Missing Landlords: Leasehold Houses – Leasehold Reform Act 1967:

Enfranchisement Rights Provided by the Leasehold Reform Act 1967:

The current law allows owners of leasehold houses  who have been registered owners for  more than 2 years to benefit from statutory enfranchisement rights provided by the provisions of the Leasehold Reform Act 1967 (“the 1967 Act”) allowing them to extend their lease term by an additional 50 years or purchase the freehold interest of their house. In most cases, the latter right to acquire the freehold is the most as it allows them to fully remove the current freeholder (and any other intermediate landlords) from the frame along with the obligations to pay an annual ground rent.

 

So how do leaseholders of houses qualify?

To exercise the statutory enfranchisement rights, leaseholders need to satisfy the qualifying criteria set out in the 1967 Act, which is broadly summarised as follows:

1. The lease of the property must be a long lease – a lease granted for 21 years or more
2. The property must meet the criteria of a ‘House’ as set out in the 1967 Act, and as clarified by the case law
3. The leaseholder must have been the registered owner of the property for at least 2 years – Note, however, that it is possible for leaseholders to launch their claim and assign the benefit of such claims to another person buying the property thereby enabling a buyer to extend the lease or purchase the freehold before they have owned the property for 2 years.

 

Provided the above criteria is met the leaseholders would be best advised to seek valuation advice and serve a statutory notice of claim on the freeholder (and other intermediate landlords as necessary) to initiate the statutory process to exercise their rights under the 1967 Act.

 

What happens where the freeholder is missing?

If the leaseholder is unable to serve the notice of claim on the freeholder because the freeholder’s identity or whereabouts is unknown, the 1967 Act provides for a separate process to enable leaseholders to still exercise their statutory enfranchisement rights. A missing landlord does not prevent a leaseholder making a claim there is simply a different process to follow:

 

Making Enquiries:

Leaseholders will need to conduct investigations in an attempt to locate the Freeholder. Often this involves instructing a tracing agent, reviewing the electoral roll and chasing up any leads which may exist as to the freeholders identity or whereabouts, or the identity of the freeholders personal representatives where it is suspected that the freeholder may be deceased.

If the freeholder was a person who died complete intestacy (where there are no beneficiaries) or where the freeholder was a company that has been struck off or dissolved then enquiries would need to be made to the Treasury Solicitor who may be able to facilitate the sale of the freehold interest.

In most cases, after some initial enquiries a ‘missing’ freeholder is usually located, and once the freeholder is found the leaseholder can then serve them with a statutory notice of claim to exercise their rights.

 

Application to the court:

When the freeholder cannot be found then an application is made  to the county court for a vesting order, submitting all evidence of the enquiries they have made to attempt to locate the missing Freeholder.

All being well, if the qualifying criteria is met and the court is satisfied with the enquiries that have been made, the court will use their discretionary powers to make an order confirming the leaseholder’s eligibility to exercise their enfranchisement rights.

 

First-tier Tribunal (Property Chamber)– assessment of the valuation:

Following the court’s order, the First-tier Tribunal (Property Chamber) will then consider the valuation evidence submitted by the leaseholder’s valuer and they will make a determination as to the value of the freehold interest this being the “price” you will pay for the freehold interest.

 

Sums Paid in to Court and Completion:

Once the Tribunal has made their determination as regards the valuation, the leaseholder will pay the freehold purchase price determined by the Tribunal into court. After funds have been paid in to court the legal transfer documentation, having been approved by the court, can be executed by a Judge nominated by the court in place of the missing freeholder. Once executed, the legal documentation can be registered with HM Land Registry in the usual way.

 

If the missing freeholder is found at a later date then they can make an application to request payment of the funds which the leaseholder has paid in to court.

 

If you own a leasehold house and would like to discuss your statutory right to purchase the freehold of your property please contact Daniel Farrelly in our Residential Leasehold team on 01543 442 105 or email DF@adcocks.com

 

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