Head leaseholder wants to muscle in!

Head leaseholder wants to muscle in!

16:21 PM, 8th August 2022, About 2 months ago 7

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Hello everyone, My wife and I own a leasehold flat in a block of six. A head leaseholder is named on the lease but the freeholder is unknown.

We want to extend the lease, so made every attempt to identify the freeholder without success. We appointed a search agency to find the freeholder, and we placed an advert in the London Gazette. We appointed a RICS surveyor to value the property and calculate the Premium, a proportion of which they adjudicated to the head leaseholder.

We also appointed a solicitor to draw up a new lease. We then applied to the County Court for a Vesting Order, which was granted.

We subsequently applied to the First Tier Tribunal to determine the value of the Premium. In the application, we stated the name of the head leaseholder, who, up until this time, had only communicated with us to say that they did not know who the freeholder was. The head leaseholder is not the competent landlord as they have insufficient time left on their lease to grant the extension.

However, on receiving notification of our application from the tribunal, they contacted us to say, erroneously, that they were not aware of our intention (our exhibits to the County Court included several emails between us which demonstrate this not to be true) and that they wanted to negotiate the premium in order to save costs. They also said that we would have to meet their costs for going to the Tribunal.

My initial reply was that, yes, we are open to negotiations but would they tell me on what authority they based their right to do so.

I referred them to the case of Kateb v. Howard de Walden Estates Limited and Accordway Limited (2016 EWCA 1176) which confirmed that, as long as they act in good faith, the freeholder conducts the lease extension claim on behalf of the other intermediate landlords. In effect, the freeholder, I suppose, is now the County Court.

The head leaseholder can make an application to the County Court if they have no confidence in the competent landlord before the premium and the terms are agreed.

As regards the costs, the lease advisory service states that the leaseholder is not responsible for the freeholder’s costs at the tribunal.

We have found that this is an area unfamiliar to many solicitors and so we would be interested to hear opinions on whether the case I quote would apply and whether we would be responsible for the head leaseholder’s costs.

Thank you,

Robert



Comments

Ian Narbeth View Profile

17:16 PM, 8th August 2022, About 2 months ago

Robert
It is odd that your solicitor cannot locate the freeholder. Unless the freehold is unregistered you can get official copies from the Land Registry within a few minutes!

I am not sure how we at Property 118 can help if your solicitor cannot. I assume you have appointed one.

Nigel Parry View Profile

12:23 PM, 9th August 2022, About 2 months ago

Sounds like you have got your ducks in order as it were. You may want to contact lease-advice.org just to dot the i's as it were, otherwise contact Bernie Wales in Southampton. I'm sure he can help you. He is my goto guy for lease extensions.

Laura Delow

14:37 PM, 9th August 2022, About 2 months ago

Totally agree with Nigel - speak with the Leasehold Guru; Bernie Wales https://berniewales.co.uk/leasehold-advice/

BernieW View Profile

15:15 PM, 9th August 2022, About 2 months ago

Reply to the comment left by Nigel Parry at 09/08/2022 - 12:23
Thank you, Nigel and Laura. Mention much appreciated.

As Ian says - I'm not sure why the solicitor can't ascertain the freeholder details ... but presumably that will have been queried/tested prior to the Vesting Order being given.

I can't see the point of negotiating with the Head Leaseholder. The FTT will determine the premium for the extension - and how that is to be apportioned between the parties.

And the Head Lessee can try to persuade the FTT if they think their costs should be paid by you.

Robert Huntly

19:10 PM, 9th August 2022, About 2 months ago

Thank you all for the comments. We did initially appoint a solicitor, who began the process of the lease extension. However, we had to dismiss him and we decided to prepare the case ourselves.
The original builder confirmed that they had no knowledge of whether they still held the freehold. The Head Leaseholder said they didn't know who the Freeholder was. We appointed a solicitor to draw up the new lease, but presented our own case to The County Court who accepted that the Freeholder couldn't be located, and granted the vesting order. The FTT now says the matter can be determined by a way of a paper determination.
The Head Leaseholder has suggested negotiations to "avoid future costs". As Nigel says, my understanding was that the FTT will determine the premium. My concern with not negotiating is whether the Head Leaseholder could lengthen the process and cause us to incur extra costs.
I must point out that the premium suggested by our surveyor is small - about £1100. (It's a small flat and we live in a cheaper area of the country as regards housing!) Since my first post, and as I am writing this, our surveyor has just told us that he has been contacted by the Head Leaseholder's surveyor - although we have not yet agreed to negotiate! - and it would appear that the extra premium they would use as a starting point for discussion would be another £500. Whilst annoying if, in fact, the Head Leaseholder doesn't have the right to intervene, (does the case I quoted in the original post apply?) it means that the rental return is still high. So, we have instructed him to negotiate the premium. I have an appointment with the leaseholder service on Tuesday when I will ask their advice about the Head Leaseholder's costs.

Freda Blogs

17:32 PM, 10th August 2022, About 2 months ago

Reply to the comment left by Robert Huntly at 09/08/2022 - 19:10
I hope to be wrong, but be prepared to be underwhelmed by Lease Advice. They are not solicitors and in my experience their people, though helpful, are unable to advise on anything other than basic or standard issues, whereas your issue is unusual and you seemed very clued up.

Robert Huntly

19:00 PM, 10th August 2022, About 2 months ago

Thank you for the warning!

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