Even in the case of an absentee freeholder, you may still be able to extend your lease, buy your freehold or exercise your right to manage. It might even be cheaper than usual.
This is provided for under The Leasehold Reform, Housing & Urban Development Act 1993 as well as the Commonhold and Leasehold Reform Act 2002.
It is achieved with a vesting order, for which an application can be made to the county court, including the Civil Procedure Rules (CPR) Part 8 application form and court fee.
Although the process usually takes longer than if the landlord was present, it often ends up costing less money than it would have if the landlord was there.
If they are absent then you will not incur their legal, administrative and surveyor costs, for instance, whilst you may be entitled to have some of your costs refunded if these have been unfairly incurred as a result of the freeholder’s absence.
In particular, you may save on the cost of serving a Section 13 or Section 42 Notice, and avoid the cost of negotiating with the landlord’s surveyor (since none is present).
Furthermore the First-Tier Tribunal determines the value of the interest to be acquired, which usually amounts to a cheaper premium than normal.
For the county court to grant a vesting order they must be satisfied that reasonable efforts to trace the landlord have been made. There is no definitive rule stating what must be done, though a selection of the following methods have been known to satisfy the court:
- Perform a land registry search of the freeholder’s last known address to prove that they no longer own the property and have moved to an unknown address
- Obtain witness statements to confirm that a visit to the freeholder’s last known address has not yielded a forwarding address
- Advertise in the London Gazette or your local newspaper
- Use a tracing agency and present the results to the court
- Show an absentee freeholder title indemnity policy that may have been taken as a condition of mortgage by any leaseholder who recently bought a flat in the block
The particulars of claim in the Part 8 Claim Form must show whether the leaseholders served notice of claim on the freeholder’s last known address or served it in a local paper, or else request that the court grants a dispensation from the requirement to serve notice.
A case bundle has to be prepared, including up to date land registry title searches, copy leases, copy notices, witness statements and draft land registry transfer forms.
The county court may set a date for a hearing or the district judge may be satisfied that reasonable efforts to trace the freeholder were made and rule on the basis of the facts presented without need for a hearing.
When your case is proved the court will issue a judgment setting out that the freehold may be acquired by the leaseholders, with funds being paid to court on behalf of the absent landlord and the case deferred to the First-Tier Tribunal (FTT) for premium determination.
The FTT hears many absentee freeholder cases without a full hearing by issuing directions for the hopeful leaseholders to comply with and timescales for documents to be produced.
The documents the tribunal will need include the order made by the county court, copy leases, the valuation for the leaseholders, and proposed TR1/TP1 land transfer form.
The tribunal panel usually consists of a layperson, a lawyer and a valuer who make their determination from both the evidence put before them and their experience.
There is therefore little point in putting a valuation before the panel that is not prepared in accordance with current case law and that reflects market trends in respect of capitalization rates and improvement rates.