Who are the various people involved in a lease?
There can be a number of parties involved in a lease.
At the top of the ladder is the freeholder who ultimately owns, not only the building, but also the site the building is sitting on. He/she will be the person/company who will legally eventually get the property and site back when all of the leases have expired. Of course in reality the leaseholders will probably keep extending their leases whenever possible and so the freeholder may never actually get the property back.
The next rung down in the ladder is the headlease. This is simply a lease like any other where the lessee leases the whole building/flat/house from the freeholder.
There can then be a number of underleases, again which are like any other lease but which are each successively slightly shorter than the lease above them (sometimes by as little as 3 days or as large as many years), and then the lowest rung on the ladder is the bottom lease. It is usually this bottom lease that is requesting the lease extension.
If there are so many people involved in the chain of ownership who can give the right to extend?
Because the leaseholder is extending his lease by another 90 years the “competent” landlord is the one who holds a lease which expires after the extended lease will do so.
So for example, if you have 40 years left on your lease you will end up with 130 years left on your lease after extension. If there is a head lease which has more than 130 years remaining on its term then only they can offer you an extended lease. The freeholder has no say.
If there were a number of leases in the chain of ownership then the first one that expires after 130 years will be the “competent” landlord.
Can the freeholder refuse to extend the lease?
In the majority of cases the freeholder cannot refuse a qualifying tenant to extend their lease.
However, there are exceptions to this rule and the most common is probably if the freeholder wishes to redevelop the property or use it for their own residence (although this is very rare). In either of these cases it is only possible for short leases.
For example a freeholder cannot claim to wish to use the property for his own accommodation if there are 50 years left on the lease. It would simply not be possible for him to prove that in 50 years’ time he definitely needs the property for his own personal needs. However, he could prove this if there was only 5 years remaining.
Redevelopment is slightly different because a freeholder could own an estate with 100’s of flats on it. In this case it may be possible for him to show an indication that in 20 years time the estate will be demolished and replaced with something else, although this would still be difficult to prove. Therefore, he could raise an objection to the lease extension when only 20 years are remaining.
This would also be the case for a very long headlease. It is not unusual for a head lease to have a 950 year term and then grant underleases for 125 years, thereby having over 800 years remaining on the lease when the underleases are due to expire. In this case the head lease could also show an indication of redevelopment of the estate in say 20 years time.
We, at Leasehold Valuations, have the knowledge, experience and much more to support you and will guide you through this process and the expertise to fight your case as vigorously as it deserves from initial valuation to the First-tier Tribunal (Property Chamber)– (if required).
Please refer to our case studies to see how successful we have been when we have had to go to tribunal and helped our clients achieve fantastic results, in some cases saving them over £1 million but in most cases saving them many thousands.
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