Build-Up of Ground Rent Debt from billing error

by Readers Question

3 years ago

Build-Up of Ground Rent Debt from billing error

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Build-Up of Ground Rent Debt from billing error

I own and live in a flat based in central London. A separate company manages the building and ground rent payments.

Over a period of twenty months up to November 2014, this company regularly issued me with monthly statements saying that I have a zero balance with them (i.e. stating that I owe no ground rent).

Suddenly in November I received a letter stating that I owed £416.60 in ground rent which amounts to twenty months of ground rent at £20.83 per month.

I contacted the company in question and they explained that this had occurred due to an error on their part whereby they had not been regularly billing me for ground rent (but still issuing monthly zero balance statements), the result being a build-up of ground rent debt which has left me with this large one-off payment to make. Funnily enough, in the latest monthly statement they’ve sent me it still states that I have a zero balance even after they’ve written to me about this outstanding debt.

Does anybody know if I really have to make this lump sum payment although the large outstanding debt has arisen due to an accounting error on the company’s part whereby they haven’t been regularly billing me?

Thanks

Danielbilling error

Comments

Neil Patterson

3 years ago

Hi Daniel,

Do you have documented evidence of you asking why the bill was £0 for the ground rent before this point?

Daniel Chown

3 years ago

Thanks for your response Neil.

Unfortunately I didn't previously ask about this. I originally paid my ground rent by direct debit so I didn't notice that the £20 had stopped leaving my account every month. Considering I was also regularly receiving zero balance statements I just assumed the payments were continuing as usual. I accept that I probably am going to have to pay the £416.60 balance to cover the twenty months of non-payment, but I just wanted to check that I am definitely legally obligated to do so.

Neal Craven

3 years ago

Is it usual for ground rent to be paid monthly?

Have you checked your lease?

Tony Atkins

3 years ago

I would say you are honour-bound to pay this: you expected to pay it, you thought you were paying it by direct debit, and it doesn't seem fair on the management company to evade your responsibilities just because they made an invoicing mistake. Everyone's human. If you have genuine difficulty paying the £416.60, then negotiate a staged payment.

I think there's some legislation that states that the management company must issue a ground rent payment request once a year, or it may just say this in your lease agreement. You may have a case if they have failed to issue such a payment request, but otherwise I would just pay up. £250 p.a. in ground rent for a flat in central London sounds like a bargain to me.

Mike W

3 years ago

I think you are obligated to pay.
That the company did not use the direct debit is clearly a mistake. That you did not notice the difference in your account is clearly your mistake. That they continued to say monthly you didn't owe money was a mistake. So clearly both parties made mistakes. The matter has now been discovered. Do you think it reasonable to get a discount on what you contractually owe? After all presumably the management company has obligations to others...?

Gary Nock

3 years ago

Hi Daniel

Provided that the Freeholder or their agent has served the correct form of Notice to your notified address (not necessarily the property address) requesting ground rent, within the time limits as stated on the Notice, and in the correct font (yes you read it right- correct font...not less than 10 point) in accordance with Section 166 Commonhold and Leasehold Reform Act 2002 then you do have to pay. However until they do that no payment is due and no penalty can be imposed. I was asked by a large Freeholder for £192 in ground rent demands that were sent to the property address and not to our office as notified to them. They also tried to impose a £400 admin charge for non- payment. Neither the ground rent payment or the demand for admin fees complied with the Act above and I just told them I was going to Tribunal for £65 for a determination. Result. Paid the ground rent and no admin fees. Many Freeholders and their agents fail to serve Notices in the correct form of words or font. Until they do it's not a legal demand. For more information check out the lease.org website.

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