Late ground rent payment charges including legal fees?

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    Late ground rent payment charges including legal fees?

    I moved to a new address and totally forgot to pay my half year ground rent to E&M that is £100 on 1st March. All the letter chase were sent to my old address and I didn't get passed on by my tenants in time, only got them yesterday.

    The first reminder asks for ground rent plus 50 pound admin fee.
    Reminder two increase the admin fee to 150 pound.
    Then a letter from the lawyer asking for a legal fee of £150+£100 ground rent+£200 admin fees

    I spent the whole evening yesterday reading all the Q&A in this forum and found it really helpful. And I have gone back to read my lease which states the following:

    "To pay interest at the rate of 4% above Barclays Bank base rate...."

    "To pay all costs charges and expenses (including legal costs and fees payable to a Surveyor) incurred by the lessor in or in contemplation of any proceedings or service of any notice under Sections 146 and 147 of the Law of Property Act 1925 including the reasonable costs charges and expenses aforesaid of and incidental to the inspection of the Demised Premises the drawing up of schedules of dilapidation and notices and any inspection to ascertain certain whether any notice has been complied with and such costs charges and expenses shall be paid whether or not forfeiture for any breach shall be avoided otherwise than by relief granted by the Court"


    I understand the first paragraph, which is my ground rent +(4%+base rate) and I am happy to pay that, however I am not too sure of the second big paragraph, does that mean I will have to pay for all the legal and admin fees incurred by the late payment?

    Also I would like to go back to E&M (FH) and ask them to
    1. clarify under what sections of the lease are the admin charges due
    2. provide breakdown of admin costs

    Am I going on the right track?

    Many thanks!

    #2
    The demands should have been in a specific format, and should have been accompanied by a statutory notice, detailing your rights to challenge the reasonableness of administration charges, which is what the legal fees are.

    You should probably pay what you believe is the reasonable cost of chasing the debt. If you had paid on the first reminder, their real costs should be low, but there will be a point where they need to escalate.

    Note that the specific form of the ground rent notice arose because ground rents originally did not need to be demanded at all, rather like, I suspect, the rents you are getting from your tenant, and unscrupulous freeholders would let people default and hit them hard.

    Why did you have the property as your service address for the lease? Does it not allow you to notify an alternative address.

    Note that the company you are dealing with seems to have an interesting business model, based on other mentions of them here.

    Comment


      #3
      I would pay the ground rent by cheque, writing ground rent only on the reverse and write a covering letter stating that the cheque is to be accepted as settlement of the ground rent only. I would keep a copy of the letter and the cheque, front and reverse.

      I would not pay or offer to pay any interest if it has not been demanded.

      I would object to the administration charges and state that unless they are reversed, you intend to apply to the FTT. In view of the Company with whom you are dealing, you will probably receive no reply.

      I would NOT pay or offer to pay any part of the administration charges, that would prejudice your position.

      The Company you are dealing with is likely to carry forward the charges hoping that you will not wish to apply to the FTT and that when you wish to sell, you will pay the charges in full.

      You will need to be prepared to apply to the FTT in order to at least reduce the charges to a reasonable level but the Company you are dealing with is well known to the FTT. Unless you intend to sell, I would wait a year or two before making an application to the FTT and ensure that you pay ground rent on time during that period.

      Comment


        #4
        Thank you leaseholder64! I will also include an additional £50 to cover the cost of chasing the debt (more reasonable than £300 I think...)

        I moved to my current property 4 months ago and forgot notifying E&M (FH) in writing. But on completing my BTL mortgage the bank must have notified E&M for the change of my correspondence address, I need look for evidence. I know it was my fault to miss the letters, but they shouldn't really demand £300 for admin costs...

        After reading the second paragraph of the lease, I am very unclear about whether I should pay legal fee...

        Comment


          #5
          Thank you so much for your informative reply eagle2! I am sending back a 100 pound cheque to E&M tomorrow to pay the ground rent and then wait for their reply.

          Comment


            #6
            Usual advice here is to pay what's demanded, and go to the FTT. That way, the freeholder can't claim for further legal fees for chasing the existing legal fees.

            Comment


              #7
              Originally posted by eagle2 View Post
              I would pay the ground rent by cheque, writing ground rent only on the reverse and write a covering letter stating that the cheque is to be accepted as settlement of the ground rent only. I would keep a copy of the letter and the cheque, front and reverse.

              I would not pay or offer to pay any interest if it has not been demanded.

              I would object to the administration charges and state that unless they are reversed, you intend to apply to the FTT. In view of the Company with whom you are dealing, you will probably receive no reply.
              E&M's lawyer state in their letter "all payments must be sent to ourselves. Our client (E&M) will refuse any payment tendered unless legal fees are included". In this case should I still send the cheque of ground rent to E&M then send a photo copy of the letter and cheque to their lawyer?

              Thank you!

              Comment


                #8
                I would send the cheque to the freeholder and not to the solicitors. I doubt very much that it will be returned to you but if they wish to reject your payment of ground rent, that is fine, that would work in your favour. You may wish to obtain proof of posting your letter from the Post Office in case they claim that they do not receive your letter.

                I would not contact the solicitors, you can leave that to the freeholder. Once again I would not pay what is demanded, you are not dealing with a normal freeholder here.

                I must stress that I am explaining what I would do in your position which may or may not be helpful to you and it is entirely your decision. Others seem to disagree with me, which is fine, there are different ways of dealing with issues. I have no intention of criticising others who are giving up their own time to try to assist you. Please consider all points of view and you may wish to seek professional advice.

                Comment


                  #9
                  Freeholder & 'solicitors' are one & the same I believe.

                  Comment


                    #10
                    Originally posted by JK0 View Post
                    Freeholder & 'solicitors' are one & the same I believe.
                    That is also my understanding.
                    They seem to have an intricate network of Companies and businesses, including "debt collectors"..

                    Comment


                      #11
                      Extra costs are only payable IF the lease allows and IF demanded correctly with Administration Charges - Summary of Rights attached..the s146 clause can't be used for amounts under £350 also note this figure can't be bumped up by admin/legal charges. From what your lease days all you may owe extra is the 4% interest.
                      Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                      I do not accept any liability to you in relation to the advice given.

                      It is always recommended you seek further advice from a solicitor or legal expert.

                      Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                      Comment


                        #12
                        Originally posted by eagle2 View Post
                        I would send the cheque to the freeholder and not to the solicitors. I doubt very much that it will be returned to you but if they wish to reject your payment of ground rent, that is fine, that would work in your favour. You may wish to obtain proof of posting your letter from the Post Office in case they claim that they do not receive your letter.

                        I would not contact the solicitors, you can leave that to the freeholder. Once again I would not pay what is demanded, you are not dealing with a normal freeholder here.
                        Thank you so much eagle2 for all the useful advice! Like you suggested earlier I sent a cheque to E&M via recorded delivery last Thursday and now I'm waiting for their response (the cheque has not been drawn yet).

                        Comment


                          #13
                          Originally posted by andydd View Post
                          Extra costs are only payable IF the lease allows and IF demanded correctly with Administration Charges - Summary of Rights attached..the s146 clause can't be used for amounts under £350 also note this figure can't be bumped up by admin/legal charges. From what your lease days all you may owe extra is the 4% interest.
                          Thank you andydd! I have sent back a cheque to cover ground rent only and am ready for the battle with E&M.

                          Comment


                            #14
                            Let us know how you get on..this is a common scam to try and get more money out of LHs.

                            Even if you are late paying that can't add on any more unless lease says, s146 doesn't apply to amounts less than 350, in any event there is lots of legislation that allows you to challenge amounts for reasonableness. ..there are a lot of hurdles for your FH to clear. .I suggest they fail at the first fence.

                            I can only see the interest being legitimate and they haven't correctly demanded that so that's not payable either.

                            When you send cheque ask them which clause in lease they are relying upon to charge extra.
                            Last edited by andydd; 25-07-2018, 03:18 AM. Reason: Typo
                            Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                            I do not accept any liability to you in relation to the advice given.

                            It is always recommended you seek further advice from a solicitor or legal expert.

                            Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                            Comment

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