Who is the Competent Landlord? Extending your lease.

The Competent Landlord

As mentioned in our article on Section 42 Notices, you must ensure that such notice is served on the 'Competent Landlord'. So who is this? In most cases it is the freeholder, but it's not always that straight forward.

The Competent Landlord is the first landlord above the flat owner that has sufficient years remaining on its own lease to be able to grant an additional 90 year lease extension.

In some cases, the lease of a flat is granted under an intermediary lease as illustrated below.

Competent Landlord

The problem with this scenario is that the intermediary leaseholder may not have sufficient years remaining on their own lease to be able to grant a lease extension to the flat owner.

This is illustrated below

Where the freeholder is the competent landlord

Freeholder Competent Landlord

In the scenario above, the intermediary leaseholder does not have sufficient years remaining on it's own lease to be able to grant an extension to the flat owner, thus the competent landlord becomes the freeholder.

Where the intermediary leaseholder is the competent landlord

This is illustrated in the example below:

Intermediary Competent Landlord

In the above scenario, the intermediary leasehold has sufficient years remaining to extend the flat lease without it exceeding the number of years on the head lease (999 years)

Agreement between the Competent Landlord and Flat Owner

In the Court of Appeal on 29th October 2016 (Kateb v. Howard de Walden Estates Limited and Accordway Limited [2016] EWCA Civ 1176) it was held that any agreement reached between the freeholder, as competent landlord, and the flat owner is binding on the intermediary leaseholder. Despite this, the freeholder must act in good faith and take reasonable care having regard to the intermediary leaseholder's interests, otherwise they would put themselves at risk of breaching their fiduciary duty of care.

The intermediary leaseholder can make an application to the County Court if it feels that there is sufficient evidence to prove the competent landlord is not capable of agreeing the terms.

To avoid litigation the competent landlord should involve the intermediary leaseholder during discussions and negotiations with the flat owner.