Leasehold - £900 / 9 years Ground Rent Back Charge

ooSTEVEoo · 6 October 2016 at 1:18PM

I'm just trying to sell my leasehold flat after living in it just over nine years from new.
Every year that I can remember I received a bill for £450 in December for the following years ground rent. Every year I paid that bill on time.

Now I'm trying to sell the flat the buyers solicitor raised a query about the large expense of the ground rent. She said it was £550 and doubled every 25 years and pointed it out to her client as a concern. I'd been living here blissfully unaware for 9 years thinking my ground rent was £450 as that was what I was being billed each year and with no idea it doubles in 2031.

So it's quite an expensive ground rent but then it is a nice flat in London. I'm currently hoping my buyer won't be put off by the ground rent and as we have right to manage our very low service charge hopefully offsets this slightly higher than normal ground rent.

Anyway, after querying my lease with the Landlord today I received a bill for £900. It just states 'Ground Rent Back Charge 1 Jan 2008 to 1 Jan 2016'. Clearly when I called to query the terms of my lease they noticed they'd been undercharging me.

So the question is, do I have to pay this bill? Can they back date a charge like this for so long? I thought I read somewhere the max might be 6 years?
I want to tell them where to go with this bill but I'm also aware I may be looking at exchanging contracts on my flat any time soon and I'm sure the landlord will need to authorise something to do with the lease at some point and will likely refuse now I have an outstanding debt.

Before I call them to dispute this charge I need to know if I have any grounds to do so. I was genuinely unaware myself until a few weeks ago that my lease states £550 and not £450 so I have been paying my bills in good faith the last 9 years. £900 is a lot of money!

Also I have no way of checking my bank statements as far back as 9 years so I can't even double check that I have always only paid £450. I'm pretty sure I have but the fact I can't check surely makes it dubious that this bill can be fair.

Would you just pay it? Any advice greatly appreciated. Thanks.

Bossypants · 6 October 2016 at 3:59PM

Honestly I would just pay it. If memory serves you may be right that they can't pursue you for an unacknowledged debt older than 6 years (unless you have now acknowledged it?), but they would likely still be able to for the rest, so really you're only looking at being able to save £300. Your sale is unlikely to be able to move forward until this is settled, and the management company have no stake in your sale and every reason to dig their heels in. They will be able to drag this on and on (and on and on) if they wish to, causing you no end of stress and quite likely jeopardising your sale as your buyer gets fed up and moves on. All for the sake of £300.

Seriously, just pay the £300 and move on. You will be glad you did.

ooSTEVEoo · 6 October 2016 at 4:13PM

The management company and landlord are two completely different people. We have right to manage and I have previously been involved as managing agent for our building but we recently appointed an external management company to collect the service charge and manage the building. They won't have anything to do with the freeholder/landlord/ground rent though and the directors of our right to manage management company are good friends and neighbours of mine.
I've tried googling what input the freeholder/landlord has on a sale and from what I could see they are simply informed by my solicitor on completion (can anyone confirm this). If this is the case I may even have exchanged and completed before they issue a reminder for this bill.
What annoys me is that the bill didn't even come with a covering letter explaining why it was.
Assuming the sale does go through I don't really want the new owner then being chased for the debt so I will probably try and resolve this before then anyway. However, if they can only go back six years then that's all I would offer to pay. It's their mistake and £300 is still significant money. This company are sharks and try ripping us off for any dealings so I won't feel bad. They wanted £600 recently just to look at a proposal for a deed of variation without saying if it would have any chance of success or how much more further money they want. I just need to know where I stand before I do contact them.

G_M · 6 October 2016 at 4:53PM

My landlord has not demanded ground rent for several years. Can he still demand it?

Under the Limitation Act 1980 the limitation period for recovery of ground rent is 6 years. This means that your landlord can only seek to recover ground rent going back 6 years.
More information you might find useful:
Limitation Act 1980 (external website)

Service Charges and other issues: Ground rent

More Frequently Asked Questions on Ground Rent

http://www.lease-advice.org/faq/my-landlord-has-not-demanded-ground-rent-for-several-years-can-he-still-demand-it/

ooSTEVEoo · 6 October 2016 at 6:07PM

Thanks. That's all I could find too. I plan on ignoring it until I at least know what's happening with my sale and then I'll maybe call them and offer £600. I was hoping there might be some way out of it as they have already billed the last 9 years and I'd paid but I'm assuming not. I'd at least expect some proof from them that I've underpaid by this much though.

ooSTEVEoo · 11 October 2016 at 4:10PM

Today my solicitor told me they needed £258 to pay the freeholder for a pre-assignment pack. Seems expensive! :mad:

Anyway, knowing this would just show up my arrears I called the landlord to question the £900 bill. I mentioned the 1980 limitation act but they just said they believed that didn't apply and as I'd owned the flat from new they had 12 years. Is anyone aware of any rule they're using here or are they just trying it on?

hazyjo · 11 October 2016 at 4:41PM

ooSTEVEoo wrote: »

Thanks. That's all I could find too. I plan on ignoring it until I at least know what's happening with my sale and then I'll maybe call them and offer £600. I was hoping there might be some way out of it as they have already billed the last 9 years and I'd paid but I'm assuming not. I'd at least expect some proof from them that I've underpaid by this much though.

You could also throw into the mix that you can't remember and want to see bank statements or accounts saying what you paid in for years 6-9. Chances are they won't be able to provide them. Can you get statements up to 6 years? I'd be inclined to only be willing to pay what they and you can prove you paid. Not like you're lying - you may well have paid slightly more for the first few years.

Jx

hazyjo · 11 October 2016 at 4:42PM

PS The £258 for an info pack (presuming that's what it is) isn't unreasonable. It's a pretty normal amount. Some have been hit with much higher bills

anselld · 11 October 2016 at 5:00PM

ooSTEVEoo wrote: »

Today my solicitor told me they needed £258 to pay the freeholder for a pre-assignment pack. Seems expensive! :mad:

Anyway, knowing this would just show up my arrears I called the landlord to question the £900 bill. I mentioned the 1980 limitation act but they just said they believed that didn't apply and as I'd owned the flat from new they had 12 years. Is anyone aware of any rule they're using here or are they just trying it on?

The problem is that you need them to do stuff in order to progress your sale.

You can trade rules and regulations with them all you like but if they dig their heels in for the full £900 there is only one way to proceed if you want to sell.

ooSTEVEoo · 11 October 2016 at 11:47PM

After my call to them in the morning they emailed me back with a revised bill for £600. It seems me just mentioning the 1980 Limitation Act made them agree £600 was a fair compromise. I paid online straight after. I've saved £300 so I'm happier than I was, they're £600 up so should be happy and I don't think I upset them in the progress.

As it turns out today was a bad day anyway as the buyer of my flat pulled out anyway after 3 months citing other issues with the lease. Mainly the high cost of the ground rent. Oh well, at least the ground rent is now settled for when I hopefully find a new buyer who isn't as out off by the lease.

Thanks for the replies.

ooSTEVEoo · 11 October 2016 at 11:50PM

hazyjo wrote: »

PS The £258 for an info pack (presuming that's what it is) isn't unreasonable. It's a pretty normal amount. Some have been hit with much higher bills

It's not an info pack from the mangement company as I provided most of that myself as we have right to manage and do it all ourselves. The £258 was just a pre-assignment pack which just outlines the ground rent and if I'm paid up to date. Outrageous really for such little information. I no doubt they'll want even more cash if I ever complete. This is certainly the last leasehold property I buy.

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Leasehold - £900 / 9 years Ground Rent Back Charge

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