Individual enfranchisement and lease extensions of houses

The Leasehold Reform Act 1967 (LRA 1967) gives an individual tenant of a qualifying house, where the tenant meets the qualifying criteria, the right to:

  1. extend the lease by 50 years after the expiry of the existing term (see Practice Note: Guide to the right to enfranchisement and lease extensions of houses under the Leasehold Reform Act 1967 (LRA 1967)), or

  2. acquire the freehold of the house (individual enfranchisement) (see Practice Note: Guide to the right to enfranchisement and lease extensions of houses under the Leasehold Reform Act 1967 (LRA 1967))

The purpose of those rights is to enable tenants to continue occupation of their residential house at a fair price and on fair terms.

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Insolvency, declarations of trust, loan agreements, artificial asset protection, sham transactions, transactions defrauding creditors, interspousal asset transfers, change of position defence and wife’s entitlement to share of husband’s assets (Sayers v Dixon)

Restructuring & Insolvency analysis: The court held that six declarations of trust (DoTs) executed by the transferor (Mr Dixon) in favour of his wife (Mrs Dixon) constituted transactions defrauding his creditors within the meaning of section 423 of the Insolvency Act 1986 (IA 1986) and that two of them, purporting to transfer all his future assets and income to Mrs Dixon, along with an accompanying loan agreement, were shams which were void and ineffective. It set aside the DoTs and ordered Mrs Dixon to restore the value of three transferred properties (which had been converted into £551,589 cash) to Mr Dixon’s trustees in bankruptcy (trustees) together with interest of £101,726. It also ordered an account to be taken of the funds that had been transferred to Mrs Dixon or on her behalf by Mr Dixon over the seven years between the date of the DoTs and his bankruptcy. The court dismissed Mrs Dixon’s defence of change of position to the trustees’ claim for restoration, finding that even if such a defence were generally available (which is unclear), she had not acted in good faith and could not rely on it. It also dismissed her defence that, having been married to Mr Dixon for many years, she was entitled to half his assets and/or an entitlement to a share of them by virtue of a right to be maintained. Written by Jonathan Lopian, barrister at New Square Chambers, who acted for the successful claimants.

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