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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 9348
Experience:  I have been practising for 30 years.
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Question about Ground Rent. I have received a reminder,

Resolved Question:

Question about Ground Rent.
I have received a reminder, despite not receiving an original request for payment.
The bill is for £150 for the period 1st April 2016 to 31st March 2017
There is a charge for interest - 30p to 16/04/2015, not relevant to this bill, and 98p to 23/05/16, and a charge for a reminder letter of £36.
The section 166 notice attached to it states "If you are liable to pay an administration charge, it is payable only to the extent that the amount is reasonable".
£36 for a letter, in my view, is not reasonable - do I have to pay it? I have paid the ground rent, but not the interest, nor the reminder letter charge.
Regards
Submitted: 1 year ago.
Category: Law
Expert:  F E Smith replied 1 year ago.

The liability to pay ground rent arises under the terms of the lease or the deeds. There is a covenant to pay and only in exceptional circumstances is there a covenant for the landlord to demand the rent or send reminders. Very rare. It is for the owner of the land to volunteer the money even if it has not been demanded. In that respect, you might want to make a note in your diary for future.

If the amount of £36 is noted in the deeds, then you are liable to pay it. If it is not noted in the deeds then whether the amount is reasonable or not is a matter of fact. A solicitor would charge £15 for sending one letter plus an amount of money for perusal of matters relating to the sending of the letter. They would then charge another £15 for receiving the reply.

Hence, £36, although it seems a lot of money and on the face of it is an unreasonable amount, if it came down to an argument in court, the court are likely to find it reasonable. The court have found that an £80 charge for overstaying in a car park is reasonable.

So you can see that what is reasonable to the man in the street and what is reasonable to a business and to court are two different things.

You are liable for interest on any overdue payments. I don’t know whether the calculations are correct or not.

If you do not pay the administration charge they are likely to continue to add interest and late payment charges which can then grow exponentially even though if it came down to an argument, it may or may not be ultimately reasonable.

To avoid further charges and arguments over them and arguments over interest you can always pay the charges under duress and then sue the management company to get the costs back. The correct way of deciding whether these charges are reasonable or not would be to refer the matter to Leasehold Valuation Tribunal.

The tribunal are likely to find a £36 charge reasonable. Sorry.

Can I clarify anything for you?

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Best wishes

FES.

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