Ringley's top 10 tips for Freeholders and Directors

1.   Alterations to leasehold property Under most leases a leaseholder is required to obtain consent before making any alterations to a property. It's a simple process also known as an application for a Licence to Alter.

2.   Sub-letting Most leases have a mechanism to regulate and control subletting. There are 3 typical methods: For the leaseholder to... obtain consent or in some cases licence before subletting their property, get their sub-tenant to enter into a deed of covenant promising to abide by key covenants of the lease, serve notice of under-letting or grant of tenancy. It would be a breach of lease to not comply with the requirements of a sub-letting clause, but usually a leaseholder would be able to regularize the position and apply for consent retrospectively.

3.   Consultation & recovery of money towards big works Since 1985 it has been a requirement to consult lessees on big works that exceed the consultation threshold set by the government. If the statutory consultation requirements are not met recovery of expenditure is limited to £250 per flat.

4.   Forfeiture, the Freeholder taking possession of a flat due to a lessee's breach In February 2004 the Freeholder's powers to take forfeiture action were restricted. Forfeiture action can only take place with the permission of the Leasehold Valuation Tribunal or after obtaining a Court judgement. These restrictions were put in place to protect leaseholders from unscrupulous landlords seeking to determine their interest on frivolous basis, i.e. a Court or Tribunal must first determine that there is a breach.

5.   Don't send invalid demands A demand for ground rent, service charges or administration charges must contain the relevant prescribed notes to be valid. In some instances the money demanded may not be legally due until relevant disclosures are made, if at all.

6.   Buy your freehold using the existing management company (if you have one) Otherwise you will bear the cost of preparing two sets of accounts. You may need advice on changing the scope of the Memorandum of Association to enable you to do so and to call a meeting to pass the relevant resolutions.

7.   Don't put up with a defective lease Section 37 of the 1987 Act provides that you no longer need 100% consent to get a defective lease varied. Is your lease effective? Does it have a clause so you can charge interest on arrears? Can you collect service charges in advance? Can you insure the buildings via a block buildings policy?

8.   Consider the terms of a lease extension Whilst since 1993 there has been a legal right to claim an additional 90 years and reduce the ground rent to £1.00/peppercorn if demanded, if the lessee does not need 90 years, by agreeing a modern ground rent you could sell an extension for a little less and keep the value of the freehold title higher.

9.   Consider if you can raise money from the Freehold title Selling a share in the freehold to a leaseholder who did not participate in the original freehold purchase transaction could raise funds to distribute between the existing freehold shareholders. Consider granting consent to the top floor flat to convert the attic to habitable accommodation perhaps an extra bedroom for their flat and charge a premium for granting consent.

10.   Fed up with legal paperwork? Simplify, simplify, simplify! Corporation tax self assessment, write to your local tax office seeking a corporation tax return exemption. Stop trading if you can, reduce your Companies House accounting responsibilities to dormant company accounts (a balance sheet). To become dormant you must have not traded during the accounting year, so (1) Stop receiving income (pass a resolution to stop collecting ground rent, (2) hold money outside the company, ie, in an Agent's Client account so you do not have a trading bank account, (3) ensure you have not bought or sold any assets during the year.