Don’t ignore your nil value units when charging property
Nil value units can be an administrative headache when charging property. It is easy to assume they do not matter and do not need to be included precisely because they hold no value. These units are very often omitted from lists. It can take a lot of time to work out which properties have been omitted and then to have them put back in. It would be better to include them from the outset.
What are nil value units?
These can be any unit, the freehold of which is owned by the landlord, where a lease has been granted out of that freehold. These might be flats in a block sold under the Right to Buy or 100% staircased shared ownership units. These are the more obvious units to identify. More hidden, are the units which might be used as for example a guest room within a scheme or as perhaps an admin office space within a block. Also, any form of commercial unit, such as a shop under flats. All these need to be included in any list of property to be charged because they are an intrinsic part of the legal interest of the property being charged.
In this situation the landlord's chargeable interest is the freehold of the block subject to any leases.
Why do nil units need to be included?
The reason they must be included is because the full legal interest owned by the landlord is what is being charged. So we need to understand and clarify exactly what that includes.
There is also a practical reason. We always have to consider the need to ensure that it is possible to readily sell any charged property in an enforcement scenario. In practical terms, the freehold of a block of flats cannot function piece meal. All parts of the building are physically interdependent and necessary for one another to exist. There can be no 'floating' parts. So, all units must be included to ensure we can sell a fully functioning independent entity.
By contrast, if a landlord owns a number of houses in a street and one of these is sold, it can be excluded. This is because it can function as an individual unit and the remaining units can function without it. They can be separated out into different legal interests.
It is essential to bear in mind the legal ownership of your property when preparing lists.
When lists are accurate and complete, charging can run smoothly and efficiently.