We have already dealt with in a previous article most of the details in relation to a lease extension and the qualifying parts and what to do. We are now dealing with how preparing the tenants notice and what happens if there is an absentee landlord.
The tenants notice does trigger legal procedures for buying a new lease and you are liable for the landlord’s reasonable costs from the date it is received. It is therefore extremely important that you read our previous article on the costs. The notice has to be accurate and contain no mistakes because although you can apply to the County Court to have it corrected there is a cost involved in doing this and it could avoid a huge expense. If the tenants notice is incomplete it will not be valid and a competent landlord can reject it. We will therefore always advise you to instruct a solicitor in this regard.
Please see our previous article in relation to what a competent landlord is.
You can also register the tenants notice with the Land Registry. This ensures it protects you from the landlord then trying to sell the freehold. It does not preclude them from selling the freehold but it lets anybody know that you are applying for your lease in the interim.
When you serve the notice this also fixes the “valuation date” as the date of the notice. The valuation date is when any figures which affect the price and we could change it are set. For example the number of years left on the lease and the present value of the flat. It is therefore important that however long it takes to negotiate or decide on the price the price will be based on the figures that apply on that date that you serve the tenants notice. We will always advise you to instruct a solicitor to prepare and serve such a tenants notice to ensure that it is correct.
You obviously need to appreciate that the premium quoted in the notice may not be the price that is actually agreed between you and the landlord. You may find that a Tribunal may make a decision or negotiation with the landlord may be that the figure is more than has been stated. The premium you propose must be a genuine opening offer. It is not be quoted as a very low figure in order to reduce this as it may invalidate the notice.
What is an absentee landlord? It is a landlord that you cannot get hold of in relation to the property and has not managed the property for many years.
Simply put it is a court order that passes the legal title in lieu of a legal conveyance. It is an equitable remedy and therefore by its nature discretionary and the results from finding by a court of the way of passing one property to another. This can be an expensive way of doing it. If the court is satisfied that you are eligible for a new lease, it will grant the lease to you in the landlord’s absence. The courts usually refer the case to the tribunal to decide how much the premium should be. However, there is a specific application that you would need to make under the first tier Tribunal. We would suggest in this instance that you speak to your solicitor dealing with this.
Once you have served the tenants notice the landlord can ask for evidence that you own your flat and how long you have owned it for. The landlord has a period of at least 21 days from the date you serve the notice in which to ask for this evidence. It is important therefore that you provide this evidence within 21 days. If you do not then you can be prevented from having a lease extension and the landlord may serve you a default notice and ask the court to order for you to provide it. The landlord also has the right to inspect the flat to carry out a valuation must they must give you at least three written days’ notice.
If your landlord wishes to be really difficult then after serving the tenants notice they can ask for you to pay a deposit. This may be 10% of the premium you propose in your tenants notice or up to £250.00 whichever is the greatest amount.
It would then go to the Tribunal and they would make a decision.
If the landlord does not serve a counter notice by the date stated in your notice you can apply to the court for a vesting order (please see above) The application is not for a court order requiring the landlord to serve the counter notice but effectively takes the matter out of the landlords hands by asking the court to grant a new lease. The court has the right to grant a new vesting order on the terms proposed in your counter notice. If you decide to a court for a vesting order it has to be done within six months of the date you should have received the counter notice. Whilst this can be expensive it is your rights to do so and could actually work to your advantage.
Once a notice has been served by a tenant then you can assign any right of this notice with the lease. It basically means that you can serve a notice and then sell the flat with the benefits of the application. The person who buys the flat will be able to go ahead with the application immediately without having the need for it to be owned for a period of two years. This will often help in cases when there are not many years left on the current lease and this represents mortgage difficulties for anybody considering buying the flat. Please see our previous article.
In this event your personal representatives can make an application for up to two years from the grant of probate letters of letters of Administration and will have the right to buy a new lease.
During the whole of the process if at any point you would like a quote for the insurance of the building to see whether your landlord is charging you more than he should then please don’t hesitate to contact us.
It is always important when considering whether you wish to become a buy to let…