Ground Rent no longer being charged

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    Ground Rent no longer being charged

    I own a flat with a share of freehold. The lease states a ground rent of £10 per year which is payable along with the service charge.

    Recent invoices have not included the ground rent which I queried and was told our accountant had advised that it was an unnecessary charge.

    Is this correct or are we breaking the terms of the lease?

    Are there any unforeseen implications of not charging ground rent?

    Thanks in advance

    #2
    The terms of the lease are probably that you pay it without its being demanded, but that has been overridden by statute. There is no obligation on the freeholder to demand it, and managing agents seem to take the view that chasing such small amounts is not worth it.

    However, it is the only source of money that the freeholder can rely on, and use for any legal purpose. In particular, if this is a share of the freehold, costs of administering the company or trust should come from the ground rent, not the service charge.

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      #3
      As above. The accountant doesn't understand what they are talking about. Without ground rent the freeholding company cannot pay for directors insurance, certain legal costs, filings at companies house, company correspondence. £10 isn't much but you should collect it.

      Comment


        #4
        It is not the accountant's decision, he can only advise the freeholder. Perhaps he is suggesting that the cost of issuing demands does not justify the amounts to be collected. The ground rent can be collected at any time within 6 years, so it may be better to wait and collect the amounts for several years.

        In a recent case Chiswick Village Residents Ltd v Southey, the Upper Tribunal has found that corporate expenses may be included within the service charges.

        Comment

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