Freeholder Ground Rent Arrears

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    Freeholder Ground Rent Arrears

    Hi All,

    I need some help with a freeholder who believes we owe him ground rent. About 18 months ago our freeholder sent a letter to all 12 apartments with an increase in ground rent and back dated it to when it should of been last reviewed. A little suspicious we got a solicitor involved who agreed he could not raise it due to the lease being vague how it could be raised and the freeholder not following proper process. Our solicitor drafted a letter and we all sent a copy of it, which we got no reply to and carried on with our lives. We have since paid the original ground rent amount without delay since and heard nothing back.

    Until one of us tried to sell and now he is claiming rent arrears and wont answer any of the solicitors questions.

    The ground rent is currently £225 and the proposed raise was above the £250 amount which would changed the lease type to an AST.

    Any one have any helpful suggestions on how we can resolve this? We took legal action once and we thought that put the issue to rest.

    #2
    Ground rent over £250 does not change a lease to an AST and is no reason for the rent increase proscribed by the lease not to take affect..
    WHat exactly does the lease say about rent increases ? That's what counts.

    Comment


      #3
      Sorry poor wording doesn't it change how rent arrears are dealt with which causes issues with lenders etc.

      Just getting lease bits now.

      Comment


        #4
        From the lease:

        "The Ground Rent payable under this Lease shall be Two Hundred and Twenty Five Pounds (£225) a year payable in advance in half yearly instalments on the 1st January and the 1st July. The Ground Rent
        shall be reviewed every 5 years and shall not exceed a 17% increase from the Ground Rent payable
        at each Review Date."

        Our solicitors argued the original letter didn't conform to Section 166 of the Commonhold and Leasehold Reform Act 2002, the criteria how the rent is reviewed is vague with no timescales and mechanisms or any of the usual ground rent review provisions. We do not believe the previous rent review happened, evidence that for 10 years the rent has remained unchanged and accepted payments. ​​​If a rent review was done it should be at rpi and 17% is unjustified.

        I'm sorry if it reads badly I've tried to summarise and reword where possible.

        Comment


          #5
          Originally posted by PropertyFun2742 View Post
          "The Ground Rent payable under this Lease shall be Two Hundred and Twenty Five Pounds (£225) a year payable in advance in half yearly instalments on the 1st January and the 1st July. The Ground Rent shall be reviewed every 5 years and shall not exceed a 17% increase from the Ground Rent payable at each Review Date."
          If that is all the lease says then I agree it is too vague to work. Apart from that, if rent demands do not meet the requirements of section 166 no rent is due.



          Comment


            #6
            A 17% rises every 5 years equates to doubling every 22.1 years. Not ideal but until the recent campaigning by pressure groups it was acceptable. Now almost anything with the word doubling or RPI is seen as the work of the devil

            My reading of it is that the landlord can increase the ground rent to whatever he wants, but cannot exceed 17% every 5 years.

            If you disagree with his interpretation you will need to challenge this, you will need to make an application to the county court. The FTT do not have powers to deal with ground rent disputes.




            Comment


              #7
              Originally posted by Lawcruncher View Post

              If that is all the lease says then I agree it is too vague to work. Apart from that, if rent demands do not meet the requirements of section 166 no rent is due.


              Thanks Lawcruncher, we have a meeting with the solicitor to go over our options. Do you have anything we could do to make the freeholder see sense and not hold us to ransom?

              Comment


                #8
                I cannot think of any legal points. You need your solicitor to be forceful.

                Comment


                  #9
                  Originally posted by Lawcruncher View Post
                  I cannot think of any legal points. You need your solicitor to be forceful.
                  Thanks for your help, we will feedback what happens.

                  Comment


                    #10
                    I think leases which allow ground rent to rise every 5 years may judged as an "unfair contract term" by CMA ( the Competition & Markets Authority ) . One of the National Builders has set up a £130M fund to pay for correcting defective leases.
                    You should make an internet search on the builder .

                    Comment


                      #11
                      I would have thought that the wording in the lease could be argued to allow a review every five years from the original date, but not in any other year. If there was no increase in years 5, 10, 15, etc., it should be assumed that reviews determined that no increase would be applied in those years.

                      If no increase was notified in the appropriate years I doubt that there is a good argument that the ground rent can be increased in (for example) year 18 - and certainly no argument that it could be back-dated.

                      You can probably expect a 17% increase whenever the five year review period comes up from now onwards though if you don't get a court ruling that this is unreasonable.

                      Ground rents of above £250 per year outside of London apparently mean that the lease can be treated as an 'Assured Tenancy' and apparently this removes some of the forfeiture protections that long-leaseholders have if they fail to pay ground rent - but there is no obligation for freeholders to keep ground rent below this amount.
                      https://www.ts-p.co.uk/news/the-gbp2...und-rent-issue

                      Comment


                        #12
                        Originally posted by Gordon999 View Post
                        I think leases which allow ground rent to rise every 5 years may judged as an "unfair contract term" by CMA ( the Competition & Markets Authority ) . One of the National Builders has set up a £130M fund to pay for correcting defective leases.
                        You should make an internet search on the builder .
                        I see no reason why ground rent increases every five years should necessarily be considered an unfair contract term. Inflation is a fact of life, the cost of most things increases over time - why shouldn't ground rent be the same?

                        Comment

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