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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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If i want to redevelop a block of freehold properties that

Resolved Question:

If i want to redevelop a block of freehold properties that have flats above that have been previously sold off on long leases,what rights do the leaseholders have and can we terminate the leases.
Submitted: 2 years ago.
Category: Property Law
Expert:  Joshua replied 2 years ago.
Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

May I clarify is this a row of maisonettes or another type of property please?

Joshua :

Whether this is maisonettes, a block of flats or another type of premises, from what you say you own or are looking to buy the freehold for the entire block which will include the freehold reversion of the flats you mention (i.e. you are/will be) their freehold landlord.

Joshua :

Is the above correct please?

Customer:

Hi Joshua

Joshua :

Hi there

Customer:

Hi joshua this is a block of 6 victorian detached properties along a main road all the ground floor premesis are retail shops and the residential flats above have been sold on long leases. we would like to purchase all the freehold titles but what is the situation if any of the leaseholders dont want to sell?

Joshua :

Thanks. For the avoidance of doubt, for your proposal to go ahead you would need to acquire vacant possession of the leasehold flats and the shop premises in each building. Is that correct?

Customer:

Yes we would be looking to demolish everything and rebuild

Joshua :

Thanks. there are some potential traps to avoid here as well as challenges in respect of your proposal. To potential traps come to mind which are the right of first refusal and enfranchisement rights both of which give the tenants of the various leases rights which potentially could be adverse to you. From what you say, I suspect you will avoid the straps but it is important to be sure.

Joshua :

the landlord and tenant act 1987 gives tenants of long leases the right of first refusal upon sale of the freehold. In other words, where the freehold of a building is sold, under the above act, the tenant has the first right to acquire the same. However, for this right to exist, it is necessary for the to be two or more flats in the building and from what you say, each building only has one flat. If this is the case, the right of first refusal should be avoided

Joshua :

the second potential trap is attendance right to enfranchise. this is a right provided by the commonhold and leasehold reform act which gives the tenant the right to force a landlord to sell him the freehold. For this right to exist however among other things, it is necessary for a building to contain less than 25% of commercial space and again, from what you say, this therefore should not likely apply but it is important to be sure

Joshua :

assuming you successfully avoid these traps, this should be no difficulty in you acquiring the freehold of each building. However, if you were to do so, the freehold would be subject to any existing leases that have been granted and there is no legal way for you to force any tenant to sell you his leasehold interest, though equally there is nothing stopping you making an offer for the same. The only way in which you can force a tenant out of the property would be by showing that the tenant is in breach of one or more covenants under the lease and even where you could show this, a court would only order forfeiture of a residential lease in exceptional circumstances - in practice it almost never happens

Joshua :

accordingly, what you are likely proposing is effectively the purchase of in the case of each building to properties-the freehold title which presumably includes the commercial premises and the leasehold title which from what you say comprises a residential flat. You would need to ensure that you have agreement for the sale of both titles before proceeding in each case. It may well be that one or more of the individual leasehold tenants would be willing to sell but equally, one or more of those leasehold tenants may not wish to do so. therefore, before you proceed in spending much if any money on this project, it would be sensible to approach the various residential tenants in question to negotiate with them and if they are in principle willing to sell, consider taking option agreements or something similar in respect of each of their leasehold flats so that you can be sure that if you do progress with your proposal and spend money doing so, at least you have the right to buy those individual leases at the prices you agree with the individual tenants

Joshua :

to directly address your initial question, unfortunately if these are indeed long leases as you suspect, as above, there is no reliable or even likely way you would be able to forcibly terminate the leases. You will likely be aware that in fact tenants possessing long residential leasehold titles have the right to extend their leases beyond the original term for a market rate though you could seek to oppose such an extension on grounds of redevelopment; having said that, assuming the existing leases have some considerable term left run, this is likely to be of little use in practice.

Joshua :

there is of course nothing to prevent you from proceeding with redevelopment of the ground floor of the individual premises which are not occupied by residential leases unless there is a provision granted in those residential leases that restrict redevelopment which would be unusual.

Joshua :

Have I been able to help you with all your questions on the above?

Customer:

Yes Thank you very much.

Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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