A vast number of people throughout London and the UK struggle to purchase a home and renting property has quickly become the norm. However, despite its prevalence, renting certainly does not come without its issues. One problem which is becoming increasingly prevalent is the issue of landlords disappearing.
Do you have a landlord who is always out-of-town or otherwise unavailable? This typically occurs in residential flat schemes whereby landlords sell their flats on long leases and have passed away or forgotten about owning the freehold, or the landlord is a company which has dissolved.
Fundamentally, from the tenant’s perspective, this can be extremely daunting and it is safe to assume that two questions will inevitably arise. Firstly, what are the major problems when a landlord is not contactable? And secondly, what are the available solutions?
The disappearing act
If a landlord disappears, they are not be able to perform any of their obligations under the lease, such as building insurance, repairs, resolving disputes between other leaseholders in the property and anti-social behaviours by the occupiers. As a result, with a missing landlord, the tenant is likely to face both financial and social difficulties. Wrexham Council recently rejected plans for the development of houses in multiple occupation (HMOs) because of these underlying problems associated with absentee landlords and the corresponding burden on the tenant to pick up the pieces, when it is ultimately not their responsibility.
Under leases spanning more than 80 years, and where the landlord has not been present to enforce their lease obligations, there is a high chance that the tenant may breach these promises. This could include changing the use of the property or making internal alterations without the landlord’s consent. Consequently, if the tenant was looking to sell the lease, the buyer’s solicitor would enquire whether any changes had occurred within the property. Changes require the landlord’s consent and if changes had been made without it, even despite the landlord being absent, this could lead to the sale of the property not occurring.
In England and Wales, in cases where the landlord is missing, it can be very challenging to obtain a mortgage, as lenders will want to know who and where the landlord is, as the terms of the lease are difficult to enforce without the landlord.
How do these tenants find solace?
It would be prudent to try to make contact with the landlord or its directors (for a company). One way to do this would be to search the electoral roll, a register recording everyone who is registered to vote in the local area. Search agents can also sometimes be engaged. However, if the landlord is a company which has dissolved, these solutions are unlikely to help.
The Absent Landlord Indemnity Policy is another option. This form of insurance protects tenants when the landlord reappears and attempts to make a claim against the tenant for failing to make ground rent payments, or for any alterations undertaken.
A slightly more complex solution is to purchase the freehold. There are several steps that need to be followed in order to allow the freehold title to be transferred to the tenant. However, a flaw of this approach is that the tenant applying for the freehold will need the support of all the other tenants in the building. This could be challenging for two reasons. Firstly, the other tenants would have to pay the premium, which is non-returnable if the landlord were to reappear. Secondly, some tenants may not want the burden of taking accountability of the building. Nonetheless, if there is an agreement between the tenants, the above steps can be taken and the freehold would then be transferred to the tenants.
Positive change is on the horizon
In the last three years, there has been a surge in disappearing landlords and this has caused a significant number of problems for tenants and local communities. However, Local Authorities are beginning to tackle these problems through large scale regeneration schemes, such as one in Blackpool estimated at £300 million, and by enforcing fines on landlords for their failure to comply with their obligations. One example of this can be seen an instance involving a missing landlord being fined £150,000 by Dudley Council in 2019 for not carrying out the necessary safety works to an HMO.
It is not all doom and gloom for tenants and despite Alan Cavill, the Director of Tourism in Blackpool acknowledging that there are issues with absentee landlords, he also explains that “we are working very hard to try and improve things.”