Intermediate leasehold interest?

by Readers Question

8:58 AM, 17th June 2019
About a month ago

Intermediate leasehold interest?

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Intermediate leasehold interest?

We have a flat in a modern block with 81 years left of the term. We wish to extend the lease under the Leasehold Reform Act. However, between us 10 Under Leasehold flat owners and the Freeholder is a Head Leaseholder whose term is 10 days longer than the Underleases and who hands over exactly the same total rent collected from us, to the Freeholder.

The Freeholder is the Landlord able to grant us the additional 90 year term envisaged by Statute and he is prepared to diminish the Head Leaseholders rent so that the main compensation would be payable to him, but the Head Leaseholder does not agree and the Freeholder will not proceed on this basis without this agreement.

The net result of this, we have been advised, is that the compensation payable by us will be around £30K where as the alternative approach to be adopted the compensation would be about half that. It would seem that the Act needs amendment to ensure that diminution of the Head Leaseholders rent should be the default position and that the compensation payable is then apportioned between the two landlords.

Douglas

 



Comments

Neil Patterson

9:05 AM, 17th June 2019
About a month ago

Check the Leasehold Advisory service page on the subject >> https://www.lease-advice.org/article/stuck-middle-lease-extension-flats-rights-intermediate-leaseholder/

Intermediate leases

The most common relationship in flat ownership is that of leaseholder and freeholder. Sometimes additional complexity is introduced when a lease exists between the freeholder and the flat owner, known as an ‘intermediate leasehold interest’ (“headlease”). In that situation, the flatowner has what is known as an ‘underlease’. As a result, the owner of the headlease is the ‘immediate landlord’ of the flatowner. Accordingly one has to identify the party upon whom the initial notice is to be served and who can ultimately deal with the grant of the lease extension. That party is called “the competent landlord”

The competent landlord is the first landlord above the underlease who is capable of granting the 90 year extension. Often the competent landlord will be the flatowner’s immediate landlord, but there are circumstances where they do not have sufficient years on their own headlease to grant the underleaseholder the additional 90 years.

For example, if an underlease is 75 years, then the immediate landlord must have at least 165 years headlease to be the competent landlord. If the immediate landlord is not able to grant the additional 90 years to the flatowner then it would usually, but not always, be the freeholder who would be capable of granting the additional 90 years to them. As the competent landlord, the freeholder would conduct the lease extension claim on behalf of the other intermediate landlord(s). Separate prices will need to be proposed in the notice of claim in respect of the effect of the extension on the freehold and headlease.

The intermediate landlord can seek to conduct their own affairs, if their ownership or the premium is in question, by serving a notice of separate representation; but as this Court of Appeal decision demonstrates the headlessee has limited powers and remains vulnerable in certain circumstances.

Shaun Counihan

10:24 AM, 17th June 2019
About a month ago

Morning Neil

I’ve just been reading your comments re above leasehold situation.

I am in a similar situation re an intermediate landlord intent on charging a premium while the actual freeholder does not.

Could we exchange details via DM and possibly discuss over a call?

Much appreciated.
Shaun

Neil Patterson

10:35 AM, 17th June 2019
About a month ago

Hi Shaun,

I am sorry I am far from an expert on the subject, but know the Leasehold Advisory Service is THE place to start your research 🙂

Shaun Counihan

12:54 PM, 17th June 2019
About 4 weeks ago

Reply to the comment left by Neil Patterson at 17/06/2019 - 10:35
Hi Neil

Thanks.
Do you know of any solicitors specialising in this field?

Lindsay Keith

12:00 PM, 22nd June 2019
About 4 weeks ago

Suggest ODT Solicitors at Pavilion View, 19 New Road, Brighton, East Sussex, BN1 1UF, England
Tel: 01273 710 712

I worked at their Hurstpierpoint office as a Consultant and know that Leasehold Enfranchisement is a speciality. They did one for me.


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