Compulsory Acquisition of the Freehold
The route of compulsory acquisition can be used where the freeholder is in consistent breach of its management obligations over a period of time. It comes under s33 of the Landlord and Tenant Act 1987 and it’s criteria is that:
- There are two or more flats;
- Leaseholders who own more than two flats in the development are not included,
- Two thirds of the flats are owned by qualifying tenants;
- The required majority of the qualifying tenants make the application.
The right does not apply if:
- Less than half the flats in the block are let on long leases (which are not business leases);
- There is a resident landlord.
Preliminary Notice on the Landlord
Before an application for an acquisition order can be made to the County Court, the qualifying tenants must serve a Preliminary Notice on the landlord in (under s27 of the 1987 Act).
The notice must state:
- The name and address of the qualifying tenants;
- The addresses of their flats;
- The name and address for the service of notices in England and Wales if different;
- The tenants intend to make an application to the court for an acquisition order;
- The grounds on which the order will be sought, and the matters which will be relied on in establishing those grounds; and
- The landlord should take steps to put right those matters that are capable of being remedied within a reasonable time limit as specified in the notice. Note that leaseholders may not apply for such an order if the landlord takes the required action.
- If the landlord fails to remedy the matters set out in the notice, or if there are other grounds, then the tenant may proceed with the application to the county court.
The Court may dispense with the requirement to serve the notice if it is satisfied that it would not be reasonably practicable such as where there is an absent landlord who cannot be located.
APPLYING TO THE COURT
Where the landlord fails to comply with the preliminary notice, the qualifying tenants will be entitled to make their application to the county court. Unlike collective enfranchisement or acquiring the right to manage, the application for compulsory acquisition is made in the individual names of all of the participating tenants rather than in the name of a nominee purchaser.
In the claim form, the applicants are required to specify a nominated person, who will be joined as a party to the application. The nominated person could be for example, a company incorporated by the participating tenants through which the freehold will be held when acquired. It is the nominated person who will be named in the order as the person acquiring the landlord’s interest.
Court Makes The Order
The county court can make an Acquisition Order where it is satisfied that:
- The landlord is in breach of any obligation relating to the repair, maintenance, insurance, or management of the premises in question;
- A manager has been appointed by the First-tier Tribunal (Property Chamber) for the period of two years prior to the application being made and the appointment is in force at the date of the application to the county court;
- In either case the court considers it appropriate to make an acquisition order in the circumstances.
An order can be made relating to the whole or part of a building.