Owning a long lease of a flat can offer security and stability. However, complications may arise if the landlord is "missing" or uncontactable. This article explores the legal avenues available to leaseholders in such scenarios, focusing on how to buy the freehold, extend the lease, or take over management obligations legally.
What counts as a 'missing landlord'?
A landlord or freeholder may be deemed "missing" for various reasons:
they might be unaware that they own the freehold (if they sold their flat for example)
or have forgotten about their interest in the building
emigrated,
passed away,
been declared insolvent,
or chosen to ignore their obligations.
If the landlord is a limited company, it might have been struck off the register by Companies House.
Establishing whether the landlord is genuinely "missing" is crucial. In some cases, such as when a landlord has died, further searches at the Probate Registry are necessary. If the landlord has been declared bankrupt or struck off by Companies House, the Treasury Solicitor should be contacted.
It is essential to demonstrate to the Court that efforts have been made to locate the landlord, which can involve hiring a professional tracing agent and placing adverts in local newspapers and publications, as well as writing to any previous address of the freeholder.
How the law deals with missing landlords
Several pieces of legislation protect leaseholders' rights in the context of missing landlords:
Leasehold Reform, Housing and Urban Development Act 1993 ("the 1993 Act")
Landlord and Tenant Act 1987 ("the 1987 Act")
Commonhold and Leasehold Reform Act 2002 ("the 2002 Act")
Under these laws, leaseholders cannot serve a claim notice if the landlord is unidentifiable or their whereabouts unknown. Landlords are required by Section 48 of the 1987 Act to provide their name and address for service, but compliance is not always observed. The Land Registry usually holds an address for a landlord, but these records may not be updated.
Leaseholders can request the landlord's contact details from the rent collector. Non-compliance with such a request is an offence, though this is less helpful when no rent or service charges are demanded.
Options for Leaseholders with a missing landlord
If a landlord is truly "missing," leaseholders have several legal options, some of which require majority support from other leaseholders.
Lease Extensions
Under the 1993 Act, leaseholders can extend their lease by 90 years and replace their ground rent with a peppercorn. This process starts with serving a claim notice, which becomes problematic if the landlord is missing. The leaseholder can apply to the court for a vesting order, allowing the court to vest a new lease in the leaseholder without needing to serve a notice on the landlord. The First Tier Tribunal (Property Chamber) ("The FTT") decides the premium.
Collective Enfranchisement
The 1993 Act also enables a majority of qualifying long leaseholders to acquire the freehold of their building on payment of a premium. Again, the issue of serving a claim notice arises if the landlord is missing. The County Court can issue a vesting order, transferring the freehold title to a company set up by the leaseholders. As part of this process, the premium will be determined by the FTT, which will appoint an experienced valuer and this is a cost that the flat owners must meet.
Acquisition Order
This is a right only really known to leasehold specialists. At Peppercorn law we find that a generalist solicitor will not typically be aware of this option, and the potential for the leaseholder to save money by taking this route. We have handled several acquisition order cases for buildings in Brighton and London, usually saving leaseholders money as against the traditional collective enfranchisement route.
The 1987 Act provides empowers leaseholders to acquire the freehold on certain grounds, typically where the freeholder is in breach of its obligations under the lease, such as to insure the building or maintain a program of repairs.
If the landlord is "missing," they are very likely to be in breach of a number of obligations under the leases. The Court can issue a compulsory acquisition order, followed by a vesting order that transfers the freehold to the leaseholders new residents management company.
Although some wrongdoing by the freeholder needs to be shown, using the 1987 Act may result in a lower premium, as it is determined by a surveyor appointed by the President of the Upper Tribunal (Lands Chamber), potentially saving leaseholders significant costs, especially if the leases have less than 80 years remaining.
Appointment of a Manager by the Tribunal
The 1987 Act allows any one qualifying leaseholder to apply to the FTT for a manager to be appointed. This option is useful if acquiring the freehold is unaffordable or if there is no majority among leaseholders to bring a collective enfranchisement claim or RTM claim.
This can be something of a remedy of last resort due to the costs and more litigious nature of the process, because fault must be proven with the existing management. However in the case of a missing landlord, this is typically straightforward compared to a case involving a freeholder who will defend the proceedings.
The Tribunal can appoint a manager, usually nominated by the applying leaseholder, to take over management obligations (note that this must be an experienced manager, the FTT is unlikely to appoint a flat owner to manage their own block). The manager reports to the Tribunal, not the leaseholders, making this a suitable solution if there is discord among leaseholders. After a two-year appointment, leaseholders can rely on this as evidence of entitlement to acquire the the freehold under the 1987 Act.
Right to Manage
The 2002 Act provides flat owners with the right to acquire management obligations without proving landlord fault. The process involves serving a claim notice on the landlord, which is problematic if they are missing. However, the 2002 Act allows leaseholders to apply to the FTT for an order granting their Right to Manage (RTM) company the right to acquire management duties, even if the landlord is missing.
This may not be an ideal long term solution if the building contains flats on short leases, as sooner or later the leaseholders will need to acquire the freehold to resolve that issue.
Conclusion
Navigating the complexities of dealing with a "missing" landlord requires understanding the legal options and why a particular option could work out faster or lower cost than another in the particular circumstances. That is were your leasehold solicitor comes in.
Flat owner should also keep an eye on leasehold reforms in 2025, which may improve the options of dealing with the tricky situation of an uncontactable freeholder.
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