Q&As

Where the freehold of a building was sold for a market price to a third party at the same time as the seller being granted a 999-year lease of the premises for £1, should a purchaser of the 999-year lease a year later be concerned that the transaction was at an undervalue?

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Published on LexisPSL on 06/01/2017

The following Property Q&A provides comprehensive and up to date legal information covering:

  • Where the freehold of a building was sold for a market price to a third party at the same time as the seller being granted a 999-year lease of the premises for £1, should a purchaser of the 999-year lease a year later be concerned that the transaction was at an undervalue?

Where the freehold of a building was sold for a market price to a third party at the same time as the seller being granted a 999-year lease of the premises for £1, should a purchaser of the 999-year lease a year later be concerned that the transaction was at an undervalue?

It is assumed that an issue has arisen in respect of a commercial building, or at any rate that no more than 50% of the building comprises residential premises consisting of more than two flats held on leases outside the protection of the Rent Act 1977 (RA 1977) or the Housing Act 1985 (HA 1985) and Housing Act 1988 (HA 1988). If that were the case then it is likely that the right of first refusal under the Landlord and Tenant Act 1987 (LTA 1987) will apply and unless the original freehold owner complied with its provisions, then both the transfer of the freehold interest to the third party and the grant of the 999-year lease (of the whole premises, rather than of just a flat within it, which would not be caught) will be vulnerable to being set aside on the application of the residential tenants.

Instead, it is assumed that the focus of concern is the right of a trustee in bankruptcy (in the case of individual insolvency) or the administrator or

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