Admin charges on late ground rent

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  • Admin charges on late ground rent

    Hi, hope someone can help

    I own a buy-to-let flat in Manchester. Ground rent is payable yearly on 1st Jan. I recently moved my home, and neglected to inform the company responsible for collecting ground rent of the CoA. Last Friday, the new owner of my old home gave me some post which included a number of letters from the agent, who collect the ground rent.

    These letters (three, though another is apparently awaiting me) moved from 'your rent is overdue' to 'we have added an admin charge' to 'we will move to legal action within seven days' over the period of three weeks.

    As soon as I received the letters I paid the ground rent. However, I now have (six weeks after the rent was due) outstanding 'admin' charges of £268--two payments for Mainstay's admin of £38 each (one for a letter 17th Jan, one for a letter 25th Jan), a solicitor referral fee of £85 (13/02) and 'legal costs' of £85 (not dated). Legal action has been threatened within seven days if I do not pay in full. The original rent was only £150, so the admin and other charges are now considerably higher.

    There is nothing in the lease to cover administration charges for late
    payment, so assume this comes under schedule 11 of the 2002 act.

    MY own feeling is that these administration charges, and the set legal
    fees, and the speed with which the charges mounted, are extraordinarily
    high, but where would I stand in going to the LVT? And are there any
    other courses of action?

    If I choose to go to the LVT, does that stop the process, or would it be best to pay (without admitting any liability) to stop the legal process and then appeal?

    And what would be my likely cost if I lost at LVT? Would I have to pay
    Mainstay's legal costs? As the basic cost of going to LVT is <£100, I
    have to judge whether there is any chance of getting more than that wipe off the charges.

    In the meantime, I have asked for a copy of the original invoice for
    ground rent, which should have been sent in November last year, as there is no record of this being received at my old home address. The agent claim this was sent, but I have yet to see it. However, as they do refer as a matter of course to 'invoices' I don't hold out much hope of being
    able to argue the original demand was incorrect. Although I have no
    memory (and my solicitor has no record) of signing a document giving the
    landlord my home address for communication, other than the lease. Is this deemed sufficient under s.166(6)?

    Any help would be appreciated, and paid for in virtual beer (the best kind..)

    John

    (Apologies for layout, cut and pasted from email)

  • #2
    As to the speed and amount of charges imagine if you are the landlord and your rent has not been paid, and attempts to contact your tenant have been ignored. You have no means of contact and have no idea if it will be next week next month, or ever.

    How long do you leave it? What do you do?

    Bearing in mind that the problem arose because you forgot to tell them and your tenants let the mail pile up rather than calling you or forwarding it....

    Wouldn't you feel that you have to protect your investment and start legal action?

    While the LVT will be able to rule, in directly, whether any charges
    are due under the lease under the proposed action, and also whether they are reasonable.

    Take a look at the lease for any reference to legal costs in relation to non payment and usually this is restricted to forfeiture action ( re-entry).

    The wording will say if it is restricted to certain costs eg surveyors or solicitors fees" but unless it is extended to " any or all" or a similar wording it is unlikely that the admin charge is due.
    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

    Comment


    • #3
      Thanks for your response. I think (well, know given I do the same with my tenants) that I don't send out a letter and seven days later send another, each with an associated charge).

      The lease clearly has only legal costs relating to forfeiture. Does this suggest I can hold tight, or is it better to go to LVT for a determination?

      Which leads to a follow-up, do the variable costs that come under Schedule 11 of the 2002 act (in this case for late payment) have to be allowed for in the lease? And, given no mention in my lease is made for repayment of legal charges except in terms of possession of the property, am I within my rights to ignore that part of the charge.

      We're now at the ludicrous point of them taking court action to recover charges rather than the original rent.

      Comment


      • #4
        But the timing of a bill, a reminder, and then a final with fee, in those timings is long established as being widely used. After the s166 notice and invoice, there is no obligation whatsover to issue further reminders at all- the next letter could be a letter before action.

        As posted that is correct that where the admin costs for legal action are not in the lease they are not recoverable. The trick is to ask the LVT to consider reasonableness of all the fees under sch 11 that are begin recovered under ( insert the para's in the lease). That way you sneakily ask them to interpret the lease ( they can be a bit fussy over doing that in these cases) and do not assert they are not recoverable, leave that to the hearing.

        It is not ludicrous in recovering charges not the rent when they did their job and sent the bill to your last reported address, gave a month's grace and then reminder, and a further seven days before referal..... Most BTL landlords will be on the phone to their tenant if the rent is not in their bank account of the rent day.

        Perhaps you offer without prejudice that it was an oversight on your part, and rather than go to the LT to determine you are prepared to pay £x and settle.

        It use to you and I wish you luck I think you ahve an even chance either way but the root is forgetting to tell them.

        And the advice I have given to BTL landlord's is not to do the dumb thing and say "when I get a bill I will pay- I am moving around the place you'll just have to keep up -sigh" and assume the agent will mess it up, you diarise due dates for GR and SC and anything else. If they haven't turned up within a week, contact someone.
        Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

        Comment


        • #5
          Thanks muchly, very helpful.

          The only matter for some debate is the serving of the original notice. I didn't receive it, even though a re-direct of post was in place at the time. And they say they sent it. Not quite sure where the burden of proof lies. However, I'm not disputing it was owed.

          Sorry, last question--given they say they're going to court next week, better to pay up now and go to LVT to forestall the amounts increasing?

          Comment


          • #6
            Is the threat court proceedings to be issued next week, as you have not mentioned a claim having been issued, but it has been a month since the referal to solicitors.

            Yes proof of service of the original bill and notice is something you can question and I suspect that there will be a standard response to any such claim.

            If there is doubt on that and a court sides with you then given the due dates in the notice a copy is not a demand under s166 and the rent is not due and therefore the subsequent fees are not triggered( irrespective of whether they are recoverable or reasonable).

            Another option is therefore to respond if a claim has not yet been issued to say that you have made an application to the LVT.

            But do consider if all this time and energy is worth it for £284, or without full sight of the paperwork I cannot see if you have not posted or understood the significance of something and you risk a CCJ.

            Yes you can also a pay and say you do not agree or admit the costs, and then pay in full and hit them with the LVT later on.
            Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

            Comment


            • #7
              Yes, the threat is 'if not paid by next Monday, we will proceed with our court action.'

              You're right of course, might not be worth it, just damn galling. If the admin was just the two charges I'd swallow and accept it. The rest makes it more worthwhile going to LVT.

              Comment


              • #8
                Others also have problems with Mainstay -

                http://forums.moneysavingexpert.com/....php?t=1007571

                Comment


                • #9
                  I'd seen that, yes, they have a certain reputation.

                  Looking at their solicitors, SLC, who presumably employ interns to check on sites like this (*waves*), the company offers a 'no fee' service for freeholders. They say they can offer a 'no fee recovery service' when..

                  the leasehold title is registered;
                  the property is mortgaged to a financial institution such as a bank or building society;
                  there is a forfeiture clause present in the lease;
                  the lease allows for the recovery of professional legal fees;
                  no genuine dispute exists.

                  It is usual for all these criteria to be met and when we do act on such a basis all fees are paid by the leaseholders thereby easing any demands on the freeholder or resident management companies to fund recovery actions commenced by solicitor agents
                  Which implies to me they work on the basis of the lease clauses allowing the charge of legal time to be made in cases of forfeiture. Therefore its in their interest to boost the amount owing above the £350 barrier for initiating forfeiture. Now I;ve reduced it back down below that level once again, I assume their next step will be to find a charge that returns us above. And so it goes on.

                  Comment


                  • #10
                    The £350 excludes costs.

                    Whatever the actions of an agent /landlord is, a prudent landlord runs an estate terrier to protect themselves from missing important dates and handing them the opportunity.

                    I am sorry it was an expensive lesson.

                    Better now to say "in principle, hands up my fault, but play fair on the costs, and since you won't, let the LVT decide".
                    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                    Comment


                    • #11
                      Cool, thanks for all the help

                      Comment

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