What to Do if You Have An Absentee Freeholder
If you own a leasehold flat or house, you have a freeholder, who is your landlord. Sometimes, a freeholder goes missing or stops responding to enquiries. This is a common situation known as an 'absentee freeholder'.
While this might seem convenient because you don't receive ground rent demands or service charge bills, it creates problems in the long run. An absent freeholder can make it impossible to sell your property, extend your lease, or carry out necessary repairs to the building.
What is an Absentee Freeholder?
An absent freeholder is a landlord who owns the freehold to a property but is either missing or unresponsive to all communication.
While this might seem like a good thing at first because you might not receive ground rent demands or service charge bills, it creates serious legal and financial problems in the long term.
In England & Wales, the main issues you will face include:
- Selling Your Property: Most buyers and their mortgage lenders will not proceed with a sale until the issue is resolved. This is because a missing freeholder means the property's management and insurance status are uncertain.
- Lease Extension: You cannot extend your lease without the freeholder's co-operation. A short lease can significantly lower your property's value, and many buyers will avoid properties with a lease below 80 years.
- Building Maintenance: With no freeholder to manage the building, you and other leaseholders may have to take on the responsibility for repairs and maintenance, or the property can fall into disrepair.
- Property Alterations: You cannot get the freeholder's consent for any changes you want to make to your property, which is often a requirement of the lease agreement.
- RICS-accredited surveyors for the lease premium.
- Fixed, competitive fees.
- Solicitors to serve the Section 42 Notice.
- Expert negotiations with your Freeholder
- Full management of the entire lease extension process.
- First-tier Tribunal representation (if required).
- Combined surveyor and solicitor leasehold services.
How to prove a Freeholder is absent
Before you can take any legal action, you must prove to the court that you have made all reasonable attempts to find the freeholder. The court will not grant a vesting order unless you can satisfy this requirement.
To show you have made a diligent search, you must take the following steps and keep a detailed record of each action:
Step to Take | Details |
|---|---|
Step to Take Check the Land Registry. | Details The first step is to see if a current address for the freeholder is registered. A Land Registry search can also reveal who previously owned the freehold, giving you a starting point. |
Steps to Take Hire a Tracing Agent. | Details A professional tracing agent can conduct in-depth searches of public records, such as the electoral roll and credit agency data, to locate the freeholder's last known address. |
Steps to Take Place Adverts. | Details You must place at least two advertisements in a local newspaper. This publicly demonstrates your attempts to find the freeholder. |
Steps to Take Check Probate Records. | Details If you believe the freeholder may have died, you should check for a grant of probate or letters of administration to see if a will was left or if an estate was handled. |
You must keep a detailed record of every action you take, including copies of adverts and receipts from tracing agents. The court will require this evidence.
The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not fully enforced yet 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
Solutions for an Absent Freeholder
Once you have taken all the necessary steps to prove a freeholder is absent, you can apply to the court for a Vesting Order.
A Vesting Order is a legal document that gives you the right to purchase a lease extension or the freehold from the court, as if the freeholder were present to sell it.
This is the only way to proceed when the landlord is missing.
Buying the Freehold
If there are other leaseholders in your building, you might be able to buy the freehold collectively. This is known as collective enfranchisement. At least 50% of the leaseholders in the building must agree to participate.
The process is similar to a lease extension: you apply to the court for a Vesting Order. The court then sets the price, and the freehold is transferred to a company set up by the leaseholders.
Right to Manage
If the main problem is a lack of maintenance or management, and you do not want to buy the freehold, you and the other leaseholders can exercise your Right to Manage.
This allows you to take control of the building's management, including repairs, insurance, and service charges. A key benefit of RTM is that you do not have to prove any fault on the freeholder's part.
When the freeholder is absent, you can apply to the Tribunal to take over management without having to serve a notice on them.
Lease Extension
You can apply for a statutory lease extension through the court. You will still need a specialist surveyor to value the lease premium and serve a Section 42 Notice.
The court will then check the valuation and the terms of the new lease before granting the Vesting Order. The money for the premium is paid to the court and held in a trust account in case the freeholder reappears later.
- Fixed Fees.
- Leasehold Specialist Solicitors.
- RICS Surveyor Negotiations.
- Complicated jargon made simple.
- Preparation and serving of Section 42 Notice.
Selling a property with an Absent Freeholder
Having an absent freeholder is a major problem when you try to sell your property. Most buyers, and their mortgage lenders, will not proceed with a sale because of the legal risks involved.
You cannot get ground rent receipts, a consent for alterations, or a new lease. This can cause the sale to fall through, even if a buyer is keen.
Absent Landlord Indemnity Insurance
A mortgage lender may require you to get an Absent Landlord Indemnity Policy. This insurance covers you for the risk that the freeholder reappears in the future and makes a claim against you for things like unpaid ground rent or breaches of the lease.
However, this is a temporary fix. Not all mortgage lenders will accept it, and it does not fix the underlying legal issue.
Your buyer will likely have the same problem when they come to sell the property in the future, which can reduce its value or make it harder to sell. It also does not help if your lease is too short to be mortgaged.
Free Initial Leasehold Advice
Arrange a free consultation with one of our experienced conveyancing executives on:
- Lease extension.
- Purchasing the leasehold, freehold or share of freehold.
- Selling a leasehold property with a short lease.
- Extending the lease at the same time as you sell.
We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension. Request a tailored quote for:
- RICS Lease Extension Valuation or L2 Homebuyers Survey.
- Serving of the section 42 notice or section 13 notice on the freeholder.
- Negotiation with the freeholder (with the support of your RICS valuer).
- Completion of the legal work, including deed of variation.
- Application to Tribunal to determine the premium.
- Vesting order for absent landlords.
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.
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.
