Existing tenants in auctioned flat?

Existing tenants in auctioned flat?

9:33 AM, 2nd February 2024, About 10 months ago 18

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Hello readers, I am again seeking people’s superior knowledge. A flat in a block where I have the Freehold has been sold by auction owing to repossession. It has tenants in situ and they are nice, quiet, hard-working people.

The Leaseholder went into mortgage arrears and let’s just say he never wanted to spend money on anything. He didn’t conform to Landlord regulations. The electrics need upgrading so there is no Electrical Certificate, No EPC and probably no gas certificates either. The lease is also very low and the flat was sold cheaply, which is unsurprising.

I am wondering how the new owners can evict the tenants if the paperwork wasn’t in order from the former landlord?

Can they just start again with a new contract and get all the compliance done now?

They will no doubt raise the rent a lot.

Can they apply for a Section 21 or would they need all the evidence of compliance from the time the tenants moved in, which was over 3 years ago.

Also, how can the flat be sold legally with no EPC? And what if the tenants won’t allow access for it to be done?

Many thanks

Helen


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L Bennett

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10:30 AM, 2nd February 2024, About 10 months ago

This begs the question -why are you asking so many questions?

Unless you have purchased the flat yourself?

Southern Boyuk

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10:49 AM, 2nd February 2024, About 10 months ago

The question really is why as the freeholder have you not enforced and insured compliance to the leased properties.

Why have you not insisted the flat comply to the latest fire regs and fire front doors, as the freeholder, you have a legal responsibility to do this.

It You are taking fees from the Lessies without following your due diligence of compliance

eagle view

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11:22 AM, 2nd February 2024, About 10 months ago

All down to the leases. If the lease is not clear, you cannot enforce it. The mortgagee should have contacted you to get a management pack and pay any leaseholder arrears. A new owner can start everything now by giving a 6-month tenancy with a 2-month notice. If the tenant is in breach of the tenancy, then they can be evicted. This includes refusing to allow EPC, gas, and electric certificate renewals.

JB

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12:41 PM, 2nd February 2024, About 10 months ago

Reply to the comment left by Southern Boyuk at 02/02/2024 - 10:49
How can a freeholder enforce compliance if the leaseholder does nothing?

Judith Wordsworth

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18:48 PM, 2nd February 2024, About 10 months ago

Reply to the comment left by JB at 02/02/2024 - 12:41
s146

Judith Wordsworth

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18:49 PM, 2nd February 2024, About 10 months ago

Reply to the comment left by eagle view at 02/02/2024 - 11:22
New owner probably paid in cash

Judith Wordsworth

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19:01 PM, 2nd February 2024, About 10 months ago

Helen, as Freeholder the new owners tenants are not really your problem.

More that the front door of the flat is fire risk compliant ie FD30 or 60; self-closing mechanism, intumescent strips fitted, locks that do not need keys to operate from the inside etc etc. Might be your cost or more likely that of the new owner.

That, depending on the building, there is linked communal fire alarm to the flats, emergency lighting etc etc and the communal fire alarm tested weekly and service 6 monthy.

If you know that they are in situ this is breaching Regulations as no property can be tenanted without an EPC with a minimum of an E unless has an exemption certificate. https://www.gov.uk/guidance/domestic-private-rented-property-minimum-energy-efficiency-standard-landlord-guidance

As sole Freeholder (?) if the new owner wants to increase the lease length ( anything by over 50 years has to be agreed by you so not auto to 999) and reduce the ground rent to a peppercorn they need to come to you. Marriage value has not yet been abolished so could be quite lucrative.

Kizzie

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9:14 AM, 3rd February 2024, About 10 months ago

It’s not clear what is meant by “A flat in a block where I own the freehold “ . I take it that as leaseholder of your flat you own a share of the freehold interest held in a Residents management company.
There is something wrong if the lease has been auctioned. A lease cannot be pursued for debt. It is the leaseholder who must sell the lease to raise money to pay off mortgage debt. If the leaseholder in arrears with service charge then the RMC acting for the landlord applies to the FTT for a section 146 law of property act 1925 forfeiture notice and the lease is sold.
What has happened now is the original proprietor still holds registered title to his share of freehold and is now the immediate landlord to the new purchasers of the lease. The service charge still must be paid to the landlord named in the lease.
It means also that eith share of freehold in an RMC you all have collective legal responsibility to manage the block ensuring the EPC fire safety block insurance etc.
There are legal concerns about exactly what was sold at auction and into whose pocket the profit from the sale went.
And if the new leaseholder actually does own the lease.
This is a can of worms.

Judith Wordsworth

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10:22 AM, 3rd February 2024, About 10 months ago

Reply to the comment left by Kizzie at 03/02/2024 - 09:14
Not all leaseholders are joint owners of the freehold. Many just own the leasehold to their flat.

One single person could own the freehold and, or not, own one of the leasehold flats.
Many freeholds are bought for the money that can be made by extending leases, marriage value has not yet been removed.

Leasehold property is often sold at auction as the lease length may not be too short for a residential mortgage.

DPT

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18:25 PM, 3rd February 2024, About 10 months ago

The short answer is that the new owner will struggle to evict the tenants. They won't be able to use s21 unless they've complied with the pre-requisites, such as Gas Safety Cert, (which it sounds as though they haven't). If the tenants are not in rent arears they will struggle to find a relevant Section 8 notice too. They could try Section 8 ground 1 if they intend to live there, but as they're a new buyer, this would be at the discretion of the judge.

They can only start again with a new tenancy agreement if the tenants are willing to sign one. If they're clued up, they will decline and stick with their existing arrangement.

If they really want the tenants out, they may have to make it worth their while financially, sharing with them some of the money they've saved. No such thing as a free lunch in the landlording business.

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