ground rent

[altis]

Many years ago, when we first moved into our house, we used to pay ground rent. It was something like £1.50 every six months. At least 10 years ago we realised that the demands had stopped coming. We asked around but no one seemed to know anything and we just assumed that it was costing them more to collect the rent than they were gaining.

Today, out of the blue, we received a letter from http://www.comptongroup.com/ saying that they had acquired the lease on the property, together with a demand for £9 arrears with 14 days to pay.

Any advice?

[orangebird]

Originally Posted by altis

Many years ago, when we first moved into our house, we used to pay ground rent. It was something like £1.50 every six months. At least 10 years ago we realised that the demands had stopped coming. We asked around but no one seemed to know anything and we just assumed that it was costing them more to collect the rent than they were gaining.

Today, out of the blue, we received a letter from http://www.comptongroup.com/ saying that they had acquired the lease on the property, together with a demand for £9 arrears with 14 days to pay.

Any advice?

Yes - pay it! It's only £9!! It'll also stop your credit history getting all messy.....

[Rob]

Debts are recoverable for around 6 years I think. They are it appears seeking this period.

The ground rent is a lease requirement, even if it is for such a worthless amount. You are obliged to pay, and indeed, I suspect the lease does not even require it to be demanded per se, you have to pay regardless as it is binding that you do so. Pay up without a fuss.

Incidentally, if a company has bought the freehold of the flats, were you as long leaseholders collectively in your block given a first refusal of the freehold. If not the sale of the freehold may have contravened lease enfranchisement legislation.

[Jon M]

As OB said, pay up ASAP, we were buying our first house and almost incurred £600 worth of unpaid maintenance and ground rent. Fortunalty our lawyer spotted it and made them agree to clear it before we exchanged.

It could be a serious issue if you want to move house in the future.

[Chris]

Originally Posted by altis

Many years ago, when we first moved into our house, we used to pay ground rent. It was something like £1.50 every six months. At least 10 years ago we realised that the demands had stopped coming. We asked around but no one seemed to know anything and we just assumed that it was costing them more to collect the rent than they were gaining.

Today, out of the blue, we received a letter from http://www.comptongroup.com/ saying that they had acquired the lease on the property, together with a demand for £9 arrears with 14 days to pay.

Any advice?

Official legal advice will be required here - your house, or at least the land it is built on, appears to be leasehold rather than freehold, and you need to understand the precise terms of the lease. I imagine the best place to start would be the deeds to your property, which may well be lodged in a safe with your mortgage lenger. You will need to get a solicitor to look into it for you.

Your legal advice needs to establish whether you have acquired any right to have the land rent-free for having enjoyed it that way for such a long time; it needs to establish if they have any legal right at all to collect money owed from such a long time ago (even the Inland Revenue has a lmited 'window' in which to catch you out and make you pay up); and it needs to establish what right (if any) the landowner has to vary the level of the ground rent (as they could make life difficult for you that way).

In the first instance, I wouldn't personally get too worried about the '14 days to pay' letter. It would take them significant time and money to pursue you through the courts for the sake of £9 so in practical terms, intimidating letters are the only effective means at their disposal to make you pay up.

Perhaps you could write the cheque, hand it to your solicitor for safe keeping, and get your solicitor to write to them explaining that this is what you have done, and the cheque will not be handed over until you have satisfied yourself of the rights and obligations that exist between yourself and your new landlord.

Whatever you do, do nothing that might inadvertantly grant them the right to screw you over in the future. Be very sure of where you stand.

EDIT

Looking at their website, they appear to be a local, south wales del boy family firm interested in spending a little money anywhere they can turn a quick profit. Nothing illegal in that, but tread very carefully indeed. They didn't buy the land your house is build on for charity's sake. I doubt they would have bought it at all for the sake of £3 a year (unless they acquired it unavoidably, as part of a very large deal).

[altis]

Thanks Towny, that sounds like good advice. I feel if I send them the money straight away then, in law, I have accepted their right to collect it.

Reading more of the letter..

The Lease imposes obligations regarding the buildings insurance of the property. In the interests of good estate management we will require that you insure the property with our approved insurer Zurich Insurance Company. <snip> Compton Insurance Services Limited act for us on insurance matters and they will contact you in due course.

This is sounding serious

As has been said, if it's in the leasehold then paying Ground Rent is a requirement and it doesn't matter if nobody's asked you to pay it or not.

However as MGP has pointed out, it is definitely worth looking at how this company managed to "acquire the leasehold" since there is a definite possibility that you should have been given the option to buy it.

I'd strongly suggest getting some professional advice on this, eg by visiting your local Citizens' Advice or it may be worth checking to see if your household insurance policy includes free legal advice cover.

Addendum you may also want to look at:

"2. Section 164 of the Commonhold and Leasehold Reform Act 2002 provides that subject to certain conditions set out in subsection (2) of that section, a tenant of a house isnot required to take out insurance with the landlords insurer. One of those conditions isthat the insurance taken out by the tenant is with an authorised insurer as defined insection 164(10)."

http://www.odpm.gov.uk/stellent/grou...608528-04.hcsp because it sounds very much like they want you to get insurance through "Brother-in-Law Insurance Brokers" and you may end up paying unnecessary fees.

[Rob]

Every building should be insured. You have to have that even as a condition of insurance, so that should be nothing new.

It is normal for insurance of a building to be arranged by a freeholder, using a block policy. This ensures that parts of the building like the common staircases are also covered, otherwise individual leaseholder might only be insuring thier individual flats. Recent changes in regulations will soon require those offering insurance to be registered with the FSA, probably one reason why this freeholder has a separate arem for dealing with it. Of course it also means that the insurance arm of the freeholder collects any commission for selling the policy, and pockets it themselves. You will need to check the lease to establish if you have any rights, collectively as leaseholders, to require alternative competetive quotes than the pet company.

If the insurance co is to change, as it often has to if the policy holder, the freeholder changes, ensure the remaining premium of the old policy is refunded to the leaseholders.

Nb this insurance will be for buildings only, not contents. you should arrange your own cover for that.

[Chris]

Originally Posted by altis

Thanks Towny, that sounds like good advice. I feel if I send them the money straight away then, in law, I have accepted their right to collect it.

Reading more of the letter..

This is sounding serious

No, no, no, no, no. This is exactly what I was worrying about. There had to be more in it for them than your ground rent. They are after the commission they will get from Zurich insurance by forcing you to arrange insurance through them.

Those lease terms (assuming they are even being interpreted correctly, and you don't know that, as you haven't seen them for yourself yet) have not ever been enforced. I can't believe that it is enforcable in such circumstances. Don't sign anything, don't agree to anything, don't pay anything - just get your solicitor on it.

This could be further complicated, of course, if your mortgage is tied to buildings cover....

[Chris]

Originally Posted by MovedGoalPosts

Every building should be insured. You have to have that even as a condition of insurance, so that should be nothing new.

It is normal for insurance of a building to be arranged by a freeholder, using a block policy. This ensures that parts of the building like the common staircases are also covered, <snip>

MGP, as far as I can tell, Altis lives in a house, not a block of flats. The rent he is paying is for the land the house is built on. There would appear to be no 'common' concerns here. And it does not appear that any insurance policy has ever been enforced on him before.

[danielf]

Originally Posted by altis

Thanks Towny, that sounds like good advice. I feel if I send them the money straight away then, in law, I have accepted their right to collect it.

Reading more of the letter..

This is sounding serious

Yes, that does sound serious. That, rather than the £9 may be what they are in for. I suggest you have a look at the lease.

[SMHarman]

You have a house on leashold land? This is a strange situation to be in. Very few houses in this country are leasehold. Normally only flats and shared properties as this was the only way of doing it for a long time.

Consult your solicitor, consult the internet.

http://www.google.co.uk/search?sourc...nfranchisement
http://www.propertylawuk.net/longlea...chisement.html
http://www.practicallaw.com/jsp/article.jsp?item=24856
http://www.lease-advice.org/housframe.htm

Make sure you keep on top of this, the ultimate court sanction for non payment of ground rent is termination of the lease, you could have a property with no right for it to stand on the ground it is on.

The insurance thing sounds like a scam to make a buck through overpriced insurance and them taking the brokerage. Check your lease for itt's insurance clause, you probably only have to provide them with evidence of the insurance. Nobody, not even a bank can force their own insurance on you these days, thay can impose a £20 doc review fee though (not sure if a price cap is set in law).

EDIT

Had a look at their website, good to see a 404 error on a 5 page site! Not as if they cannot test all the links manually.

Looks like they buy up blocks of leases and put them into their computer system to make sure all the ground rents are collected, this system then keeps spitting out letters and legal process is taken where necessary. So don't get worried about the 14 days yet. In fact, you could declare to them you are paid up, put £3 cash in an envelope and sent it to the address you had been sending it too for years etc. and ask for evidence of the debt as a first step.

[Rob]

Just a thought on where the big money in their buying the freehold might lie, How long is your lease unexpired term. If its nearing 60 years or less, your leasehold value starts to drop quite rapidly, as mortgage companies get reluctant to grant new mortgages (by the time your 25 year term is paid off there is little left to run if you sell your flat towards the end of the mortgage, and any new 25 year then starts to run a risk of expiring when theres little or nothing left of the lease). As the lease gets shorter the more you will have to pay to extend it and make your lease valuable again. There are rules for this, but the unscrupulous companies have means of dragging it out, so it costs you money, and you pay up, rather than go through the tribunal systems, for whcih you may not have time if you must sell.

[Rob]

Originally Posted by towny

MGP, as far as I can tell, Altis lives in a house, not a block of flats. The rent he is paying is for the land the house is built on. There would appear to be no 'common' concerns here. And it does not appear that any insurance policy has ever been enforced on him before.

Oops regading the house v flat bit. Hopefully Altis will confirm.

As for the insurance, it may still come down to the terms of the lease. As you say, legal advice will be needed to decide if such restrictions are enforceable, if they haven't been before.

As far as I am aware, most of the enfranchisment provisions of legisltation apply equally to any residential property. In fact the only big exception that I know of is where a part of the total building has commercial use.

It's more common than one might think to find leasehold houses.

[Chris]

Originally Posted by MovedGoalPosts

It's more common than one might think to find leasehold houses.

Yes, I remember a few years ago one of the houses for sale locally while my mum was trying to move was a leasehold house. She refused to even consider it and now I'm all grown up (and looking to move later this year) I wouldn't consider one either. It can get too complicated, even if on the face of it £1.50 every six months sounds too insignificant to worry about.