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 per s166 (1) of the Commonhold & Leasehold Reform Act 2002 (requirement to notify long leaseholders that ground rent is due).
In order to be valid, the demand must include the following:
- The name of the leaseholder;
- The period the demand covers;
- How much the leaseholder has to pay;
- The name and address of the freeholder and/or managing agent;
- The date on which the ground rent is due or fell due which cannot be earlier than 30 days from the date notice is given, and it cannot it be 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.
The section also provides that the notice ‘may’ be sent by post and if it is, it must be addressed to the tenant at the dwelling on which the ground rent is payable. If the tenant has notified the freeholder in writing of a different address in England & Wales to which notices are required to be sent, then it must be addressed and sent there.
If the ground rent is not demanded in this prescribed form and completed in accordance with s166 (1) the tenant (leaseholder) is not liable to make payment unless (and until), it is properly demanded. This doesn’t mean that the ability to demand ground rent has been lost, but if any attempt is made to levy legal or administration charges for non-payment based on an incorrect demand notice, those charges will not be payable. If necessary the leaseholder should seek a determination from the First-tier Tribunal (Property Chamber) in England, or the Leasehold Valuation Tribunal in Wales.
The form also contains a reference to s167 of the 2002 Act (failure to pay small amount for short period). 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 outstood for more than three years. Ground rent can be recovered for up to six years in arrears under the Limitation Act 1980 if not collected.
More on what ground rent actually is and what it is used for can be found here.