Property Management issues with Ground Rent

Hamburgler

HI 
I own a Flat in a large block in Walsall. This summer  a new owner purchased the freehold and appointed a new management team.
They duly asked for the ground rent in August to be paid in September.
I due to personal circumstances, forgot to pay it.
 In November, I was in America attending my nephews wedding when I received a demand for £1037 for late payment of ground rent. I initially thought this was a scam letter as they stated they were going to repossess  the flat and  to pay via a link they had sent.
This email did ,however, get me to check and realise I hadn't paid the ground rent. I promptly paid the £100.00 via their bank . I also sent an email reply to the threatening  email saying I wouldn't pay them as I thought it was a scam.
I then received another email stating that they were going to repay the £100 pound and unless they received the full amount would repossess the flat. 
After discussing it with my wife and not having access to the deeds of the flat I, under protest paid the money they demanded.
I have looked at the leasehold agreement and it does state that the landlord can demand reasonable compensation for late payment.
I would not call £900 reasonable for a £100 debt that was paid as soon as I was reminded about it.

Can anyone please tell me the steps I can take to recover some of this money? I am happy to pay a small penalty for late payment.
Before anyone else says it : Yes I've learnt a lesson!
It would appear that there a number of companies that are buying up properties and trying to squeeze every penny they can out of them.

eddddy

Hamburgler said:

I am happy to pay a small penalty for late payment.

In the UK, it's illegal for freeholders, management companies (or any other type of company/person) to charge penalties or fines.

Only public authorities can charge penalties or fines.

However, the law says that if you don't pay ground rent, you have to pay freeholders / management companies reasonable costs in enforcing payment.

For example...

• If they have to send you reminder letters - they could probably charge you around £50 per letter to cover their admin costs.

• If you still don't pay, it might be reasonable for them to instruct solicitors - and you would have to pay the solicitor's fees, as long as those fees are reasonable

• Or it might be reasonable for them to instruct debt collectors - and you would have to pay the debt collectors' fees, as long as those fees are reasonable

So you should ask for a breakdown of the £1037, so you can decide whether the charge is 'reasonable'.

For example...

• It wouldn't be reasonable to charge, say £250, for sending a reminder letter

• It wouldn't be reasonable to instruct a solicitor immediately after a payment is overdue - it would be reasonable to send 1 or 2 or 3 reminders/warnings first 

If you feel that the £1037 charge is unreasonable you can challenge it at a tribunal. (If you say that you intend challenging the charge at tribunal, sometimes freeholders / management companies will reduce the fee, to avoid a tribunal case.)

Hamburgler

Thank you for your reply. There were no reminders, went straight to this level of demand. I will write to them and see what their stance is on this. I am not worried about going to a tribunal, however, this company seems to play hard ball and I don't want to throw good money after bad so to speak.
Again thank you for your  response. 
If we called it an administration fee would that be appropriate? 

saajan_12

Hamburgler said:

Thank you for your reply. There were no reminders, went straight to this level of demand. I will write to them and see what their stance is on this. I am not worried about going to a tribunal, however, this company seems to play hard ball and I don't want to throw good money after bad so to speak.
Again thank you for your  response. 
If we called it an administration fee would that be appropriate? 

Fixed fees usually have to be agreed by contract (ie lease in this case) to be enforcible - so check. 

If its not in the contract, then they can only rely on damages, ie what it cost them to enforce the ground rent. Eg £x in postage and materials, £x to pay someone for the time to review the files and put together the letter. Doesn't necessarily have to be exact ie video proof of them taking x minutes at a salary of £y per hour but it has to be reasonable.. eg £30-50 for a chaser, not £1000. 

eddddy

Hamburgler said:

If we called it an administration fee would that be appropriate? 

The legislation calls it an "Admiration Charge".

There is specific legislation that covers Administration Charges - so contract law, damages etc aren't directly relevant.

In theory, there might be a "fixed administration charge" (or formula) mentioned in your lease, but since leases typically last over 100 years, they very rarely set a charge (or formula) which would be valid for 100+ years.

So the charge probably isn't mentioned in your lease, and therefore it's a "Variable Administration Charge".


Here are some relevant snippets from the Commonhold and Leasehold Reform Act 2002:

Meaning of “administration charge”

1(1) In this Part of this Schedule “administration charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent which is payable, directly or indirectly -

...

• (c) in respect of a failure by the tenant to make a payment by the due date to the landlord or a person who is party to his lease otherwise than as landlord or tenant, or

Reasonableness of administration charges

2 A variable administration charge is payable only to the extent that the amount of the charge is reasonable.

Link: https://www.legislation.gov.uk/ukpga/2002/15/schedule/11

FWIW, in a tribunal case a few years back, I recall that the judge agreed that £50+vat per hour was a reasonable rate for admin work by a management company. Maybe now that would be £75+vat per hour.

An written application to the Tribunal costs £110. 

For a case like this, I doubt you'd need a solicitor and I doubt that an 'in-person' hearing would be required.