Can a landlord be forced to vary a lease?

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    Can a landlord be forced to vary a lease?

    Hi there,

    I live in a block of identical flats.

    One leaseholder has recently sold her flat.
    The new owner negotiated a lease variation capping/reducing ground rent.

    Are the rest of the leaseholders also entitled to such a ground rent reduction?
    It would seem strange for a single lease to be different when all the units are identical.

    Does anyone know if there is any way to compel a freeholder to ensure that leases have the same terms?

    Thank you

    #2
    Not in that case. It's not a defective lease, and I don't think it is sufficiently necessary for the overwhelming majority method of changing the lease to apply.

    The biggest problem will be if you enfranchise. The chances of the resulting residents' management company being able to charge different people different rents is about zero!

    Comment


      #3
      That's exactly what prompted the question!
      We're trying to buy the freehold and (obviously) we would like our ground rents reduced before valuation.

      Could you please tell me a bit more about the "overwhelming majority method" (or at lease point me in the right direction)?

      Thank you

      Comment


        #4
        Aside from wanting ground rent reduction, why would you want to compel the freeholder to ensure that leases have the same terms? I take it when you bought your flat your conveyancing solicitor did not make you aware that the block of flats had different leases?

        Comment


          #5
          If at least 75% of the parties to the lease agree to a change, and no more than 10% disagree (not sure if that is <= or <), there is no other reasonable way of achieving the objective, and the FTT thinks the change is desirable, it is possible force a change.

          I don't believe that the FTT would accept such an application.

          Percentages of the total numbers, not votes cast.

          Comment


            #6
            TruthLedger,

            All the leases had the same terms until very recently when one person sold. As part of the sale the new owner negotiated a ground rent reduction. So there was never an issue in the past.

            Of course the issue has come to the fore now because we're trying to buy the freehold and lowering everyone's ground rent would help reduce the purchase consideration.

            Comment


              #7
              leaseholder64,

              Thank you.

              Are you referring to s.37 variation under the Landlord and Tenant Act 1987?
              If so, I agree that s.35 suggests that an application would only be made in relation to "repair or maintenance".

              But section 37 doesn't explicitly say this (although I accept it may be implied from s.35).

              Comment


                #8
                I am wondering if there is a confusion. May be they extended the lease and as such have agreed for the ground rent to be lowed, but they would have paid money for it.

                Comment


                  #9
                  Originally posted by Flashback1966 View Post
                  I am wondering if there is a confusion. May be they extended the lease and as such have agreed for the ground rent to be lowed, but they would have paid money for it.
                  Hi, it was definitely agreed as part of the sale.
                  I know the vendor and she told me she had paid £500 towards the lease variation.

                  As I understand it, a section 37 variation can be applied for to change any aspect of the lease.

                  Comment


                    #10
                    The limitation on a s37 change is that the FTT has to agree that the change is important enough to require making, and I can't see that being true here.

                    Making the change will cost money in conveyancing fees, including the fees to lender to release the deeds and approve the change.

                    Comment


                      #11
                      Reading this excerpt from Section 37 does seem to support this. If she did get a lease variation for ground rent reduction, all leases should also have had a ground rent reduction too. It could not have happened otherwise:

                      (3)The grounds on which an application may be made under this section are that the object to be achieved by the variation cannot be satisfactorily achieved unless all the leases are varied to the same effect.
                      http://www.legislation.gov.uk/ukpga/1987/31/section/37
                      Attached Files

                      Comment


                        #12
                        I personally cannot see that

                        a) Ground rent amount and
                        b) The term of the contract

                        have any bearing at all on whether the leases are identical.

                        The product can be identical even though the price of that product (term and price are part and parcel of the same) differs. The price is a matter between the seller of the product and the purchaser (and FH can of course waive ground rent completely for a particular lessee if they wish).

                        Of course service charge percentages are a totally different matter.

                        Lease end dates and start dates for example almost always vary because they are issued at different times. Lease extensions can be negotiated but are not compulsory for all lessees.

                        Comment


                          #13
                          I think there are only two ways that you have any chance of getting the ground rent in all the leases to be the same.

                          1. If your leases contain a clause that clearly states that all leases require the same ground rent to be paid, or that all leases must be identical, you might be able to force a change.

                          2. All remaining leaseholders negotiate with the freeholder for informal lease variations to match the terms given for the lease that was recently sold (this will involve paying whatever premium the freeholder wants + legal fees).

                          Unless 1. applies, there is no obligation for the freeholder to keep all ground rents the same, and no way they can be forced to do so. They will want compensating for any loss in ground rent if they do reduce it.

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