Unfair late Penalty Fee

suzyT

I pay Ground Rent on a Property every 6 Months when I receive my Payment Request.

On this one occasion I hadn't received any letters of request until One that said I not only owed the Ground rent of £175 but also a late penalty of £132.00 ?

I called them and said this is the first letter I had from them and they informed me that one had gone out to me previous to this one. As a gesture of good will they would reduce it to £92 which I disagreed with as this was my first letter from them and if they checked back through my history I have never missed or had been late with payment.

They said they would put my account on hold and asked me to put in writing my query which I did stating that through no fault of my own I cannot see how this is a fair settlement and the fee was extortionate, I also posted to them a cheque for the Ground Rent of £175.00 only until the other charge was resolved.

They have sent back my Ground Rent saying wrong amount sent as it should be £267.00 (inc the Pentaly fee) as I am in breach of the terms and if this is not paid then  further fees will be charged.

Not sure what to do

[Deleted User]

Maybe post on the property boards as there are very knowledgeable people there. Sure you can appeal this just not sure how 

eddddy

In legal terms, the late fee is an 'Administration Charge'. The  Commonhold and Leasehold Reform Act 2002 says that Administration Charges must be reasonable - i.e. they must reflect the freeholder's time and costs.  Tribunals seem to accept that £60 + vat per hour is a reasonable cost for admin work.

So you can ask the freeholder for a breakdown of the £92 charge (i.e. time spent and other costs)

You could try writing them a letter saying something like:

"I would have expected that sending a payment reminder letter would take less than 20 minutes of your time. Therefore I believe that £25 would be a reasonable Administration Charge (as defined in he  Commonhold and Leasehold Reform Act 2002). If you charge me more than £25, I will only pay it under protest, and reserve my right to challenge the charge at a Tribunal."

Some freeholders back down - because they don't want a tribunal to make a decision, because then they can't really continue to ask other people for £92 or £132.

peter_the_piper

Would it not be simpler, in future, to just pay by direct debit/standing order? Saves the possible problem that could recur again due to "lost in post"?

DoaM

That's a fair point in principle ... ground rent doesn't usually change except for when it contractually does so. (e.g. doubles every 10 or 25 years). But the devil is in the detail - OP would need to clarify the terms of their ground rent.

suzyT

peter_the_piper said:

Would it not be simpler, in future, to just pay by direct debit/standing order? Saves the possible problem that could recur again due to "lost in post"?

I did have a direct debit set up but this is a new company which have taken over the management of the ground rent so first billing with them

suzyT

This is what i have received from them today after asking for a break down etc 

Thank you for your recent correspondence.

Please note, we are appointed as managing agents on behalf of the Landlord, Grays Inn Capital Limited, to collect the ground rent and it is not unreasonable to expect administration charges to be accrued due to late payment for ground rent and in the course of preparing an arrears file and unfortunately fees had been incurred.

Please be advised, outlined below is a breakdown of the charges:-

1.                   Perusing computer and paper records

regarding the above property                                                             £50.00

2.                   Preparation of file and letter including perusal

of file by manager                                                                                    £60.00

3.                    VAT thereon at 20.00%                                                                         £22.00

                                                                                                                TOTAL DUE         £132.00 

Aylesbury_Duck

You're paying for double perusal.  "Anyone else in the office want a look at this file?  It's chargeable!"

What conveniently rounded figures!  It would be more credible if they'd charged £50.36 and £60.22 for the elements instead of just making up numbers.

powerful_Rogue

suzyT said:

I did have a direct debit set up but this is a new company which have taken over the management of the ground rent so first billing with them

I think this is quite important.

So the previous management company you paid every six months via direct debit? Was any paperwork ever sent to you when they collected payment, or was it just the direct debit going out?

powerful_Rogue

I would also ask for a further breakdown, ie, how they have arrived at those figures.

I would also submit a SAR to them requesting a copy of all the information they hold on you. Will be interesting to see what is in the file then and whether it justifies the £60 price tag. The SAR should be free unless they try and pull a fast one!

suzyT

The old company used to send me a invoice with the date of when the direct debt would come out