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Read Full Bio >Absentee freeholders can cause no end of trouble for the residents of leasehold property. If you’re struggling to get in touch with the outright owner of your home, it can be difficult to know what to do – particularly when the time comes to sell and move on.
In this guide, we explore the issues involved in selling leasehold property with an absent freeholder and explain how to achieve a sale quickly, in a straightforward and fuss-free manner.
What is a Freeholder?
If you live in leasehold property – such as a flat or a house on a shared ownership development – it means that you have bought the right to live in that home for a specified number of years.
However, the freehold title of the wider building or development will belong to a certain individual or company. This party, known as the “freeholder”, retains absolute ownership of the property and its associated land.
They are usually tasked with managing the maintenance, repairs, cleaning and upkeep of the main structure of the building, as well as any communal areas therein. Many freeholders handle disputes between leaseholders too.
The task of calculating, setting and collecting ground rent, service charges and other sums related to the property also falls to the freeholder. They should provide reports informing the leaseholder of the ways in which this money is being used.
Another freeholder responsibility is the acquisition of buildings insurance. They must also pay the associated premiums, though the leaseholder may have their own contents insurance.
Who is the Freeholder for My Flat?
If you’re not sure who owns the freehold title for your home, you can take a look at the information held about the property by HM Land Registry.
While many freeholders remain very active in the management of their property, others do not. On occasion, a freeholder will become entirely uncontactable and apparently cease to uphold their duties. This is known as an “absent freeholder”.
Whether you’re faced with unanswered emails, an unrecognised phone number or calls going straight to voicemail – if you’re not able to contact the owner of your building for an extended period of time, you may have run into an issue of this kind.
Much like an absentee landlord, an uncontactable freeholder can cause all kinds of problems.
Issues with the payment of service charges or questions about building regulations, electrical installations, damage, maintenance issues and anything else besides can cause frustrations to mount when there’s no way of speaking to the person responsible.
This can be particularly stressful if you intend to sell your home in the near future.
So – what should you do in these circumstances?
Selling a Flat with an Absent Freeholder
If your freeholder is absent, you may find yourself struggling with numerous obstacles when preparing to sell a leasehold flat or house. The most common problems are as follows:
1. Your conveyancer may need to contact the freeholder
In many cases, the seller’s conveyancing solicitor will need to get the freeholder of the property to fill in a LPE1 form.
Using this document, the owner must share certain information about the related ground rent, service charges, insurance and other vital matters.
If you have been unable to get in touch with your property’s freeholder, it is likely that a legal specialist would also struggle to do so when the time comes to complete an LPE1.
If your freeholder is also the building’s managing agent, your conveyancer may also need them to hand over a “seller’s pack” or similar. Naturally, this won’t be possible if they remain uncontactable.
2. Properties in poor condition take longer to sell
If you live in a home that has not been properly maintained, it will be harder to sell.
When a freeholder has been absent for a while, it is likely that their building will have fallen into some disrepair. At the very least, the communal areas and outdoor spaces may look a little shabby and perhaps somewhat outdated.
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.
For this reason, your leasehold property is likely to sit on the market for some time – with little interest – if you are unable to make contact with the outright owner of its title.
3. Mortgage lenders will hesitate to get involved
Due to potential problems with maintenance and insurance – as well as a possible lack of dispute resolution options – most prospective buyers of leasehold property with an absentee freeholder will likely find their mortgage provider very hesitant to lend.
There are ways around this issue, however. By arranging Absent Freeholder Indemnity Insurance, you may be able to make the property much more attractive to buyers and their mortgage lenders.
We’ll explain a little more about this type of cover later on.
4. There will be no one to turn to for additional information
You may need to provide a buyer with certain details about the property – such as information on insurance, warranties, access to particular areas, or even just a new copy of the terms of the lease.
They should also be given the contact details of the freeholder in case they need to report any maintenance problems, disputes with other leaseholders or issues affecting the wider building’s insurance.
Naturally, if you are unable to reach the freeholder using the details you have for them, the new buyer will not be able to do so either.
5. Licence to Assign cannot be confirmed
Can a freeholder stop a sale due to their absence? In some cases, yes. Some agreements state that the leaseholder will need the consent of the freeholder in order to sell their house or flat. This is known as “Licence to Assign”, and will usually be stated in the lease terms.
If you have been unable to contact your property’s freeholder, you won’t be able to ask them for their consent in order to sell.
Absent Freeholder Indemnity Insurance
Absent freeholder insurance is a very important product for any leasehold property resident. Having cover of this kind in place will help to appease most buyers’ mortgage lenders, as it will show them that their client is protected should the freeholder reappear unexpectedly.
Specifically, this kind of insurance is arranged to cover a leaseholder who:
- Has not paid the required ground rent or service charges in full to date – perhaps because they had not received notice of any change, or because they have withheld the amount due to no repairs or maintenance being undertaken
- Has in some way broken the terms of their lease agreement, possibly by arranging for repairs to be undertaken to the building themselves in the absence of the freeholder
- Is facing litigation from a freeholder for the above reasons, or as a result of other problems
There are various types of Absent Freeholder and Absent Landlord Indemnity Insurance available – so, if you’re a leaseholder, it’s best to shop around and find the product that best suits you.
Buying the Freehold
If you’re struggling with an absent freeholder, buying the freehold may be the most effective course of action.
This is likely to make the home more desirable to house hunters – as to buy freehold property is to purchase outright ownership of a home rather than the right to live there for a set period. It may be easier for them to arrange a mortgage, too.
Furthermore, you will be permitted to make major changes to the property in order to add value before you sell.
Buying a property with an absentee freeholder can be a complex process, but there are ways in which it can be achieved.
It is possible to “club together” with other leaseholders in your building or estate in order to purchase the freehold from the owner of its title. If you decide to do this, at least 50% of the leaseholders within the property will need to be involved.
You will then need to get the freehold valued. After this, you should serve a Section 13 notice to your freeholder. They must then respond with a Section 21 counter-notice within a set period of time.
In this notice, they may agree to sell, refuse to sell and explain their reasons, or neither agree nor disagree but express their intention to redevelop the building.
If you cannot get in touch with the freeholder, you can apply to the court for a “vesting order”. This will allow the court to transfer ownership of the property without the need to go through the conveyancing process.
What Happens if the Freeholder Sells?
Can a freeholder sell the freehold? The answer is yes. If a freeholder is no longer able to keep up with the demands of the property, or if they simply wish to make some money, they may decide to sell.
However, in most cases of this kind, the resident leaseholders will be granted “Right of First Refusal” – which means that they should be given the opportunity to purchase the leasehold before the property is placed on the open market.
Any Questions?
If you wish to find out how to sell your leasehold property quickly, simply get in touch with our team today. We can provide you with a free valuation and a no obligation cash offer straight away. If you decide to go ahead, we can help you sell in as little as 7 – 21 days.
