Ground Rent Pack

Medge

Hey all,

Looking for some advice relatively urgently. Basically we’re in the process of selling our flat and all has been progressing relatively well though of course experiencing all the joys of selling a leasehold. 

A few months ago we paid our management company for their pack- a little more expensive than expected (on the higher price of all the estimates we’d seen online) but no issues- knew it was coming, knew we needed to do it so paid straight away. However, we’re now being asked to pay for another pack from the company that we pay our ground rent (and collecting the ground rent is literally the only interaction we have with them) and I’m just struggling to understand how necessary this is as from what I can understand it will only provide them reassurance that we are up to date with our ground rent but will cost us almost £400. Also to note- we didn’t get this when we bought the flat four years ago.

We’ve pushed back but our sellers solicitors are insisting they need this and after a lot of back and forth have now said they need it to satisfy their lender. Our solicitor initially agreed with us that she didn’t understand why it was needed but has since just taken the ground that it’s our responsibility to provide any packs requested. Which I totally get that but £400 is a lot of money for us so not something we have just sitting ready (plus we’re already having to pay out money for an indemnity policy they’ve insisted on as well) and just frustrating if what they get from this can be provided in a cheaper way (we’ve offered to provide them assurance we’re up to date with our ground rent in any other way).

If we have to pay it we will find the money somewhere and I totally get selling is just expensive but I guess I just wanted to know is this normal to have to also buy the ground rent pack? Is there something I’m missing in terms of what this pack will provide? And do I have any grounds to keep pushing back or is this just something we need to suck up and pay?

Thank you in advance for any help you can give. 

jlfrs01

A leasehold information pack contains all of the relevant documents and information related to a property that is being purchased on a leasehold basis. This includes details regarding the length of the lease, any restrictions or covenants attached to it, service charges and other cost implications, building insurance requirements, and any rights held by the landlord over the property. It may also contain information about ground rents and management companies involved with managing communal areas. 

In short, if your buyer's Solicitor is requesting this I don't think there's any other option than to provide it at your cost, particularly if it's for the Lender.

Medge

Thanks for the reply- really
appreciate it.

So everything to do with our leasehold and the information around this was in our management pack. If I remember right it contained literally everything you listed as we recieved the same when we bought it. Paid this no issue as though it was a lot of money (£600) I knew how important all the information in it was.

My problem is what more this other pack provides outside of the assurance that we’re up to date with our ground rent. i’ve just looked  on the companies website it says: ‘Including a ground rent statement and breach of covenant report’. So the only extra addition would be the breach of covenant report- but (and maybe this is me being really naive) that doesn’t seem like much for £400.

eddddy

Do you have a tripartite lease? i.e. a lease between 3 parties - Freeholder, Management Company, and Leaseholder?


You could try something saying something like this to the freeholder... 

"I am prepared to pay a fee of £100 for written confirmation that my ground rent payments are up to date. If you charge more than £100, I may challenge the charge at a tribunal, as I believe it is unreasonable.  I believe that a tribunal would determine that a reasonable fee would be less than £100, based on the likely work involved."

(And if you want, you can pay the £400 now to get the sale completed, then challenge the fee at tribunal later.)


But it's a bit risky (and it might depend on the precise wording of your lease)...

• Sometimes tribunals will rule on this type of fee and sometimes they wont. Tribunals sometimes argue that they only rule on charges which the lease requires leaseholders to pay. And the lease doesn't require you to get a management pack from the freeholder, and the lease doesn't require the freeholder to provide a management pack.

• So providing a management pack is usually voluntary. So if you kick-up a fuss, and the freeholder is vindictive, they could refuse to provide a management pack at any price.

• But if a tribunal did agree to rule on this - I suspect they would rule that a charge of about £50 or £60 would be reasonable

• If a tribunal ruled that, say, £60 was a reasonable charge, it would be difficult for the freeholder to charge others £400 in future. So they might agree to accept £100 from you, to "shut you up" and to avoid a tribunal decision, so that they can continue to charge others £400.

Medge

eddddy said:

Do you have a tripartite lease? i.e. a lease between 3 parties - Freeholder, Management Company, and Leaseholder?


You could try something saying something like this to the freeholder... 

"I am prepared to pay a fee of £100 for written confirmation that my ground rent payments are up to date. If you charge more than £100, I may challenge the charge at a tribunal, as I believe it is unreasonable.  I believe that a tribunal would determine that a reasonable fee would be less than £100, based on the likely work involved."

(And if you want, you can pay the £400 now to get the sale completed, then challenge the fee at tribunal later.)


But it's a bit risky (and it might depend on the precise wording of your lease)...

• Sometimes tribunals will rule on this type of fee and sometimes they wont. Tribunals sometimes argue that they only rule on charges which the lease requires leaseholders to pay. And the lease doesn't require you to get a management pack from the freeholder, and the lease doesn't require the freeholder to provide a management pack.

• So providing a management pack is usually voluntary. So if you kick-up a fuss, and the freeholder is vindictive, they could refuse to provide a management pack at any price.

• But if a tribunal did agree to rule on this - I suspect they would rule that a charge of about £50 or £60 would be reasonable

• If a tribunal ruled that, say, £60 was a reasonable charge, it would be difficult for the freeholder to charge others £400 in future. So they might agree to accept £100 from you, to "shut you up" and to avoid a tribunal decision, so that they can continue to charge others £400.

Thanks for much for this l- hadn’t even considered going the other way and questioning the cost. Would this be applicable to the company working on behalf of our freeholder though? Because it’s not the freeholder that is asking for the money but the set price of the property management company that take our ground rent. I guess my other concern then is that we’d threaten/ take them to tribunal and we’d be beaten by their legal team because they seem a fairly big/ well off company.

The other problem as well is that our buyers solicitor have said they want the pack and won’t accept just an up to date ground rent statement. So I guess on that logic confirmation from our freeholder still wouldn’t be enough anyway . 

So frustrating- it just feels like their solicitors are pushing anything they can without any flexibility because at the end of the day we’re the only people it’s going to cost.

Oh and yes I believe it is a tripartite lease we have- will double check in a little while though. 

jlfrs01

Medge said:

Thanks for the reply- really
appreciate it.

So everything to do with our leasehold and the information around this was in our management pack. If I remember right it contained literally everything you listed as we recieved the same when we bought it. Paid this no issue as though it was a lot of money (£600) I knew how important all the information in it was.

My problem is what more this other pack provides outside of the assurance that we’re up to date with our ground rent. i’ve just looked  on the companies website it says: ‘Including a ground rent statement and breach of covenant report’. So the only extra addition would be the breach of covenant report- but (and maybe this is me being really naive) that doesn’t seem like much for £400.

Ah, so this is useful to know as you may have grounds for negotiation with the buyer as well as the Leaseholder if the bulk of the information needed has already been provided. In your position I'd go back to my Solicitor and say that having checked the contents of the pack provided I'm confident all the information has been submitted already so can they ask the buyer's Solicitor what they think is missing exactly? It may just be they or the Lender have made an assumption that a Management Co. Pack would exclude the information a Leaseholder Pack would normally include.

You may get a response they overlooked the contents of the pack and all is well. If not then they ought to specify exactly what is missing. If it is literally the Ground Rent Statement then request this from the Leaseholder. They may well charge a much more reasonable fee for this piece of paper but if not and they won't budge, I'd go back to my Estate Agent asking them to liaise with the seller with a request the £400 is met by the 3 of you on the grounds it is an outrageous amount of money to be asking for a sheet of A4 paper or an email.

eddddy

Medge said:
Thanks for much for this l- hadn’t even considered going the other way and questioning the cost. Would this be applicable to the company working on behalf of our freeholder though? 

Presumably, the company is the freeholder's agent. i.e. They are working on behalf of the freeholder. So technically you are asking the freeholder (via their agent) for the relevant information, and your freeholder is instructing their agent to deal with your request.

Medge said:

The other problem as well is that our buyers solicitor have said they want the pack and won’t accept just an up to date ground rent statement. 

I guess you need to be clearer about what exactly the buyer's solicitor is asking for, so that you can decide how much work is involved and what a reasonable fee is - and therefore, whether you want to challenge it.

FWIW, a few years ago a tribunal agreed that a reasonable fee was £50+vat per hour for admin work - but perhaps that's gone up a bit now.

Medge said:

I guess my other concern then is that we’d threaten/ take them to tribunal and we’d be beaten by their legal team because they seem a fairly big/ well off company.

It would cost you £100 to make a tribunal challenge.

As I mentioned,  I think the key argument is whether the tribunal will rule on this type of fee. The precise wording of your lease might influence this. Some newer leases explicitly say that the freeholder must provide a management pack when requested - which would strengthen your case hugely.

Medge

jlfrs01 said:

Medge said:

Thanks for the reply- really
appreciate it.

So everything to do with our leasehold and the information around this was in our management pack. If I remember right it contained literally everything you listed as we recieved the same when we bought it. Paid this no issue as though it was a lot of money (£600) I knew how important all the information in it was.

My problem is what more this other pack provides outside of the assurance that we’re up to date with our ground rent. i’ve just looked  on the companies website it says: ‘Including a ground rent statement and breach of covenant report’. So the only extra addition would be the breach of covenant report- but (and maybe this is me being really naive) that doesn’t seem like much for £400.

Ah, so this is useful to know as you may have grounds for negotiation with the buyer as well as the Leaseholder if the bulk of the information needed has already been provided. In your position I'd go back to my Solicitor and say that having checked the contents of the pack provided I'm confident all the information has been submitted already so can they ask the buyer's Solicitor what they think is missing exactly? It may just be they or the Lender have made an assumption that a Management Co. Pack would exclude the information a Leaseholder Pack would normally include.

You may get a response they overlooked the contents of the pack and all is well. If not then they ought to specify exactly what is missing. If it is literally the Ground Rent Statement then request this from the Leaseholder. They may well charge a much more reasonable fee for this piece of paper but if not and they won't budge, I'd go back to my Estate Agent asking them to liaise with the seller with a request the £400 is met by the 3 of you on the grounds it is an outrageous amount of money to be asking for a sheet of A4 paper or an email.

Thanks for this- really appreciated! We’ve been back to our buyer’s solicitor asking what they specifically require from this pack and they’ve basically refused to give us an answer e.g. their response was that we just have to provide the pack and totally ignored our actual question. Incredibly frustrating because as you said this effects what we can say to our ground rent company and if we do end up paying we want to make sure we’ve said the right things to put us in best shape to potentially take them to tribunal. Are our buyers solicitors being unreasonable in not providing us an answer on this? We can’t understand why they won’t just give us an answer.

We’ve also tried to reach out to our buyer through our estate agent now. No response yet but we’re going to chase today. All not the start we were hoping for this year especially when our potential completion dates looms .

penners324

You need to get the information pack from the Freeholder and from the building management company.


The Solicitors will want both packs. 

penners324

These companies have a set amount of information they hand over.

Quickest and easiest option is to get your solicitor to request the pack (surprised they haven't done so) and you then pay your solicitor 

Medge

eddddy said:

Medge said:
Thanks for much for this l- hadn’t even considered going the other way and questioning the cost. Would this be applicable to the company working on behalf of our freeholder though? 

Presumably, the company is the freeholder's agent. i.e. They are working on behalf of the freeholder. So technically you are asking the freeholder (via their agent) for the relevant information, and your freeholder is instructing their agent to deal with your request.

Medge said:

The other problem as well is that our buyers solicitor have said they want the pack and won’t accept just an up to date ground rent statement. 

I guess you need to be clearer about what exactly the buyer's solicitor is asking for, so that you can decide how much work is involved and what a reasonable fee is - and therefore, whether you want to challenge it.

FWIW, a few years ago a tribunal agreed that a reasonable fee was £50+vat per hour for admin work - but perhaps that's gone up a bit now.

Medge said:

I guess my other concern then is that we’d threaten/ take them to tribunal and we’d be beaten by their legal team because they seem a fairly big/ well off company.

It would cost you £100 to make a tribunal challenge.

As I mentioned,  I think the key argument is whether the tribunal will rule on this type of fee. The precise wording of your lease might influence this. Some newer leases explicitly say that the freeholder must provide a management pack when requested - which would strengthen your case hugely.

Thank you this is all really helpful and unfortunately likely looking like the approach we’ll have to take (our hope was we could find a compromise with our buyer instead of having to spend the time/ money/energy taking the company to tribunal. Following further research, it turns out this company are already being taken/ in court over the prices they charge. 

We’ll make an offer to the company as per your first suggestion and if/ when they reject it at least we have it evidenced that we made a reasonable offer. Frustratingly we’re also being refused an answer on what it is our buyer’s solicitor actually wants out of this pack which doesn’t make thing easy. Gonna take a look at our leashold tonight as well so fingers crossing this might help as well.