Ground rent squared?

Ground rent squared?

9:37 AM, 21st November 2023, About 3 months ago 5

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Hello, I think we have seen cash strapped councils trying plenty of tactics to raise much-needed funds, the most obvious being the selective licensing scheme. What I have been invoiced for this month though, is new to me.

My ground rent invoice this year was more than double what I was expecting (Ground rent = £330, extra charge = £415.22). My immediate thoughts were ‘they’ve forgotten I have a deed of variation’ or ‘maybe I missed my invoice last year’.

Before I managed to speak with the company though, an explanatory email was sent to accompany the invoice. It appears that I am the leaseholder of my property, the company is the head Leaseholder of the building, but Manchester City Council (MCC) are the Head Freeholder/Superior Landlord.

The services listed as being carried out by MCC within the ‘property area include’:
-Waste and Street Cleansing – Grounds Maintenance – Highways – Neighbourhood Management – CCTV
The charges date back from April 2018.

I wonder whether anyone has any experience with this and whether the charge is enforceable as per the terms of the invoice (payable as a lump sum on 1st Jan)?
1) Are the services listed above not part of the council tax? If there is an owner occupier in place, do they pay these charges PLUS their council tax?
2) Is this a charge for owners or residents?

Thanks,

Ben


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Comments

Graham Bowcock

9:57 AM, 21st November 2023, About 3 months ago

Ground rent and service charges are not the same thing.

Ground rent is usually fixed, but there may be increases allowed in the lease - so read the lease.

Service charges are actual costs incurred by the freeholder/management company for dealing with requirements under the lease. Usually paid in advance by way of a budget, with a reckoning up at the end of the year when service charge accounts are prepared.

You need to read the lease to see what the parties' obligations/liabilities are and who pays for what. If unclear, the freeholder should provide full details.

DAMIEN RAFFERTY

10:07 AM, 21st November 2023, About 3 months ago

The charges date back to April 2018 so nearly 5 years worth of charges.
Still a big bill

Judith Wordsworth

10:20 AM, 21st November 2023, About 3 months ago

If your lease was amended by variation re the Ground Rent the Freeholder’s admin might have just sent a big standard generated notice with figures from the original lease. Read your Lease and Variation, if the notice is wrong then contact the admin.

Service/Maintenance Charges are different and may be in advance or in arrears. Again read your Lease. If the Freeholder is a Local Authority somethings might have been accidentally added applicable to another block. Again query what is being charged for.

Ben

12:21 PM, 23rd November 2023, About 3 months ago

Reply to the comment left by Judith Wordsworth at 21/11/2023 - 10:20
this isn't a service charge for the building, I pay that already to the management agent.
I pay the superior leaseholder of the building their ground rent.

This appears to be a form of ground rent (on top of the existing ground rent charged for the building) but is justified by providing services such as bin collection and street cleaning (which the tenants pay council tax for).

Manchester City Council have remained the ultimate freeholder. they charge my 'landlord' (abacus land etc) and they pass the charges on to me (the landlord of the flat).

do i also pass it down the chain to tenants? i doubt it. but why does the buck stop with the leaseholder (me) and not with the the superior leaseholder?

i have emailed MCC for some form of explanation but have recevied no response

Judith Wordsworth

8:47 AM, 25th November 2023, About 3 months ago

Reply to the comment left by Ben at 23/11/2023 - 12:21
Bin collection and street cleaning cannot be charged as Ground Rent.

Ground Rent is exactly what it says it is, renting a piece of ground. Your Lease will detail what the Ground Rent amount is.

https://thefreeholdcollective.co.uk/ground-rent-and-service-charges-explained/

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