Accounting for leaseholders monies: Landlord and Tenant Act 1985: New sections 21 and 21A (amended and inserted by section 152 of the Commonhold and Leasehold reform Act 2002).
The new sections 21 and 21A of the Landlord and Tenant Act 1985 as amended and inserted (retrospectively) by the Commonhold and Leasehold Reform Act 2002 will require the landlord to provide a regular statement of account, a summary of tenants rights and obligations, and an accountant’s certificate where necessary. This will replace the existing section 21 requirements, which gives leaseholders the right to demand a summary of relevant costs (certified by a qualified accountant where there are more than four dwellings involved).
New section 21 also gives the Secretary of State the power to prescribe the form and content of the documents to be provided by the landlord, as well as power to prescribe any exceptions from the need to supply the accountant’s certificate.
Where the landlord fails to provide the tenant with those matters specified in section 21 or fails to provide them in accordance with the prescribed form and content, the tenant can withhold service charges under new section 21A.
Regular Statement: New section 21(1):
Where the regular statement of account is concerned, it must be both informative, and clear enough for the tenant to understand. Of course, many landlords already provide a regular statement. It is intended that statement required under new section 21 will replace that statement, where provided.
The following document is the balance sheet layout recommended (on 28th January 2003) by the Assistant Policy Advisor of the Leasehold Reform Branch from the Office of the Deputy Prime Minister of the Government in Power.
Accountants’ certificate: New section 21(3)(a):
It is important that any certificate and wording that is prescribed satisfies, among other things, the requirements of new section 21.
Under current legislation, a certificate is not required where the relevant costs are payable by the tenants of four or fewer dwellings (although the summary of relevant costs must be provided if requested).
The following document is the Accountant’s Certificate layout recommended (on 28th January 2003) by the Assistant Policy Advisor of the Leasehold Reform Branch from the Office of the Deputy Prime Minister of the Government in Power.
Summary of tenants’ rights and obligations: New section 21(3)(b):
Finally, in addition to the regular statement (and accountant’s certificate) required under new section 21, a summary of tenants rights and obligations will also need to be provided. This is in addition to the summary of rights and obligations to accompany a demand for service or administration charges (see new sections 21B of the Landlord and Tenant Act 1985, and paragraph 4 of Schedule 11 of the 2002 Act).
The following document is the Summary of Tenant’s Rights and Obligations layout recommended (on 28th January 2003) by the Assistant Policy Advisor of the Leasehold Reform Branch from the Office of the Deputy Prime Minister of the Government in Power.
Councils Powers under the Landlord and Tenant Act 1985, as amended
The Council has powers to prosecute landlords who fail to fulfil their obligations, under the Landlord and Tenant Act 1985, as amended.
Such matters include the failure of freeholders to give long leasehold tenants information concerning service charges and insurance.
Where a complaint is received the Council’s Housing Officers will endeavour to secure that the required information is provided. However, in the case of persistent failure to provide the information a prosecution will be considered.
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