Absent Freeholder Lease Extension
(Last Updated: 29/05/2024)
01/04/2022
348
6 min read
The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not yet in effect and the date for this is not yet clear. We will update our content as and when the finalised legislation is published. Read more - Expected changes
Where you have an absent freeholder and you are looking to extend the lease on your flat you can apply for a vesting order from the courts.
The challenge is that it will take months to obtain a court order and you will need to pay for the legal fees and court costs - although some of these costs can be reclaimed at court.
We'll explain in this article how to search for your freeholder, apply for a vesting order and the time scales and costs involved in extending your lease when a freeholder is absent.
What is the law when a freeholder is absent?
Under the Leasehold Reform Act 1993 | Section 50, in relation to the freeholder's obligation to send a counter notice, it states:
(1) Where —
- a qualifying tenant of a flat desires to make a claim to exercise the right to acquire a new lease of his flat, but
- the landlord cannot be found or his identity cannot be ascertained,
the court may, on the application of the tenant, make a vesting order under this subsection.
Where you have an absent freeholder you can't serve a Section 42 Notice on them and as such will need to apply to the County Court to obtain a court order (Vesting Order). If successful the court will dispense of the need to serve the notice.
How do you prove a freeholder is absent?
Under Section 50: Applications where landlord cannot be found (4) it states: "Before making any such order the court may require the tenant to take such further steps by way of advertisement or otherwise as the court thinks proper for the purpose of tracing the person in question."
Failing to make all reasonable attempts to find the freeholder could lead to your application to court to be rejected. To avoid this you should:
- Place 2 adverts in the local newspaper;
- Hire a search agent to find the freeholder;
- Physically attend the last known address of the freeholder; and
- Check the probate records.
You could also get your order rejected if you choose to only do 1 or 2 of the above. Don't make this mistake and ensure you do all of the above.
Lease Extension Vesting Order Process
- 1
Are you eligible to extend your lease?
Check you are eligible to extend your lease - only a qualifying tenant of a flat can extend their lease. Check to see if you are eligible here: Am I eligible?
- 2
Get a lease extension valuation
You need to find out the cost of the premium to pay for the additional years on the years. Read more - Lease extension valuation
- 3
Attempt to find freeholder
- 4
Apply to Court for a Vesting Order
Read more on the Government website - Guidance on Vesting orders.
- 5
Apply to Tribunal to determine premium
- 6
Extend the lease
Is it cheaper to extend when your freeholder is absent?
You may think it is going to be cheaper to extend your lease because you don't have a freeholder to argue over the amount to pay or even to pay the premium to. Sadly this is incorrect and the premium is payable in full. Here are few other myth busters:
- Cheaper Process the process will take longer than a normal lease extension due to the additional stage of waiting to prove the freeholder is absent and then obtaining a vesting order.
- More work, costs more the additional legal work costs more to search for the freeholder, obtain a vesting order and applying to Tribunal for a determination of the premium. Although some of these costs could be awarded by the court and deducted from the premium, the leaseholder will need to pay for them before the hearing.
Frequently Asked Questions
You can only agree to extend your lease informally if you can agree terms with your freeholder. Unless you are able to locate your freeholder to agree informal terms with then you will have to extend your lease formally.
Yes you do. Even though the freeholder is absent you are still liable to pay a premium to extend your lease. The premium needs to be calculated by a RICS surveyor and presented to the Tribunal for determining the premium to pay.
You read up more on how to calculate the premium to pay your freeholder.
The Court may "make an order dispensing with the need to give a copy of such a notice to that person". In such cases no Section 42 Notice will need to be served and this part and cost can be avoided.
You read up more on how to serve a section 42 notice.
In view that a Court Order is only granted due to your Landlord being missing your counsel will ask the court to award the costs in connection with the court application in your favour. If the court agrees to do so (which in most cases they would) the costs awarded would be deducted from the premium paid for the Lease Extension.
Although costs maybe awarded, you will need to pay your solicitor for their fees and disbursements before the hearing and then, hopefully, get the costs deducted from the premium you need to pay to extend your lease.
You will be liable for the lease extension and Tribunal costs for determining the lease premium. Read more about the Lease Extension Costs.
Where the existing leaseholder makes an application to court to obtain a vesting order to extend the lease the seller's solicitor should be able to register this against the property to allow the buyer to carry with the process.
The buyer does however take on the risk of:
- the freeholder returning and disputing the vesting order
- the premium to extend being higher than budgeted for
The buyer will need to be a cash buyer if the lease is shorter than a mortgage lender would allow. A short lease for a lender is normally between 60 to 80 years.
Read more - How to buy a property with a short lease
If the freeholder returns before the vesting order is granted they may contest the application. The court will decide how best to proceed however could make an order for the Section 42 Notice to be served by the leaseholder on the Freeholder to allow the formal lease extension process to proceed.
Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
