Landlord and Tenant Act 1987

What it does

The 1987 Act deals with how service charge money must be held, what every demand must contain, and several leaseholder rights against a landlord that is failing.

Key parts for a self-managed block

• Section 42, trust money: service charge money (including reserves) is held on trust for the leaseholders who paid it. It must be kept apart from the company’s own money and used only for the costs it was collected for. Directors are, in practice, trustees.
• Section 47: every written demand must include the landlord’s name and an address in England and Wales, or the service charge part is not due until it does.
• Section 48: the landlord must give leaseholders an address in England and Wales for serving notices. Until it does, service charges are not due.
• Part I, right of first refusal: if a landlord plans to sell the freehold, qualifying leaseholders must be offered it first.
• Part II, appointment of a manager: leaseholders can ask the tribunal to appoint a manager when management is failing. This can apply to a leaseholder-owned company too, which is why good records matter.
• Part IV, variation of leases: a tribunal can fix leases that do not work, for example service charge percentages that do not add up to 100%.

Status

In force. Section 42A (designated trust accounts with a statutory right to inspect) was added in 2002 but has never been brought into force in England.