Can freeholder refuse permission to let leasehold property?

[Lat]

I live in a Victorian house that was converted into 2 x 3 bedroom flats. The freeholder owns the upstairs flat and has never lived there but has rented it out to tenants for the last 25 years. I have a lease on my flat for 975 years.

If I want to rent my flat out can the landlord refuse permission?

Thanks in advance.

Lat

[mind the gap]

What does your lease have to say on the subject?

[ram]

Often, but not always, your lease may state you must ask the
freeholders permission to sub-let ( underlease ). so as above, check
your lease as to the exact wording.

Yes, he can refuse, but refusal MUST be quantified and be an
extreem condition for refusing to authorise.

If your lease prohibits underletting "The whole" of the property,
then by way of the freeholder sub-letting ( underletting ) for
the last 25 years, then freeholder has waived this clause.
(added in case you come back and say the lease prohibits sub-letting )

Is subletting (underletting ) of the "Whole" mentioned in your lease ? ( as opposed to "Part of the property" )

Is mention of asking the freeholder for permission to underlet, in your lease ?

[Lat]

Thank-you ram and "mind the gap"

The only clauses relating to sub-letting I can see in the lease are shown below. I have rented this flat out before and the freeholder has known about it. I did not formally request permission at the time and there was no issue. When contacting the freeholder recently about buildings insurance coverage of which I pay half towards, I did specifically ask does the buildings insurance cover let property. He sent me the policy documents which to me does not look like a Landlords insurance policy and his reply was....

“Please have a read through the attached and see what you think; but i think that all should be covered, albeit with the usual insurance company's small print. My property has always been rented so that was always declared. I think the main thing is usually to ensure your lender knows.”

There is no mortgage on my property. Would you regard that reply as permission?

Leasehold entries.
(8) Not to assign transfer underlet license part with or share possession of any part of the Flat being less than the whole thereof__________________________

(9) Within three calendar months next after any transfer assignment underletting charge or devolution of their interest hereunder in the Flat to give notice in writing to the Landlord of such transfer assignment underletting charge or devolution and pay him a fee of ten pounds plus VAT for the registration of such notice________________________

[ram]

A ) There is no mortgage on my property. Would you regard that reply as permission?

Leasehold entries.
B) (8) Not to assign transfer underlet license part with or share
possession of any part of the Flat being less than the whole

C) (9) Within three calendar give notice to Landlord, pay him £ 10

A ) Would you regard that reply as permission?

No. it is not permission. You just asked to see ( which is your right )
the buildings insurance policy.
I can ask a shipping company how much to import 56 pistols into
U.K. -- A quote given on shipping costs,+ expected import duty
payable based on the value of the goods, is not permission to import
illegal goods.

B) Not to underlet less than the whole
Are you sure there is no other mention of not to underlet the Whole ?
if not, and if no whered oes it say to get the freeholders permission,
then you do not need the freeholders permission.

C) You do just that, notify the freeholder of underletting, their
names, and give him £ 10.

Just make sure your A.S.T. states the tenant will observe the
head lease, ( Exluding service charge and ground rent stipulations )

Looks like you can go ahead, but why ? are you asking if freeholder
can stop you letting out your flat. Was thee a reason why you
think he may want to ?

Insurance -- Block insurance is for the TOTAL building, common
water and sewerage pipes, the roof etc.
If you want to run a business by letting out your flat, you need
insurance- for that flat only. E.G. Landlords insurance.
But - your tenants must get their owen contents insurance, andyou
need to see a copy within 30 days of occupation.

Happy letting.

R.a.M.

[dominic]

Assuming the extract is all that the lease has to say about sub-letting, you don't need permission.

RAM: the lease only needs to state what is not permitted, there is no legal need to expressly say anything about sub-letting the whole of the property unless restrictions applying to the sub-letting or disposing of the whole are to be imposed, and therefore it is not uncommon for the extract quoted by the OP to be the sum total of all that a lease has to say on the subject.

[Lat]

Thank-you Ram and Dominic.

In answer to Ram's question..

Looks like you can go ahead, but why ? are you asking if freeholder
can stop you letting out your flat. Was thee a reason why you
think he may want to ?

I am thinking about registering in the "Non Residents Landlords Scheme" and am trying to cover all the bases so there are no surprises when I am out of the country.

This is off topic but the buildings insurance premium is just over £1000 per year. Given that the freeholder rents out upstairs I would of expected a Landlords building insurance which is definitely not the case here. The policy clearly states .....

What is not covered…..
Damage caused by:

• wear and tear, settlement, shrinkage,
vermin, insects, fungus, weather conditions
or anything that happens gradually
• faulty materials, design, workmanship or
electrical mechanical breakdown
• chewing, scratching, tearing or fouling by
Your domestic animals
• building renovations, alterations, extensions
or repairs; or
• paying guests or tenants.

An online Landlords building insurance quote with Direct Line to cover the whole house with both flats rented came in at £735.

[ram]

You only need landlords insurance for YOUR flat, should you wish to
have landlords insurance.
You don't need a quote for a flat that does not belong to you.
The other flat takes out landlords insurance for their flat ( should they wish to )

The Block insurance price seems about right of £ 1000, as does
the not covered items.
As stated before, if you wish do more things with your flat, you
may take out extra insurance if you want extra cover for letting
out your flat.

[Lawcruncher]

If clause (8) is the only clause that mentions subletting you do not need consent provided you are subletting the whole flat. Do not ask for consent. All you have to do is comply with clause (9).

[dominic]

You only need landlords insurance for YOUR flat, should you wish to
have landlords insurance.
You don't need a quote for a flat that does not belong to you.
The other flat takes out landlords insurance for their flat ( should they wish to )

The Block insurance price seems about right of £ 1000, as does
the not covered items.
As stated before, if you wish do more things with your flat, you
may take out extra insurance if you want extra cover for letting
out your flat.

What does your lease say about building insurance requirements? it seems likely (although we cannot say for sure without reviewing the terms of the lease) that the FH's current cover is inadequate because, as you rightly point out, it will not cover damage caused by tenants (noting that sub-letting is permitted by your lease). This means that, should the building burn down because a tenant left the gas stove on, or snmoked a cigarette before bed (even in contravention of the tenancy agreement), the insurer would not pay out, meaning you would have to find the hundreds of thousands of poiunds yourself (together with the FH) to rebuild it.

The individual insurance ram refers to is (LL's) contents insurance, not buildings insurance, the latter of which should be taken out by the freeholder, who owns (and is responsible for) the fabric of the building in which your flat is situated.

It is also in the FH's interest to upgrade his insurance so that it will cover damage by tenants - he will lose his property also in the circumstances described above. Also, query whether you yourself (as a leaseholder) are a tenant within the meaning of the policy terms?

If the current cover does fulfil the insurance requirements of the lease, then unfortunately you hjave a very badly drafted lease!

[Lat]

Thank-you everyone that replied. I do appreciate that this has gone off topic from the title.

Dominic has captured my concerns exactly regarding the buildings insurance, I would of expected to see a “Landlords Buildings Insurance” given my first post that the freeholder/landlord has rented upstairs for the last 25 years and still is renting out upstairs.


The buildings insurance cover is provided by an agent and is underwritten by Royal and Sun Alliance

Within the insurance schedule is....
Name and Address of Insured - Freeholders name and address (who lives in another borough)
Address of Insured Property - Both flats addresses are entered.
The date and monthly amount of first Premium - (I pay half to the freeholder monthly)
It clearly states "BUILDINGS" cover.

In the “General Exclusions/Policy Conditions” section
The following endorsements apply to the buildings section of the Policy.
THE INTEREST OF THE FOLLLOWING PARTIES IN THIS INSURANCE IS NOTED
Upstairs Flat Address – FH’s Name – FH’s Mortgage company name – FH’s Mortgage Account No.
My Flat Address – My Name – Expired Mortgage company Name* - Expired Mortgage Account No*

*The mortgage on my property has been paid/settled.


The policy document can be found here....
http://www.selectandprotect.co.uk/do...%20Wording.pdf

Within the policy document it does discuss Legal Advice and Helpline. I can always make the phone call tomorrow to find out but would anyone know as a leaseholder paying half towards a building insurance policy if am I entitled to use the policy services? and hopefully ask the question Dominic raised…

Also, query whether you yourself (as a leaseholder) are a tenant within the meaning of the policy terms?

Here are the entries from the Lease relating to Insurance/Fire

4.______THE Landlord HEREBY COVENANTS with the Tenants as follows :-

(2) At all times during the term hereby granted to insure and keep insured the Building against loss or damage by fire and all risks normally covered by a comprehensive policy and such other insurable risks as the Landlord shall determine in some insurance office of repute to the full replacement value thereof including Architects Quantity Surveyors and other professional fees and two years loss of rent the Landlord making all payments necessary for the above purposes within 7 days after the same shall respectively become payable and to produce to the Tenants on demand at the cost of the Tenants the Policy or Policies of such insurance and the receipt for the last premium for the same______

(3) Unless the insurance shall have been vitiated by some act or default of the Tenants as often as the Building or any part thereof shall be destroyed or damaged as aforesaid with all convenient speed to rebuild and reinstate the same in a good and substantial manner________

…………………..
…………………..

(b) IT IS HEREBY MUTUALLY COVENANTED AND AGREED
by and between each of them the Landlord and Tenants as follows :-

……………………..
……………………..

7, PROVIDED THAT in case the premises hereby demised or any part thereof shall at any time be destroyed or so damaged by fire or otherwise as to be unfit for occupation or use then and in such case (unless the destruction or damage shall have been caused by fire or other insured risks and the insurance shall have been forfeited or vitiated by the act or default of the Tenants and the terms of such insurance shall have been previously disclosed to the Tenants) the rents service charge and other payments hereby reserved (which shall in the case of the rent first hereinbefore reserved be deemed to be apportionable or a fair proportion thereof according to the nature and extent of the damage sustained) shall as from such destruction or damage as aforesaid and until the Flat shall have been built or reinstated and made fit for occupation and use or until the expiration of two years (whichever period shall be shorter) be suspended and cease to be payable.

[Gordon999]

So within the schedule of insured cover ( under buildings - section 2) what is

(1) the insured cover for re-instatement of the entire building ? Does it show 300,000 pds or some similar figure ?
(2) the insured cover for public liability ? may be 2 Mil pds ?
(3) the insured cover for employee liability ? may be 5 or 10 Mil pds ?
(4) insured cover for LL effects in communal areas ( not inside the flats )?

[Lat]

Hi Gordon, to answer your questions...

(1) Cover is for just under £350,000 (Sum Insured)
(2) No mention of public liability
(3) No mention of employee liability
(4) No mention of communal areas.
(5) Accidental damage is included.
(6) The Excess is stated at £100, Flood Excess £100 and Subsidence Excess £1000

[dominic]

The more I rad this the more I think this policy is an owner occupier policy not suitable for a building spolit into two flats (although I am no financial/insurance expert).

I would ring the insurance company (assuming they let you speak to them, if you are not the policy holder), and describe the circumstances. This may jolt the insurer into speaking to the LL about any flaws in his cover.

If that doesn't work, come back to this forum. As a LH you have certain rights with respect to the insurance taken out by your FH for the building in which your property is situated.

[Lat]

Thank-you Gordon and Dominic.

I am thinking about getting 3 quotes from "reputable" insurance companies for "Landlords Buildings Insurance" using the same parameters as above but as me as the freeholder for the whole property which must include cover for both flats rented out. I appreciate my details/circumstances will not be the same as the freeholders but I imagine the schedules and quotes supplied will highlight what should be mentioned in a schedule when cover is required for properties that are let out. Who knows, the quotes that come in may be cheaper than what we are currently paying. Not too sure where I stand if I send these 3 quotes/schedules to the Freeholder for his consideration.