Service charge debtor still collecting rent!

[eagle2]

If the leaseholder has not supplied you with an alternative address, you can serve demands at the property address..

[Gordon999]

The rental tenant should give you the contact address of leaseholder or you can post the service charge demand to the letting agent which collects the rent money.

[Macromia]

I think it is due as rent . I amnot sure what that means.

If you mean that the lease states that service charges are "reserved as rent", that doesn't make a lot of difference but might affect the length of time that you have available to take the defaulters to court if it comes to that (and there may be other legal considerations).

[Codger]

I think it is due as rent . I amnot sure what that means.

[flyingfreehold]

Quite often you don't know where the leaseholder is, when they have sublet for years. Is the s/c owed due as rent?

[eagle2]

Advising a 3rd party of an amount which you consider to be due to you is not permitted. If a Tribunal finds that the amount is not payable or a reduced sum is payable, you could face a hefty fine.

Why are you unwilling to take action against the leaseholder if you are confident that the amount is payable and there is no valid reason for non payment? It is not difficult to trace a leaseholder without contacting the tenant.

[Codger]

I will ask the subtenant for updated contact details as the leaseholder is not replying. He was keen to ring me previously about condensation! I thought chasing debts was allowed under Gdpr..

[eagle2]

The objective appears to be to shame the leaseholder into paying a service charge debt but it could backfire because as freeholder, you would be in breach of GDPR by disclosing personal information to the tenant and a Tribunal could find that the personal information is incorrect,

There are two separate contracts and the tenant has no contractual obligation to pay you anything.

[Macromia]

Actually you are incorrect. There is a procedure whereby a sub-tenant can be ordered to pay his landlords' arrears to the freeholder. I cant remember the name of the Act but it is possible

No.
What vmart said was correct.

Before there is any possibility of a tenant being ordered to pay rent directly to a freeholder in order to pay off a leaseholder's debt, the freeholder needs to take action against the leaseholder.

It may well be that, if they win a determination that a debt is owed, they can get a court order requiring the tenant to pay what they owe the leaseholder to the freeholder, but they cannot require the tenant to pay them direct without taking action against the leaseholder.

[vmart]

Hi Flyingfreehold, that's interesting. Pity you cannot remember the name of the Act. If you do, please let us know. Thank you.

[fos333]

Actually you are incorrect. There is a procedure whereby a sub-tenant can be ordered to pay his landlords' arrears to the freeholder. I cant remember the name of the Act but it is possible

Hi,

I'd be very interested to hear what this procedure is given that our development had substantial arrears from BTL landlords, who continued to receive rent, however failed to pay their service charge or the deficit from the previous year.

As they have no contract with the legal entity entitled to demand and receive service charges I am very surprised to hear that they can be ordered to pay their landlords arrears!

[flyingfreehold]

There is no legal basis for the tenant to pay the freeholder his/her landlord's service charges. If the tenant did, they would not be able to deduct the sum from rent or recover the monies from their landlord. I cannot think why you would imagine otherwise.

It is up to the freeholder to take action against the non-paying lessees to recover service charges.

Actually you are incorrect. There is a procedure whereby a sub-tenant can be ordered to pay his landlords' arrears to the freeholder. I cant remember the name of the Act but it is possible

[flyingfreehold]

My firm manages quite a few blocks and there are literally dozens of leaseholders who ignore all requests for payment. Indeed many of them let the flats, but don't even give us their new address for service or an email address and the land registry will typically just have the demised address on file. Hence the routine is not to seek to forfeit but once the arrears get to over about £1000 is to get a simple money claim on line judgement and then apply for a charging order against the lessee's title. Once the money judgement has been granted interest clocks up at the County Court Rate which is currently 8%. To get an interim charging order the secured lender (if any) must be informed, and in a proportion of cases the lender either pays or directs the borrower to pay. I am always astonished when leaseholders pop up asking for a clear rent account statement so that they can remortgage and say something like I had no idea that there were service charges payable and seem to have forgotten that there is a ground rent of £100 pa or some such sum. Once the charging order is in place, the flat can't in practice be sold without the lessee coughing up. Typically a solicitor will give his undertaking to pay out of the proceeds of sale. If as a landlord or management company, it is affordable to carry the debt, the key is to secure it so that the statute of limitations does not apply.

[Gordon999]

In our block we have flat owners who let them out ,collect rent but do not pat gr or service charge.
i am considering asking the tenant to pay the freeholder to pay off the debt and embarrass the flat owner. Any comments?

The managing agent (MA) can use the small claims court to collect service charge arrears from leaseholders. The MA's responsibility to collect service charge money is covered in section 7 of RICs Residential Management Code:

https://www.rics.org/globalassets/ri...ition-rics.pdf

[Macromia]

I would have thought forfeiture might be the outcome to propose / aim for, if LH's are not paying ground rent or service charges(?)

Alternatively, in order to simply force payment in cases where flats are mortgaged, a letter to the lender is a common tactic.

As eagle2 suggests, the first step should be to find out if there are reasons why a leaseholder isn't paying - and then to correct the problem if it is the fault of the freeholder or managing agent.
Freeholders (or their managing agents) should start by checking that the demands have been sent in accordance with both legal requirements and the terms of the lease, it is ridiculous how often they seem to fail to send correct demands, and leaseholders are under no obligation to point out that demands are not payable for these reasons.