Right of First Refusal (RFR): Landlord and Tenant Act 1987

[yewtree]

Can anyone advise? I own a leaseold property. Recently, I found out that the existing freeholder sold the freehold of the property I own the lease in but they did not tell me. Now the new Freeholder is seeking to charge what we believe is an unreasonable charge for insurance.

Had the Freeholder told us that they were disposing of the freehold then we have ben interested in purchasing the freehold but, the fact they did not and we were unaware of any change until we received a demand from the new owners and had to write to the previous for clarification.

We thought that there was an obligation on the Freeholder to inform the lease owners of their intention to sell an offer them the first right to purchase ? Is this correct ?

Two further questions:-

a) can some one knowledgeable advise what our rights are ? as a consequence of the previous freeholders actions we lost out on the right to purchase freehold and now face increased costs ?

b) can we dispute the charges, If so do we need to pay first, then dispute to avoid action from the new freeholder or should we inform them that payment is pending resolution of any dispute via the LVT ?

We are a reasonable tennant but now feel cheated and about to be ripped off.

Any and all advice is appreciated. Thanks

Chris

[Poppy]

I recommend that you visit the Leasehold Advisory Service website at www.lease-advice.org.

[yewtree]

Thank you for guidance, it is appreciated. This is very useful. Only issue is that the guidance advises what are the minimum periods to be respected but not otherwise. To explain, the guidance indicates that a min of 2 months notice must be given but, what if the Freeholder gave notice at an earlier period then the property was sold. Having read the oligations on The FH, I can only assume that it is almost impossible to miss all the requirements which makes me wonder whether they issued notice 6, 9 12, ,etc months plus earlier and we purchased in between. This then begs the queston as to the following questions:-

a) where can one find out what notices were issued , if any. The FH is hardly going to tell you if a) they have sold the FH as no longer have an interest or they have not complied (shooting them self in the foot)?

b) What is the maximum period the FH can issue prior to selling ?

c) What are the legal obligations on the previous LH to tell you that the notices have been served assuming they have ?

Any thoughts anyone?

Thanks

[Markonee1]

Hi
I've had the LandlordZone listed as one of my 'favourites' for several years but not searched these forums until recently.
I am a leaseholder of an upstairs maisonette with 900 years left on the lease. My partner lives below me. Our ground rents are fixed at £7.50 per year. All land around us was divided up in the 1950's so there are no common parts.

We started to convert the building into a 4 bedroom semi. The freeholder raised no objections and agreed to sell the freehold at a disproprtionate £1500. We paid a deposit last year but the freeholder has not communicated further! I as nominee will probably have to take him to court.

We have blocked the communal doorway back up to ensure two flats still exist. We are stuck in a funny position because on the assumption of a speedy freehold purchase the council has rerated the maisonettes as a house.

Ten years ago the freehold changed hands as part of a package of 36 groundrents and a further (Unknown) quantity of 'premium' Surrey groundrents. We were not notified under Section 5 (landlords intention to sell) or section 3A. ('85 Act) or even Section 18.(prospective purchasers intention) We thought time had run out for the Right of First Refusal; but an extremely important case in the CA "Savva" 2005 wherein the 'obiter' of Lord Carnforth stated that the time will not run until tenants have been notified of their rights (via the 3A mechanism).The relevent disposal in the SAVVA case had occurred some 10 years earlier!
Sorry to waffle!

What I'm looking for is other leaseholders with 'Maxiwood' of Hove as a landlord to check their satisfaction.
I am also looking for some leaseholders who are insuring their flats/maisonettes through AXA under my landlord or otherwise. I am looking for premiums paid /sum assured for comparison purposes. I find the premiums extortionate and in our case inappropriate... Communal gardeners tools insurance! The landlord is also getting us to pay as part of the insurance a loss of rent cover to the sum of 20% of the buildings cover! This clause belongs with flat rentals.

One final oddity of our leases: The insurance is nominee/agency (usually house leases) and not block. Studying the 2002 Leasehold act says houses with nominee insurance clauses are free to insure with any bonafide insurance co.s 'House' is as defined in Pt 1 of the 1967 act. From the library (the only available resource for complete Acts prior to '88) states that a building may be a house even if it was built as or is split into flats.
There are some 500 other similar premiums out around the country at least according to my insurance certificate policy number and I'd like to find some of them.
I appologise once again for the long posting and it will not happen again. Thanks for the great site.

[tenant29]

1. I suggest that you proceed to buy the freehold immediately as your part conversion of building into one house has created a serious position- your building insurance as 2 flats may not be valid and you may have no cover.

You can make a compulsory purchase under the Commonhold & Leasehold Reform Act 2002. ( Online Information available by download from the Office of the Deputy Prime Minister - see " Long Leaseholders" )

2. Since the 2 flats ( GF + Maisonette ) pay ta otal of 15 pds annual ground rent - I would offer to buy the freehold at 20 x Ground rent = 300 pds and threaten to take the case to the Leasehold Valuation Tribunal if the sale price is not agreed.

3. What is the name of your freeholder and its managing agent ? You can check the freeholder's name from the Land Registry.

4. Then I suggest that you post another message on this forum giving -

Freeholder Name, Managing Agents name , Insurance company name , Policy number , starting date , premium paid and insured cover amount .

Asking if anyone is coved by same policy to contact you ?


5. I think Brighton & Hove Council & Hastings Council have a Leaseholder Association which may offer a way for you to contact other Leaseholders

[Markonee1]

Hi
Thanks for the response.
As previously posted in my 'essay' the Landlord is Maxiwood of Hove.This is also the Freeholder. It is run by a Mr Brotherton who I believe runs a letting agency. There is no management fee (there are no common areas except the road which is under a no obligation of repair by either tennant or landlord and grants 'Right of Way' for all purposes).
There are just groundrent demands and an annual request for us to buy insurance through AXA for which he gets a commission as an Agent of the same.The premiums are about £190 per 2 bed maisonette.
Quotes on the High st start at £90+
The properties are north of Bristol and were a 'conditional freebie' of the purchase of some lucrative (local to him) Surrey groundrents. He is 150 miles away.
He accepted groundrent last year in full knowledge of our part conversion. After last year when we gave him £350 as part payment towards the £2000 inclusive purchase price of our freehold... He tried to make us responsible for pro rata road maintenance [the first occupiers in the 70 year history of the road] and then never cameback to us. Last correspondence was August last year.
Subsequently I discovered that crucial case in the Court of Appeal that even the good folk at the LVT hadn't spotted. (Some of their decisions could be reversed!). So I wish to go down the route of RFR. I told him by letter that this could open the flood gates for other claims within his portfolio; but silence is all I get! Here it is, peruse at your leisure:
http://www.bailii.org/cgi-bin/markup...VVA&method=all

[tenant29]

Thanks for your information giving the website address showing the decision made by the Court of Appeal. Have you asked the LVT if this can be used by leaseholders to gain their freehold at the last sale price when the right of first refusal was not offered ?.

Another thought I have about your wish to contact other leaseholders insured under the same AXA policy number - I suggest you write to AXA and ask for confirmation about the premium paid, the tax paid , amount of insured cover and the commission paid to the landlord. ( and address of other properties insured under the same policy).

[Markonee1]

Sorry for the slow response by me to the help on this thread. I've just been sat these last few months twiddling my fingers and hoping the freeholder would respond to my demands to complete. It looks like I need to go to the County Court. I'll need to do this to establish that the right to the 'Right of First Refusal' exists. I'm sure it does as at no time were we offered the freehold under the same terms as the previous freeholder sold it.

Statute says price to be paid is as sold at the time and excludes the time value of money. As all land divided off there has been no added value; eg development land. LVT decisions show expected returns of about 12% during Christmas 1995 so the freehold values to these pairs of maisonettes are ball park £150.
The other way to get a sale from the freeholder is to challenge the insurance which includes the inappropriate rent cover of automatic payment of 20% of sum insured (about £160000 rebuild for the pair) which means a payout of £32000! Bastard [oops]... I see references to that costing about £99 per flat. I shall claim that back. I'm guessing for the pair of flats he owes nearly £800. Given that if I succeed in court then the other 17 pairs become eligible it could be costly for the freeholder!

Could some of you professional landlords recall approximately what the premium for rent cover has been for the last few years? Ideally back as far as the year 2000?

Additionally in the last insurance demand (request to buy actually; as he only nominates and gets his agency commission) there was a clause where gardeners tools are covered. There's not been a communal gardener since the creation of the leases in the 1950's.

My tradesman friend across the way says he can't insure his tools Could anyone put a cost to this?

One final interesting point is that there used to be 2 head leases (999 years) (Communal gardens era) 1943. Making our 950 year leases Under Leases and protecting freehold sales. However sometime before the 1980's (according to the Land Registry) they were reabsorbed back into common ownership with the freehold and exist only as an extract on the freehold title. I don't think this affects the disputed RFR which took place in 1996. Any thoughts please.

Holy cow another long post
Best regards
Mark

[tenant29]

Mark,

Building insurance is normally take out on based on "declared value" for building re-instatement purposes and the insured cover offered often includes an uplift of 20-30% to cover inflation of re building costs. Leases normally are worded to state the landlord has the right to decide what insured cover shall be included. So going to the LVT to challenge the building insurance may not result in a favourable decision for you.

If the value of your freehold was 150 pounds at the 1995 freehold sale, you should apply to get the County Court to transfer the freehold jointly to you and other flat owner under the RFR (at the same 1995 price ) as soon as possible. Alternatively, you could apply to the LVT for a compulsory purchase and get a determination of the price of the freehold ( I think about 16 x annual ground rent and it would be a lot less then the 1500 which you has agreed to pay ). Your rights are explained at website given below

http://www.communities.gov.uk/index.asp?id=1151618

[Markonee1]

[QUOTE=tenant29]
Mark,
Building insurance is normally take out on based on "declared value" for building re-instatement purposes and the insured cover offered often includes an uplift of 20-30% to cover inflation of re building costs. Leases normally are worded to state the landlord has the right to decide what insured cover shall be included. So going to the LVT to challenge the building insurance may not result in a favourable decision for you.

Thanks for the quick response. I'm a little confused with the above; and think you may have misunderstood my witterings:
The freeholder has an automatic payout clause in the insurance for 'loss of rent' at a sum of 20% of rebuild. His rent/ground rent is £7.50 per year. From what I understand this is cover that I would take out to cover the £500-600 rent that I could get if I rented out, and what 'buy to let' investors do! Why pay an annual premium of £99 to cover income of £7.50? I think it's a scam at no cost to the freeholder that could give an automatic golden egg...

The leases only ask "to insure buildings against loss or damage by fire" ... so strictly speaking with no comma after the word loss; insurance cover against losses other than by fire are not neccessary! (not that I wouldn't want the usual covers)

Regards
Mark