Leasehold ground rent; looking for reassurance

tryingmybest99

Hi all, I was wondering if somebody who is knowledgeable about leasehold and ground rents could give me some reassurance? I know I am just being anxious, but I waited a long time to buy my first flat and I keep on thinking someone is going to take it away from me!

I bought my first flat just under four months ago. The lease was being extended as part of the sale. Before the extension, ground rent was over £300, rising with RPI. Now it is £150 (still rising with RPI), so for now at least the AST/ Section 8 issue is not a problem for me. 

Ground rent and service charges are paid every six months and it is due next month. It is the first time I am paying (the previous owners paid the last 6-months and as part of the sale I paid them, pro-rata for what I owed, which was the service charge from when I moved in and ground rent at the £150 per year rate). I have asked the management company on how to pay both (looking back at my documents from the sale, it looks like there is an online portal people pay on). I haven't received an invoice yet.

I have this awful anxiety as the land registry has not been updated yet to reflect the sale and the new lease (I believe there is a backlog?), that somehow the freeholder will say there is arrears in ground rent as I haven't paid yet. But if I have a copy of my lease (extended lease) showing the rent is £150 a year and proof I paid the pro-rated ground rent I am ok aren't I? They wouldn't be able to start court proceedings without even sending me an invoice and attempting to take payment, right? 

NameUnavailable

The ground rent and service charges have to be requested in a legally correct and formal format - until you receive the requests you don't have to pay.

FWIW in 2 years time you could request a formal extension to your lease and reduce the ground rent to peppercorn, as the fact it's still rising might be an issue when you come to sell (how long are there between reviews?).

tryingmybest99

NameUnavailable said:

The ground rent and service charges have to be requested in a legally correct and formal format - until you receive the requests you don't have to pay.

FWIW in 2 years time you could request a formal extension to your lease and reduce the ground rent to peppercorn, as the fact it's still rising might be an issue when you come to sell (how long are there between reviews?).

Thanks! That's reassuring. There is 15 years between rent reviews. I do intend to go through the formal extension process once the two years are up (and once I've saved funds to do this). I think that given that new leases will have peppercorn rent, flats like mine will not be as sellable and if the ground rent is over £250 after the next review it will be very undesirable, even if they change the AST law.

eddddy

You're probably worrying a bit too much...

• When you receive the invoice, it should tell you how to pay.

• Your solicitor should have checked that the ground rent was paid up to date as part of the conveyancing process.

• You solicitor should have sent the freeholder a 'notice of transfer' to say that you are the new owner - the freeholder won't be asking Land Registry about it. And your freeholder will have signed the lease extension document, so they'll know what they've signed, they won't need to get details from Land Registry.

• But I suppose it's possible that the admin person who does the billing might not know about the lease extension, so if they charge the wrong ground rent, you can tell them.

• The freeholder / management company won't be interested in you paying pro-rata ground rent to the seller - it's nothing to do with them, so they won't care.

• Ground rent only becomes due when they send a bill. If they haven't sent you a bill, it's not due.

tryingmybest99

eddddy said:

You're probably worrying a bit too much...

• When you receive the invoice, it should tell you how to pay.

• Your solicitor should have checked that the ground rent was paid up to date as part of the conveyancing process.

• You solicitor should have sent the freeholder a 'notice of transfer' to say that you are the new owner - the freeholder won't be asking Land Registry about it. And your freeholder will have signed the lease extension document, so they'll know what they've signed, they won't need to get details from Land Registry.

• But I suppose it's possible that the admin person who does the billing might not know about the lease extension, so if they charge the wrong ground rent, you can tell them.

• The freeholder / management company won't be interested in you paying pro-rata ground rent to the seller - it's nothing to do with them, so they won't care.

• Ground rent only becomes due when they send a bill. If they haven't sent you a bill, it's not due.

Thank you! That's really helpful. I know I probably sound a little crazy, but I can get very anxious sometimes. At least it means I tend to do my research and keep all my documents safe!

NameUnavailable

tryingmybest99 said:

NameUnavailable said:

The ground rent and service charges have to be requested in a legally correct and formal format - until you receive the requests you don't have to pay.

FWIW in 2 years time you could request a formal extension to your lease and reduce the ground rent to peppercorn, as the fact it's still rising might be an issue when you come to sell (how long are there between reviews?).

Thanks! That's reassuring. There is 15 years between rent reviews. I do intend to go through the formal extension process once the two years are up (and once I've saved funds to do this). I think that given that new leases will have peppercorn rent, flats like mine will not be as sellable and if the ground rent is over £250 after the next review it will be very undesirable, even if they change the AST law.

Well you've got at least 15 years then before you need to worry about it going over the £250 threshold, and as you say the law might change by then. It's a pity the vendor didn't go down the formal route for the lease extension but you can look to do that later if you want.

tryingmybest99

Erm... so an update to the above. The management company are saying that my conveyancer didn't send a notice of transfer, but the conveyancer is saying that they did. I have forwarded the online copy of the letter that my conveyancer has sent me, but the deed of covenant is meant to be enclosed, so they are sending it by post also. If there was any demands sent to me for ground rent, they would have been under the old owner's name. I thought any notices would be sent direct to the freeholder, but the conveyancer says it was sent to the management company. 

eddddy

tryingmybest99 said:

 I thought any notices would be sent direct to the freeholder, but the conveyancer says it was sent to the management company. 

The lease will say who the notice of transfer needs to be sent to. But if it says it's the freeholder, often the management company will be acting as the freeholder's agent - so sending it to the management company should be ok.

There's probably a fee to pay along with the notice of transfer - do you know if it's been paid? (if no fee was paid, that might be why they didn't process the notice of transfer.)

Hopefully, it will now get sorted out. But if service charges and/or ground rent haven't been paid, there are likely to be "late fees" added.


If your conveyancer failed to send a notice of transfer, it might be reasonable for them to reimburse the late fees. Or if the management company failed to process the notice of transfer, it might be reasonable for them to cancel the late fees.

tryingmybest99

eddddy said:

tryingmybest99 said:

 I thought any notices would be sent direct to the freeholder, but the conveyancer says it was sent to the management company. 

The lease will say who the notice of transfer needs to be sent to. But if it says it's the freeholder, often the management company will be acting as the freeholder's agent - so sending it to the management company should be ok.

There's probably a fee to pay along with the notice of transfer - do you know if it's been paid? (if no fee was paid, that might be why they didn't process the notice of transfer.)

Hopefully, it will now get sorted out. But if service charges and/or ground rent haven't been paid, there are likely to be "late fees" added.


If your conveyancer failed to send a notice of transfer, it might be reasonable for them to reimburse the late fees. Or if the management company failed to process the notice of transfer, it might be reasonable for them to cancel the late fees.

I can't see anything on my documents about a fee. I just had an email from the management company accounts department to say "I don't know what happened to the letter. I have now updated our ledger"... so I think it is fine?

eddddy

tryingmybest99 said:

I just had an email from the management company accounts department to say "I don't know what happened to the letter. I have now updated our ledger"... so I think it is fine?

If I was a cynical person - I'd say that email means "Oops, we made a mistake. I've found the original notice of transfer. I'll try to quickly brush it under the carpet."

If the management company really hadn't received the original notice of transfer, I think they'd be demanding a fee, kicking up a fuss, etc.

But maybe you've just got a really nice, easy-going management company!

tryingmybest99

eddddy said:

tryingmybest99 said:

I just had an email from the management company accounts department to say "I don't know what happened to the letter. I have now updated our ledger"... so I think it is fine?

If I was a cynical person - I'd say that email means "Oops, we made a mistake. I've found the original notice of transfer. I'll try to quickly brush it under the carpet."

If the management company really hadn't received the original notice of transfer, I think they'd be demanding a fee, kicking up a fuss, etc.

But maybe you've just got a really nice, easy-going management company!

@eddddy I just wanted to say for the record, you were right, although the management company were happy to change their records and send me the service charge bill, the freeholder wants £120 to process the notice of transfer (although my conveyancer has confirmed that this is already covered by the fees I paid the conveyancer and they have paid the freeholder). So it looks like it is sorted!