Leaseholder charging upfront.

serendipity109

My daughter bought a house the ground rent is  just 77p  per 6 months but they charged her £45 at completion (last September taking her up to September 2022) for approving her insurance documents. They have never asked to view these at all but took the £45. I was worried at the time they might not approve of her insurance she took out and would insist that she took theirs as others have stated , so much going on at completion but I wondered is the onus on her to send them her insurance only for them to say no you need ours?

 Today she received an invoice, it shows she has paid her 'annual insurance approval fee' for September 2021- September 2022 however they are now demanding  77p from the previous homeowner (not worth bothering about) but then another £45 for the period September 2022 - September 2023, plus annual ground rent to be paid up to September 2023 giving a figure of  £47.31

 Is it common practice to be charged upfront? I am also really put out they can get away with ripping people off like this however I don't want to 'rock the boat' so to speak.

 There were concerns at the conveyancing stage, see the Q&A below: The solicitors answers are in bold

•       Are they aware and in full approval of the building work that the current vendor has made in the last 2 years i.e. the conversion of the outside toilet into a utility/toilet? If so, I would like to see evidence of their approval. I cannot see any covenant within the lease requiring the landlord’s approval to any such works.

•       Re the £45 charge of insurance approval, can I see proof that this is a legal requirement? Where does it state this? There is a covenant within the lease which states that the landlord must approve the buildings insurance. The landlord have then confirmed within their attached letter that they charge a fee for approving the insurance.

•       I have a copy of the lease however it is a really bad photocopy and some of the wording is missing from the end of the page, please can you ensure I receive a full copy as neither you nor I can read the full facts on this? This is the only copy of the lease we have been provided with, this is the copy available from the Land Registry. All the required information is legible, so we don’t see this to be an issue.

•       I can see the ground rent charge is 15/5d which equates to 77p in today's currency however there is no mention of the amount where this £45 comes from? The £45 is the landlord’s bi-annual fee for approving the insurance, so this is separate to the ground rent. Their fees are confirmed within the attached letter.

•       Are they at liberty to increase this extraordinary amount and within what parameters? I am not aware of any legislation governing this. The landlord could potentially increase this sum in the future, but I could not comment on any future fees the landlord may charge I’m afraid.

•       Do I have to run by the insurers I use each year before I take out the policy otherwise I may waste money buying a policy they do not approve of? I think you said that this was highly unusual. Yes, the landlord is enforcing this covenant which is a term of the lease to the property. It is quite unusual that landlords still enforce such a covenant, but not unknown. You would have to obtain their approval of the insurance each year if you purchased the property.

Slithery

You already have a thread on this...

Having to pay leaseholder for checking insurance

serendipity109

Slithery said:

You already have a thread on this...

Having to pay leaseholder for checking insurance

Yes and I have added lots of information to this posting .

eddddy

serendipity109 said:

 Is it common practice to be charged upfront? 

You need to read the lease to see if it says you can be charged up front or in arrears.

If you think the freeholder is wrong, you can pay under protest and challenge it at a tribunal - but I really don't think it's worth the hassle (just to save 12 months interest on £47!).

But you definitely shouldn't  just refuse to pay, and ignore the bill. If you don't pay it, the freeholder might add late fees, solicitors fees, debt recovery fees, etc to the bill.  Then they might ask your mortgage lender to pay and/or start lease forfeiture (repossession) proceedings.

serendipity109 said:

•       Are they at liberty to increase this extraordinary amount and within what parameters? I am not aware of any legislation governing this. The landlord could potentially increase this sum in the future, but I could not comment on any future fees the landlord may charge I’m afraid.

If you like, you can point your conveyancing solicitor towards this bit of legislation: The Commonhold and Leasehold Reform Act 2002.

It says that all leasehold administration charges must be reasonable (as explained in your previous thread).

saajan_12

serendipity109 said:

Slithery said:

You already have a thread on this...

Having to pay leaseholder for checking insurance

Yes and I have added lots of information to this posting .

Then please add it to that posting - its litterally the same topic and shoudl remain in the same place, especially as you already have advice there. 
Admin should close this thread shortly. 

canaldumidi

Forum Rules are here.

Threads are easier to follow and read if they follow a conversation style pattern. With this in mind, please don't create duplicate posts on or across multiple threads. Flooding (repeated posting aiming to dominate or overwhelm a page) will be treated as spam.

Bumping threads annoys other users in the community, so please don't do it. People will respond if they have something to add.