Landlord and tenant – Shared ownership lease – Initial 50% interest with option of acquiring further shares and freehold – Claimant not exercising that option – Arrears of rent – Possession on ground 8 in Schedule 2 to Housing Act 1988 – Whether claimant entitled to beneficial half-share of freehold – Whether holding long lease under Commonhold and Leasehold Reform Act 2002 in addition to assured tenancy determined under 1988 Act – Whether defendant landlord failing to comply with procedural requirements for forfeiture under 2002 Act – Claim dismissed
In 1995, the claimant acquired a shared ownership lease of a house in Tamworth from the defendant’s predecessor for a term of 99 years at a premium of £29,500. The premium represented 50% of the then market value of the property. In addition, a rent of £1,456 pa was payable, subject to an annual increase by way of indexation. “Staircasing provisions” in the lease entitled the claimant to acquire further shares in the value of the house, with consequent rent reductions, and to acquire the freehold once she held 100% of the shares.
The claimant did not take advantage of the staircasing provisions. After receiving threats, she moved elsewhere for her safety. For a time, her rent on the Tamworth property and her new accommodation was paid by way of housing benefit. However, benefit was available in respect of the Tamworth property for a limited period only, owing to the claimant’s absence from it, and was subsequently stopped. As a result, she fell into considerable arrears of rent and decided that she would have to sell the property. She informed the defendant, which obtained a valuation of the property at £151,000. Local estate agents were instructed, but the property failed to sell.
In October 2005, when 16 months’ rent was outstanding, the defendant issued proceedings for possession on the ground of rent arrears pursuant to mandatory ground 8 in Schedule 2 to the Housing Act 1988. That claim was allowed by a district judge. The claimant subsequently brought proceedings in which she contended that: (i) as a result of the shared ownership lease and the premium that she had paid, she had acquired a 50% interest in the property, and that the freehold was held by the defendant on trust for itself and the claimant; and (ii) in addition to her assured tenancy under the 1988 Act, she held a long leasehold interest, in respect of which the procedural requirements for forfeiture imposed by the Commonhold and Leasehold Reform Act 2002 had not been met by the defendant. She sought a declaration as to the extent of her interest in the property and an order for sale or an account of 50% of the proceeds of any sale.
Held: The claim was dismissed.
(1) The relationship between the defendant and the claimant was that of landlord and tenant, not trustee and beneficiary. The claimant had the right to claim the freehold only if she had paid the other half of the value of the property and exercised her staircasing rights. In effect, she held an option, but had not exercised it. Accordingly, her proprietary interest was merely a leasehold interest.
(2) The claimant’s single lease had not created two different but concurrent tenancies of the same premises, only one of which had been determined by the district judge’s order. The claimant’s tenancy was one to which section 1 of the 1988 Act applied. It was a tenancy of a dwelling-house let as a separate dwelling to an individual who occupied it as her only or principal home and it did not fall within any of the exclusions. Therefore, it was an assured tenancy. Consequently, the tenancy could not be determined either by notice to quit or forfeiture, but only by a court order on the grounds in Schedule 2. There was one tenancy the mode of determination of which was laid down by statute, and which had been duly determined by the district judge’s order.
Moreover, the claimant’s lease could not be a long lease as defined in section 76(2)(e) of the 2002 Act since she held only a 50% share in the property. Even if it had qualified as a long lease, the prohibition against forfeiture in section 167 of the 2002 Act did not apply owing to the amount of the arrears. There had been no requirement for the defendant to tick the forfeiture box on its claim form since its claim was not, strictly speaking, a claim for forfeiture but rather a claim for possession pursuant to the terms of the 1988 Act; the claim form had made that clear.
It followed from the above that the claimant had no interest in the property since the lease had been determined by order of the court, such that she was not entitled to the relief that she sought.
Michael Paget (instructed by Clarke Kiernan, of Tonbridge) appeared for the claimant; Christopher Baker (instructed by Anthony Collins, of Birmingham) appeared for the defendant.
Sally Dobson, barrister
