Understanding the Impact of Freeholder Administration on Leaseholders: The Case of Una St Ives

What happens when a freeholder enters administration?

When a freeholder company like KURL enters administration, an administrator takes control of its assets - in this case, the land on which Una St Ives’ 34 private holiday lets, leisure centre, and spa are located - to repay creditors. However, the leasehold agreements tied to these properties remain legally binding. Unless a lease contains an exceptional clause allowing termination upon the freeholder’s insolvency, the administration does not disrupt leaseholders’ rights or operations. This legal protection ensures stability for both leaseholders and the resort’s day-to-day activities.

Operational continuity for leaseholders and holidaymakers

Una St Ives itself is not in administration. The administration of KURL does not affect the resort’s leasehold businesses or amenities. The holiday lodges and villas are owned under separate leasehold agreements and managed independently, while the leisure centre and spa are also under distinct ownership. Holiday bookings remain unaffected, handled by ABTA-accredited agencies and owner websites like Carbis Bay Lodge at Una, providing financial security for guests.

As a result, leaseholders can continue running their holiday let businesses, and holidaymakers can book with confidence, knowing that resort operations are insulated from the freeholder’s financial restructuring.

How leasehold agreements are protected

Leasehold properties at Una St Ives are governed by agreements that remain valid regardless of changes in freehold ownership or administration. These contracts safeguard leaseholders’ rights to use and operate their properties, ensuring continuity even as the freehold land is sold. This stability underscores why the resort’s leasehold businesses and facilities face minimal disruption during this process.

Can leaseholders acquire the freehold?

With the freehold up for sale, some leaseholders may consider acquiring it. Typically, the Landlord and Tenant Act 1987 grants certain residential leaseholders a Right of First Refusal (RFR) when a freehold is offered for sale. However, RFR only applies to buildings with flats where at least 50% of the internal floor area is used as residential accommodation. Detached houses do not qualify, and flats with holiday-use restrictions (in the case of Una St Ives with a planning restriction that limits occupation to 30 consecutive days) may be classified as commercial rather than residential, excluding them from RFR.

At Una St Ives, the leasehold properties are detached houses, not flats, so RFR does not apply. Even if they were flats, their holiday-use restrictions would likely disqualify them from RFR eligibility. Despite this, leaseholders have alternative options to pursue the freehold:

• Negotiation: Leaseholders could form a consortium to negotiate a purchase directly with the administrator or the eventual new freeholder.
• Leasehold enfranchisement: Under the Leasehold Reform Act 1967, certain long leaseholders of houses may have enfranchisement rights to acquire the freehold, if applicable.
• Legal challenge: Leaseholders could contest the classification of their properties as non-residential to claim RFR, though this would require legal proceedings.

Looking ahead

As the Una St Ives freehold is marketed for sale, the administration process will conclude once a buyer is secured. The new freeholder will inherit the existing lease agreements, leaving their terms unchanged. This transition ensures long-term stability for leaseholders and resort operators. For holidaymakers, the resort remains a dependable destination, unaffected by the freeholder’s financial restructuring. Leaseholders, meanwhile, can operate with confidence while exploring potential opportunities to shape the resort’s future ownership.