Leasehold reform and buying freehold now

Flipjango

I'm having some issues with my freeholder as we've uncovered some changes to the floorplan of our flat made by the previous owner may not have been given permission when we came to sell the flat (its a long story but basically the lease plan in the lease we received when buying wasn't clear so we didn't know the plan had been changed, but the buyers asked the freeholder as part of their enquiries and now they're treating it like a breach). The freeholder is asking for compensation and we may end up  better off buying the freehold instead. But because the freeholder is being difficult, I may not have time to wait until leasehold reform and may need to at least give them notice sooner rather than later, even if we then drag our feet about getting anything done about it. 

So my question is, with leasehold reform coming in, will we have to wait till it comes into force before we issue notice to buy the freehold if we want to use the new terms? If so, how soon after the legislation passes will it actually be usable legislation? Or if we issue notice soon to get the freeholder to back off about the breach, but then drag our feet over the valuation or any other action, could we still use freehold reform terms to transact the rest of the process? 

eddddy

Flipjango said:

I'm having some issues with my freeholder as we've uncovered some changes to the floorplan of our flat...

You mention a flat. You can't buy the freehold of just one flat. (But you can buy the freehold of a house.)

But if you club together with at least 50% of the flat leaseholders, you can (probably) buy the freehold of the whole building.






Edit to add...

I just re-read your last thread, Have you heard any more from the freeholder since that thread?

FWIW, it seems very much like your freeholder is just taking a punt - and has simply asked a solicitor to write a 'scary' letter inviting you to pay some 'compensation', to see if you fall for it.

Flipjango

eddddy said:

Flipjango said:

I'm having some issues with my freeholder as we've uncovered some changes to the floorplan of our flat...

You mention a flat. You can't buy the freehold of just one flat. (But you can buy the freehold of a house.)

But if you club together with at least 50% of the flat leaseholders, you can (probably) buy the freehold of the whole building.






Edit to add...

I just re-read your last thread, Have you heard any more from the freeholder since that thread?

FWIW, it seems very much like your freeholder is just taking a punt - and has simply asked a solicitor to write a 'scary' letter inviting you to pay some 'compensation', to see if you fall for it.

This would be to buy the freehold with the owner of the other flat, as he's already agreed and wishes to.

The freeholder is persisting on asking for compensation. They still won't specify how much and are persisting in their claim that it is a breach and that if we don't pay they will ask us to restore the flat to how it was. I have no idea what to offer. We don't have much money at the moment as we're paying the mortgage on an empty flat at £1500 a months, so until the flat sale goes through so I can't really afford to pay him (If we buy the freehold, I'd pull out of the sale and relet the flat, so I could then afford to deal with the freehold, then put it back on the market next year). 

You could be right that they're chancing it. I have no idea what to offer them. I was thinking of offering £150 which is equivalent to one years ground rent but suspect they'd laugh in my face. 

eddddy

FWIW, some solicitors will send scary letters for roughly a £100 fee - which 'invite' you to make a payment, even though there is no valid claim that would stand up in court.

Based on what you say in your other thread, if it were me, I'd write a letter to the freeholder along these lines:

Based on my understanding of the lease, no structural changes have been made to the flat, so no consent is required, and no compensation is payable.

If you disagree, and you believe that consent is required, please treat this email/letter as a formal application for consent.

In that case, please let me know your reasonable Administration Fee for considering and granting this application for consent.

I may take further advice on this matter, and based on that advice, I may do any of the following:

• If I do not hear from you within a reasonable time, I will consider that as unreasonably withholding consent. (Landlord and Tenant Act 1927 Section 19)

• If you refuse to grant consent unless I make a compensation payment, I will consider that as unreasonably withholding consent

• If you insist on demanding an Administration Fee for granting consent, I may challenge that fee at a tribunal, on the basis that my lease does not require me to get consent, so it is unreasonable for you to demand a fee for granting consent. 

• It is not generally customary or necessary to use a solicitor for administrative tasks associated with granting consents. Therefore, if your demand includes solicitor's fees for work which could reasonably be done by an administrator, I will challenge it at tribunal.

• Any application I make to a Tribunal will include an application under section 20C of the Landlord and Tenant Act 1985 for your costs not to be recoverable through the Service Charge. This would mean that your solicitor's fees and other costs would have to be paid by you, and cannot be reclaimed from leaseholders.

However. I appreciate that this issue is holding up your sale - so the freeholder might simply delay in order to grind you down. 

Flipjango

eddddy said:

FWIW, some solicitors will send scary letters for roughly a £100 fee - which 'invite' you to make a payment, even though there is no valid claim that would stand up in court.

Based on what you say in your other thread, if it were me, I'd write a letter to the freeholder along these lines:

Based on my understanding of the lease, no structural changes have been made to the flat, so no consent is required, and no compensation is payable.

If you disagree, and you believe that consent is required, please treat this email/letter as a formal application for consent.

In that case, please let me know your reasonable Administration Fee for considering and granting this application for consent.

I may take further advice on this matter, and based on that advice, I may do any of the following:

• If I do not hear from you within a reasonable time, I will consider that as unreasonably withholding consent. (Landlord and Tenant Act 1927 Section 19)

• If you refuse to grant consent unless I make a compensation payment, I will consider that as unreasonably withholding consent

• If you insist on demanding an Administration Fee for granting consent, I may challenge that fee at a tribunal, on the basis that my lease does not require me to get consent, so it is unreasonable for you to demand a fee for granting consent. 

• It is not generally customary or necessary to use a solicitor for administrative tasks associated with granting consents. Therefore, if your demand includes solicitor's fees for work which could reasonably be done by an administrator, I will challenge it at tribunal.

• Any application I make to a Tribunal will include an application under section 20C of the Landlord and Tenant Act 1985 for your costs not to be recoverable through the Service Charge. This would mean that your solicitor's fees and other costs would have to be paid by you, and cannot be reclaimed from leaseholders.

However. I appreciate that this issue is holding up your sale - so the freeholder might simply delay in order to grind you down. 

I love this approach in theory, and thanks for taking so long to write all that, I really appreciate it. But I am worried that because the breach has already happened, do we still have this same bargaining power? I get it, if we were asking for permission to do the works before they happened, but can't they argue that we have no rights as we've already broken the terms of the lease? I'm wary of poking the hornets nest and having it all come crashing down on me. 

eddddy

Flipjango said:

I love this approach in theory, and thanks for taking so long to write all that, I really appreciate it. But I am worried that because the breach has already happened, do we still have this same bargaining power? I get it, if we were asking for permission to do the works before they happened, but can't they argue that we have no rights as we've already broken the terms of the lease? I'm wary of poking the hornets nest and having it all come crashing down on me. 

I'm not sure if you're understanding the situation correctly.

It's not a case of bargaining. You're not trying to do a deal. You're stating your rights under the law and the lease, and saying what you will do if your freeholder gets in the way of your rights.

Just because somebody says you must pay them compensation, it doesn't mean you must. (I could say that you must pay me compensation because you've been wearing green socks...)



In simple terms, you're saying to the freeholder

• I haven't done any structural alterations, so I don't need consent, and I don't need to pay you compensation

• If you disagree, I'll take you to a tribunal (court) and they can decide who is right and who is wrong

And even if the lease does require you to get consent - then all you need to do is get consent.

The law doesn't allow the freeholder to 'fine' you or demand 'compensation' from you because the alterations are already done.

In fact, the law is more on the side of the leaseholder in relation to altering/improving their home. Essentially the freeholder has to give valid reasons for refusing consent.

Flipjango

eddddy said:

Flipjango said:

I love this approach in theory, and thanks for taking so long to write all that, I really appreciate it. But I am worried that because the breach has already happened, do we still have this same bargaining power? I get it, if we were asking for permission to do the works before they happened, but can't they argue that we have no rights as we've already broken the terms of the lease? I'm wary of poking the hornets nest and having it all come crashing down on me. 

I'm not sure if you're understanding the situation correctly.

It's not a case of bargaining. You're not trying to do a deal. You're stating your rights under the law and the lease, and saying what you will do if your freeholder gets in the way of your rights.

Just because somebody says you must pay them compensation, it doesn't mean you must. (I could say that you must pay me compensation because you've been wearing green socks...)



In simple terms, you're saying to the freeholder

• I haven't done any structural alterations, so I don't need consent, and I don't need to pay you compensation

• If you disagree, I'll take you to a tribunal (court) and they can decide who is right and who is wrong

And even if the lease does require you to get consent - then all you need to do is get consent.

The law doesn't allow the freeholder to 'fine' you or demand 'compensation' from you because the alterations are already done.

In fact, the law is more on the side of the leaseholder in relation to altering/improving their home. Essentially the freeholder has to give valid reasons for refusing consent.

Ooo, that's interesting, thank you. 

They are arguing that even if the works themselves weren't structural, moving pipes made holes in the structure of the building, which is structural. The problem is, they've got a point and I think they could argue it is structural from that perspective. 

So not getting consent prior and therefore breaching the lease conditions doesn't affect my rights? 

eddddy

Flipjango said:

Ooo, that's interesting, thank you. 

They are arguing that even if the works themselves weren't structural, moving pipes made holes in the structure of the building, which is structural. The problem is, they've got a point and I think they could argue it is structural from that perspective. 

So not getting consent prior and therefore breaching the lease conditions doesn't affect my rights? 

So that's a new piece of info. The freeholder isn't challenging the alteration of the flat from 1 bed to 2 bed - they're saying that new holes were cut in structural walls for pipes.

• Are they saying that holes were cut in external walls - which might belong to the freeholder? If so, that's much trickier.

• Or are they saying that holes were cut in internal walls - which belong to you?  In which case, maybe you just need to apply for retrospective consent - with no compensation payment

Do you know if new holes where really cut in the external walls (or the internal walls)? Or whether new pipes were fed though existing holes? (Or if the freeholder is just guessing?)


Having said that, based on your lease, I'm not sure that the external walls belong to the freeholder - they might belong to you (i.e. the external walls might be demised to the lessee) - but I don't really understand what the "common cement of the flat" means:

Flipjango

eddddy said:

Flipjango said:

Ooo, that's interesting, thank you. 

They are arguing that even if the works themselves weren't structural, moving pipes made holes in the structure of the building, which is structural. The problem is, they've got a point and I think they could argue it is structural from that perspective. 

So not getting consent prior and therefore breaching the lease conditions doesn't affect my rights? 

So that's a new piece of info. The freeholder isn't challenging the alteration of the flat from 1 bed to 2 bed - they're saying that new holes were cut in structural walls for pipes.

• Are they saying that holes were cut in external walls - which might belong to the freeholder? If so, that's much trickier.

• Or are they saying that holes were cut in internal walls - which belong to you?  In which case, maybe you just need to apply for retrospective consent - with no compensation payment

Do you know if new holes where really cut in the external walls (or the internal walls)? Or whether new pipes were fed though existing holes? (Or if the freeholder is just guessing?)


Having said that, based on your lease, I'm not sure that the external walls belong to the freeholder - they might belong to you (i.e. the external walls might be demised to the lessee) - but I don't really understand what the "common cement of the flat" means:

The freeholder is guessing, but they're guessing correctly. Pipes were run though the external walls, I can see that fairly easily. 

eddddy

OK - so like I say, I think your lease says the external walls belong to you and not your freeholder. (If you have a competent solicitor, you can ask them to confirm that they agree.)

In that case, there is no requirement for you to pay a premium (or compensation) to the freeholder for drilling holes in your own wall.

The question is then whether drilling a hole in a structural wall counts as a structural alteration - which is arguable.

If it does count as a structural alteration, then you need to apply for retrospective consent. But it's such a straightforward alteration, I'd expect any reasonable freeholder to look at some photos of the pipes and write you a letter saying "I consent to those alterations" and charge you a fee of maybe £100.

(And as I said previously, if they charge you much more than that - consider threatening to take them to tribunal.)




Out of interest - looking at your lease - is your flat what is sometimes called a maisonette? i.e. Two purpose built flats, either in a terrace or semi-detached building, and each flat has it's own front door to the outside - with no communal spaces inside the building?  In that case, it is fairly common for the leaseholder to own their outside walls.

Flipjango

eddddy said:

OK - so like I say, I think your lease says the external walls belong to you and not your freeholder. (If you have a competent solicitor, you can ask them to confirm that they agree.)

In that case, there is no requirement for you to pay a premium (or compensation) to the freeholder for drilling holes in your own wall.

The question is then whether drilling a hole in a structural wall counts as a structural alteration - which is arguable.

If it does count as a structural alteration, then you need to apply for retrospective consent. But it's such a straightforward alteration, I'd expect any reasonable freeholder to look at some photos of the pipes and write you a letter saying "I consent to those alterations" and charge you a fee of maybe £100.

(And as I said previously, if they charge you much more than that - consider threatening to take them to tribunal.)




Out of interest - looking at your lease - is your flat what is sometimes called a maisonette? i.e. Two purpose built flats, either in a terrace or semi-detached building, and each flat has it's own front door to the outside - with no communal spaces inside the building?  In that case, it is fairly common for the leaseholder to own their outside walls.

Sadly, I neither seem to have a competent solicitor, or a reasonably freeholder. They are asking for undisclosed compensation, as well as legal fees and surveyors fees that would total around £3000 so far. 

No, its not a maisonette, its a converted victorian house split into 2 flats sometime in the 1970's. There's a communal hallway.