Unreasonable Admin Charge for Late Ground Rent

shortcrust

Edit: I was wrong!

Richard_Webster

You can challenge the fee by going through the Leasehold Tribunals - which will cost you a lot more than £180 in legal and surveyor's fees.

If you don't they may take action against you to seek to collect it - but even if they don't - in years to come when you come to sell they will tell buyer's solicitors that you owe £180.

Your solicitor will say it was an unreasonable fee.

Buyer's solicitor will say:
1. to your solicitor that he doesn't care - he is not having his client lumbered with an argument like that; and
2. to his buyer client - that it looks like the landlords are unreasonable - does he still want to buy the property?

So in practical terms they have you.

p_raks

Latest on this, I phoned and asked SImarc to point out where in the lease there is any provision for them to charge an admin fee for late ground rent, funnily enough they said they would have to check the lease and get back to me.

When I first learned of the admin charge I had asked for a breakdown of the admin charges and they mentioned something about obtaining copy of leasehold, so in conclusions I have been charged for an admin fee which should have included a check of lease that was not performed.

I also challenged them on the amount and asked what if someones Ground rent is lower than the admin charge (which in reality could be the case) to which I was told they cannot comment on that. So I think the admin charges are tailored to the size of your ground rent!

ReadingTim

p_raks wrote: »

I also challenged them on the amount and asked what if someones Ground rent is lower than the admin charge (which in reality could be the case) to which I was told they cannot comment on that. So I think the admin charges are tailored to the size of your ground rent!

It could well be - in the same way as a restaurant service charge is a percentage of your bill rather than the actual cost of opening a bottle of wine, or carrying a plate from kitchen to table. The point is, 1%, 2%, 5%, 10% could well be reasonable, 50%, 75%, 125% is not.

So what percentage is £180?

economic

Richard_Webster wrote: »

You can challenge the fee by going through the Leasehold Tribunals - which will cost you a lot more than £180 in legal and surveyor's fees.

If you don't they may take action against you to seek to collect it - but even if they don't - in years to come when you come to sell they will tell buyer's solicitors that you owe £180.

Your solicitor will say it was an unreasonable fee.

Buyer's solicitor will say:
1. to your solicitor that he doesn't care - he is not having his client lumbered with an argument like that; and
2. to his buyer client - that it looks like the landlords are unreasonable - does he still want to buy the property?

So in practical terms they have you.

Exactly. The whole system of leasehold is setup whether intentionally or not, to essentially screw the leaseholder by the freeholder/managing agent.

Lesson to learn here is be careful what you buy and ideally go for a share of freehold where at least everyone has a common incentive to keep costs low. If a managing agent is ripping off the leaseholders, if you also have a share of freehold you can at least together remove the agent and have another one more reasonable one or you can appoint a fellow share of freeholder to look after all the things.

p_raks

So my Ground rent is 1100, which would make the admin charge 16%

I disagree that it can be similar to a restaurant service fee, the admin charge relates to extra work they have to carry out to receive the outstanding money, to me if it costs £20 in total to chase people etc then that cannot be variable depending on the size of your Ground rent.

Although I am sure thats probably how its done so they can make more money!

sundanceski

Hi there OP - can you tell me how you got on in the end with this?
I have a similar issue with the same firm Simarc - ground rent £200 overdue by a few days !130 admin fee demanding and refuse payment of just £200 by phone and then sent my cheque back. I am about to search out the lease. We are both students and can't afford to pay the admin fee which I also believe to be unreasonable as I dont believe any admin was carried out other than production of an automatic letter.

sal_III

sundanceski wrote: »

Hi there OP - can you tell me how you got on in the end with this?
I have a similar issue with the same firm Simarc - ground rent £200 overdue by a few days !130 admin fee demanding and refuse payment of just £200 by phone and then sent my cheque back. I am about to search out the lease. We are both students and can't afford to pay the admin fee which I also believe to be unreasonable as I dont believe any admin was carried out other than production of an automatic letter.

If you can't afford £130/year unexpected expenses, how do you plan to cope with a Section 20 notice for major works on the building, that can demand £1000s? Or what's even more likely - a bump in the mortgage rate.

You should seriously rethink your budget.

sd1133

Hello, any advice on the following would be great. Thanks

I am in the process of buying a freehold property but found out that there is a management company which I believe is in charge of the communal areas and also another which collects an annual rent charge of £10. This company is called Simarc.
In order for us to successfully complete, we were charged the following fees by Simarc, £258 for Deed of Covenant, Notice of Transfer fee of £174, Notice of Charge fee of £174 and after we we were told that Simarc could not provide the Deed of Covenant but their solicitors could, we were charged a further £228. Normally, I would try to get more information about these charges and our entitlements but because we are under different constraints, I have paid.

Any information on whether this is standard practice or what I can do about it would be greatly appreciated.

Best Regards,

Stephen

Nick_C

sd1133 wrote: »

Hello, any advice on the following would be great. Thanks

I am in the process of buying a freehold property but found out that there is a management company which I believe is in charge of the communal areas and also another which collects an annual rent charge of £10. This company is called Simarc.
In order for us to successfully complete, we were charged the following fees by Simarc, £258 for Deed of Covenant, Notice of Transfer fee of £174, Notice of Charge fee of £174 and after we we were told that Simarc could not provide the Deed of Covenant but their solicitors could, we were charged a further £228. Normally, I would try to get more information about these charges and our entitlements but because we are under different constraints, I have paid.

Any information on whether this is standard practice or what I can do about it would be greatly appreciated.

Best Regards,

Stephen

Annual rent? Communal areas? Doesn't sound like freehold!

But as you are in the process of buying, the logical thing would be to ask your solicitor!