute to the costs of insurance, it shall provide that the tenant is entitled to inspect the relevant policy at such reasonable times as may be specified in the lease.

• (3) Where the landlord does not insure against the obligations imposed by the covenant implied by virtue of paragraph 14(3), or, as the case may be, the superior landlord or other person does not insure against his obligations to the like effect, the lease may require the tenant to pay a reasonable sum in place of the contribution he could be required to make if there were insurance.

• (4) Where in any case the obligations imposed by the covenants implied by virtue of paragraph 14(2) or (3) are modified in accordance with paragraph 14(4) (power of county court to authorise modification), the references in this paragraph are to the obligations as so modified.

• (5) This paragraph has effect subject to paragraph 16B (restrictions in certain cases as regards costs incurred in the initial period of the lease).

16B

• (1) Where a lease of a flat requires the tenant to pay service charges in respect of repairs (including works for the making good of structural defects), his liability in respect of costs incurred in the inital period of the lease is restricted as follows.

• (2) He is not required to pay in respect of works itemised in the estimates contained in the landlord’s notice under section 125 any more than the amount shown as his estimated contribution in respect of that item, together with an inflation allowance.

• (3) He is not required to pay in respect of works not so itemised at a rate exceeding–

• (a) as regards parts of the initial period falling within the reference period for the purposes of the estimates contained in the landlord’s notice under section 125, the estimated annual average amount shown in the estimates;

• (b) as regards parts of the initial period not falling within that reference period, the average rate produced by averaging over the reference period all works for which estimates are contained in the notice;

together, in each case, with an inflation allowance.

• (4) The initial period of the lease for the purposes of this paragraph begins with the grant of the lease and ends five years after the grant, except that–

• (a) if the lease includes provision for service charges to be payable in respect of costs incurred in a period before the grant of the lease, the initial period begins with the beginning of that period;

• (b) if the lease provides for service charges to be calculated by reference to a specified annual period, the initial period continues until the end of the fifth such period beginning after the grant of the lease; and

• (c) if the qualifying person served notice under section 142 deferring completion, the initial period ends on the date on which it would have ended if the lease had been granted on the date on which the notice was served.

16C

• (1) Where a lease of a flat requires the tenant to pay improvement contributions, his liability in respect of costs incurred in the initial period of the lease is restricted as follows.

• (2) He is not required to make any payment in respect of works for which no estimate was given in the landlord’s notice under section 125.

• (3) He is not required to pay in respect of works for which an estimate was given in that notice any more than the amount shown as his estimated contribution in respect of that item, together with an inflation allowance.

• (4) The initial period of the lease for the purposes of this paragraph begins with the grant of the lease and ends five years after the grant, except that–

• (a) if the lease includes provision for improvement contributions to be payable in respect of costs incurred in a period before the grant of the lease, the initial period begins with the beginning of that period;

• (b) if the lease provides for improvement contributions to be calculated by reference to a specified annual period, the initial period continues until the end of the fifth such period beginning after the grant of the lease; and

• (c) if the qualifying person served notice under section 142 deferring completion, the initial period ends on the date on which it would have ended if the lease had been granted on the date on which the notice was served.

Inflation allowances

16E

The inflation allowance for the purposes of paragraphs 16B(2) and 16C(3) shall be calculated, in respect of each item, by the formula–

$$I=( E× C P )−E$ where– C the index figure relating to the last date in the initial period on which costs were incurred in respect of the item (whether or not such costs were the full costs incurred in respect of that item), E the amount shown in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) as the tenant’s estimated contribution in respect of that item, I the inflation allowance, P the index figure relating to the date on which the landlord served the notice on the qualifying person, and the “index figure” is an index figure in the “Public sector housing repair and maintenance cost index” in the “Housing and Construction Statistics” published from time to time by Her Majesty’s Stationery Office, but does not include a provisional index figure.$

16F

• (1) The inflation allowance for the purposes of paragraph 16B(3)(a) shall be calculated by the formula–

$I=( A× C P )−A$

• (2) The inflation allowance for the purposes of paragraph 16B(3)(b) shall be calculated by the formula–

$I=( R× C P )−R$

• (3) In this paragraph–

• (i)

A the amount shown in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) as the estimated annual average amount, C the index figure relating to the date on which the tenant is required to pay the relevant charge for which the inflation allowance is being calculated, or, if earlier, the date the initial period ends, I the inflation allowance, P the index figure relating to the date on which the landlord served the notice on the qualifying person, and R the average rate produced by averaging over the reference period all works for which estimates are contained in the notice.

• (ii) “Index figure” means an index figure in the “Public sector housing repair and maintenance cost index” in the “Housing and Construction Statistics” published from time to time by Her Majesty’s Stationery Office, but does not include a provisional index figure.

Information for tenants

16G

• (1) The information which must be given to a tenant when he is asked to pay a relevant charge in respect of works itemised in the estimates is–

• (a) a description of the works to which the relevant charge relates, together with an identification of the item in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) to which the works relate,

• (b) whether or not further costs will be incurred in respect of which item in the initial period; and, if not, the last date in the initial period on which costs were incurred in respect of the item (whether or not further costs will be incurred after the end of the initial period),

• (c) the amount of any payment made by a predecessor in title of the tenant in respect of such item, and

• (d) an explanation in simple terms of the provisions of paragraphs 16B to 16E, to the extent that they are relevant.

• (2) In this paragraph “relevant charge” means a service charge or an improvement contribution to which the provisions of paragraph 16B or 16C are or may be relevant.

16H

• (1) The information which must be given to a tenant when he is asked to pay a relevant charge in respect of works not itemised in the estimates contained in the notice under section 125 (landlord’s notice of purchase price etc.) is–

• (a) a description of the works or that part of the works to which the relevant charge relates,

• (b) the extent to which costs were incurred in respect of such works or part of the works in–

• (i) any part of the initial period falling within the reference period, and

• (ii) any part of the initial period not falling within the reference period,

• (c) the amount of any payment made by a predecessor in title of the tenant which is relevant in relation to such works, and

• (d) an explanation in simple terms of the provisions of paragraph 16B and paragraphs 16E and 16F, to the extent that they are relevant.

• (2) In this paragraph “relevant charge” means a service charge or an improvement contribution to which the provisions of paragraph 16B or 16C are or may be relevant.

Avoidance of certain provisions

17

• (1) A provision of the lease, or of an agreement collateral to it, is void in so far as it purports to prohibit or restrict the assignment of the lease or the subletting, wholly or in part, of the dwelling-house.

• (2) Sub-paragraph (1) has effect subject to section 157 (restriction on disposal of dwelling-houses in National Parks, etc.).

18

Where the dwelling-house is a flat, a provision of the lease or of an agreement collateral to it is void in so far as it purports–

• (a) to authorise the recovery of such a charge as is mentioned in paragraph 16A (contributions in respect of repairs, etc.) otherwise than in accordance with that paragraph and paragraph 16B (restrictions in initial period of lease); or

• (b) to authorise the recovery of any charge in respect of costs incurred by the landlord–

• (i) in discharging the obligations imposed by the covenant implied by paragraph 14(3) (rebuilding or reinstatement, etc), or those obligations as modified in accordance with paragraph 14(4), or

• (ii) in contributing to costs incurred by a superior landlord or other person in discharging obligations to the like effect; or

• (c) to authorise the recovery of an improvement contribution otherwise than in accordance with paragraph 16C (restrictions in initial period of lease).

19

A provision of the lease, or of an agreement collateral to it, is void in so far as it purports to authorise a forfeiture, or to impose on the tenant a penalty or disability, in the event of his enforcing or relying on the preceding provisions in this Schedule.

PART IV — CHARGES

Grant of lease

20

A charge (however created or arising) on the interest of the landlord which is not a tenant’s incumbrance does not affect a lease granted in pursuance of the right to buy.

Conveyance of freehold

21

• (1) This paragraph applies to a charge (however created or arising) on the freehold where the freehold is conveyed in pursuance of the right to buy.

• (2) If the charge is not a tenant’s incumbrance and is not a rentcharge the conveyance is effective to release the freehold from the charge; but the release does not affect the personal liability of the landlord or any other person in respect of any obligation which the charge was created to secure.

• (3) If the charge is a rentcharge the conveyance shall be made subject to the charge; but if the rentcharge also affects other land–

• (a) the conveyance shall contain a covenant by the landlord to indemnify the qualifying person and his successors in title in respect of any liability arising under the rentcharge, and

• (b) if the rentcharge is of a kind which may be redeemed under the Rentcharges Act 1977 the landlord shall immediately after the conveyance take such steps as are necessary to redeem the rentcharge so far as it affects land owned by him.

• (4) In this paragraph “rentcharge” has the same meaning as in the Rentcharges Act 1977; and–

• (a) for the purpose of sub-paragraph (3) land is owned by a person if he is the owner of it within the meaning of section 13(1) of that Act, and

• (b) for the purpose of that sub-paragraph and that Act land which has been conveyed by the landlord in pursuance of the right to buy but subject to the rentcharge shall be treated as if it had not been so conveyed but had continued to be owned by him.

SCHEDULE 7A — RECKONABLE AMOUNT OF QUALIFYING PERSON FOR PURPOSES OF RIGHT TO DEFER COMPLETION

Introductory

1

This Schedule has effect with respect to the calculation of a qualifying person’s reckonable amount for the purpose of ascertaining whether he is entitled to defer completion.

2

In this Schedule–

• “admissible source” means a source of income of the qualifying person which is to be taken into account for the purposes of this Schedule; and

• “qualifying person” means a person who is exercising the preserved right to buy.

Reckonable amount

3

The qualifying person’s reckonable amount for the purposes of section 142 (deferment of completion) is to be calculated by taking the amount which, in accordance with paragraphs 4 to 7, is his annual income and multiplying it by such factor as, under paragraph 10, is appropriate to the case.

Income from employment

4

• (1) This paragraph applies to income from an employment.

• (2) The amount to be taken into account as income to which this paragraph applies is the qualifying person’s current annual pay, namely his current pay expressed as an annual amount or, where that amount does not fairly represent his current annual pay, such amount as does.

• (3) In this paragraph–

• “employment” includes a part-time employment and an office but does not include a casual or temporary employment; and

• “pay” includes any commission, bonus, allowance (but not an expense allowance), tip, gratuity or other payment made to the qualifying person in connection with his employment but does not include any benefit in kind; and references to pay are references to it before any statutory or other deduction has been made.

Income from a business

5

• (1) This paragraph applies to income from a business carried on by the qualifying person (whether or not with any other person).

• (2) The amount to be taken into account as the qualifying person’s annual income from the business is an amount which, having regard to the latest available information, fairly represents the current annual net profit of the business or, if the qualifying person shares the net profit with any other person, his share of the net profit.

• (3) In this paragraph “business” includes any trade, profession or vocation.

Other income

6

• (1) This paragraph applies to income from a source to which paragraphs 4 and 5 do not apply.

• (2) No account shall be taken of state benefits other than benefits under–

• (a) sections 36 and 37 of the National Insurance Act 1965 (graduated retirement benefits);

• (b) sections 27, 28, 29, 39 and 40 of the Social Security Act 1975 (retirement pensions); and

• (c) sections 6, 7 and 8 of the Social Security Pensions Act 1975 (state earnings related pensions).

• (3) The amount to be taken into account as the qualifying person’s annual income from a source to which this paragraph applies, which is not excluded from account by sub-paragraph (2), is an amount which before any statutory or other deduction represents the qualifying person’s current income from that source expressed as an annual amount.

• (4) In this paragraph “state benefits” means any benefits under the Family Income Supplements Act 1970, the Social Security Acts 1975 to 1985, the Child Benefit Act 1975 and the Supplementary Benefits Act 1976.

Income from more than one source

7

If the qualifying person has income from more than one admissible source, the amount to be taken into account as his annual income shall be the total amount of his annual income from all admissible sources determined in accordance with the provisions of this Schedule.

Estimates

8

The landlord may accept any estimate for the purposes of paragraphs 4 to 6.

Joint tenants

9

Where the right to buy is being exercised by more than one qualifying person, the preceding provisions of this Schedule shall be applied separately to determine the amount of each person’s annual income.

Multipliers

10

• (1) This paragraph specifies the appropriate factor to be applied as a multiplier of the qualifying person’s annual income to arrive at his reckonable amount.

• (2) If the qualifying person’s income is the principal income, the appropriate factor in relation to his annual income is the multiplier shown in the following Table corresponding to his age on the date of service of the notice under section 122 claiming to exercise the right to buy.

Qualifying person’s age on the date of service of the notice	Multiplier
Under 60	2.5
60 and over but under 65	2.0
65 and over	1.0

• (3) If the qualifying person’s income is not the principal income, the appropriate factor in relation to his annual income is 1.

• (4) Subject to sub-paragraph (5), the qualifying person’s income is the principal income for the purposes of this paragraph if–

• (a) he is the only qualifying person with annual income, or

• (b) there is more than one qualifying person with annual income and the amount of his annual income is larger than that of the other qualifying person or, as the case may be, of any of the other qualifying persons, or

• (c) in a case to which paragraph (b) applies, the landlord agrees to treat the qualifying person’s income as the principal income, despite the fact that the amount of the annual income of another qualifying person is larger than his.

• (5) The income of only one qualifying person shall be treated as the principal income for the purposes of this paragraph.

SCHEDULE 9A — LAND REGISTRATION AND RELATED MATTERS WHERE RIGHT TO BUY PRESERVED

Statement to be contained in instrument effecting qualifying disposal

1

On a qualifying disposal, the disponor shall secure that the instrument effecting the disposal–

• (a) states that the disposal is, so far as it relates to dwelling-houses occupied by secure tenants, a disposal to which section 171A applies (preservation of right to buy on disposal to private landlord), and

• (b) lists, to the best of the disponor’s knowledge and belief, the dwelling-houses to which the disposal relates which are occupied by secure tenants.

Registration of title on qualifying disposal

2

• (1) Where on a qualifying disposal the disponor’s title to the dwelling-house is not registered, section 123 of the Land Registration Act 1925 (compulsory registration of title) applies–

• (a) whether or not the dwelling-house is in an area in which an Order in Council under section 120 of that Act (areas of compulsory registration) is in force, and

• (b) whether or not,where the disposal takes the form of the grant or assignment of a lease, the lease is granted for a term of more than 21 years or, as the case may be, is a lease for a term of which more than 21 years are unexpired.

• (2) In such a case the disponor shall give the disponee a certificate stating that the disponor is entitled to effect the disposal subject only to such incumbrances, rights and interests as are stated in the instrument effecting the disposal or summarised in the certificate.

• (3) Where the disponor’s interest in the dwelling-house is a lease, the certificate shall also state particulars of the lease and, with respect to each superior title–

• (a) where it is registered, the title number;

• (b) where it is not registered, whether it was investigated in the usual way on the grant of the disponor’s lease.

• (4) The certificate shall be–

• (a) in a form approved by the Chief Land Registrar, and

• (b) signed by such officer of the disponor or such other person as may be approved by the Chief Land Registrar,

and the Chief Registrar shall, for the purpose of registration of title, accept the certificate as sufficient evidence of the facts stated in it.

3

Where a qualifying disposal takes the form of the grant or assignment of a lease, sections 8 and 22 of the Land Registration Act 1925 (application for registration of leasehold land and registration of dispositions of leasehold) apply notwithstanding that it is a lease for a term of which not more than 21 years are unexpired or, as the case may be, a lease granted for a term not exceeding 21 years; and accordingly section 70(1)(k) of that Act (leases which are overriding interests) does not apply.

Entries on register protecting preserved right to buy

4

The Chief Land Registrar on application being made for registration of a disposition of registered land or, as the case may be, of the disponee’s title under a disposition of unregistered land, shall, if the instrument effecting the disposal contains the statement required by paragraph 1, enter in the register–

• (a) a notice protecting the rights of qualifying persons under this Part in relation to dwelling-houses comprised in the disposal, and

• (b) a restriction stating the requirement of consent under section 171D(2) for certain subsequent disposals of the landlord’s interest.

Change of qualifying dwelling-house

5

• (1) This paragraph applies where by virtue of section 171B(6) a new dwelling-house becomes the qualifying dwelling-house which–

• (a) is entirely different from the previous qualifying dwelling-house, or

• (b) includes new land,

and applies to the new dwelling-house or the new land, as the case may be.

• (2) If the landlord’s title is registered, the landlord shall apply for the entry on the register of–

• (a) a notice protecting the rights of the qualifying person or persons under the provisions of this Part, and

• (b) a restriction stating the requirement of consent under section 171D(2) for certain disposals of the landlord’s interest.

• (3) A qualifying person may apply for the entry of such a notice and restriction and section 64(1) of the Land Registration Act 1925 (production of land certificate) does not apply to the entry of a notice or restriction on such an application; but without prejudice to the power of the Chief Land Registrar to call for the production of the certificate by the landlord.

• (4) If the landlord’s title is not registered, the rights of the qualifying person or persons under the provisions of this Part are registrable under the Land Charges Act 1972 in the same way as an estate contract and the Landlord shall, and a qualifying person may, apply for such registration.

Effect of non-registration

6

• (1) The rights of a qualifying person under this Part in relation to the qualifying dwelling-house–

• (a) shall be treated as interests to which sections 20 and 23 of the Land Registration Act 1925 apply (under which the transferee or grantee under a registered disposition takes free from estates and interests which are not protected on the register and are not overriding interests), and

• (b) shall not be treated as overriding interests for the purposes of that Act, notwithstanding that the qualifying person is in actual occupation of the land.

• (2) Where by virtue of paragraph 5(4) the rights of a qualifying person under this Part in relation to the qualifying dwelling-house are registrable under the Land Charges Act 1972 in the same way as an estate contract, section 4(6) of that Act (under which such a contract may be void against a purchaser unless registered) applies accordingly, with the substitution for the reference to the contract being void of a reference to the right to buy ceasing to be preserved.

Statement required on certain disposals on which right to buy ceases to be preserved

7

• (1) A conveyance of the freehold or grant of a lease of the qualifying dwelling-house to a qualifying person in pursuance of the right to buy shall state that it is made in pursuance of the provisions of this Part as they apply by virtue of section 171A (preservation of the right to buy).

• (2) Where on a conveyance of the freehold or grant of a lease of the qualifying dwelling-house to a qualifying person otherwise than in pursuance of the right to buy the dwelling-house ceases to be subject to any rights arising under this Part, the conveyance or grant shall contain a statement to that effect.

• (3) Where on a disposal of an interest in qualifying dwelling-house the dwelling-house ceases to be subject to the rights of a qualifying person under this Part by virtue of section 171D(1)(a) or 171E(2)(a) (qualifying person becoming tenant of authority or body satisfying landlord condition for secure tenancies), the instrument by which the disposal is effected shall state the dwelling-house ceases as a result of the disposal to be subject to any rights arising by virtue of section 171A (preservation of the right to buy).

Removal of entries on land register

8

Where the registered title to land contains an entry made by virtue of this Schedule, the Chief Land Registrar shall, for the purpose of removing or amending the entry, accept as sufficient evidence of the facts stated in it a certificate by the registered proprietor that the whole or a specified part of the land is not subject to any rights of a qualifying person under this Part.

Liability to compensate or indemnify

9

• (1) An action for breach of statutory duty lies where–

• (a) the disponor on a qualifying disposal fails to comply with paragraph 1 (duty to secure inclusion of statement in instrument effecting disposal), or

• (b) the landlord on a change of the qualifying dwelling-house fails to comply with paragraph 5(2) or (4) (duty to apply for registration protecting preserved right to buy),

and a qualifying person is deprived of the preserved right to buy by reason of the non-registration of the matters which would have been registered if that duty had been complied with.

• (2) If the Chief Land Registrar has to meet a claim under the Land Registration Acts 1925 to 1986 as a result of acting upon–

• (a) a certificate given in pursuance of paragraph 2 (certificate of title on first registration),

• (b) a statement made in pursuance of paragraph 7 (statements required on disposal on which right to buy ceases to be preserved), or

• (c) a certificate given in pursuance of paragraph 8 (certificate that dwelling-house has ceased to be subject to rights under this Part),

the person who gave the certificate or made the statement shall indemnify him.

Meaning of “disposal” and “instrument effecting disposal”

10

References in this Schedule to a disposal or to the instrument effecting a disposal are to the conveyance, transfer, grant or assignment, as the case may be.

Signed

Nicholas Ridley — Secretary of State for the Environment — 6th March 1989

Peter Walker — Secretary of State for Wales — 6th March 1989

Explanatory note

(This note is not part of the Regulations)

These Regulations modify Part V (the right to buy) of the Housing Act 1985 in its application to a case where an authority which is the landlord of a dwelling-house occupied by a “secure tenant” for the purposes of Part IV of the Act disposes of the dwelling in circumstances under which the tenant’s right to buy the dwelling is preserved by section 171A.

The modifications are, in the main, consequential changes of terminology, omission of irrelevant material and the inclusion of relevant material from current subordinate legislation.

There are three principal changes of substances–

• (a) there will not be a right to a mortgage (sections 132 to 135 of the Act);

• (b) there will not be a right to claim a shared ownership lease (sections 143 to 153 of the Act); and

• (c) the preserved right to buy will be exercisable against certain housing associations (broadly, charities and ones which have not received Government or local authority grants) which are excepted from the “mainstream” right to buy.

The Local Government Reorganisation (Preservation of Right to Buy) Order 1986 (S.I. 1986/2092) will continue to apply in relation to disposals of dwelling-houses by the bodies and authorities to which it applies which have taken place before these Regulations come into force. Future such disposals will fall within the terms of these Regulations.

Footnotes

[^f00001]: 1985 c. 68; sections 171C and 171A were inserted by section 8 of the Housing and Planning Act 1986 (c. 63).

[^f00002]: 1985 c. 51.

[^f00003]: S.I. 1986/2092.

[^f00004]: 1947 c. 54.

[^f00005]: S.I. 1986/594 (N.I. 3).

[^f00006]: 1976 c. 70.

[^f00007]: 1968 c. 73.

[^f00008]: 1973 c. 37.

[^f00009]: 1980 c. 45.

[^f00010]: S.I. 1984/1821 (N.I. 11).

[^f00011]: S.I. 1972/1072 (N.I. 9).

[^f00012]: 1967 c. 37 (N.I.).

[^f00013]: 1894 c. 60.

[^f00014]: 1988 c. 50.

[^f00015]: 1985 c. 6.

[^f00016]: 1965 c. 51, as continued in force by regulation 3 of the Social Security (Graduated Retirement Benefit) (No. 2) Regulations 1978 (S.I. 1978/393).

[^f00017]: 1975 c. 14.

[^f00018]: 1975 c. 60.

[^f00019]: 1970 c. 55.

[^f00020]: 1975 c. 14, 1975 c. 60, 1977 c. 5, 1979 c. 18, 1980 c. 30, 1980 c. 39, 1981 c. 33, 1982 c. 24, 1984 c. 48, 1985 c. 53.

[^f00021]: 1975 c. 61.

[^f00022]: 1976 c. 71.