The only way is up, or that certainly seems to be the view of landlords seeking to claim development value as part of the compensation payable to them as part of a freehold purchase under the 1993 Act.

As part of the compensation payable under the 1993 Act, the landlord is entitled to claim in addition to what might traditionally be called the ‘term and reversion’ and any marriage value – something ‘extra’ if you will, in respect of lost development value.

Often the roof is an area where it is at least arguable in a built up property that there is the scope for further addition to the property.

Some landlords take things a stage further and seek to create other property interests that are designed to protect their interests in such a situation. One such device is a lease of the ‘air space’ above the building as ownership of this is key to unlocking any future development potential.

So what happens on enfranchisement? Can this additional area be acquired? Or indeed, must it be? And if so, what price will be attributed to it?

These were the questions in the case of Durrels House (Hemphurst Limited v Durrels House Limited [2011] UKUT 6 (LC)).

In this case there was just such an airspace lease in place.  The potential – it was said – for future development was huge and as a flat of significant value could in theory be created. In fact a planning permission for just such a development had been obtained – which is a highly relevant point from the point of view of valuation.

The fact that planning permission had been obtained and that the airspace lease had been granted meant that the tribunal had to accept that the potential for the development of the upper part of the property clearly existed. In valuation terms the value attributed to this area was significant.

The tenants sought to evade the problem of having to purchase the whole of the airspace lease (at significant cost) by seeking to purchase only those parts of the surface of the roof and not the remainder of the lease that would have formed part of the potential development above.

On a collective enfranchisement, the tenants may acquire leases of other parts of the property if they comprise part of the common parts, or if the area is used in common but reasonably necessary for the management or maintenance of the property. At first instance the LVT had decided that any such lease must be acquired in its entirety.

In Durrells House, the Upper Tribunal confirmed that the nominee purchaser is was not obliged to acquire the whole of the airspace lease but could select to acquire (at a lesser cost) simply those parts of the roof and the ‘envelope’ of the building that were that were necessary for maintenance and repair.

The case establishes an important principle, which is that the nominee purchaser may acquire part of any additional leasehold interest that forms part of the common parts or a common area rather than being obliged to buy the whole of this area.

Mark Chick

Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area.  It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.

If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk

Who is responsible for maintaining the structure of the building?

If you live in a freehold property, the answer to this question is simple – if you own the part of the property in question, you are responsible for repairing it.

In a leasehold property a similar logic applies, but you must first establish which bits of the property you own and are also responsible for repairing. This is because with a leasehold property there can be a number of important distinctions between the ownership of a part of the property and the legal responsibility to repair it.

In most leases, the flat owner owns the internal parts of their own flat – for instance, the plaster surfaces of the walls, the floorboards and the ceiling plasterwork. However, the structural or main parts of the building usually belong to the freeholder who has the legal responsibility to maintain and repair them and recovers the cost of doing this via a ‘service charge.’ The proportion of the service charge that you pay might also depend on the size of your flat although this depends on the way in which the leases in the building are written.

There are also some fairly common leasehold arrangements, where the property is effectively divided into ‘layers’ and in which each flat owner is responsible for maintaining their ‘slice’ of the property – both inside and out. This in theory at least makes redecoration and repair of the exterior an interesting exercise and you would hope that the flat owners would co-ordinate in terms of both timing and colour!

This type of arrangement is particularly common in maisonette or ‘one up one down’ type properties – often  in leases granted in the 1970s .

In these ‘maisonette’ leases, it often also turns out that the top floor flat is entirely responsible for maintaining the roof and the ground floor flat is entirely responsible for the foundations.

If your lease has this kind of arrangement then often the only obligation to the freeholder is to pay a ‘ground rent’ – as the insurance of the building is also in the hands of the flat owners. This is at odds with the more frequently found ‘service charge’ type of arrangement mentioned above where the freeholder insurers and the flat owners reimburse the cost of this.

With a leasehold property, the starting point for answering any question about responsibility for maintenance and repair is the lease document itself.

Leases are not always easy to understand and it may help to get professional help in understanding and interpreting the terms in your lease, particularly before commencing major works, or incurring large expenditure as problems can arise if you carry out work on areas that are not owned by you, or that require the consent of the freeholder to carry out work.

If you do require assistance with this sort of issue a specialist solicitor, such as a member of ALEP will be well placed to provide you with help and practical guidance on these sorts of issues.

Mark Chick


Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area.  It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.

If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk

I was pleased to speak at the Landlord and Letting Show at the Barbican on 25th/26th February 2015, giving two talks on “What to look for when buying a leasehold property as an investor” and “How to Add Thousands of Pounds In Value to Your Flat… by buying the freehold or extending the lease.”

Both talks were well received and there was a good Q&A session after each. If any one would like to get in contact to discuss further any of the issues raised then please do email leasehold@bishopandsewell.co.uk or visit:

http://www.bishopandsewell.co.uk

Section 5B of the Landlord and Tenant Act 1987 requires the freeholder to notify the qualifying tenants in the event that he plans to sell the freehold to the property at auction.

For tenants, this means that they will have to act quickly if they want to consider accepting this offer. For landlords, this is a good way of ensuring a quick disposal with a definite end date. It may also be a good way of getting a market value or above market value price, although if the tenants act properly when the property is sold in the room, the successful bidder will know that the tenants have a ‘right of first refusal to complete on the same terms as they buyer (normally within 28 days) and therefore not all interested parties may bid. If you are selling a ground rent it may be better to investigate an informal approach to those looking to buy.

In response to some recent questions, I wrote an article that appeared recently ‘Landlord and Buy to Let’ Magazine.

see:

http://www.joomag.com/magazine/landlord-buy-to-let-magazine/0540853001421676588?short

there is also some more information about this on http://www.leaseholdinfo.com

If you would like to discuss from the point of view of buying or selling a freehold, then by all means do get in contact with me to discuss.

Mark Chick

Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area.  It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.

If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk