UPDATE July 25: Mark Chick, a solicitor at Bishop and Sewell, has responded to this reader’s letter and can be read below.
The issue concerns a leaseholder feeling powerless in a two-flat block, where the other flat owner has the freehold. Especially … when the leaseholder has let her lease run down to 69 years
All comments gratefully received.
I am a leaseholder of one of two flats within a house conversion in North London. The leaseholder of the other flat is also the freeholder of the building. I am seeking a freehold purchase.Unfortunately, because of the other owners’ status, I am effectively discriminated against from ever acquiring an interest in the freehold (or RTM) because, as the rules presently stand, a majority of 51% of qualifying leaseholders are required in order to collectively enfranchise.
As the other tenant in my building is also the freeholder, it means I will never be in the majority and therefore can never gain a meaningful interest in the property I call my home through a freehold purchase.
I have enjoyed an excellent relationship with the freeholder for several years, but 12 months ago she moved out of her flat and rented it to 3 students.
This caused tremendous disruption to me as the noise has increased substantially.
I raised the issue regarding noise with the freeholder but she has been very unwilling to do anything more than install carpet to address the issue.
Needless to say, the carpeting has not resulted in much relief at all. As this is not what might be considered ‘antisocial noise’, I do not seem to have any recourse to get anything more done about it.
Unfortunately the freeholders’ lease has had all but the very general clauses relating to noise removed, whereas my lease contains several more strict covenants pertaining to noise nuisance.
My frustration with this situation comes from the fact that if the FREEHOLDER had raised exactly the same complaint SHE could compel me to contribute toward any fixes to resolve the issue (as per my lease, each leaseholder should contribute one half of the costs toward installing any new measures the freeholder deems necessary to improve the accommodation).
The freeholder seems to have totally avoided any responsibility here, meanwhile I have to live with the consequences of her actions (renting her flat out to 3 tenants without soundproofing her flat first) and will have trouble selling my flat because of the noise complaint.
My lease effectively gives the freeholder carte blanche to impose ‘improvements’ to the property as and when they feel necessary, but of course the leaseholder do not enjoy the same right.
It seems perfectly possible that two flats within the same building may have very different leases, obviously causing great consternation for the party whose lease contains the more strict covenants. Why is this possible? Both leases should be uniform.
Additionally, any covenants in the freeholder’s lease that could help in the this regard are only enforceable at the freeholder’s discretion – and of course she has so far not enforced any of these covenants against herself.
I find this imbalance in the favour of the freeholder extremely unjust.
The freeholder absolutely refuses to allow me any part in a freehold purchase. She knows she has the upper hand, as demonstrated by her handling of our recent disputes. She knows if I had an interest in the freehold I might have more rights and could fight any dispute on a much more equal footing. Unfortunately I am also barred to claiming RTM – again because I am not in the majority.
At the same time, my lease is becoming dangerously short – it expires in 67 years but I really cannot bring myself to extend as I am so fundamentally against this antiquated, unfair, stupid system.
The cost of extending my lease by the statutory minimum (90 years) is equitable to purchasing an interest in the freehold, therefore the freeholder has absolutely no incentive to share the freehold at all.
She has simply refused to sell, leaving my only option being to extend the lease which means it keeps them ‘in the money’ (via ridiculous service charges) as well as ensuring they retain all control.
Additionally – again because I am not in the majority – once the freeholder decides to sell her property (which I believe may be in the next 2 – 3 years) there is absolutely no obligation on her to offer me right of first refusal. Yet another gross injustice which leaves me frozen out of ever obtaining a meaningful interest in this property.
Absolutely ludicrous system.
I would like to know why there are so few entitlements for individuals in my situation (i.e.: two flats in the building, one party has a lease on one flat as well as the freehold on the property)? It is obvious that a freeholder in this position has way to much control, this situation plays in favour of the freeholder only, none of the decisions they make will ever be unbiased or fair.
In my view, I believe that I should be allowed to forcibly acquire an interest of the freehold just as others are so that i can have a fair and equal control of the building and an equal voice in any dispute. At the moment, I am relying on the goodwill and sense of justice of the freeholder to ‘do the right thing’ morally. This reliance does not work because the freeholder will not do anything more than the bare minimum required of them and they will not enforce covenants contained within their leases against themselves.
I do not want to pursue this via the LVT because the bottom line is currently UK law is not on my side. Fundamentally there is an imbalance whereby I am effectively barred from any reasonable chance of obtaining a fair stake and control in my own home. The LVT route therefore does not offer a viable alternative.
I’d be most grateful to hear what advice you might have on this?
A landlord and tenant solicitor offers his thoughts
Mark Chick is a solicitor dealing with leasehold issues and is a partner at Bishop & Sewell LLP and a director of ALEP (the Association of Leasehold Enfranchisement Practitioners).
This note (being very general in its nature) is not a complete statement of the law in this area. It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.
This is an interesting enquiry and as the enquirer says there is no legal compulsion on a freehold collective (or single owner) to sell a share in the freehold to a flat owner that did not take part in the original purchase.
In this situation it may be because the previous owner of the freehold resided in their flat and as such was not bound to offer a share in the freehold under the 1987 Act when they sold their flat (and the freehold).
I am assuming also that the structure is that there are two leases, one for each flat.
You mention that the ‘freeholder’s lease’ has been modified so that the restrictions against noise nuisance are not so severe. Perhaps rightly so, you say that this is unfair. It may be that there is something that you can do about this aspect as the freeholder has an implied obligation to keep the leases on broadly similar terms and not to grant concessions unilaterally to one or more flat owners at the expense of the other.
Similarly, apart from the implied covenant to keep the leases on similar terms, there may also be a remedy for what is called ‘derogation from grant’ if the situation between the two properties is now so unbalanced that the changes to the freeholders’ lease mean that you can now longer have proper enjoyment (in the legal sense) of your flat.
You mention the declining lease length. Clearly the best course of action to take to preserve longer term value in your property is to apply for a lease extension under the 1993 Act. This will give you an extended term of 90 years on top of the unexpired term – in your case, 157 years. There will be a nil ground rent and the terms of the renewal lease will be controlled by statute.
The issue in your case may be that the statutory position is that you get the same terms that appear in your current lease. So, unless there are changes in legislation since your lease was originally granted, or defects in the existing lease that need to be remedied then the scope for amendments may well be limited.
In particular any tribunal dealing with the terms of your new lease would not have the power to order changes to the lease of the other flat. For this reason, you may need to proceed down a ‘twin track’ approach looking to extend the lease but also perhaps to have the amendments to the freeholders’ lease set aside if they will not voluntarily harmonise these.
Clearly, there are limitations on the sort of guidance that can be given without reading your lease and title documents and understanding the full background to your case. The first step is to make sure that you consult with someone suitably qualified to advise you further such as an ALEP member.