Ground Rent – Demand for Payment

by Readers Question

16:09 PM, 18th December 2012
About 8 years ago

Ground Rent – Demand for Payment

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Ground Rent – Demand for Payment

Ground Rent - Demand for PaymentHuw has received a strange “Demand for Payment” of Ground rent and would like to raise this topic with the Property118 community.

“In Jan’2007 I purchased a leasehold terraced property in Wales from a mortgage company following a previous repossession.  At the time neither myself, my solicitor nor the mortgage company could locate the Freeholder.  Having spoken to the neighbours, at the time, it seems that their last few years cheques for ground rent had never been cashed and some had started to be returned to sender.

I therefore thought nothing further of this until last week. I completed the renovation of the property and it has been rented out for the past 5 years.

Last week I was contacted by my tenants who informed me that I had received a letter demanding payment of this coming year’s Ground Rent plus eight previous years’ worth of arrears.

The actual sum is very small, as the ground rent is only £2.25 per annum and as such payment of this and future years would not be of any great concern.  However, the heavy handed wording of the letter, the short time specified for payment before administration charges would be added (the letter arrived at the property on the 14th December however was dated the 23rd November and payment is due by the 25th December) and the fact they are chasing arrears from a period before I owned the property, set a few alarm bells ringing.

I’m out of the country at the moment so I’m not in a position to check with the neighbouring property owners whether they received similar demand letters.  However, I’m guessing they all have the same letters, so that’s about 100 houses

I’m sure this is not an ideal situation for some of the elderly occupants of the street, especially as the demands contain hints of large administration charges being levied if the bill is not paid, not the best Christmas gift!!!

I wonder if any of your other Landlords have experienced similar demands and know if these arrears can be legally claimed.

Regards

Huw


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Comments

5:01 AM, 21st December 2012
About 8 years ago

To answer this point Annette, the arrears have been outstanding for about 8 years I believe, 5 of which I have owned the property. The Freeholder has been errant for this time, as I believe it was originally 2 old ladies who used a solicitor to collect the annual duty however both he and the old ladies passed on and the estate has been in probate ever since – not sure if this would be then considered one of your “thresholds”?
Thanks for all your comments
Huw

5:17 AM, 21st December 2012
About 8 years ago

I hope when you paid the amount owed BEFORE you purchased the property indicated that a certain portion of GR not owed by YOU was being paid by you WITHOUT PREJUDICE.
If you haven't such payment of the amount by you that you were NOT liable for, might be construed as accepting liability for anything that was owed for the period you paid GR prior to purchasing the property.
If you haven't I would correspond with the Managing Agents informing them that some of the payment was made WITHOUT PREJUDICE..............................................you just NEVER know what might come out of the woodwork!!!??

7:34 AM, 21st December 2012
About 8 years ago

Thanks Paul, a very good point.

Annette Stone

8:55 AM, 21st December 2012
About 8 years ago

Paul, none of my comments were meant to be harsh and, believe me, I have seen almost everything in this business. Sometimes I think I should write a book!!!

What concerns me most of all when I talk about professionalism among landlords is that this should be a lasting investment and you talk about being 71 and handing back all the keys. What happens if you live to 91 or 101. I note the comments about untraceable assets and trust me, the way things are now if you have assets, traceable, untraceable or under the cat's pillow HMRC will find them. Personally, I think that is as it should be because the country does have to be funded. I am not going to go into the benefits issue here as I think most of us are on the same page on that one!!!

Normally it is only fairly complicated issues or major refurbishments that end on my desk now but I know that our service charges people's experience is that every single lessee who used to do what you are doing is now finding it all much more difficult because the banks are more and more unwilling to just pay monies up front and more and more people are ending up in Court and facing forfeiture. There are specialist law firms making a fortune out of this and they work in a manner which could be described as "fast and furious". My view is mostly it happens because people extended themselves too thinly in the good years (although this is not the case always) and whilst I take on board the comment about "sitting pretty" that is probably because those people went somewhat more slowly . There is also the point that this is not really a business for amateurs and I really feel sorry for people who only understood the upside of being a LL

Have a great holiday whereever you are and here's to a happy and prosperous 2013.

Finally, Mark thanks for creating such a great forum. I have learnt a lot of even yesterday was on to our lettings people about the change in tenancies and the effects on deposits. Great stuff!!

Joe Bloggs

11:11 AM, 22nd December 2012
About 8 years ago

still surprised you got a term ending when you are 71 (which is what i meant to say)

23:36 PM, 22nd December 2012
About 8 years ago

Yes perhaps more luck than judgement!

I had been trying to obtain a remortgage on a resi IO for years; never could do it.

Then I sold quick as I had to and ended up in one of my rental flats which fortuitously, a tenant had just vacated, not paying 1 months rent.

Then I was flooded otand then back to Mum's, this NOT for the first time

Still the insurance company for the flat paid for everything and my Mum made a bit of extras!!

The mortgages came off a fixed rate and reverted to a 2% ABBR which I was unaware of.

I hadn't ever really read the mortgage conditions as I has an expectation that I would be remortgaging again.

All this was of course ALL pre-CC expectation!!

How naive was I !!

I never even thought of a CC!!

So more by luck than judgement have I ended up with an IO mortgage which doesn't need to be paid until I am 71!!

Of course I WON'T be paying it.

I shall just vacate and probably rent with all my salted away gains!!!

Of course if the property has lots of equity then yes I would sell and make some profit offset against ALL my losses which are far more than any equity I could ever imagine seeing in my properties in the next 18 years.

I conjecture that property will be in the doldrums for decades, like in Japan.

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