Lawyers Specialising in Leaseholder/Freeholder Disputes
In any residential lease arrangement, both the leaseholder and freeholder (and in some circumstances a management company) have certain duties and responsibilities they must meet. If these obligations are not met, it may lead to a breach of the lease, resulting in potentially severe consequences for either party involved. Dealing with a breach of a lease by a freeholder can seem extremely daunting at first, especially if you feel as though nothing can be done to remedy the situation or they won’t take the necessary action to meet their legal obligations. Thankfully, with the aid of an experienced property dispute lawyer, there are several ways that both parties can be helped to find a solution. Here, we will explain everything that you need to know about handling a breach of a lease by a freeholder if you are a leaseholder.
NB for the rest of this page where we refer to the rights and responsibilities of a freeholder, those rights and responsibilities may also apply to management companies in certain circumstances
Looking for legal advice on a Breach of Lease By your Freeholder ? Call our specialist Property Dispute Resolution Lawyers on FREEPHONE 0800 1404544 for expert FREE initial phone advice – with no strings attached.
What is a breach of a residential lease by a freeholder or management company?
If a freeholder (i.e. landlord) or management company (if it is their obligation rather than a landlord within the lease) breaches a residential lease, it means that they have not met their legal duties and obligations. Examples of a breach of a lease by a freeholder may include:
· Neglecting building maintenance -– Freeholders must ensure that the building, including any crucial structural elements such as the roof and foundations, are properly maintained. Your freeholder failing to maintain your property can lead to significant deterioration, damage, and safety hazards.
· Inadequate insurance – Keeping the building insured against risks such as fire and flood damage is normally the responsibility of the freeholder. If the freeholder fails to maintain adequate insurance, leaseholders could face significant financial losses in the event of a disaster.
· Failure to redecorate – The freeholder is also usually responsible for painting and redecorating the building. Neglecting this can lead to the building looking unsightly and potentially suffering from further maintenance issues.
· Poor lighting in common areas – Ensuring that passageways and stairwells are well lit is essential for the safety and convenience of building occupants. Failing to provide adequate lighting can create hazardous conditions and may be a breach of the lease agreement.
· Poor record keeping – Freeholders must maintain proper records of annual certificates, accounts, and audits. This transparency is crucial for accountability and making sure that all regulatory requirements are met.
· Neglecting Repairs – Freeholders should carry out repairs to the building, that they are responsible for under the lease, when notified within a reasonable time frame. Ignoring these can lead to inconvenience and further damage for leaseholders.
· Excessive increases in charges – If a freeholder increases rent, service charges, or any other charges excessively, this may also be a breach of the lease agreement.
What are the options if your freeholder has breached the terms of the lease?
Having reviewed your lease, if you are confident that the freeholder has breached the agreement, there are several ways to resolve this kind of property dispute, including:
· Alternative dispute resolution (ADR)
· Making a ‘Right to Manage’ application
· Buying the freehold of your building (collective enfranchisement)
· Applying for a court order
In the beginning, it’s always a good idea to try to resolve any breach by a freeholder by speaking to them directly. In most cases, simply explaining your concerns will result in action, which may fix the problem. If this does not prove effective, speak to a property dispute lawyer about Alternative Dispute Resolution (ADR) methods like mediation.
LEASEHOLD UPDATE
The Leasehold and Freehold Reform Act 2024 was passed on the last day of the last Parliament on 24 May. However following the general election in July, we still don’t have an indication of when the various reforms will come into effect.
Keep up-to-date with the proposed changes – click here to read our Leasehold Reform Latest News
Alternative Dispute Resolution – What is ADR?
ADR includes a range of different methods of finding a resolution to a dispute outside of the courtroom, including:
· Negotiation and “round table” meetings
· Mediation
· Conciliations and ombudsmen
· Early Neutral Evaluation
· Arbitration
Mediation is the most commonly used of the ADR methods. Mediation is a confidential, private and flexible process under which disputing parties appoint a neutral and trained independent mediator to help with a negotiated settlement.
A residential property dispute lawyer will be able to recommend the best ADR method for your particular circumstances. It is important to consider that the courts may not even consider hearing a property dispute matter unless ADR has been used. The good news is that ADR is extremely effective in resolving even the most complex of disputes, including where a freeholder has breached their lease agreement. what’s more, given the significant backlogs in the court system currently, ADR is likely to be much quicker, and much much cheaper, way of solving your problem.
What are the benefits of ADR in a leasehold dispute?
There are a number of real potential advantages to using ADR in this kind of situation including the following:
· Speed – it is often much faster to resolve a matter through ADR compared to going through the courts
· Preserves the relationship between the freeholder and the tenant – ADR is designed to be ‘non-contentious’. This means that both parties are encouraged to be understanding and respectful towards one another.
· An outcome that is more likely to be honoured – because ADR is not contentious, there is less likely to be animosity. And that means that both parties are more likely to keep to any agreement they have reached.
· Allows for court involvement if needed – if ADR is not effective, or if it is only partially effective, it is still possible to go to court to seek a final resolution for anything not already agreed.
· More likely to lead to a positive court decision – your willingness to go through ADR will be viewed positively by the courts.
Here at Bonallack & Bishop, our dispute resolution team are big fans of mediation although we accept that there are some circumstances where it simply doesn’t work. However, where possible, we will work to resolve your leasehold dispute without needing to go to court while preserving your contractual relationship with your freeholder.
Bringing a Right to Manage application
In some cases of a breach of lease by a freeholder, it may be appropriate to bring a ‘right to manage’ (RTM) application. This is often done if tenants are unhappy that the freeholder is not looking after their building to the standard they expect. If an RTM claim is successful (and provided you meet the criteria, your freeholder can’t refuse to let you manage your own block), the claimants can form their own management company with other leaseholders, allowing them to manage the building themselves.
It is important to understand that an RTM company can handle most aspects of building management, with the exception of the collection of ground rent. In addition, the RTM company will not have the right of forfeiture.
Our 5 strong highly specialist leasehold team handle right to manage applications a regular basis.
Click here to read more about how our right to manage solicitors could help you.
Collective enfranchisement
With collective enfranchisement (also known as leasehold enfranchisement or freehold purchase), leaseholders in a block of flats or apartments can join together to take over the freehold and headlease (if any exist) of the building, giving them more control over the management and maintenance of their property. This right is granted by the Leasehold Reform Housing and Urban Development Act 1993. To make a claim for enfranchisement, a leaseholder must:
· Have a ‘long lease’ of at least 21 years when first granted, and
· Not own more than two flats in the building
· There are some exceptions to the above that would allow the leaseholder to be considered eligible but are rare. (For example: shorter leases with a right of perpetual renewal or leases that are terminated on the death or marriage of one of the parties or has an unknown date in the lease for termination).
· That 50% of the owners of flats that meet the above criteria (“Qualifying leaseholders”) participate in the application.
In addition, the building:
· Should be a self-contained unit, or if it is within a larger building, it must be possible to separate it vertically without depending on services from the other parts.
· Must include at least two flats, with a minimum of two-thirds of these flats owned by qualifying leaseholders.
· Have no more than 25% of the internal floor area, excluding common areas used for non-residential purposes such as shops or offices and
Over the last 20 years, our specialist leasehold team have helped around 10,000 people extend their leases or buy their freeholds. And we are the only law firm recommended for enfranchisement work by the HomeOwners Alliance.
Click here to read more about how our Lease Enfranchisement Solicitors could help you
Breach of Lease By Freeholder – Seeking a Court Order
A residential lease agreement is a legal contract. Where a breach of covenant or condition in a lease has occurred and attempts to resolve the matter through negotiation or alternative dispute resolution are not successful, it may be possible to make an application to the court for declaration of the breach under CPR 40.20 and Section 15(1) County Court Act 1984.
Depending on the merits of your case, a judge may issue an order to the freeholder to:
· Pay you compensation for any damage or loss to your property
· Complete any repairs and/or maintenance of the property required or
· Take any other action they feel is appropriate
Another option is to apply to the First Tier Tribunal (Property Chamber) (England) or Leasehold Valuation Tribunal (Wales) for a determination of the breach of the lease
If you are considering taking your freeholder to court due to a breach of your lease agreement, it is important to carefully weigh up the strength of your case and what you might achieve by taking legal action. One of our understanding and experienced freehold dispute lawyers can handle the process for you. We take the time to understand your case and recommend the best course of action to resolve the matter efficiently and in a manner that protects your investment and personal interests.
We would also recommend including within the application that the court or tribunal decide that the costs should not be allowed to be put through the service charges. Without this request being included in the application, the court or tribunal could find the case in your favour but the freeholder could then put their legal costs through the service charge as an expenditure, which would then have to be paid by the tenants, if the lease permits this. If the court decide against this under Section 20C Landlord and Tenant Act 1985, then the freeholder is not permitted to include this in the service charge due from you.
