Thirsk Winton LLP

Absentee landlords – Playing hide and seek?

Though it can seem quite strange for a property owner to ‘forget’ or ‘leave behind’ assets worth considerable sums, it can happen that when a Tenant seeks to extend their lease or groups of Tenants want to collectively purchase their Freehold, they cannot actually locate their Freeholder and would appear to have no means to then proceed, leaving them in limbo.

Thankfully the law has put in place a process of how to deal with just such a situation for both lease extensions and Freehold purchases.

Lease Extensions

Shmuel Portnoy
sportnoy@thirskwinton.co.uk

In these cases the Tenant can apply to the Court for a ‘Vesting Order’ whereby the Court will direct that the new lease extension will vest in the Tenant on terms to be determined by the Property Tribunal.

In order to obtain such an order it will be necessary to prove to the Court that you have taken all reasonable steps to attempt to locate the absentee Freeholder. This could include instructing a Tracing Agent or placing adverts in the local papers and London Gazette.

Once the order is obtained the Property Tribunal will then take on the role of determining the price to be paid for the extension and the terms to be included in the lease, in place of the absentee freeholder. The price payable is then paid into Court to be held for the absentee Freeholder and the Court will then execute the lease extension documents in their place.

Freehold Acquisitions

Tenants looking to come together to purchase their Freehold may have two possible options where there is an absentee freeholder:

  1. As with lease extensions, they can apply to the Court for a ‘Vesting Order’ whereby the Court will order that the property is to be transferred to the Tenants on terms to be determined by the Property Tribunal. This process then follows the same pattern in that you will need to evidence the steps taken to try and locate the absentee Freeholder and once the Order is made the Property Tribunal then takes the position of determining the price and terms in place of the absentee freeholder with the Court executing the Transfer in their stead.
  2. Where the absentee Freeholder was required to do a positive action under the flat leases, such as insuring the premises or carrying out repair work, and they haven’t done so because they have been absent, then the Tenants have an alternative option to apply to the Court for an ‘Acquisition Order’ because of the Freeholder’s breach of their obligations and the likelihood that they will never rectify that problem. Once all reasonable steps are taken to attempt to locate the Freeholder, a notice is then served at their last known address giving them a short period to rectify the breach of the lease, failing which the Order is then sought at Court. A premium is still payable, however the calculations are worked out differently to the first option and will be determined by an independently appointed surveyor.

There are pros and cons to both of the above options and it would be best to discuss the matter with an experienced solicitor who specialises in these areas.

If you believe that your Freeholder is absent and would like to discuss the various options available to you in extending your lease or purchasing the Freehold of your flat, then speak to a member of our Enfranchisement team today.