Paragraph 21

After section 138 insert —

“138A

(1)

On completion the freeholder shall pay —

(a)

to the landlord and to an intermediate landlord (if any), and

(b)

to the rent owner of a rentcharge charged on or issuing out of the lease of the landlord or an intermediate landlord,

an amount calculated in accordance with the formula —

$$\mathrm{A}=\genfrac{}{}{0.1ex}{}{\mathrm{R}}{\mathrm{V}}\times \mathrm{P}$$

where —

• A is the amount payable to the landlord, intermediate landlord or rent owner;

• R is the amount which, under this section, is to be taken to be the value immediately before completion of the lease of the landlord or intermediate landlord (as the case may be) or of the rentcharge charged on or issuing out of such a lease;

• P is the price payable for the dwelling-house by the tenant; and

• V is the amount which is the sum of the values, immediately before completion, of the interests in the dwelling-house of —

  • the landlord,

  • intermediate landlords (if any),

  • rent owners as mentioned in subsection (1)(b) (if any), and the freeholder.

(2)

Where the whole or any part of any discount obtained by the tenant is recovered by the freeholder (whether by the receipt of a payment determined by reference to the discount or by a reduction so determined of any consideration given by the freeholder or in any other way), the freeholder shall pay to the authority or body which immediately before completion was the landlord or an intermediate landlord and to the rent owner of a rentcharge which was then charged on or issued out of the lease of any such authority or body, an amount calculated in accordance with the formula —

$$\mathrm{A}=\genfrac{}{}{0.1ex}{}{\mathrm{R}}{\mathrm{V}}\times \mathrm{D}$$

where —

• A is the amount payable to the authority or body or rent owner;

• R is the amount which, under this section, is to be taken to be the value immediately before completion of the lease of the authority or body or of the rentcharge charged on or issuing out of such a lease;

• D is the amount of the discount recovered by the freeholder; and

• V is the amount which is the sum of the values, immediately before completion, of the interests in the dwelling-house of —

  • the landlord

  • intermediate landlords (if any),

  • rent owners as mentioned in subsection (1)(b) (if any), and the freeholder.

(3)

For the purposes of this section —

(a)

the value of an interest immediately before completion shall be taken to be the price which, at that time, it would realise if sold on the open market, free from any mortgage, by a willing vendor on the assumption that this Part did not apply, and

(b)

where a lease or a rentcharge includes property other than the dwelling-house the value of the interest shall be taken to be that part of the value which is attributable to the dwelling-house.

(4)

No payment shall be made under subsection (1) or (2) in relation to a lease of the dwelling-house if it is (or was) a lease for a term certain and the residue of the term unexpired immediately before completion is (or was) a period of less than twelve months or if it is (or was) a periodic tenancy.

(5)

In this section “rentcharge” and “rent owner” have the same respective meanings as in the Rentcharges Act 1977^f1.”.