'Reasonable' ground rent collection charge?

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    'Reasonable' ground rent collection charge?

    Hi guys

    We recently achieved RTM from our underperforming managing agents. We no longer pay our service charge to them. However our old managing agents still represent the freeholder, and so we still pay our ground rent to him via the old managing agents.

    Following RTM, they've begun to charge a £48 'collection fee' for receiving this ground rent biannually - amounting to an extra £98 a year for most residents. The lease does seem to allow such a charge to be levied by the following clause where leaseholders agree to pay:
    1. the fees of the Lessor’s Managing Agents for the collection of the rents of the Flats in the Building and for the general management thereof.
    Assuming I've read this right and it does allow collection charges to be levied, does £48 a time seem reasonable to you? I'd have thought a few quid would be more appropriate since all they do is send a letter out requesting payment.

    Is it worth challenging this at Tribunal?

    #2
    I would have though the lessor would have been replaced by the RTM in that clause.

    The problem for the lessor is probably that the fee needs to cover the costs of chasing non-payers, as well as simple invoicing costs.

    Comment


      #3
      See section 96 of the Commonhold and Leasehold Reform Act 2002 :

      http://www.legislation.gov.uk/ukpga/2002/15/section/96

      Under 96 (2) it says :

      Management functions which a person who is landlord under a lease of the whole or any part of the premises has under the lease are instead functions of the RTM company.

      Tell the freeholder the RTM can collect the ground rent and charge £48 collection fee from the ground rent..

      Comment


        #4
        Yes..as there is now a RTM there is no need for the original MA, the original MA can charge the FH for its services (such as collection of GR, but this fee cant be recovered from the LHs in this way), a FTT (if asked) would conclude that such costs would be recoverable under the general management fee, but this would be charged by the new RTM), just send the FH the GR fee.
        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


          #5
          Thanks guys this is interesting.

          Would it make a difference that there are two blocks, only one of which has RTM? It's why I've assumed our MA cannot collect on behalf of the whole estate since it only manages one block?

          Comment


            #6
            If there are two blocks there are typically estate and block charges and the estate charges typically remain with the original freeholder, although I half remember that the new manager may have to collect them on their behalf. As such, I would expect the old managing agent to be taking money, from you, for more than ground rent collection.

            Comment


              #7
              Are the other block being charged extra to collect the ground rent?

              Comment


                #8
                No, the new fee has been implemented this Christmas for both blocks.

                Comment


                  #9
                  leaseholder64,

                  There hasn't been any official shared management agreement between the new and the old MAs, though we've requested a meeting to come up with a shared plan. In practice, the new MA is managing both our block and the shared estate space - so our block is paying for all repairs to communal space.

                  Comment


                    #10
                    Hi guys

                    I've confirmed that our MA IS allowed (by the terms of the lease) to charge residents a ground rent collection fee. However I'm still not clear what a 'reasonable' fee would be. The googling I've done suggests about 10% of total is appropriate - does that sound about right? Is there any guidance available on what a 'reasonable' fee would be?

                    Comment


                      #11
                      It would be very unusual to implement a charge just for collecting ground rent and it can't include amounts for chasing non-payers, that would definitely be unreasonable.
                      As others have suggested this collection duty can be taken over by the RTM resulting in minimal extra cost.
                      Or, just pay the ground rent element direct to the freeholder and let them whistle for the rest..

                      Comment


                        #12
                        How much is the ground rent?

                        Comment


                          #13
                          Ground rent is payable by leaseholders under the lease. But ground rent collection fee is payable by the freehold company to its own agent.

                          Comment


                            #14
                            Originally posted by Lawcruncher View Post
                            How much is the ground rent?
                            It varies per lease. The original leases have it at £100 PA - and as the collection charge is levied twice yearly, this amounts to 96% of the total.

                            The informally extended leases are linked to RPI and vary between about £200-300 PA dependent on when they were extended.

                            Those of us who extended formally no longer pay ground rent at all.

                            Comment


                              #15
                              Gordon999 / Section20z

                              It would be very unusual to implement a charge just for collecting ground rent and it can't include amounts for chasing non-payers, that would definitely be unreasonable.
                              As others have suggested this collection duty can be taken over by the RTM resulting in minimal extra cost.
                              Or, just pay the ground rent element direct to the freeholder and let them whistle for the rest..[/QUOTE]

                              I do appreciate your replies but I don't think either of them supersede the lease. I've checked the clause - we agree to pay 'the fees of the Lessor's Managing Agents for the collection of the rents of the flats in the Building'. We have taken legal advice - both from solicitors and our own managing agents - and both suggest that we need to pay it. I really do just want a view on what a reasonable charge might be and what it might include.

                              Comment

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