1. Mark Spall – AGE UK Leasehold Casework Adviser Workshop for ARHM Conference 2013 Lease Variations and Variation of Special Services.

2. Lease variations Leases in common can be varied on a voluntary basis if there is 100% agreement of all of the parties, including the freeholder. An appropriately worded Deed Of Variation is required, a solicitor is required to draft DOV. Once a DOV is agreed by all of the parties and signed it is forwarded to Land Registry. Costs will be incurred in lease variations which can usually be passed on to the leaseholders.

3. When is lease variation required When a term in the lease clearly states or strongly implies a provision that all, or a vast majority of the parties, wish to remove. When the lease is silent on a provision that all of the parties wish to introduce. When the lease specifies the level of service but all of the parties wish to change the level e.g resident scheme manager to visiting.

4. Lease variations at LVT Sections 35 to 40 of the Landlord and Tenant Act 1987 apply. Section 35 sets out the grounds by which any party can make an application to LVT on the grounds the lease fails to make satisfactory provision and it specifies these grounds. Section 36 allows other parties to the lease to have their lease varied accordingly.

5. Application to the LVT to have a number of leases varied Under Section 37 an application can be made in respect of two or more leases to vary them all and the changes can only be achieved if all the leases are varied to the same effect. Where the application is in respect of less than nine leases, all or all but one consent. Where it is in respect of more than eight at least 75% consent and it is not opposed by more than 10%.

6. Orders varying leases If the LVT considers all of the leases need to be varied it can make an order subject to; The variation would be likely to substantially prejudice any party to the lease or any other party e.g a tenant of a leaseholder. Any other reason it would not be reasonable The LVT could make an order for any party to the lease to pay compensation to any other person for any loss or disadvantage they are likely to suffer as a result of the variation.

7. Variation of Special Services This applies when there is a proposal to change the existing service and the lease does not state the level of service to be provided. The requirements and the consultation process are set out in Chapter 6 of the ARHM Code of Practice. There is an additional Good Practice Note for managers produced by the ARHM.

8. How has need for Chapter 6 arisen Developers/managers provided a level of service which was not specified in the lease. External changes, such as the Working Time Directive have affected level of services. Even well-drafted lease would not cover every situation, such as use of communal lounge. Leaseholders have requested different, usually lower, service levels to limit rising costs.

9. Definition of special services Special services are The scheme manager service, The emergency alarm system, and The communal facilities. A variation of a special service may be the removal or a significant change in or significant variation in the charges for that service.

10. Restriction on variation of special services The ARHM code clarifies that Managers should not vary a special service without; Holding a meeting with leaseholders to inform and explain the proposal to vary the service. Holding a secret written ballot on the motion. Achieving a result for the motion of at least 66% of those voting (and this figure shall be at least 51% of those eligible to vote) and not more than 25% of those eligible to vote shall be against.

11. The meeting to inform & explain - 1 Managers should hold a leaseholders’ meeting and at least two weeks’ notice should be given Leaseholders should be given documents that explain proposals 7 days before meeting. Documents should contain; A summary of the proposals, The objective of the proposal to vary service, The issue to be addressed,

12. The meeting to inform & explain - 2 Who is likely to be affected and how, Various options, backed up by arguments for and against them and allowing for other options to be put forward, Explanation of costs for the various options, Details of the managers’ staff member who can be contacted to discuss the issues prior to the meeting.

13. The Ballot The ballot should be a secret postal vote. The ballot paper should contain the following The motion to be considered, The majority required to pass the motion, & Who will count ballot and how this is done. The period allowed for votes to be returned should be a minimum of 30 days.

14. Confidentiality of the Ballot Ballot papers should be counted and only seen by an independent organisation. It should not be possible for leaseholders’ votes to be identified by managers or residents. After counting, managers should inform all of the leaseholders in writing the number of votes for and against the motion, any votes rejected, with reasons, and any abstentions. No other information should be disclosed by the ‘ballot counters’ or by the managers/landlord.

15. Eligibility to vote Each leaseholder will have one vote. Joint leaseholders will receive one vote. Any resident who is a private tenant will not be eligible to vote, as it will be the absent leaseholder who will be eligible. The scheme manager does not have a vote and should not try to influence any voting. A representative may vote in cases of Power of Attorney or if there is written authority.

16. The ARHM Good Practice Note The consultation process can be used for proposed lease variations but the percentages for agreement will be different. i.e 100% for lease variation on a voluntary basis and 75% in favour, 10% against, due to LTA 1987 S. 37 (5) Chapter 6 consultation should not be used for multiple proposals. More conventional ballot to arrive at option with most support and then this should be the motion to be put forward.

17. Revised ARHM code of practice There were only minor changes suggested for Chapter 6 of the code during consultation. Reference to the Good Practice Note which is helpful but may need to be amended. Clearer definition of communal facilities to include the residents’ lounge, guest suite, laundry and scheme manager’s office. Unresolved debate about whether the term ‘significant’ change should be retained.

18. Dilemmas regarding Chapter 6 When managers wish to make relatively minor changes it is difficult to decide whether the consultation process should be followed. If it is not followed managers can make several small changes which might result in a more significant change i.e scheme manager’s hours Managers may have great difficulty achieving an increased level of service that is required as leaseholders unlikely to vote for raised costs.

19. Conclusions and feedback Chapter 6 is not ideal in every situation but it does allow leaseholders to determine the changes in the level of an existing service. It protects minorities by preventing a change in the service if more than 25% are against. It is beneficial for the profile of retirement housing to carry out this type of consultation. Feedback from managers on whether Chapter 6 is effective would be helpful.