Leaseholder Landlords and the Law

by Tessa Shepperson

3 months ago

Leaseholder Landlords and the Law

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Leaseholder Landlords and the Law

This is the 11th post in my 2017 Legal Update series.

In most landlord & tenant situations where the landlord is a freeholder it is comparatively simple. You have a landlord. And a tenant.

However, if the landlord is himself a tenant under a long lease, it gets a bit more complicated. You will also have:

  • The freeholder, and often
  • The freeholder’s management company

How does this work in practice?

The answer is, not always as anticipated. If you rent a property under a long lease you have to be aware that you cannot always deal with it as if you were the freeholder. You are bound by the terms of your lease.

For example, your lease may prohibit subletting the property to tenants!

So, before you buy a flat as an investment property you need to check carefully the terms of the lease.

There has been a case, for example where the lease had a clause saying

“To use the flat as a private dwelling for the lessee and his family and for no other purpose

Which, the First Tier Tribunal held, meant it could not be rented out to tenants.

Another lease had the wording:

Not to use the premises hereby demised or permit the same to be used for any purpose whatsoever other than as a single private dwelling house in the occupation of the Lessee and his family.”

Which had a similar effect.  So be careful about this.

Then, even if you are using it as your home, you may find, like Ms Nemcova did in another case at the First Tier Tribunal, that you can’t let it out for weekends on Airbnb, because of the wording of the clause in the lease.

The problem about all of these is that, ultimately, if you carry on doing the prohibited thing, your landlord can forfeit your lease. Not something you will want to happen.

A question of repairs

Then there are issues about who is responsible for repair work. And can a landlord be held liable by their tenant for things which are actually the responsibility of the freeholder?

This issue came to a head in the recent case of Edwards v. Kumarasamy.

The Court of Appeal in that case basically found that the landlord was responsible for repairs to the exterior of the property even if the landlord had not been given notice and the repair in question was down to the freeholder.

To the relief of landlords and agents everywhere this decision was reversed by the Supreme Court who more or less re-instated the rule that landlords have to have been given notice of repairs before they are liable if they don’t do them.

However, that is not to say that problems will not arise in the future. So, make sure you keep yourself informed.

Further information:

Our 2017 Conference Course featured a talk by housing barrister Robert Brown specifically on leaseholder landlords and he discussed in greater detail the issues I have outlined above.

If you sign up for the course you will also get his comprehensive notes which include information about other issues he did not have time to discuss – in particular on service charges.

You will find more information about the Conference Course here.

There is also a certain amount of information on my Landlord Law site plus members can always ask me questions in the members forum.

You can find out more about Landlord Law here

On Monday, I will be looking at landlords repairing obligations.

To see all the articles in my series please Click Here

Tessa Shepperson is a specialist landlord & tenant lawyer and runs the popular Landlord Law online information service.

To see all the articles in my series please Click Here

Comments

terry sullivan

3 months ago

leasehold has to go--it is a con

Mike

3 months ago

Hi Tessa, your article has come out at the right time for me, my wife owns a 2 bedroom first floor flat on a 90 year lease, the flat was a conversion from a 3 bedroom house, whilst another lady owns the lease to the downstairs flat.

Hence we are tenants as far as the leaseholder is concerned, we pay him ground rent each year. We don't live there ourselves and rent it out to our tenants on an AST.

Both flats share a common front door and a lobby, then each flat has its own seperate door to lead in. Recently the front door has started to play up, locking out our tenants, the key or the locking mechanism jams every now and again.

So the question now is whose responsibility would you say it is to replace the front door, would it be our joint responsibility or the free holder's ?

And same again if there was a roof leak, who would need to replace or fix a leak on a roof? and suppose the freeholder is responsible, would he then pass us the maintenance or repair bill? like in some flats or apartment blocks the landlord (freeholder) can make a charge to all leaseholders where the charges are usually astronomical, I remember my cousin owned one such flat and she was given a huge bill to replace roof that was shared by two other flats, and she was presented a huge bill to pay 5K towards a new roof by her freeholder, and she also owned a 2 bed flat, usually one can get a whole roof over a 3 bedroom replaced for that sum, and her roof literally cost her 10K considering there was another flat downstairs.

Finally who would be responsible for the front garden boundary wall (fence) that has fallen over!
I will appreciate if you can answer these if not I don't mind paying you for the advice.
kind regards

mike

Tessa Shepperson

3 months ago

The simple answer to half of your issues is - look at your lease. This should say who is responsible for what insofar as your long lease with the freeholder.

So far as you and your tenants are concerned, you are liable to them under the landlords repairing obligations under s11 LTA1988 (the subject of Monday's post) and whatever is in your tenancy agreement with them.

This can cause problems where you are yourself a tenant under a long lease and don't have access to or the right to do certain repairs for which you are liable to your tenant.

I don't normally advise on long lease issues myself as my expertise is in short lets - ASTs and the like. If you wanted some advice on your long lease, I would suggest signing up for some advice via our telephone advice service here http://www.landlordlaw.co.uk/services and I will pass it over to solicitors Anthony Gold who also provide advice via this service.
They would be able to advise - they would need sight of your long lease and your tenancy agreement with your tenant.

NB You can buy the recording of Robert's talk as part of our conference course (referred to in my article above) and also on its own here http://www.easylawtraining.com/product/conference-course-2017-robert-brown-leaseholder-landlords/

We also hope to run a one day workshop with Robert specifically on leaseholder landlords probably next year some time - you may want to sign up to our mailings to be kept informed http://www.easylawtraining.com/easy-law-courses-mailing-list/

Prakash Tanna

3 months ago

Hi Mark,

I have a clause in a Lease which prevents sub-letting of part of the property and restricts it's occupation to a single family only. Basically it can be sublet as a whole but not as rooms (HMO).

We are one of six flats. The Freeholder owns one of the flats. If all other 5 Leaseholders club together (majority of total minus 1 as it's less than 8 flats in total) what chance of success do we have of asking for the Lease to be varied under s37 of the L&T Act 1987 ?

Is this something you or Mark at Cotswold would get involved in ?

Thank you

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