Ground Rent Arrears Solicitor Costs - Possession Hearing For Forfeiture Of Lease

PRW369

I own a leasehold flat and I missed 2 x £216 ground rent payments purely by accident. I moved from my flat in Altrincham to a new house at end of 2019, set up a mail redirect for 12 months, which must have run out just before my 2021 ground rent bill arrived.

I thought I had notified everyone of my new address but missed E & J estates (who own freehold). I am a first time private landlord, covid struck, new house, got married, left job, no excuse but I simply forgot.

I have a tenant in the flat who (understandably) didn’t forward any post. I contacted E & J last Thursday as I was concerned I hadn’t received any bills for a while. They wouldn’t deal with me and said my ground rent debt has been passed to J B Leitch Solicitors. I called them immediately and they informed me they are taking me to county court for forfeiture of lease on 2 August unless I pay £3780 by 20 July.  I have contacted Manchester County Court to move date, to allow be a bit more time to get help and also because I am out of the country on 2 August.

Can anyone assist with a without prejudice save as to costs offer, as the solicitor bill seems astronomical?

bouicca21

Search the forum for Leitch.  Others have been in the same boat.

dimbo61

You may need to pay the debt under protest  
Get legal advice, join NRLA 
Your Tenant may not have wanted to receive " Your mail" but it would have been sent to the Occupier as they did not have your new address so I would also break the Good news to them that they maybe " Homeless " and thanks for passing on any letters that arrive.

eddddy

PRW369 said:

Can anyone assist with a without prejudice save as to costs offer, as the solicitor bill seems astronomical?

Be careful with that approach. Whilst you're "negotiating" further fees can be added, and the process to forfeit your lease can continue.


In general, with leasehold administration fees, the recommended approach is to pay whatever is demanded under protest, and then challenge it at a tribunal.

The bill should be made up of the overdue ground rent and Leasehold Administration Fees. The law requires that leasehold administration fees are "reasonable"


So you can then you can ask for a breakdown of Administration Fees, showing things like...

• Actions undertaken by the freeholder, and how much fees they are charging. (To check if their hourly rate is reasonable.)

• The solicitors bill - showing a breakdown of hours, hourly rate, etc.

• Out of pocket expenses incurred by the freeholder and the freeholder's solicitor

• The debt collector's bill, to make sure it's reasonable

And you also have to decide whether it was "reasonable" for your freeholder to instruct debt collectors, and "reasonable" to instruct solicitors etc.


If you decide if anything mentioned above (or anything else) is unreasonable, you can challenge it at a tribunal.




One "trick" to be careful of...

Make sure the bill is only for ground rent and administration fees payable to your freeholder.

Some rogue debt collectors might provide a bill saying something like:

You owe...

• £2.8k which is for your freeholder
• £1k debt collection fee to us (the debt collection company)

If it's presented like that, the £1k isn't a leasehold administration fee - it's just a fee you are voluntarily paying to the debt collection agency (so cannot be challenged at tribunal).

You need to make sure that the whole £3.8k is classified as ground rent and leasehold administration fees.

PRW369

Hi thanks so much for prompt reponses!  All very helpful!  I do have a breakdown of costs as follows.  These have been provided on request by the solicitor used by the freehold company as follows:

£432.78 ground rent arrears

£329.20 administration charges

£792 preparation & service of section 146 notice

£355 court fee

£1800 legal costs broken down as follows:

receipt & perusal of instructions

file opening

all necessary communcations to client

acquistion of title documents from land registry

acquisition of lease

detailed lease review

checking title position

drafting claim form

drafting particulars of claim

filing certificates of service

4.4 hours by a grade A fee earner @ £250 + vat = £1350

3.2 hours by a grate D fee earner @ £118 + vate = £452.12

they have rounded this down to £3.12 for convenience (laugh)

So total to pay to the solicitors £3708.98

I spoke with the Leasehold Advisory Service at the weekend and they advised I have to pay it and solicitors can charge whatever they want for their services, is this correct?

I really can only take advice on the matter.  It does seem like a very well oiled machine, set up to make money.  I suspect they churn these demands out so I don't really understand why a Grade A fee earner would be required?

PRW369

sorry typo on Grade A, should be 4.5 hours not 4.4

PRW369

Just to add a little more information, I missed my 2021 ground rent bill and 2022 ground rent bill, I assume my tentant binned these.  I have no idea if the freeholder sent any reminders/demands.  I suspect they didn't do anything until after the 2022 bill was sent as you can't take someone to court for forfeiture of lease unless ground rent is in arrears for 3 + years or the total debt is over £350.  I know I am in the wrong for not paying (as mentioned in original post complete human error with malicious intent).  I read somewhere the freeholder must prove they have taken reasonable steps to locate you before serving a section 146?

PRW369

another typo sorry, no malicious intent!!!

TBagpuss

Solicitors charges to their own clients are a private contractual matter so they can charge what they like.

For costs recoverable from another party there are guidelines which is what the references to Grade A and Grade D fee earners relate to . Grade A is a lawyer with 8+ years of experience, Grade D is a trainee or paralegal (https://www.gov.uk/guidance/solicitors-guideline-hourly-rates ) If you don't agree the costs then you can ask the court to assess them, and they ca reduce hem if they consider them unreasonable - however, for a comparatively low amount the cost of that might be more than any savings. 

The work done is likely reasonable - they tried to contact you and didn't get a response, which isn't their fault. You *might* be able to argue that the time  taken or the seniority of the person doing the work were excessive but I am not sure how likely you would be to succeed, they are saying they've done around 7.5 hours of work which is probably not excessive, you might be able to suggest that someone more junior could have done more of the work as it is not complex, which might shave a couple of hundred off. 

That said, it looks as though the hourly rates they are using are out of date and the current guidelines are slightly higher, which I suspect might make it harder for you to claim they were unreasonable

PRW369

Just had a look at the NRLA website, it states they can't advise on freehold or leasehold sadly, but thank you

PRW369

Can anyone advise how the administration charges differ from the solicitor fees, thank you?