Under S21 Landlord and Tenant Act 1985 a tenant has the right to demand from the landlord a summary of service charge costs relating to the last accounting year. The Act amends this section so that the landlord shall be under an obligation to provide this yearly summary to each tenant, in a form to be prescribed, whether requested or not. Where he fails to provide the statement the tenant will have a statutory right to withhold payment of service charges up to certain limits.

S42 Landlord and Tenant Act 1987 currently requires the landlord to hold service charges monies in a trust account however there is no express provision in the section as to exactly what type of account it must be held in, nor any requirements to give the tenant information relating to the account/s. The Act inserts a new section requiring the landlord to place service charge monies in a designated account (i.e. one notified as such to the financial institution holding the money and also notified that no other funds are to be held in the account). The description of account is to be specified by regulations made by the Secretary of State. Tenants will be entitled on written request to reasonable facilities for inspecting documents relating to that account. Failure by the landlord to comply with the accounting requirements can lead to a right for tenants to withhold payment of the service charge and the landlord can be guilty of a criminal offence.

It is not yet clear when these provisions will be commenced.

A landlord may not commence forfeiture proceedings unless he has first proved, or the leaseholder has admitted, the breach of the lease. Neither can forfeiture be commenced if the alleged arrears are less than £350 or have been outstanding for less than three years.

The landlord cannot serve a forfeiture (Section 146) notice until he has proved to a Leasehold Valuation Tribunal that the leaseholder is in breach of the lease or is in arrears beyond the statutory limit; in the case of arrears the landlord must also satisfy the Tribunal that the costs, on which the arrears are based, are reasonable.

The landlord will not be able to recover groundrent unless he has previously demanded it, in the proper form, and giving at least 30 days notice.

For further information please refer to the publication Service Charges, Groundrent and Forfeiture.

Works carried out under Estate Management Schemes must be reasonable and may be challenged at the Leasehold Valuation Tribunal.

There are existing rights in relation to leases of flats for parties to apply to the County Court for a variation of a lease or leases on certain grounds under the Landlord and Tenant Act 1987. For example where the lease fails to make satisfactory provision for repairs, recovery of service charges or insurance.

Where an application is being made to vary a single lease under s35 Landlord and Tenant Act 1987 the Act broadens the grounds by allowing for a variation to be made to include interest on late payment of service charges and enables further grounds to be added by regulations. It is hoped these new provisions will significantly widen the circumstances in which variations can be made and provide more effective relief for landlords, tenants and Right to Manage Companies who are suffering problems with defective and unsatisfactory leases.

Applications for variation may now be made to the Leasehold Valuation Tribunal rather than the County Court.

The Tribunal will have powers to require parties before it to give it any information it may reasonably require on a minimum of 14 days notice subject to criminal action and a fine for failure to comply.