£390 Overdue Charges on £50 Ground Rent Balance

[J-T]

I've read around on here and read the FAQ, but I'm hoping for a little more direction on the following:

I purchased a long (999yr from 1976) leasehold BTL in 2018. I have just refinanced the property and the mortgage company asked about the ground rent account, which spurred me into thinking that I had never received a demand for that property. I was not particularly concerend, as I have a couple of older properties with a similar leasehold setup, where I usually have to chase to pay, as the ground rent is around £3 a year. The ground rent for the subject property is £20 per year according to the lease. I dug out the paperwork from my solictors from when I purchased and found that part way through the purchase, the FH changed managing agents to the current lot, Simarc Property Management and I had to pay an amount double to that previous to register the sale with them (this should have rang alarm bells!!).

Today, I called Simarc, explained that I had never receieved a ground rent demand and wanted to settle the account. I was then informed that the account currently stood at a total of £440 due to charges for late payment. They claim that demand letters have been sent to the property address (they may have been, however I do not and have never lived there). I have asked them to update the correspondence address and to send a demand to the same (not yet received). I then managed to set up an online account with them, which shows the following breakdown:

Ground Rent Due as of 29/9/20 - £50
Ground Rent Collection Costs 28/10/20 - £78
Total fees and other charges - £390
Total Payable - £440

Had they simply added the £78 'collection costs' to the account, I would have just paid it and moved on. However, I am loath to just roll over and accept £390 of 'other charges'.

I have dug out the lease and found the following clauses relating to payment/non-payment:

"...to hold the same unto the lessee henceforth for the term of 999 years and paying therefor during said term the yearly rent of 20 pounds to be paid in equal half-yearly payments free from all deduction on the 25th March and the 29th Sept in every year..."

"If the said rent hereby reserved or any part thereof shall at any time be unpaid for the space of three months next after any of the days on which the same ought to be paid whether the same shall have been legally demanded or not or in case the Lessee shall fail to observe or perform all or any of the covenants ...then it shall be lawful for the Lessor or any person or persons duly authorised by it in that behalf at any time thereinafter to enter into and upon the property hereby demised and the messuage or buildings for the time being thereon or on any part thereof in the name of the whole and the same to have again repossess and enjoy as of its former estate anything herein contained to the contrary notwithstanding and thereupon the term hereby created shall cease but without prejudice to any right or action or remedy of the Lessor in repsect of any antecedent breach of any of the covenants by the Lessee and conditions herein contained"

These clauses appear different to other cases that I have read and there are no others that relate to payment. It seems to be saying that 3 months after ground rent is unpaid, the FH could repossess the property.

I suppose what I would like some opinions on is the following:

1. In light of the above clause, is this worth fighting, as I would rather pay an unfair bill than instigate repossession as unlikely a consequence as that seems to me?
2. I realise that them not having my correspodence address will not be much of a defence. However, when my solicitor registered the sale, should they not have provided them with this? The solicitors did know that I would not be living at the property as it was purchased with a BTL mortgage and their own correspondence was all sent to my address and never the subject property even after completion.
3. I assume my next step should be to wait for the paper demand to arrive and check it is issued correctly and the check the breakdown of charges. Is there anything I should be doing in the mean time?

Any help appreciated

[eagle2]

Please remove the name of the agent from your post. I recommend that you pay the ground rent by cheque, make it clear that it must not be accepted for any other purpose, keep a copy and proof of posting. I would also ask them to remove the other unreasonable charges otherwise you will apply to the FTT. You may need to apply to the FTT if the costs are not withdrawn. You may also wish to consider offering to pay part of the costs claimed as you ought to have advised the freeholder of a correspondence address.

[J-T]

Apologies, there does not appear to be an option to edit it

[Lawcruncher]

Send a letter to the agent/landlord enclosing a cheque for the rent. Say: "I enclose a cheque for the rent relating to [insert address of property]". Say absolutely nothing else.

Have a look at the lease and let us know if if it has a clause dealing with the payment of the landlord's costs for anything. If it does please quote it in full.

[eagle2]

If you just send a cheque for ground rent with no other comment, the probability is that the payment will be accepted and applied against other charges and additional charges will be added to your account. I respect Lawcruncher's advice but I think that it is important to state that the cheque may not be accepted for any other purpose. I suspect that other charges will not be removed from your account until and unless you apply to a Tribunal to determine whether or not they are both reasonable and payable. Obviously the terms of the lease need to be considered but many freeholders make administration charges regardless of the wording in the lease on the basis that most leaseholders will simply pay rather than dispute charges.

[Section20z]

1. Realistically probably not worth fighting as you have made a grave error in not paying the ground rent. Might be worth making a full and final settlement offer but you can't go to First Tier Tribunal as they don't cover ground rent disputes.
2. You can't really blame the solicitor, I get dozens of assignment notices every year and can't recall ever getting a different correspondence address
3.Definitely don't send a cheque, as mentioned above, they may apply it to earlier charges or more likely they will simply bin in and add extra admin charges for failing to pay again and you will have no proof of payment. .
Pay by bacs and put rent in the payment reference and advise by email or recorded phone call that you have paid ground rent - you then have an instant record on your bank statement of how much, to whom, and what it was for, where even a paid cheque might just show as a cheque number and amount which is meaningless.
Remember this may drag on for years and you need record of payments and correspondence.
As mentioned many landlords apply late payment charges despite there being no specific provision in the lease and they are often held as reasonable

[eagle2]

You should definitely not pay by BACS, your payment would then be allocated to other charges and your account would show unpaid ground rent. You need to offer a cheque in payment of the ground rent only. it does not matter if the agent bins (it won't) the cheque as long as you keep a copy and proof of posting. You should check your lease, but even if the freeholder is permitted to recover costs. they should be reasonable. You can apply to the FTT to challenge the unreasonable administration charges, you would not be challenging the ground rent. It would be a relatively simple matter which could be considered on the basis of written submissions and copy documentation instead of a formal hearing. What are the additional costs of the freeholder? Probably issuing a standard letter which is held on a word processor.

[J-T]

Thanks for the input all.

From the info I have at the moment, I am unable to pay by BACS anyway - the online account only allows you to pay the full amount and I have not yet received the written demand to my correspondence address. I will update once this arrives.

I've had another look at the lease and this is the clause relating to LL's costs:

"(The lessee covenants) To pay all levies taxes charges rates duties assessments outgoings and impositions whatsoever whether parliamentary parochial or otherwise which now or shall at any time hereafter during the said term be charged rated assessed or imposed upon or in respect of the property hereby demised or any part thereof or upon the owners or occupiers in respect thereof"

When sending a cheque, would it be wise to include the £78 collection cost charge? I do not object to paying some charge for their collection costs, however I do not see how almost £400 could ever be considered fair?

[eagle2]

The clause in the lease to which you refer does not allow the freeholder to charge administration charges. If the ground rent is correct, I would pay it by cheque without waiting for a formal demand. I would not make any offer to pay the other charges.

[J-T]

The clause in the lease to which you refer does not allow the freeholder to charge administration charges. If the ground rent is correct, I would pay it by cheque without waiting for a formal demand. I would not make any offer to pay the other charges.

Thankyou. I will send the cheque and keep updated of any developments.

Would you mind explaining how that clause does not entitle the FH to charge admin fees, as the way I was reading it, it seemed as though it did; it appeared to me to be saying the lessee has to pay any charges brought about regarding or in respect of the property, which could constitute an admin fee? I’m not suggesting I know better here, I would just like to understand!

[Section20z]

https://forums.landlordzone.co.uk/fo...simarc-request
and read reviews on reviewcentre.com to see what happens when you pay be cheque.

[J-T]

The demand has just arrived in the post. It outlines that payment by cheque is acceptable.

There is a breakdown of charges:

Ground Rent due as at 29/9/20 - £50 (correct, as I think I will have missed 5x payments of £10 at 6 month intervals)
Ground Rent collection costs - £78 x 5, totalling £390
Interest due - £0

Presumably, they are charging £78 for each demand sent (not including the one just received)

They have sent a payment request outlining the above, along with Form of Rent Demand Notice (S.166) and Admin Charge Summary of Rights. The latter are both on one side of A4 in small print. I seem to recall reading that the Summary of Rights had to be in at least size 10 typeface, although I cannot seem to find this now. Could this indicate that the notice/summary is invalid?

[Lawcruncher]

The clause you quoted does not allow the landlord to charge administration costs. It is no more then a belt and braces way of saying you have to pay the rates or council tax or any other tax.

Now we know that administration charges cannot be charged you can write a different letter.

I enclose a cheque for £50 to cover the rent to date.

I dispute that any rent collection charges as the lease does not make provision for any such charges to be levied.

[J-T]

Ok, I have now located that the statutory instrument for the summary of rights & obligations specifically states it must be in at least font size 10. This definitely is not, as I have just printed out an example and compared.

On this basis, I am intending to send a cheque for the £50, indicating that it is to be used to cover the ground rent only. I will accompnay it with a cover letter stating that I dispute the admin charges, one as the lease does not allow (although I am still not too sure of that) and two because the summary of rights is invalid according to the prescribed legislation.

Comments invited Re. the above!

I also note that the managing agent has their own complaints procedure. I am fully intending that they will dispute the above two points - I assume I will need to follow this complaints procedure before any kind of application to the FTT?

Thankyou again for all of the various inputs, it has been most helpful!

[Lawcruncher]

If you just send a cheque for ground rent with no other comment, the probability is that the payment will be accepted and applied against other charges and additional charges will be added to your account. I respect Lawcruncher's advice but I think that it is important to state that the cheque may not be accepted for any other purpose. I suspect that other charges will not be removed from your account until and unless you apply to a Tribunal to determine whether or not they are both reasonable and payable. Obviously the terms of the lease need to be considered but many freeholders make administration charges regardless of the wording in the lease on the basis that most leaseholders will simply pay rather than dispute charges.

Absent any prior agreement to the contrary, if you owe money on two more different accounts and specify to which any remittance is to be applied the creditor must apply it to the account specified. Adding "and not for any other purpose" does not really achieve anything other than to emphasise the point.

Leaseholders simply paying up for a quiet life is what encourages unacceptable practices. I urge J-T to dispute the charges vigorously. Not only are the charges not payable, they are beyond excessive and approach the extortionate being wholly out of proportion to the amount owed.