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Unreasonable Admin Charge for Late Ground Rent

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p_raks
p_raks Posts: 4 Newbie
in House buying, renting & selling
Hi,
Live in a flat which is a leasehold and so ground rent is due annually. It was due Jan first and due to confusion around a Direct debit being setup we missed the deadline to pay it. After we had the reminder I went to pay it but noticed they added a £180 admin charge and I could only pay the ground rent along with the admin charge or not at all.

Its my fault for missing the deadline, however the admin charge is very high for sending a letter of reminder. I told them as much and the response I got was a breakdown:

1. Perusing computer and paper records regarding the above property £65.00
2.!Obtaining and dealing with office copy entry of leasehold title £37.50
3. Preparation of file and letter including perusal of file by manager £47.50
4.!VAT thereon at 20.00%! £30.00

They also told me they dont want to entertain any further debate on this topic to shut me down.
I got some legal advice through my home insurance who told me that there is no legislation which has governance around this area as you are contract bound when you sign up to the lease.

Has anyone had any success with dealing with this situation? I dont mind paying an "Admin" cost but I dont think that should be £180.

Thank You

RP
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Comments

  • Comms69
    Comms69 Posts: 14,229 Forumite
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    How much do you think it should be?
  • parking_question_chap
    parking_question_chap Posts: 2,694 Forumite
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    edited 19 February 2018 at 6:44PM
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    Agree that is ridiculous.

    Maybe contact the housing ombudsman and see if its something they can help with.

    Make sure you pay the ground rent, and communicate by email, keeping record if they refuse to accept payment for ground rent without the added £180.

    Maybe you can just pay this by BACS?

    Finally, have you read the lease? I think (but dont quote me) that they can only add an admin charge if the lease allows.
  • Nick_C
    Nick_C Posts: 7,460 Forumite
    Name Dropper First Anniversary First Post Home Insurance Hacker!
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    What does your lease say about late payments?
  • Asl77c
    Asl77c Posts: 87 Forumite
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    If there is nothing you can do. Pay them in pennies.
  • eddddy
    eddddy Posts: 16,526 Forumite
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    p_raks wrote: »
    I got some legal advice through my home insurance who told me that there is no legislation which has governance around this area as you are contract bound when you sign up to the lease.

    That sounds like dodgy advice to me.

    Assuming no late fee is mentioned in your lease, The Commonhold and Leasehold Reform Act 2002 Schedule 11, Part 1 says that a 'Late Fee' is an 'Administration Charge', and that an 'Administration Charge' must be 'reasonable':
    Reasonableness of administration charges

    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,


    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

    In a case in 2012, an upper tier tribunal seemed to agree that £50 per hour was a reasonable rate for admin work. It sounds like you're being charged quite a lot more than that.


    I guess one approach is to pay the £180 under protest, saying that you believe £30 is a 'reasonable' fee, and that you intend to challenge the fee at a tribunal.

    I've heard of freeholders reducing a fee as a 'gesture of goodwill' to avoid a tribunal case in these types of circumstances.

    Making it a 'gesture of goodwill' means that they can continue to charge other people a £180 fee. Whereas if a tribunal rules that £180 is unreasonable, they will have to charge other people less.
  • z1a
    z1a Posts: 2,522 Forumite
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    Asl77c wrote: »
    If there is nothing you can do. Pay them in pennies.

    Anything over 20p in coppers can be refused.
  • p_raks
    p_raks Posts: 4 Newbie
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    Thank you all, some very helpful comments here. I checked the lease and I cannot find anything specific around Late fee admin charges, that said it does not read easy and I wonder if I have read/interpreted it correctly.

    Whats odd is that I have now offered 3 times to pay the service charge but the company "Simarc" keeps refusing and will only accept the service charge + admin fee.

    Upon a little further searching, I have found a lot of people in a similar situation and I think this company simply profits from these admin charges and uses it as a source of additional revenue.

    Torn between paying and moving on and challenging with potentially more costs.....
  • eddddy
    eddddy Posts: 16,526 Forumite
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    p_raks wrote: »
    Torn between paying and moving on and challenging with potentially more costs.....

    Either way, you can state that you are paying under protest. That way you can apply to the tribunal later if you want. (I believe that the tribunal fee is £100 - and the Tribunal can decide that your freeholder has to pay it, if you win.)

    As I say, when you pay, you can tell your freeholder that you intend to challenge it at a tribunal, and how much you think it should be.

    Then they may (or may not) refund part of the fee to avoid the tribunal.
  • ReadingTim
    ReadingTim Posts: 3,970 Forumite
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    What's the Ground Rent amount? Knowing the admin fee as a percentage (or multiple) of the original ground rent amount goes a long way to determine reasonable-ness - if the £180 was (say) 1-2% of the original amount, someone could judge that reasonable, notwithstanding the fact that the admin costs are the same regardless of the amount being collected/reminded about.

    On the other hand, an admin fee of the same, or more, than the amount originally being collected, and vastly disproportionate to the work actually undertaken and your case is doubly strengthened!
  • takman
    takman Posts: 3,876 Forumite
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    z1a wrote: »
    Anything over 20p in coppers can be refused.

    I thought that only applied to payments made through a court, so any amount / payment method can be rejected.
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