Leasehold problems

emma_t_3

Hello there,

Wonder if one of you lovely people could help me? It's going to be a long one..

My partner and I put our flat on the market 3 weeks ago, but since then we've realised there is only 74 years left on our lease (from 99) and that we are going to have problems selling as the minimum period left on a lease that a person can get a mortgage for is 60 years (and solicitors would warn them to avoid buying the flat).

We have not heard from the Landlord since July this year (and before then it was 2001), where we received a letter asking for payment of ground-rent from 2002. We had not paid ground rent from then as we had had no contact from the guy, nor had we had any info about insurance etc (in fact we've taken out our own insurance, as has the man that lives underneath us). My partner checked with our neighbours and they too received the letters, and said they weren't going to pay. Must add that the letter was addressed to the previous occupiers.

Anyway, I digress. Now we have tried to get in touch with the landlord - my partner actually hand delivered a letter to the address that was stated on the letter, which was erm a bit of a spooky place to say the least! My partner saw a neighbour of the guy who said he was crazy and that there was no electricity in the house and not even the police could get him to leave - the house had lots of broken windows and was in a bit of a state. Not suprisingly my partner left quite quicky after dropping the letter through the letterbox. The letter from us states that we want to buy an extension to the lease, plus pay back any ground rent that we owe.

He went on Friday, and not suprisingly we haven't received a reply. I've checked on 192.com and the landlord is definately people registered on the electoral roll for this address.

Other things you should know are that neighbours of ours have had to auction their flats as they have been unable to sell - in fact one neighbour actually got a private investigator involved to try and track down the landlord. We also understand from somebody else that we probably aren't insured by the landlord, as a couple of years ago when somebody had enquired the cheque for payment had bounced.

We're quite desperate to sell - I'm expecting my second baby in April, so obviously time really isn't on our side. We've been told that the only other sensible option involves dropping the price of our flat by 20k in the hope that someone would want to buy and rent out. We could also take legal action, and go throught the absent leaseholder(?) process, but have been advised this could cost a lot of money and take at least a year.

My partner is going to talk to the Leashold Advisory Service tomorrow, but I was just wondering if there was anything else we could give a bash? We are getting desperate - and to be honest this is stress I could deal without!


Many thanks for getting this far,


Emma

emma_t_3

Anyone?


Emma

rrwfotr

Hi I'm not sure you can make him extend the lease. I know if I was the freeholder I would think twice before extending the lease as it will be detrimental to myself as the freeholder. The only way I think you could go forward would be to a big financial incentive.

For further information:


http://england.shelter.org.uk/advice/advice-2917.cfm

EdInvestor

Oh dear.

Other things you should know are that neighbours of ours have had to auction their flats as they have been unable to sell - in fact one neighbour actually got a private investigator involved to try and track down the landlord. We also understand from somebody else that we probably aren't insured by the landlord, as a couple of years ago when somebody had enquired the cheque for payment had bounced.

Err, why didn't you do something about this before?

Priority no 1 is getting the insurance in place I'd have thought with the other lesses, where would you be if there was a fire tonight and the property burnt down?There needs to be a policy covering the entire building.

Have you consulted your solicitor about this mess at all?

You and the other lesses might be in a position to take over management of the property, but this will take time.As for lease extensions, or buying the freehold, in the absence of the landlord, who can you negotiate with?

Frankly the outlook doesn't look very positive to me.

RiskAdverse100

Indemnity Insurance can be taken out to cover the problem of your landlord being absent.

For cover of up to £500,000 the premium is under £200.

As long as rent has not been demanded for at least 2 years and there has been no contact with him during this time, insurance should be available.

I don't think the fact that he is on the electoral roll for a particular property necessarily means that he is not missing. What is important is that, despite your efforts, there has been no communication with him.

The buyer's solicitor will arrange this insurance although you will have to pay the premium on completion.

While a 74 year lease is getting a little short, all lenders will accept it for mortgage purposes and I would try and sell it 'as is' if you can.

If you find that the length of the lease and the missing landlord are putting buyers off then is it conceivable that you could rent the flat for a year or so and deal with the lease extension yourself?

An alternative would be to club together with the other flat owners and try and buy the freehold. If the landlord really is missing then, while the procedure may take a little longer to deal with, you may get the freehold a little more cheaply.

As this will involve all the other flat owners cooperating, you may decide to take the lease extension route instead.

Yes, having a missing landlord will make it a longer procedure, although you will certainly end up paying less for the extension than you would do if the landlord was around.

You do sometimes find that missing landlords suddenly materialise again when they receive notices claiming a lease extension or the freehold and you need to be prepared for this.

If you were desperate to sell then accepting a much reduced price should result in a sale being agreed. However, this should be the last resort route.

It would be far better if the flat owners took out one insurance policy themselves for the whole of the building. It can be a concern for a buyer if all the flats are individually insured. The buyer's solicitor would want to see copies of the insurance documents for all the flats to make sure that no parts of the building were uninsured. This would be a serious problem if, for example, a fire broke out in an uninsured flat and then burnt down the whole building as there would be no insurance policy to claim on.

If you find the insurance position is putting buyers off then it might be worth having a chat with all the other flat owners about taking out one policy now.

Hope this all helps.

RiskAdverse100

Somerset

Emma

I think you've got a problem. I had a short leasehold flat & wanted an extention. My freeholder wasn't as yukky as yours but wanted an extortionate amount. Anyway I know the legislation has changed, leasehold reform act, flatowners banding together etc. BUT your problem is the time - I doubt the legal/paperwork route can be done in the timescale you need ( it's a nightmare getting flatowners to agree/stump up cash ). And if it can't be sorted out in the timescale then yes dropping the price ( to reflect an unresolved difficulty with the flat ) might be the only way to go.

emma_t_3

Thanks folks you've provided some very helpful advice.

Ed - we do have insurance, as does our neighbour (who is downstairs) - its a masionette so just the two flats. The other flats are seperate masionettes with the same landlord. Didn't realise we needed to get one insurance policy for the whole building. We've only just found out about the auctions of neighbours/properties and the fact the cheque bounced.

Risk: Partner has spoken to the leasehold advisory service, and we've been given some advice on taking things forward - my partner mentioned Indemnity insurance and vested interest? Our solicitor who will deal with the sale of the flat is aware, but we've got to find another who knows more about vested interest and has gone through this procedure. As for him being missing - checking the letter we received in July and the signature on the lease - it's totally different. God knows!

I have mentioned to my partner about renting out, but to be honest the profit we hope to make on the sale of the flat will be our deposit for our new property. To be honest we just both want shot of the place!


Realise we are not going to be able to move before April now - and yes dropping the price of the flat will most definately be the last resort.


Thank you again,

Emma

RiskAdverse100

I think the 'vested interest' you mention should in fact be a Vesting Assent.

If you go down the lease extension route using the 1993 Leasehold Reform, Housing and Urban Development Act route, then you first serve a Claim Notice on your landlord. If the landlord is missing and does not reply to the Notice and you can show that you have taken all reasonable steps to locate him, then you can apply to the court for a Vesting Assent. This in effect means that the court grants you the lease extension on behalf of the landlord. You pay to the court the amount that you put in your Claim Notice that you were prepared to pay (which will be a lowish sum) and the landlord, if he ever materialises, can claim this money from the court.

Yes, it can be a long procedure, but at least you won't have a obstructive and difficult landlord who is actually around to deal with!

RiskAdverse100

theGrinch

yes you can get an insurance to cover the risk
yes you can establish company to take over freehold and insure against return of freeholder
finally, I believe there is a formula called marriage contract or sth to work out the value of a lease extension.