Absentee Leaseholder

Vicky7260

I’ve posted on this board previously about having searches done…thank you to all that replied I’ve decided to have most (but not all)done.

However, we’ve hit a snag in locating the leaseholders details. The property isn’t freehold, there are no details held with the Land Registry and it seems that ground rent hasn't been collected for 20years plus. 

Any advice as to where we turn? 

Our Solicitor has had further questions of the vendors but I’m not expecting them to know anything as they are out of area and have inherited the house. 

user1977

Do you mean absentee freeholder? Are you buying the leasehold interest?

You're paying your solicitor to advise you on "where to turn" anyway.

eddddy

I suspect you mean that...

• You are buying a leasehold house from the current leaseholder. (So you would become the new leaseholder)

• The person or the company who own the freehold (i.e. the freeholder) cannot be traced.

Who has 'hit the snag' with locating the freeholder? For example, is it your solicitor? Or is it your own search on the Land Registry website?

How long have the current leaseholders (i.e. the current owners of the house) owned it? What was the situation with the freeholders when they bought it?  What do you know about the freeholder now?



Are you buying with a mortgage? Many mortgage lenders will still lend if the freeholder cannot be traced - if you take out indemnity insurance. 

Vicky7260

Sorry for the confusion yes we’re buying a leasehold property and the free holder can’t be located. 

Neither the sellers solicitors nor mine have been able to chase who owns the freehold. It’s not registered with the LR.

I’ve no idea what the situation was when the previous people bought the property and unfortunately they have both passed away so no one to ask. 

As it stands we know nothing about the freeholder. 

user1977

How long is the lease? Is there likely to be any reason why you'd need to contact the freeholder (e.g. for consent or because something in the lease could do with being varied)?

eddddy

Are neighbouring houses owned by the same freeholder? If so, you can ask some of the neighbours if they can tell you more.

As I mentioned, if you're buying with a mortgage, your lender might insist on...

• "Absent Freeholder Indemnity Insurance" to cover some of the risks 

• "Restrictive Covenant Indemnity Insurance" - for example, if the lease has been breached by making alterations without the freeholder's consent - because the freeholder can't be traced.

The indemnity insurance might require you to make 'reasonable efforts' to trace the freeholder before taking out the policy - but then make no attempt to trace the freeholder after the policy is taken out.  (But maybe check that with your solicitor before you do anything.)




And/or you can apply to the county court for a Vesting Order to allow you to buy the freehold. But there's a bit of an anomaly...

• The indemnity insurance policy might say that you must not attempt to trace the freeholder, but...

• To get a Vesting Order, the court will require you to make reasonable attempts to trace the freeholder

So you need to consider the risks.

Vicky7260

I assume the lease is 999 years from 1965 but I have asked my Solicitor to check. We are looking at major modifications to the property and I would  prefer to have everything in order before we start the renovations. 

eddddy

Vicky7260 said:

I assume the lease is 999 years from 1965 but I have asked my Solicitor to check. We are looking at major modifications to the property and I would  prefer to have everything in order before we start the renovations. 

So your options include...

• 1) Buying the freehold, or 

• 2) Reading the lease to see what it says about altering the property.

If, for example, the lease says you need consent from the freeholder to alter the property - that shouldn't be a major problem. You do the alterations now, and if the freeholder suddenly appears, you apply for consent. The freeholder cannot unreasonably withhold consent.


If the lease bans any alterations - many lawyers argue that the Landlord and Tenant act 1927 says you can make improvements to the property anyway. But the freeholder can insist that you undo the improvement in 999 years time, when you hand the property back to the freeholder.

(And if the lease bans alterations - you're probably better off with an untraceable freeholder anyway!)