Leaseholder Not Paying Service Charges

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    Leaseholder Not Paying Service Charges

    I'm hoping someone can help. I've tried to condense this - sorry if it's still too much.

    I'm a freeholder in a house converted into 2 flats. I live upstairs. The leaseholder (downstairs) has ignored my invoices/letters (all invoiced correctly with the correct information) related to his share of the buildings insurance/maintenance for 3 years.

    If the leaseholder wasn't aware of the lease and its terms before I became the freeholder, I wrote to him advising him that he should observe the terms of the lease shortly after I became the freeholder, so he is aware that insurance is renewed each December. I think he just expects me to pay it. There have been numerous other problems (dog dirt on account of his dogs in my garden all the time and him not once clearing it, not receiving my post because the postman considers his dogs a risk (they shouldn't be in there at all and there is a gate for their side), offensive and threatening language, noise/shouting throughout the night, stealing plants from my garden to sell, which they admitted to). They are three brothers all in their late 50s/60s, and I find them v. intimidating, if I'm honest.

    I have seen a solicitor who confirmed numerous breaches and I am debating what action to take. I am about to write to them with the fourth insurance invoice. I had cause to contact him 10 days ago as I was changing provider due to a massive increase by the current insurance provider. I needed more details about him, at the provider's request, but the leaseholder has not responded, despite the fact I made it clear it was urgent. I have therefore had to take out a different, more expensive policy, and I have no doubt they will ignore the invoice again.

    There is a sentence in the deeds re. interest which I don't understand, but I thought if they realised there is a further cost implication for them, and that I am happy to apply it, then it may cause them to think twice. The following extract is exactly as it appears in the deeds:

    'To pay the rents reserved at the time and in the manner aforesaid without any deduction or abatement whatsoever (except as aforesaid) and to pay interest at the rate of 2% per annum above Lloyds Bank base lending rate for the time being with minimum of 10% per annum as well before as after any judgement on any rent which shall remain unpaid within 14 days of the same becoming due.'
    1. Can anyone explain to me exactly what this means, so that I can add interest onto what is outstanding, or whether I can continue to add interest the longer this goes on, so as to act as a deterrent for non-payment in the future?
    2. Is there any reason why it would be more effective to handle this via a solicitor over pursuing it via the First-Tier Tribunal (Property Chamber)?
    3. If these types of disputes seldom result in eviction, which I have read elsewhere, what is the deterrent for a leaseholder not to breach the terms?

    I'd be really grateful if anyone can help with any of these questions.
    Many thanks!

    The clause, given current interest rates, means that you can charge 10% of the debt per year, 5/6 % per month, etc.

    You pursue the debt through the County Courts, not the FTT. The FTT has no ability to enforce payment, only an ability to say that the charge is validly payable.

    The FTT would get involved, if the leaseholder claims he is not paying because the charge is unreasonable or not permitted by the lease; or if you were to actually pursue a course potentially leading to forfeiture of the lease. Although this is controversial with some members of the forum, who advise leaseholders not to pay legal costs, many leases allow you to recover legal costs of forfeiture, even if the process does not go to completion, and disputes are handled that way as the only sure way of recovering costs if the leaseholder pays up after you have incurred costs.


      64 knows what he is talking about.
      I will add that I think, other than the money, the fundamental problem is their breaches of the lease. It appears they are bullying you to allow their behaviour to continue.
      I am always reluctant to suggest escalating things, especially when it could be costly and personally stressful.
      If financially possible for you I would consider consulting a specialist leasehold law solicitor to seek forfeiture of the lease. If they won't abide by the lease they should go.
      However, big however, it is difficult, time consuming and expensive to enforce the lease. On the other hand can you put up with them being there.
      Sorry for your problems, best wishes.


        Find out if they have a mortgage (land registry) then write to mortgagor saying how much is owing and that you are about to commence proceedings with a view to forfeiture.
        If it's unencumbered just send letter before action then small claims online.


          Very good suggestion.



            Thanks so much to each of you for your help! I'm much clearer on what I need to include in my next letter to them and where to go if I don't get a response/payment. I've pretty much decided to put my flat up for sale – it's a lovely flat, but I'm dealing with a totally different mindset and I don't think I will ever feel comfortable with them so close. Their mother was the leaseholder of the property originally, before I got here, and it's unencumbered. I think they have been there a long time and they pretty much think they can do what they want.

            Once again, thanks for all your wise words!


              Wasn't going to suggest that not knowing how you felt. However that is what I would do in the situation. In our block of 12, fortunately a holiday home, a dispute has gone on for 7 years. Hope you can get a quick sale but be careful not to conceal anything which might come back at you.


                Don't let this defaulter downstairs beat you! Give the debtor seven days notice to pay failing which you will issue proceedings which may affect his ability to obtain good and services on normal credit terms.
                Then go on line and Issue a "money claim online" for the debt owed, setting out the arrears amount and compound interest at the county court rate which is 8% pa. It wont cost you very much. Bring things to a head. In my experience most people will cough up when faced with a summons. Some will dispute the amount and give spurious arguments as to why they should not pay the full amount. Eventually you will succeed, and almost certainly win costs. It took me nine years to collect insurance premia from a nutter of a leaseholder but in the end we got every penny. I let it run, sending statements every six months knowing that in the end he would have to pay; a leaseholder can't sell or remortgage without a clear 'rent account' and for this purpose arrears of buildings insurance will typically be owed as rent. In the event he ignores the summons and you get judgement you are technically entitled to obtain an order for sale but in real life I would suggest registering a charge against the lease, ie like a second mortgage. All of your costs at the county court rate will be recoverable on getting judgement.


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