If there is an absentee freeholder, it is still possible to obtain a share of the freehold or claim a lease extension without the freeholder's response, by making an application to the court for a vesting order, under the Leasehold Reform, Housing and Urban Development Act 1993.
A. Purchase a Share in the Freehold
In order to make an application to the court for a vesting order to purchase a share in the freehold, the court must be satisfied that:
- The tenants are qualifying tenants;
- The premises qualify; and
- At least two thirds of the qualifying tenants participate in the claim.
The court must also be satisfied that the tenants would otherwise be able to serve an initial notice on the landlord and that all reasonable steps have been taken to try and locate the absent landlord, including placing an advert in the local newspaper.
Upon receiving a successful application from the participating tenants the court will order that the requirement to serve an initial notice on the landlord is dispensed with and the terms of the conveyance and premium shall be determined by the First-tier Tribunal (Tribunal). The Tribunal will examine the valuation report prepared by the participating tenants’ surveyor and shall consider what a reasonable landlord would have argued in their counter-notice.
Once the terms and premium have been determined by the Tribunal, the vesting order can be made by the court. The participating tenants will then be required to pay the premium into court and the conveyance will need to be executed by someone designated by the court.
B. Claiming a Lease Extension
In order to make an application to the court for a vesting order to claim a lease extension, the court must be satisfied that the tenant is a qualifying tenant and must satisfy the following two conditions:
- The tenant must have owned the property for a minimum of 2 years; and
- The original term of the lease must have been for more than 21 years.
The claim process is the same as purchasing a share in the freehold (see above).
We have been successful in acting for tenants in making an application to the court to claim back the legal costs and disbursements incurred in pursuing such a claim; this is however at the sole discretion of the Judge.
A claim under the absentee landlord procedure can take up to a year to complete.
Advantages of Purchasing a Share in the Freehold and Extending the Lease
If there is an absentee landlord, the tenant may find it difficult to sell the property if there is a short lease (80 years and below) or if the building is falling into disrepair, as there is no landlord carrying out maintenance and repairs to the building in accordance with its obligations under the lease. Therefore the advantages of purchasing a share in the freehold is that the co-freeholders will have full control over how the building is run and managed. They will also be able to grant each tenant with a share in the freehold a new long lease (i.e. 999 years for nil premium).