Can Freeholder Stop Me Selling My Flat?

Nikka Sulton

Can Freeholder Stop Me Selling My Flat?

If you are trying to sell your leasehold flat and the freeholder is blocking the sale, there are a few steps you can take. Understanding your rights and options is crucial in navigating this situation. In this comprehensive guide, we’ll delve into the complexities of leasehold property sales and explore the potential obstacles posed by freeholders. From legal considerations to practical solutions, empower yourself with the knowledge to overcome challenges and successfully sell your flat.

What is a Freeholder?

Living in a leasehold property, whether it’s a flat or a house within a shared ownership development, grants you the right to reside in that home for a specific duration. However, the ownership of the broader building or development remains with an individual or company known as the “freeholder.” The freeholder maintains full ownership of the property and its land, overseeing its management and upkeep.

Typically, the freeholder is responsible for managing maintenance, repairs, and cleaning of the main structure of the building, along with any communal areas. They also often handle disputes among leaseholders and are tasked with setting and collecting ground rent, service charges, and other fees related to the property.

Additionally, the freeholder must procure buildings insurance and pay associated premiums, while the leaseholder may opt for their own contents insurance. They are obligated to provide reports detailing how the collected funds are utilised for the property’s maintenance and management.

Who is the Freeholder for My Flat?

If you’re unsure about the owner of your home’s freehold title, you can check the property information held by HM Land Registry.

While some freeholders actively manage their properties, others may become uncontactable and neglect their responsibilities, becoming known as “absent freeholders.”

If attempts to contact the freeholder go unanswered for an extended period, you may encounter various challenges, including difficulties with service charge payments, building regulations, maintenance issues, and more, akin to those experienced with absentee landlords.

Absentee Freeholder

Absentee freeholders can create numerous challenges for leasehold property residents. Difficulty in contacting the property’s owner can pose significant hurdles, especially during the selling process.

Selling a Flat with an Absent Freeholder

When dealing with an absent freeholder, selling a leasehold property can present various challenges. These commonly encountered obstacles include:

1. Your conveyancer may need to contact the freeholder

In many instances, the seller’s conveyancing solicitor will require the freeholder of the property to complete an LPE1 form. This document entails crucial information regarding ground rent, service charges, insurance, and other pertinent details.

However, if you’ve had difficulty reaching your property’s freeholder, it’s likely that a legal specialist would encounter similar challenges when it’s time to fill out an LPE1.

Moreover, if the freeholder also serves as the building’s managing agent, your conveyancer may require them to provide a “seller’s pack” or equivalent documentation, which becomes problematic if they remain unreachable.

2. Properties in poor condition take longer to sell

Living in a poorly maintained property can hinder its saleability. When a freeholder is absent, their building often falls into disrepair, with communal areas and outdoor spaces appearing neglected. Prospective buyers are deterred by such conditions, reluctant to pay service charges to an owner who neglects property upkeep.

For this reason, your leasehold property may linger on the market for some time – with little interest – if you are unable to make contact with the outright owner of its title.

Buyers do not tend to find neglected property attractive, and prospective future leaseholders will not be keen to pay service charges to a freeholder who clearly does not take proper care of their building.

3. Mortgage lenders will hesitate to get involved

Leasehold properties with absent freeholders often face difficulties in maintenance, insurance, and dispute resolution, causing mortgage providers to hesitate lending to potential buyers. However, obtaining Absent Freeholder Indemnity Insurance can enhance the property’s appeal to buyers and their lenders, offering a solution to this issue.

4. There will be no one to turn to for additional information

When selling a property, you may need to furnish the buyer with essential details like insurance, warranties, access information, or a fresh copy of the lease terms. It’s crucial to provide the buyer with the freeholder’s contact details for reporting maintenance issues, disputes, or building insurance concerns. However, if you can’t reach the freeholder yourself, the buyer won’t be able to either.

5. Licence to Assign cannot be confirmed

Is it possible for a freeholder’s absence to halt a property sale? Yes, in certain situations. Some agreements require the leaseholder to obtain the freeholder’s consent to sell their property, known as “Licence to Assign,” as outlined in the lease terms. If you can’t reach the freeholder, obtaining their consent for the sale becomes impossible.

Buying the Freehold

If an absent freeholder poses challenges, purchasing the freehold could be a viable solution. Owning the freehold outright can enhance the property’s appeal to buyers and simplify mortgage arrangements. Additionally, you gain flexibility to enhance the property’s value before selling.

Pooling resources with fellow leaseholders enables collective purchase of the freehold. Over half of the property’s leaseholders must participate. Valuing the freehold precedes serving a Section 13 notice to the freeholder, who must respond with a Section 21 counter-notice within a specified timeframe, detailing their decision to sell, refuse, or express redevelopment intentions.

If communication with the freeholder fails, seeking a “vesting order” from the court bypasses traditional conveyancing procedures, transferring ownership efficiently.

What Happens if the Freeholder Sells?

Yes, a freeholder can sell the freehold. If unable to manage the property or seeking profit, they may opt to sell. Typically, resident leaseholders have the “Right of First Refusal,” allowing them the chance to buy the leasehold before it’s offered on the open market.