Freehold and subletting

ellymoo

My aunt owns a flat, one of four. The owners all own the freehold. From what I can understand the owners are not allowed to sub-let their flats, but two of them do it anyway, and are not particular about their tenants which is causing problems for my aunt. She has brought it up at management meetings but is ignored because she's an "old crotchety woman".

Does she have any recourse? I have been looking online but can't find anything to help us!

Thank you.

user1977

ellymoo said:

My aunt owns a flat, one of four. The owners all own the freehold. From what I can understand the owners are not allowed to sub-let their flats

Surely the first step is to check your facts, if you're not sure? What do their leases say?

DullGreyGuy

ellymoo said:

My aunt owns a flat, one of four. The owners all own the freehold. From what I can understand the owners are not allowed to sub-let their flats, but two of them do it anyway, and are not particular about their tenants which is causing problems for my aunt. She has brought it up at management meetings but is ignored because she's an "old crotchety woman".

Does she have any recourse? I have been looking online but can't find anything to help us!

Thank you.

You need to find out what's really happening precisely rather than having a vague understanding. Would also be useful to know where in the UK they are. 

For example if they each are leaseholders and are joint shareholders of the company that owns the freehold then you'd need to review the articles of association for the company to see how decisions are made and disputes resolved. If she's the sole person that has an issue with it then it's unlikely to get far as she'll be outvoted 3-1 but the articles may need a unanimous agreement. 

propertyrental

Read the leases!

eddddy

DullGreyGuy said:

ellymoo said:

My aunt owns a flat, one of four. The owners all own the freehold. From what I can understand the owners are not allowed to sub-let their flats, but two of them do it anyway, and are not particular about their tenants which is causing problems for my aunt. She has brought it up at management meetings but is ignored because she's an "old crotchety woman".

Does she have any recourse? I have been looking online but can't find anything to help us!

Thank you.

You need to find out what's really happening precisely rather than having a vague understanding. Would also be useful to know where in the UK they are. 

For example if they each are leaseholders and are joint shareholders of the company that owns the freehold then you'd need to review the articles of association for the company to see how decisions are made and disputes resolved. If she's the sole person that has an issue with it then it's unlikely to get far as she'll be outvoted 3-1 but the articles may need a unanimous agreement. 

The articles of association of the company don't override the leases.

So for example, a typical lease setup for the aunt might be as follows (in simplified terms)...

• The leaseholder covenants (promises) not to sub-let

• The freeholder covenants (promises) that all other leases will contain similar covenants

• The freeholder covenants (promises) that they will enforce the covenants in other leases, if a leaseholder requests it (and indemnifies the freeholder for the costs)

So if the aunt insists that the freehold company enforce a 'no sub-letting' covenant, the freehold company are legally required to do it.


But the problem with 'shared freehold' is that the participants often don't understand their legal obligations, and/or don't bother carrying them out. So ultimately the aunt's only choice is to take legal action against the shared freeholders (i.e. her neighbours).

(But the above  all assumes that there are 'no sub-letting' covenants in the leases.)

DullGreyGuy

eddddy said:

DullGreyGuy said:

ellymoo said:

My aunt owns a flat, one of four. The owners all own the freehold. From what I can understand the owners are not allowed to sub-let their flats, but two of them do it anyway, and are not particular about their tenants which is causing problems for my aunt. She has brought it up at management meetings but is ignored because she's an "old crotchety woman".

Does she have any recourse? I have been looking online but can't find anything to help us!

Thank you.

You need to find out what's really happening precisely rather than having a vague understanding. Would also be useful to know where in the UK they are. 

For example if they each are leaseholders and are joint shareholders of the company that owns the freehold then you'd need to review the articles of association for the company to see how decisions are made and disputes resolved. If she's the sole person that has an issue with it then it's unlikely to get far as she'll be outvoted 3-1 but the articles may need a unanimous agreement. 

The articles of association of the company don't override the leases.

So for example, a typical lease setup for the aunt might be as follows (in simplified terms)...

• The leaseholder covenants (promises) not to sub-let

• The freeholder covenants (promises) that all other leases will contain similar covenants

• The freeholder covenants (promises) that they will enforce the covenants in other leases, if a leaseholder requests it (and indemnifies the freeholder for the costs)

So if the aunt insists that the freehold company enforce a 'no sub-letting' covenant, the freehold company are legally required to do it.


But the problem with 'shared freehold' is that the participants often don't understand their legal obligations, and/or don't bother carrying them out. So ultimately the aunt's only choice is to take legal action against the shared freeholders (i.e. her neighbours).

(But the above  all assumes that there are 'no sub-letting' covenants in the leases.)

Wasnt suggesting that it does but certainly the leases I've seen are not a blanket no sub-letting but a requirement for the freeholder to consent and that is were how freeholder makes decisions does become relevant. 

eddddy

DullGreyGuy said:

eddddy said:

DullGreyGuy said:

ellymoo said:

My aunt owns a flat, one of four. The owners all own the freehold. From what I can understand the owners are not allowed to sub-let their flats, but two of them do it anyway, and are not particular about their tenants which is causing problems for my aunt. She has brought it up at management meetings but is ignored because she's an "old crotchety woman".

Does she have any recourse? I have been looking online but can't find anything to help us!

Thank you.

You need to find out what's really happening precisely rather than having a vague understanding. Would also be useful to know where in the UK they are. 

For example if they each are leaseholders and are joint shareholders of the company that owns the freehold then you'd need to review the articles of association for the company to see how decisions are made and disputes resolved. If she's the sole person that has an issue with it then it's unlikely to get far as she'll be outvoted 3-1 but the articles may need a unanimous agreement. 

The articles of association of the company don't override the leases.

So for example, a typical lease setup for the aunt might be as follows (in simplified terms)...

• The leaseholder covenants (promises) not to sub-let

• The freeholder covenants (promises) that all other leases will contain similar covenants

• The freeholder covenants (promises) that they will enforce the covenants in other leases, if a leaseholder requests it (and indemnifies the freeholder for the costs)

So if the aunt insists that the freehold company enforce a 'no sub-letting' covenant, the freehold company are legally required to do it.


But the problem with 'shared freehold' is that the participants often don't understand their legal obligations, and/or don't bother carrying them out. So ultimately the aunt's only choice is to take legal action against the shared freeholders (i.e. her neighbours).

(But the above  all assumes that there are 'no sub-letting' covenants in the leases.)

Wasnt suggesting that it does but certainly the leases I've seen are not a blanket no sub-letting but a requirement for the freeholder to consent and that is were how freeholder makes decisions does become relevant. 

Some leases have an absolute prohibition on sub-letting, others say sub-letting only with consent.

The OP seems to believe there is an absolute prohibition:

ellymoo said:

From what I can understand the owners are not allowed to sub-let their flats...

But obviously, the OP might have got that wrong.

(Some people specifically prefer blocks with an absolute prohibition on sub-letting, because they feel that owner/occupiers will be happier to invest in keeping the block looking smart, and perhaps be more respectful towards their longer term neighbours. Perhaps that was a consideration when the aunt bought the flat.)

BonaDea

And if two of the four flats are let out to tenants their landlords might have inadvertently made the building an HMO, with implications for all the freeholders, not just them.   So check that out too.

ellymoo

Thank you very much for your replies. I will get a copy of the lease but I was confused because if they have freehold then why would they have leases?! What I was trying to find out really was what I should be looking at to understand the situation so your replies have been very helpful.

BarelySentientAI

ellymoo said:

I was confused because if they have freehold then why would they have leases?! 

This is 4 flats in a building.  Usually:

There is a freehold for the building, which is owned by someone or something.  It sounds like it's owned by a "company" in which each resident is 1/4 shareholder.

Each flat is then leased by the resident from that "company".