How to buy the freehold from a missing landlord

On Friday 3rd October, Ricky Coleman, founding solicitor at Peppercorn Law represented two leaseholders at Brighton County Court in connection with their application to acquire the freehold title to their building in Uckfield from a missing landlord.

This case concerned a two-flat property where the freeholder had been absent since the late 1980s, creating long-term complications for both leaseholders in maintaining and insuring the building. This also impacted the ability of the leaseholders to sell their flats.

An Absent Freeholder Since the 1980s

When the leaseholders purchased their respective flats, the conveyancing files clearly showed that the freeholder had not been in contact for decades. Both transactions included an absent landlord indemnity policy, confirming that the freeholder had never been involved in the running of the building or in fulfilling any of their management obligations.

The freehold title remained registered in the absent landlord’s name at HM Land Registry, but there had been no communication or management input from them since the 1980s. This situation created ongoing uncertainty for the leaseholders regarding repairs, insurance, and compliance with lease covenants.

Self management of the service charge by leaseholders

The two flats were held on long leases containing the usual covenants requiring leaseholders to contribute to service charges for maintenance, insurance, and general upkeep of the building. However, because the freeholder was completely uncontactable, the service charge system had effectively collapsed.

In practice, this meant that:

• The leaseholders organised repairs and maintenance themselves on an ad hoc basis.

• The building insurance was arranged directly by the leaseholders rather than the freeholder.

• No formal service charge demands were ever issued in accordance with the lease terms.

• There was no plan for future maintenance and cyclical works in place, much less a surveyor led approach to ongoing maintenance as you would expect with a professional property manager.

While this informal arrangement kept the building in passable condition, it left both leaseholders exposed when selling or remortgaging, as lenders often require a properly managed freehold structure. A future owner might also be wary of the risk of buying a flat in a building with no real maintenance plan or records.

The County Court Application: Seeking a Vesting Order

To address the situation, the leaseholders applied to the County Court for an order that the freehold be transferred to them by way of a vesting order, a process similar to a collective enfranchisement claim. However, Ricky was able to convince the court that the more appropriate route was under the Landlord and Tenant Act 1987, rather than the usual collective enfranchisement route under the Leasehold Reform, Housing and Urban Development Act 1993.

This strategic choice carries significant advantages. The price of the freehold is generally lower under the 1987 Act route, making it an extremely useful tool for leaseholders dealing with absent landlord situations. This is particularly beneficial for flats with leases below 80 years. Read on to understand why.

Why is an acquisition order better than collective enfranchisement?

Under the Acquisition Order route in the Landlord and Tenant Act 1987, marriage value is not payable. This can result in a considerably reduced premium for the leaseholders, helping them to secure ownership of the freehold without incurring the inflated costs that would arise under the 1993 legislation.

In short, for leaseholders struggling with a missing landlord, particularly where lease terms are short, the 1987 Act provides a cost-effective and legally robust alternative to traditional collective enfranchisement.

How to claim an acquisition order of the freehold

The procedural aspects of an acquisition order under the 1987 Act are slightly different from a collective enfranchisement claim. In this Uckfield case, we began by applying to the County Court and sought an order for the following:

1. Dispensing with service of a preliminary notice on the freeholder, as no current address exists for them.

2. Dispensing with service of the claim itself for the same reason.

3. Requesting that the matter be transferred to the First-tier Tribunal (Property Chamber) for determination of a fair premium to be paid for the freehold.

This combination of applications enables leaseholders to progress the claim without needing to locate or contact the missing freeholder. Evidence is requited to persuade the Judge that these steps are the appropriate course of action for the proceedings.

Next steps: the case moves to the First-tier Tribunal (FTT)

Once the Tribunal determines the premium payable, our work focuses on ensuring the the legal mechanics to facilitate the transfer of the freehold title without requiring the freeholder’s signature.

Further detailed guidance on how this works will follow in a separate article, where we will explain how the County Court and Tribunal work together to finalise the transfer in the absence of the freeholder

Why haven't I heard of an acquisition order?

This case demonstrates that when faced with an absent or uncooperative freeholder, leaseholders have more than one legal option provided you seek advice from a specialist leasehold solicitor. As collective enfranchisement will not always be most appropriate option.

While collective enfranchisement under the 1993 Act is well known, the Landlord and Tenant Act 1987 route can offer a cheaper overall option, albeit the process is not fast and does rely on the County Court and FTT progressing the case promptly, which is not always the case in practice at the moment.

Specialist leasehold law advice

If you are a leaseholder in Uckfield, Lewes, or anywhere across Sussex or beyond and struggling with an absent freeholder, it’s essential to seek early advice from a specialist landlord and tenant solicitor.

At Peppercorn Law, we regularly act in matters involving:

• Missing or untraceable freeholders

• Acquisition Orders under the Landlord and Tenant Act 1987

• Collective enfranchisement and Right to Manage claims

• Vesting orders and Tribunal applications

Email us today with the background to your case and we will be pleased to provide a quote for assisting.