Serving the Section 42 Notice
Having completed a lease extension valuation by a RICS surveyor you’ll then be looking to serve a ‘Section 42 Notice’ to the Landlord which sets out your offer to extend your lease for an additional 90 years on top of your current lease term. The freeholder has 2 months to respond to your Section 42 notice with their Counter-Notice or their acceptance. This formal lease extension process is governed by the Leasehold Reform, Housing and Urban Development Act 1993 (the ‘1993 Act’).
Sadly when you have an absent freeholder, you cannot take an informal approach to a lease extension. You can read more about formal and informal lease extensions here – Lease Extensions.
How do you find an absentee landlord?
As with many leaseholders, you may have little or no contact with your landlord throughout your term, normally limited to payment for rent, service charges or flagging maintenance issues. It is first important to try and make contact with your landlord before applying for a vesting order
A leaseholder must take all reasonable steps to locate the absentee landowner. A court would expect you to have:
- written to the last known address of the Freeholder (you can find the freeholder's address details on the title documents of the freehold. Click here to download - Search Property Ownership Information
- attend the freeholder's last known address with a witness and attempt to make contact with the freeholder; and
- appoint a 'People Finder' to locate the freeholder
While this may on the surface seem excessive, it is the leaseholder’s responsibility to demonstrate that they have done all that they can to locate the freeholder and that they have had no success. If you don’t, and the landlord is later located, the lease extension could be void.
You should continue your attempts for a period of 3 to 6 months to demonstrate you have made all reasonable endeavours to locate the freeholder.
Important Tip: Document everything including every letter written, attendance made and contact attempt as you'll need to rely on this evidence in court when you apply for your vesting order.
Vesting Orders
After making all reasonable endeavours, if you still have an absent landlord then you can apply to the County Court for a Vesting Order. A vesting order enables the court to take on the role of the landlord.
A Vesting Order is defined under the 1993 Act as:
‘an order … granting [the tenant] a new lease… with a view to the lease being granted to him in like manner (so far as the circumstances permit) as if he had, at the date of his application, given notice under section 42 of his claim to exercise the right to acquire a new lease of his flat.’
‘an order … granting [the tenant] a new lease… with a view to the lease being granted to him in like manner (so far as the circumstances permit) as if he had, at the date of his application, given notice under section 42 of his claim to exercise the right to acquire a new lease of his flat.’
This means that the aim of the court is to provide you with, as far as is possible, the lease you would have been able to acquire had the absentee freeholder been available and the proper extension notice served. The power of the freeholder is vested in the court!
Once the court is satisfied that the leaseholder is eligible to apply for the new lease (the owner of a long lease of a minimum 21 years and has owned the property for at least 2 years) then it will grant the extension in the landlord’s absence. With regards to the premium, the court will usually refer the case to the Tribunal to determine. Click on the following article to find out more about Lease Extension Valuations.
The leaseholder would then need to pay to the court the premium, any sums outstanding to the landlord and any other fees the Leasehold Valuation Tribunal requires to be paid in connection with the grant of the new lease. These funds are then held by the court on behalf of the absentee landlord until such date as they can be found.
However, be warned: if the landlord can be traced at any time during the proceedings, the Vesting Order can be withdrawn and the leaseholder would have to follow the usual channels to obtain the lease extension. Hence you must be certain that you have exhausted all means of trying to locate the landlord before applying for a vesting order.
...the process is very similar regarding Collective Enfranchisement
If you are looking to buy your freehold regardless of whether you intend to use the informal or formal route you have to locate the freeholder. If you cannot, then the directions above apply, leading to the vesting order.
The court, similar to a lease extension case, would normally rule in favour of the premium present in your Initial Notice in the absence of the freeholder.
To find out more, click on Collective Enfranchisement Process.
