Ground Rent Collection
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 s166 of the Commonhold & Leasehold Reform Act 2002 (requirement to notify long leaseholders that rent is due) and which ‘may’ be sent by post to the address on which the ground rent is payable. If the leaseholder has notified the landlord in writing of a different address in England & Wales at which he wishes to be given notices, then they must be sent there.
If this is not adhered to then the leaseholder is not liable to make payment until it is. Again, under s166, whilst the ability to demand ground rent has not been lost if the the freeholder attempts to add legal or administrative charges for non payment based on incorrect demand notices, then these charges will not be payable.
The payment date in the notice cannot be earlier than 30 days from the date notice is given, nor can it be more than 60 days after that date. What will override this however is that the date for payment cannot be earlier than the date set out in the lease itself.
Under s167 of the 2002 Act (failure to pay amount for a short period) 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 3 years. Ground rent can be recovered for up to 6 years in arrears.
All collected ground rent should be held and accounted for in a separate bank account to that of service charges. It is important to be aware that if ground rent is not collected then there will be no money in the company account to pay for the annual return (now the Persons with Significant Control) directors and officers liability insurance and other charges that do not come out of the service charge account.