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News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Imagine a headlease of a block which consists of ground floor commercial premises, common parts, and 20 flats, 15 of which are held by qualifying tenants, four of which are occupied by assured shorthold tenants and one of which is a caretaker’s flat.
The nominee purchaser is obliged to acquire the interest of the headlessee insofar as it extends to the 15 flats held by qualifying tenants. It is entitled to acquire the common parts, assuming that the acquisition of the same is reasonably necessary for proper management of the building. They are not entitled to acquire the leasehold interest in the commercial premises (s. 2 (4) applies as it is not a flat held by qualifying tenant, a common part or appurtenant property). In that case the headlease must be severed and the rent apportioned. If the terms of severance cannot be agreed they would have to be determined by the Leasehold Valuation Tribunal under s. 24 of the Act. In such a case, the tenants need to be careful to word paragraph 5 of the initial notice appropriately e.g. “The leasehold interest(s) proposed to be acquired under or by virtue of section 2(1)(a) or (b) of the 1993 Act is the leasehold interest of XYZ under the lease dated [ ] save insofar as the same relates to the commercial premises shaded blue on the attached plan”.
The headlessee is to be regarded as a qualifying tenant of a flat let out on a shorthold tenancy in the headlease – that is as a result of the decision of the House of Lords in Howard de Walden Estates Ltd v Les Aggio [2009] 1 AC 39. However, on the facts of this example the headlessee owns more than 2 flats and is therefore excluded from being a qualifying tenant of any flat by section 5 (5), which provides that a person who own three or more flats ceases to be a qualifying tenant of any of them.
In Cadogan v Panagopoulos [2010] EWHC 422 (Ch) Roth J held that, on the facts of that case a caretaker’s flat was within the common parts. Roth J’s decision was upheld by the Court of Appeal [2010] EWCA Civ 1259. On that basis the NP could still acquire the headlease interest in the caretaker’s flat.
Suppose the facts of the above example had been slightly different and there had been no flats within the headlease held on an assured shorthold tenancy. In that case section 5 (5) (i.e. the rule that the qualifying tenant of three or more flats ceases to be a qualifying tenant) would not apply. The headlessee would then be a qualifying tenant and arguably the caretaker’s flat would fall within s. 2 (4) (a) and thus would be property that the qualifying tenants would be obliged to acquire. It seems improbable that this was the draftsman’s intention and that this is more the result of the lifting of the residence requirement and the unforeseen decision in Les Aggio that a headlessee is a qualifying tenant in respect of each of the flats in the headlease.
Piers Harrison is a barrister at Tanfield Chambers