Ground Rent - do I have to pay and can I withold?

housegirl83

Hello there

Bit of advice regarding ground rent and withholding it if that's ok please. It's a little complicated, so I'll try to keep as simple as possible!

Just to clarify - I'm not being difficult, disputing the amount, nor am I disputing that ground rent is owed, however the landlord (freeholder) is very difficult, very unprofessional and also owes me £400 for the excess due on remedial work that had to be done on my new build property within the first 2 years of being built (yes he was legally required to put it right at his cost but didn't so it had to go through his insurance). So I want to make sure he a) does everything completely by the book as I don't trust him at all and b) see if I'm able to withhold ground rent due to him owing me money because of the issues with the build. Much as I'd really like a good relationship with the landlord, he's already ruined that chance!

Details:
- leasehold house
- 999 years
- annual ground rent
- I am the property owner
- Freeholder (landlord) is same person as the developer of the properties

1) Does the law supersede the lease?

I believe that legally the landlord must use a form of notice which is prescribed by regulations in order to demand payment of ground rent. He cannot legally recover the rent from me, take me to court, nor am I liable to pay this unless it has been properly demanded using a very specific prescribed form (Form of Rent Demand Notice, Commonhold and Leasehold Reform Act 2002, section 166).

He hasn't requested in the correct format, nor with the correct information, so I believe the demand he has sent me is effectively void. Just to note - it is also unreasonable - the letter was posted to me over a week after it was dated and demanded payment in 14 days of the date of the letter!!!

However (I digress), looking at my lease I can see that there is a schedule in there that seems to contradict what is written in law - e.g. of part of this is "that if the rent or any part thereof shall at any time be unpaid for twenty one days after the same shall have become due (although no formal or legal demand shall have been made for the same) in pursuance of the covenants herein contained then and in any such case and as often as the same shall so happen the Lessor may enter into or upon the Property or any part thereof and the buildings thereon and the same to hold and enjoy and receive and take for its own use and benefit" - this seems to contradict what the law says - that it has to go through the proper legal process to be valid and demanded in the correct format, regardless of when it may have been 'due'.

(I appreciate once the official formal demand has been written/sent to me that I will have to pay it)

So do I follow my lease, or the regulations? Does the Commonhold and Leasehold Reform Act 2002, section 166 supersede the lease?

2) Can I withhold the £200 ground rent from him on the basis that he owes me £400 for the repairs to be done on the property in the first two years?

Just to note - this genuinely is owed to me - I have to pay the excess to his insurers because he didn't repair the property within the first 2 years, and he was legally liable to.

I believe that I may be able to legally withhold the ground rent from him (only up to the value of the money owed of course!) if he owes me money. I've checked the lease and can't see anything in there about not being able to set off the insurance excess against the ground rent or take deductions from the ground rent on the basis that he owes me money.

Is there anything specific that should be in the lease about not being able to set off or deduct if owed money? What should I look for? If there isn't anything in the lease then legally can I withhold this ground rent from him?

HUGE thanks for all your help! It is massively appreciated!

princeofpounds

you should speak to the leasehold advisory service (lease-advice.org)

ground rent is not the same as your service charge.

propertyman

Forget lease for now, I'll do a full reply very shortly.

propertyman

Without seeing the details of the claim I cannot say if the excess is due from him as its not straightforward. In simple terms that he was liable was one thing but on refusing to pay out and you claimed on the warranty, it is simply unfortunate that there is an excess. The court would have to be convinced that he is liable for that amount.

believe that I may be able to legally withhold the ground rent from him (only up to the value of the money owed of course!) if he owes me money.

Not in general no, and its rarely a good idea to withhold rent even as set off against another debt as both cases have their own merits and equitable set off can only be done by agreement or by court order, no matter sensible they seem. You have to be prepared to litigate for the court to ratify that which you think is sensible. If you lose and he has counter claimed, then you risk a CCJ. For £200 GR!!!

Pay it once he has billed correctly, and if he doesn't and it looks like you have to make a claim,, then pay anyway, so not to worsen the dispute. You can always ask the court to order that the next ground rent(s) is/are effectively paid.

I'd reply

Dear Landlord

In respect of the ground rent of £ X due on (date in lease eg 1/4/14) you have
-failed to provide a full and complete notice under section 166 of Common hold and Leasehold reform Act 2002 and there is no liability for me to pay under s1
(1)A tenant under a long lease of a dwelling is not liable to make a payment of rent under the lease unless the landlord has given him a notice relating to the payment; and the date on which he is liable to make the payment is that specified in the notice.

-the requirement to pay in 14 days in invalidated by s3
(3)The date on which the tenant is liable to make the payment must not be—
(a)either less than 30 days or more than 60 days after the day on which the notice is given, or
(b)before that on which he would have been liable to make it in accordance with the lease.

(If this applies) The demand itself has failed to provide the required information under section 47 & 48 Landlord and Tenant Act 1987 and is therefore not due.
http://www.legislation.gov.uk/ukpga/1987/31/section/47
http://www.legislation.gov.uk/ukpga/1987/31/section/48

I therefore have no liability to pay these amounts until you comply.

In the meantime you will recall that there is the long outstanding matter of the amount of £400 (?)a rising from the excess under the claim on the “builders warranty”(? add details ) for ( brief description of what they paid out for e.g. dodgy roof, as courts like to see this in a letter before action).

I therefore suggest that the quickest solution is for you to credit that amount against the ground rent, once it is properly demanded, and provide a statement showing it as paid.

LETTER BEFORE ACTION

If the above is not acceptable then unless I receive payment within 7 days of this letter, or arrange mediation within 21 days on this issue, then I will make a county court claim against you for this amount plus costs as litigant in person and interest.

I hope however that this is unnecessary and that we can compromise as above.




.

propertyman

However (I digress), looking at my lease I can see that there is a schedule in there that seems to contradict what is written in law - e.g. of part of this is "that if the rent or any part thereof shall at any time be unpaid for twenty one days after the same shall have become due (although no formal or legal demand shall have been made for the same) in pursuance of the covenants herein contained then and in any such case and as often as the same shall so happen the Lessor may enter into or upon the Property or any part thereof and the buildings thereon and the same to hold and enjoy and receive and take for its own use and benefit" - this seems to contradict what the law says - that it has to go through the proper legal process to be valid and demanded in the correct format, regardless of when it may have been 'due'.

(I appreciate once the official formal demand has been written/sent to me that I will have to pay it)

So do I follow my lease, or the regulations? Does the Commonhold and Leasehold Reform Act 2002, section 166 supersede the lease?

A contract is binding however it operates within the law and that takes precedence.

eg We can enter into a contract to distribute stolen goods, but as that is not lawful, the contract is not valid.

housegirl83

Huge thank you

Guess I'd better start on writing my letter! Hopefully we'll be able to come to some reasonable agreement (although I've emailed and text him to try and discuss amicably, but he never responds!)