Tony Lilleystone

It looks from your post as if the whole of the building is comprised in a single lease. If that is the case then it may be a business lease which you wouldn't be entitled to extend.
Owners of leasehold houses may be entitled to a lease extension or to buy the freehold but it doesn't look as if this property falls within the definition of a house.
Business leases may be renewable under Part II of the Landlord and Tenant Act 1954.... Read More

What does your lease say about rent increases?... Read More

Ground rent reviews of the sort you mention are not looked on with any favour by mortgage lenders, so you could find marketability affected by difficulties in buyers getting a mortgage. Better go down the statutory route where the GR is reduced to a peppercorn.... Read More

Just to add that although co-habitees do not appear to be mentioned in the English SDLT legislation they are in the similar Scottish legislation for their Land and Buildings Transaction Tax - I believe because Scottish Law may recognise 'common law marriage' - so if you were buying in Scotland you would be caught for higher-rate tax.... Read More

This insurance situation is not uncommon with maisonettes or when old houses are converted into flats.
It is likely that buyers’ solicitors will be unhappy, as mortgage lenders will normally want reassurance that the whole building is insured under a single policy.
However the answer to the problem will probably be for you to pay the premium for a Contingent Buildings Insurance legal indemnity policy. Such a policy provides cover when any part of the building of which the flat forms part is damaged by an insured event but the freeholder or another lessee has failed to insure entirely or for an adequate amount.
These indemnity insurance policies are normally arranged through solicitors and they should be able to get a quote for you. But you don’t need to pay anything until you have a buyer and their solicitors raise the point – they might not!
You could check whether your solicitors arranged such a policy when you bought your property – if so then it could be passed on to the buyer (but a top-up premium may be payable.)... Read More

Here’s an extract Q&A from the guidance note on the new SDLT (not SDTL) rates published by HMRC, which looks relevant to your case.
Q1. I am purchasing a new main residence but intend to retain my current main residence, convert it to a buy-to-let mortgage and rent it out. Will I have to pay the higher rates of SDLT on the purchase of my new main residence?
A1. Yes, the higher rates will apply as following the purchase you will own an additional residential property. However, if you sell your previous home within 3 years of the purchase of the new one you will be able to claim a refund from HMRC.
(For the full notes see https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf)... Read More

Hi Jacqueline

Is your property in England/Wales or Scotland? There are quite different legal systems for ownership of flats in each country.

If it is in England/Wales then it most unlikely that your individual flat will have a freehold title. There are legal reasons for this which would take some time to explain, but there is a simpler pratical reason – it is virtually impossible to get a mortgage on a freehold flat. The only lenders who will normally accept such properties are the RBS and NatWest and even they have limitations.

Before you joined with the other flat owners to buy the freehold title I expect that you would each have had leasehold titles. Buying the freehold does not convert your leasehold flats to freehold. Instead the previous leases would just continue – although you could grant yourselves 999 year leases to replace them.

When you buy a flat it is the leasehold title that is important, so that is why the buyer's solicitors are asking questions about it. You may also be selling your share of the freehold title (or your share in the management company if the title is vested in the company) but that will be of marginal value to the buyer.

Your own solicitor or other conveyancer should easily be able to check on the situation with the Land Registry – freehold titles and leasehold titles are registered separately, and a search will show up all the titles relating to a particular property. (I hesitate to ask, but does your solicitor/conveyancer have much experience of dealing with this type of property? He or she should be able to explain things to you more fully.)

I understand that freehold flats are more common in Scotland, which is why RBS (and NatWest) are prepared to lend on them. But I know little about Scottish land law so can't help if your property is there.... Read More

As always, check the exact wording of your lease.

Leases of flats invariably contain a tenant's covenant prohibiting alterations to the property and the removal of a partition would fall into that category. But as you say you haven't removed the partition you aren't in breach of this covenant.

Many leases also contain a covenant specifically requiring the flat-owner to keep the property carpeted. This was designed to prevent the sound of people walking about in an upper flat being heard in the one beneath. Of course this was in the days before timber flooring became popular.

If your lease contains such a covenant and you are prepared to replace the timber flooring with carpeting then you can inform the agents accordingly and therefore you will not require any Licence for Alterations and Deed of Variation.

I note that the email from the managing agents refers to “obtaining the Commissioners' approval” and I am wondering whether your freeholders are the Crown Estate Commissioners. If so this might explain why they are using Knight Franks and trying to charge such exorbitant fees.

Administration charges for such things as Licences for Alterations are subject to a reasonability test and can be challenged. See the extensive notes on Administration charges on the Leasehold Advisory Service's webpage http://www.lease-advice.org/publications/documents/document.asp?item=18#7 for more information.... Read More

You should certainly contact the gas supply company in case there is a problem with the meter.
I see that you moved in May but the problem with the hot water and heating has only just arisen. So have you been using the gas supply before now, or is this the first time you have tried to use it? (e.g if there is an electric immersion heater to supply hot water in the summer months.)
If so you might check that you have followed the correct procedure for switching the gas on after you have topped up your pre-payment card. (I know it took me some time to work this out when I had to use a pre-payment meter as it involved inserting the card in a slot in the meter and pressing a button for some time and of course checking that the gas tap was switched to the on position – all done kneeling on hard concrete in the dark and rain and while trying to holding a torch to read the instructions!!)
If the meter is not switching gas into the property I don't see how the maintenance people can say that the heating system is working! In any case the agents should have shown you how to switch on the supply and operate the system.... Read More

Who owns the freehold of the block? In the first instance it's really up to them to take action.

But it's virtually impossible to forfeit a lease of residential premises, because that amounts to taking away a valuable asset from the leaseholder.

Assuming that the lease does actually contain a forfeiture clause, a notice under S146 of the Law of Property Act 1925 would have to be served by whoever owns the freehold.

But such a notice cannot now be served unless the leaseholder has agreed or admitted the breach or there has been a determination by a court or the Tribunal that a breach has occurred. (Section 168 of the Commonhold and Leasehold Reform Act 2002)

Even when a S146 notice can be served the leaseholder has to be given the opportunity of making good any breach. And if they fail to do so and an application for forfeiture is made to court, the courts have extremely wide discretion and are most unlikely to grant forfeiture except in case of a most egregious breach of covenant which is quite incapable of being remedied.

If the leases contain a provision enabling one leaseholder to take sue a fellow leaseholder directly for breach of covenant then you might consider taking action to enforce the repairing covenant or require payment of damages if your flats have suffered damage. But you would really need advice from a solicitor (or direct-acess barrister) who specialises in property disputes.

A 'letter before action' from a lawyer might be sufficient to goad the person into action, but don't count on it!... Read More

Hi Carolyn

I note that you say that you own a freehold house, but I assume it is actually leasehold if you are being asked to pay a ground rent.

Although they are a fact of life for commercial property rent review (or escalator) clauses are less common in residential leases. They are a trap for the unwary and (dare I say it) solicitors and other conveyancers often fail to realise the implications of such clauses when acting for buyers of leasehold property and fail to advise clients properly of their potential effect.

It will pay you to get some expert advice both on the wording of the clause in your lease and relevant property values and comparables to put before the arbitrator. I agree that it might be a good idea to approach the owners of other properties affected by similar clauses for help with costs but being cynical I wouldn't expect any great response.

While rent review clauses in commercial leases generally follow a standard formula there is no such standard for residential property and so a surveyor will need to consider the exact wording (and advice from a lawyer may also be worthwhile.)

You mention a “two thirds rateable value” clause but I am not quite sure what this means. However although rateable values on residential property are usually irrelevant today the old pre-1990 values are still used by water companies to assess charges on properties which don't have a water meter so they or your local authority should be able to give you this information.

Perhaps you should also consider whether you are entitled to buy the freehold under the Leasehold Reform Act 1967, which applies to houses, and if so the likely cost. Have a look at the Leasehold Advisory Service website for more information about this. ( http://www.lease-advice.org/publications/documents/document.asp?item=15 )... Read More

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I am guessing that your property is in a fairly large block, with some flat-owners renting their properties while others are owner/occupiers. I have encountered a number of such properties where the owner/occupiers are not happy with the behaviour of short-term tenants occupying under ASTs so take control of the freehold (or management) company and endeavour to make it harder for flats to be sub-let.

The problem for people like yourself is that if you do not occupy your property you may take little or no interest in the affairs of the company and do not attend AGMs or other meetings. It then becomes possible for those that do attend to vote themselves in as directors and then do things like demanding people obtain licences to underlet and charge fees for the privilege (or telling the managing agents to do this.)

You should check what your own lease says about the need for a licence to let, and what it can contain. But part of the purpose of the licence is to require your tenants to confirm they will abide by the tenant covenants contained in your own lease of the flat, and any regulations relating to the use of common parts of the building, so it is understandable that your tenants will be required to sign.

Such covenants and regulations are intended for the benefit of all occupiers of the building and intended to stop un-neighbourly behaviour such as watching TV at 3 am with the volume turned right up or installing wooden flooring without proper sound-proofing in an upstairs flat so that the people downstairs can hear your every move (Over ball Rugby please note.)

I agree that the charges for such licences are usually outrageous when the document will be a standard-form one run off the computer. In fact the amount you are being charged doesn't look too bad compared with some I have seen, so perhaps the best thing would be to pay up for now (unless there is nothing in your lease requiring any such licence.)

But it might also be a good idea to see if you can become a director of the freehold-company and exercise more control on the way is run. Get copies of the company's Memorandum and Articles of Association as well as minutes of recent AGMs and particularly any resolutions passed at such meetings. Such documents should be available from the company secretary or from Companies House (on the GOV.UK website, which also contains some guidance on company law.)... Read More

The agents are trying to protect their own backs. There is a 'due diligence' defence to a prosecution under the 2008 Regulations i.e. “that the commission of the offence was due to [among other things] reliance on information supplied to him by another person.”
So if the agents make statements to a buyer based on information which you have supplied they could avoid prosecution under the Regulations.... Read More

Many lenders will lend on conversions provided that a Professional Consultant's Certificate
is provided in the form issued by the Council of Mortgage Lenders.
The professional consultant should be either a registered architect or a member of one of the other professional bodies.listed in the CML handbook, and should have prescribed professional indmenity insurance.... Read More

Ian's latest reply to Antony Richards is absolutely spot on. I would just add that there is no way a mortgagee can be said to be an 'owner' of the property. The owner is the person in whom the legal estate is vested, not someone who has a legal charge on the property.

One further point to reinforce the argument that a lease is perfectly valid even if a ladlord has not got his mortgagee's consent – if a property owner grants a lease which is registerable at the Land Registry and the Registry is not supplied with evidence of the mortgagee's consent they will still register the tenant with absolute leasehold title (although they will enter a notice on the title about the apparent lack of consent.)

This suggests that the Registry, which is pretty expert on land law, accepts that a lease granted without consent is still perfectly valid as between landlord and tenant. If they thought it was illegal I very much doubt that they would register such a lease.

Although ASTs are not long enough to be registerable at the Land Registry the law is surely the same (unless someone can quote chapter and verse to the contrary.)... Read More

Bear in mind that you may first have to offer the freehold to the existing leaseholders under the Right of First Refusal provisions of the Landlord & Tenant Act 1987. (See the advice on the Leasehold Advisory Service website for more information http://www.lease-advice.org/publications/documents/document.asp?item=16 )

Regarding the valuation I would assume that a competent surveyor should be able to provide this (for a fee.) But I have noticed that freehold reversions (aka ground rents) are often included in the large auction sales conducted by various major auctioneers so perhaps it would be worth approaching a few of these companies to see what they say. I don't know whether you would necessarily get a better price that way but I imagine that the sort of investors who would be interested in such properties keep a regular eye on these auction sales.

If your freehold title includes some parking spaces which are not specifically included in the leases or subject to rights of parking for the leaseholders then by all means you could keep them or sell them separately. Your solicitor will need to be aware of this when dealing with the sale, and it would be necessary to have a proper scale plan attached to the sale transfer, but that is no great problem.

Any solicitor who handles conveyancing work, or a licensed conveyancer, should be able to deal with such a sale. The best thing to do is to contact a few firms, preferably speak to a partner or qualified person, explain what you want and get a quote. (Don't bother with online quotes, those are only for ordinary property sales/purchases.) Then choose a firm you are happy with.... Read More

Hi Emma

I can't claim to be an expert in this field as while I have dealt with lease extension cases I haven't handled a freehold enfranchisement case from a missing landlord. However I have occasionally investigated the law in order to give initial advice about the process. I understand that when the landlord is missing and the county court has agreed that a vesting order can be made the actual amount payable has to be determined by the Tribunal. If you then proceed the money is then paid into court so that the vesting order can be completed.

But I am very surprised that your surveyor's valuation and the Tribunal's were so different. The basis of such valuations is laid down in the legislation so while there are always likely to be some differences between individual valuers it should not as wide as in your case. The Tribunal should apply exactly the same rules in a missing landlord case as they would in a case where the landlord is known but there is a dispute as to the amount payable.

So I am wondering whether you chose a surveyor who had dealt with similar cases and was familiar with the valuation rules, as well as being familiar with the local property market for your property.

Was the £50k figure the only one you were given or did you get best and worse case figures to give you some idea of the top price you might have to pay? Also has your surveyor commented on the Tribunal's valuation and if so what is his or her view as to the reason for the wide difference – for instance, is there any basis for arguing that the Tribunal has got it wrong?

I note that your leases have less than 50 years to run, which is comparatively short. Did your surveyor properly take this into account? The length of the leases can make a very considerable difference to the valuation of the freehold. (The Leasehold Advisory Service website shows an example contrasting the valuation of the freehold of a block where leases have 68 years to run with the same property where the leases only have 35 years remaining – £82,513 in the first case against £553,682 in the second.)

Even if there is no room for appealing the Tribunal's decision it must surely be worthwhile trying to buy the freehold if you can raise the money. Your leases are getting shorter and are losing value so if the three who are still interested can raise the cash you can then extend your own leases – and it does occur to me that the owner who does not want to participate might want to extend his leases, for which you could charge a substantial premium.

The alternative would be to go for individual lease extensions, but then you are still going to be faced with the rigmarole of applying to the court (again!) and then going back to the Tribunal to determine the amount of the premium – all of which is going to take time and cost yet more money.... Read More

I recollect that there is a long-standing rule of law that a tenant is 'estopped from denying his landlord's title' – in other words a tenant cannot argue in court that because his landlord was not entitled to grant the lease (e.g. because the landlord did not himself have title to the property) the landlord is not entitled to rent under the lease or to obtain possession if the lease has expired.

This is a old Common law rule based on previously-decided case law, and I have to say that I am not entirely sure to what extent it is now applied or whether it has been eroded by modern legislation.

But if it is still applicable then it would seem that your tenant cannot now argue that because you did not have consent from your lender or did not have correct insurance you are not now entitled to rent arrears and to serve valid S21 & S8 notices, i.e. his defence to your claim cannot succeed.... Read More

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