The Landlord and Tenant Act 1987 is an Act of the Parliament of the United Kingdom that provides guidelines for residential tenancy agreements, defining the rights and responsibilities of landlords and tenants in the UK. Enacted in 1987 and amended several times since, it is a significant piece of legislation for leaseholders in England and Wales, as it introduced new provisions regarding service charge liabilities, lease variations, and the appointment of managers. Crucially, the Act also grants tenants the right to acquire their landlord’s interest in certain circumstances.
Introduction to the Landlord and Tenant Act 1987
The Landlord and Tenant Act 1987 was enacted to provide a more balanced and equitable relationship between landlords and tenants in the residential rental market. The Act’s purpose is to confer on tenants of flats the right to acquire their landlord’s reversion, to make provision for the appointment of a manager at the instance of such tenants, and to vary long leases held by such tenants. The Act also introduces further provisions regarding service charges payable by tenants of flats and other dwellings, as well as other matters relating to such tenants.
Purpose and Scope of the Act
The Landlord and Tenant Act 1987 was introduced to address some of the perceived imbalances in the previous Landlord and Tenant Act 1985, which had been criticised for not providing enough protection for tenants. The 1987 Act made significant amendments to sections 18-30 of the 1985 Act, introducing new rights and obligations for both landlords and tenants. It also introduced new provisions regarding service charges, lease variations, and the appointment of property managers, which were seen as important reforms to the existing rental legislation.
Historical Background
The Landlord and Tenant Act 1987 was enacted to provide a more balanced and equitable relationship between landlords and tenants in the residential rental market. The Act’s purpose is to confer on tenants of flats the right to acquire their landlord’s reversion, to make provision for the appointment of a manager at the instance of such tenants, and to vary long leases held by such tenants. The Act also introduces further provisions regarding service charges payable by tenants of flats and other dwellings, as well as other matters relating to such tenants.
Key Provisions of the Act
One of the key provisions of the Landlord and Tenant Act 1987 is the right it gives to tenants of flats to
acquire their landlord’s interest
in the property. This means that if a landlord wishes to dispose of their interest in a building containing two or more flats, they must first offer that interest to the ‘qualifying tenants’ (broadly speaking, those with long leases) before they can sell it to a third party. If the landlord fails to do so, they may be committing a criminal offence, and the purchaser may be required to transfer the interest to the tenants even if they have already acquired it.
Rights of Tenants to Acquire Landlord’s Interest
The Act also provides for the
appointment of a manager
at the instance of tenants, as well as the
variation of long leases
held by such tenants. This gives tenants the ability to apply to the court or a tribunal to have the terms of their lease varied, which can be particularly useful in cases where the lease is outdated or no longer fit for purpose. The Act also introduces new rules around the retention of service charge contributions in designated trust accounts, and obligations for landlords to provide their name and address when issuing service charge demands.
Appointment of Managers and Lease Variations
The Landlord and Tenant Act 1987 introduced new regulations regarding
service charges
payable by tenants of flats and other dwellings. These include the requirement for landlords to retain service charge contributions in designated trust accounts, and the obligation to provide tenants with the landlord’s name and address when issuing service charge demands. Failure to comply with these regulations can result in the service charge demand being deemed invalid.
Service Charge Regulations
| Key Provision | Description |
|---|---|
| Tenant’s Right to Acquire Landlord’s Interest | Tenants of flats have the right to acquire their landlord’s interest in the property before it is sold to a third party. |
| Appointment of Managers | Tenants can apply to the court or a tribunal to have a manager appointed to manage the property. |
| Lease Variations | Tenants can apply to the court or a tribunal to have the terms of their lease varied, particularly if the lease is outdated. |
| Service Charge Regulations | Landlords must retain service charge contributions in designated trust accounts and provide tenants with their name and address when issuing demands. |
Procedures and Processes
The Landlord and Tenant Act 1987 outlines specific procedures and processes that landlords must follow when disposing of their interest in a property. This includes the requirement to serve an ‘offer notice’ on each qualifying tenant, setting out the terms on which the landlord wishes to dispose of the property. The Act provides that the landlord will have satisfied this obligation if at least 90% of the total number of tenants in the building have been served.
Serving Offer Notices
Landlords must serve an ‘offer notice’ on each qualifying tenant, detailing the terms on which they wish to dispose of the property. This is a crucial step in the process, as the Act requires landlords to provide this information to at least 90% of the total tenants in the building.
Tenant Acceptance and Nomination
If the tenants wish to exercise their right to acquire the landlord’s interest, they must serve a notice of acceptance within the time period specified in the offer notice, which is typically at least 2 months. If the tenants do accept the offer, they must then nominate the entity that will enter into the contract on their behalf, usually within a further 2-month period.
Contract Exchange and Completion
Once the tenants have nominated the buying entity, the landlord must either serve a notice of withdrawal (if they no longer wish to dispose of the property) or send a form of contract to the tenants’ solicitor. The tenants’ nominated entity then has a further 2-month period to offer to exchange contracts and provide the required deposit. If the contract is exchanged, the sale proceeds to completion in accordance with its provisions.
Enforcement and Disputes
The Landlord and Tenant Act 1987 includes provisions for the enforcement of its requirements, including the creation of criminal offences for landlords who fail to comply with their obligations under the Act. Landlords who dispose of their interest without first offering it to qualifying tenants, or who provide false or misleading information in the offer notice, may be committing a criminal offence and could face penalties.
Court Applications and Remedies
The Act also provides for tenants to make applications to the court or a tribunal to enforce their rights under the legislation. This includes the ability to apply for the appointment of a manager, the variation of their lease, or the transfer of the landlord’s interest to the tenants if the landlord has failed to comply with the offer notice requirements. The court has the power to grant a range of remedies to tenants, including requiring the landlord to transfer their interest to the tenants.
Conclusion
The Landlord and Tenant Act 1987 is a significant piece of legislation that has shaped the residential rental market in England and Wales. By granting tenants, particularly long leaseholders, a range of rights and protections, the Act has aimed to create a more balanced and equitable relationship between landlords and tenants. The Act’s provisions regarding the acquisition of a landlord’s interest, the appointment of managers, lease variations, and service charge regulations have been particularly impactful.
While the Landlord and Tenant Act 1987 has been amended over the years, it continues to play a crucial role in defining the legal framework for residential tenancy agreements and rental property laws in the UK. The Act’s focus on addressing the perceived imbalances in the previous Landlord and Tenant Act 1985 has resulted in enhanced tenant rights and more clearly defined landlord obligations in the UK.
As the residential rental market continues to evolve, the Landlord and Tenant Act 1987 remains a cornerstone of assured shorthold tenancies, section 21 notices, and section 8 notices, ensuring that both landlords and tenants have a clear understanding of their respective rights and responsibilities. The Act’s enduring influence underscores its importance in shaping the legal landscape of the UK’s rental property sector.
