Is there a minimum payment period that must be given?

by Readers Question

11:19 AM, 25th September 2018
About 3 weeks ago

Is there a minimum payment period that must be given?

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Is there a minimum payment period that must be given?

Hi – just wanted to check if there are any laws in this area. I am the leaseholder in a small group of flats (own share of freehold as well). It seems one or two flats have not been paying their share of freeholder fee e.g. ground rent, insurance, some monthly fee etc.

So it seems the company secretary and treasurer have come up with a few practices to encourage timely payment – they issue invoices e.g. for yearly building insurance with 6 days payment period now (in the past it used to be 30 days); For monthly payments (service charge), they request people to confirm they have set up standing order, and send out reminders for payment before their due date.

I am one of those people who always pay on time, so don’t tend to reply to any premature reminders for payments or set up standing orders. I believe as long as I pay on time so that the recipient gets the funds before the end of due date (I do allow adequate time for funds to be cleared etc.), I should be fine.

So this time, the freeholder came up with a different trick. They issued a letter saying my payment is overdue after the due date, even though I had paid on time. After several emails were exchanged, they did admit they had issued the letter based on a bank statement produced much before the due date had expired. When they actually produced a statement for close of business due date, my payment was there!

In the end, they had nothing against me, but the whole experience was quite time consuming and annoying. Seems they want to push me into paying much before due date by creating unnecessary confusion.

I wanted to understand if what they are doing is legal and if there is anything I can do to stop this unnecessary harassment. Are there any minimum payment period they must give? 6 days for annual building insurance seems too short!

I understand their goals are not necessarily bad, it’s just the approach seems like harassment.

Many thanks

Rita



Comments

Neil Patterson

11:34 AM, 25th September 2018
About 3 weeks ago

From The Leasehold Advisory service >> https://www.lease-advice.org/article/ground-rent-a-demanding-notice/

"April 2012

Since the 28th February 2005 any demand for ground rent by a freeholder, or their managing agents, must be made in a “prescribed form” as set out in Section 166 of the Commonhold & Leasehold Reform Act 2002.

If the ground rent is not demanded in this prescribed form, and completed in accordance with section 166, the tenant (leaseholder) is not liable to make payment unless, and until, it is properly demanded.

Click here to download the form of rent demand notice. At first glance the form looks reasonably straight forward. However, it is easy to complete it incorrectly, and many freeholders, or their advisers, do get this wrong.

The date for payment of the ground rent given in the notice cannot be earlier than 30 days from the date notice is given, nor more than 60 days after that date. Overriding this is the provision that the date for payment cannot be earlier than the date set out in the lease itself.

Complications can arise where the freeholder is attempting to recover several years’ arrears of ground rent. The best advice for a freeholder is to use separate forms for each period of ground rent owing.

The notes for leaseholders and landlords on the form should be read carefully to ensure compliance from a freeholder’s and leaseholder’s point of view.

Section 166 provides that the notice must be in the prescribed form and “may” be sent by post. If the notice is sent by post, it must be addressed to the tenant at the dwelling on which the ground rent is payable, unless the tenant has notified the landlord in writing of a different address in England & Wales at which he wishes to be given notices under this section. (In which case it must be addressed to him there)

In reality, the failure by a freeholder to demand ground rent, properly, may only mean that payment of the ground rent is delayed until the freeholder serves a proper demand. It does not mean that the ability to demand ground rent has been lost. However If a freeholder, or their agents, attempt to add legal or administration charges, for non-payment, based on an incorrect demand notice, such charges will not be payable. If necessary the leaseholder should seek a determination from the appropriate tribunal, being the First-tier Tribunal (Property Chamber) in England, or the Leasehold Valuation Tribunal in Wales.

The form contains a reference to section 167 of the 2002 Act. This section provides that a landlord cannot use the forfeiture procedure under the lease unless the amount owed for ground rent, service charge or administration charges (or a combination of them) is more than £350. However, the forfeiture procedure can be used even if the amount is less than £350, if it has been outstanding for more than three years. Ground rent can be recovered for up to six years in arrears.

In conclusion, the bad pun in the title of this article is correct the Ground Rent demand can be a “demanding notice” to complete correctly.

Ian Narbeth

16:14 PM, 25th September 2018
About 3 weeks ago

Ground rent is often payable even without formal demand as the leaseholder knows how much it is and when it is payable.

If you are sure you have paid on time I would not engage in protracted correspondence. Just inform the freeholder you have paid and leave it at that.

In the scheme of things it is probably worse if there are delays in getting the insurance charge paid than having a snotty and unjustified reminder.

Clint

13:47 PM, 26th September 2018
About 3 weeks ago

Whilst on this subject, I have had a freeholder who sends a reminder with additional late payment costs where they say they have sent the demand and if I disagree, they just leave the late payment costs on account.
I complained to the PRS and they stated that it was something they could not deal with and I had to take it to the First Tier Tribunal so I just settled up.
I had in the past paid for 3 years ground rent in advance at a stretch however, the freeholder no longer accepts such payments in advance and will not even let me pay more than a week before the rent is due so, it is very easy to slip up and end up having to pay late payment fees. Does anyone know if this is at all legal?

Ian Narbeth

14:37 PM, 26th September 2018
About 3 weeks ago

Reply to the comment left by Clint at 26/09/2018 - 13:47
The legal position is that fees are not payable unless the lease allows them (and there may be limits or restrictions even then). The practical position is that if you come to sell or re-mortgage the property and need the co-operation of the freeholder/managing agent the line of least resistance may be to pay up. If it gets too bad try to team up with the other tenants and enfranchise.

Puzzler

9:51 AM, 29th September 2018
About 3 weeks ago

The post also refers to service charge and I think there is no notice period required although most people try to give one month. It's a different notice that is required as well. Often they are issued together.


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