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bewildered_renter

What Happens If My Landlord Has Not Been Paying The Service Charge

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Some advice will be welcome.

Just had a letter sent to the flat I rent, which I inadvertantly opened.

It says my landlord has not been paying ground rent and service charge for over a year, with this year's charges also now due.

What should I do?

Regards

BR

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Some advice will be welcome.

Just had a letter sent to the flat I rent, which I inadvertantly opened.

It says my landlord has not been paying ground rent and service charge for over a year, with this year's charges also now due.

What should I do?

Regards

BR

Hate to say it, but start looking elsewhere.

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Some advice will be welcome.

Just had a letter sent to the flat I rent, which I inadvertantly opened.

It says my landlord has not been paying ground rent and service charge for over a year, with this year's charges also now due.

What should I do?

Regards

BR

There's nothing you can, or should, do. It's your Landlord's business. Make sure he gets the notice.

For more information, heres a link to The Leasehold Advisory Service which will tell you more:

http://www.lease-advice.org/publications/documents/document.asp?item=14

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Thanks both.

The LAS site was helpful. In particular this was interesting:

"The landlord cannot serve a valid section 146 notice where the amount of service charges, administration charges or ground rent owed (or a combination of all of these) total less than £350, or have been outstanding for less than three years."

They helpfully included a statement showing the balance history, and I can see that the first unpaid arrear is for £360 for Q4 2008. So, if I read the LAS advice correctly they can't issue a section 146 notice just yet.

However, I should probably also assume that he's not paying the mortgage, or is at least in arrears. Therefore a reposession by his mortgage company is also a distinct possibility.

HPC angle on this story - the flat was sold to my landlord for £215k in 2007, he would be lucky to get £120-130k for it right now.

In fact he may already have done a runner, as the letter complains about how they have been unable to contact him.

Regards

BR

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Thanks both.

In fact he may already have done a runner, as the letter complains about how they have been unable to contact him.

Its not that big a deal really. Theoretically the freeholder or superior landlord may be able to forfeit the lease and the management company may be able to take action to recover the debt. Unless the arrears are really substantial I wouldn't think any judge will allow the forfeit of the lease. The management company can increase the amount charged to other leaseholders to ensure that their maintenance obligations are met. Its not fair on the other owners, but its better than the property falling into disrepair.

I understand the property will not be able to be sold without the consent of the freeholder, superior landlord or management company. What I guess is usual is for the arrears to be cleared before the sale. Either by the leaseholder or by the buyer by way of deduction from the purchase price. Either way the arrears get cleared.

On one of the developments I manage there are two apartments, both owned by the same person, that an LPA receiver is "looking after". They refuse to pay the service charges and ground rent and insist I request payment from the mortgagee. The mortgagee pays after a bit of a rigmarole and adds the arrears together with their admin charges and mine to the mortgagors loan. I don't understand why the LPA receiver won't pay the service charges and ground rent from the rents they receive. I've challenged the mortgagor on this point but they won't concede.

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On one of the developments I manage there are two apartments, both owned by the same person, that an LPA receiver is "looking after". They refuse to pay the service charges and ground rent and insist I request payment from the mortgagee. The mortgagee pays after a bit of a rigmarole and adds the arrears together with their admin charges and mine to the mortgagors loan. I don't understand why the LPA receiver won't pay the service charges and ground rent from the rents they receive. I've challenged the mortgagor on this point but they won't concede.

That's all well and good. But , in the meantime, you have a tenant who is dutifully paying their way at high cost (with no asset and limited security) and abiding by contractual agreements, whilst the benefactors of property rights ritually renege on their agreements and responsibilities.

Increasingly and, seemingly, with great frequency. I've had to move twice on account of their negligence.

Rule of thumb these days is don't trust anyone in property.

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On one of the developments I manage there are two apartments, both owned by the same person, that an LPA receiver is "looking after". They refuse to pay the service charges and ground rent and insist I request payment from the mortgagee. The mortgagee pays after a bit of a rigmarole and adds the arrears together with their admin charges and mine to the mortgagors loan. I don't understand why the LPA receiver won't pay the service charges and ground rent from the rents they receive. I've challenged the mortgagor on this point but they won't concede.

That's odd.

The mortgagee often covers the ground rent and tacks in on to the mortgage debt. An LPA receiver is the agent of the mortgagor, but pays everything to the benefit of the mortgagee - effectively, the LPA works for the lender but only the borrower is responsible for his acts.

I wonder how it works where there is more than one mortgagee - does the LPA answer to all, or just to the lender who got him appointed?

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Similar happened to a friend on mine (but owner occupier) who was disputing some charges made by the rather under-handed management company. Instead of sorting the dispute, they bypassed my friend and went straight to the mortgage company. They would have been happy to pay the bill, add it to the mortgage and charge a hefty adminstration fee on top.

Edited by daiking

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you could:

try to contact the landlord for some reason - assume you fail

stop paying the rent

wait until the landlord contacts you

if his agent contacts you, say you believe the landlord is dead and you will not pay any more rent until you have confirmation of the name and address of the new owner (not true, but forces them to pony someone up). you are concerned about all the cases of fraud you see in the press when landlords pass away and property keeps ticking on....

get his contact details

pass onto the various companies trying to nail his ****

of course, be ready to move fast to somewhere else to live!

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Similar happened to a friend on mine (but owner occupier) who was disputing some charges made by the rather under-handed management company. Instead of sorting the dispute, they bypassed my friend and went straight to the mortgage company. They would have been happy to pay the bill, add it to the mortgage and charge a hefty adminstration fee on top.

Heh. An old-fashioned Feudal landlord! Are the service charges thoroughly nebulous and a whole lot bigger than the mere 90% mortgage?

Successive governments tried to put a stop to that - e.g. the L&T acts of 1985 and 87, and then commonhold. But the VIs (think "Sir Humphrey") ensure there are sufficient loopholes that the right judge can use to ensure Their Lordships get their due.

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That's odd.

The mortgagee often covers the ground rent and tacks in on to the mortgage debt. An LPA receiver is the agent of the mortgagor, but pays everything to the benefit of the mortgagee - effectively, the LPA works for the lender but only the borrower is responsible for his acts.

I wonder how it works where there is more than one mortgagee - does the LPA answer to all, or just to the lender who got him appointed?

That's how I understand the situation. I think the mortgagor is being cheated. The LPA receiver is accepting the rent, deducting their (I guess exorbitant) fees and handing over the balance to the mortgagee. I think it would be fairer if the LPA paid the service charges from the rents received but they simply refuse on the grounds that they have no authority to. The mortgagee is content with the situation.

The management company doesn't lose out as I obtain payment via the mortgagee. What I feel is unfair is that the mortgagor, obviously under financial pressure, is further penalised by having to pay additional administration fees. It doesn't seem equitable to me.

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Unless I'm misreading this thread, there seems to be some confusion as to whether the OP is a tenant renting under an Assured Shorthold Tenancy, the LL of whom is the owner of a leasehold property; or if the OP is the owner-occupier of a leasehold property themselves.

Very crudely, in essence, a leasehold property is one in which the owner-occupier owns the building (or a part of it), but not the ground it's built on; hence the term 'ground landlord' to describe the LL of a leasehold property.

The Leasehold Advisory Service exists to advise the owner-occupiers of leasehold properties in relation to disputes with ground landlords, not AST tenants in disputes with the individual or organisation from whom they rent their home.

Leasehold OOs typically pay an annual ground rent to the ground landlord, which is usually a nominal sum (in the home I grew up in, it was around £100 a year IIRC), and a share of the costs involved in maintaining any communal areas of the property. In the case of a block of flats, this usually takes the form of an annual service charge to pay for things like maintaining the lift, painting the stair rails etc. In the case of my childhood home it was one large house divided into two maisonettes, the ground landlord of whom lived in the other one and who was always trying various scams to get my parents to pay for upgrades to her flat disguised as maintenance to the communal areas; hence the reason I know a bit about this.

In this case, if the OP is a tenant renting under an Assured Shorthold Tenancy, the LL of whom is the owner (but not occupier) of a leasehold property, then unless the AST explicitly makes the tenant responsible for the ground rent and/or service charges, it's the LL's (LL as in leasehold owner of the property, not GL) problem, pure and simple.

Edited by The Ayatollah Buggeri

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Unless I'm misreading this thread, there seems to be some confusion as to whether the OP is a tenant renting under an Assured Shorthold Tenancy, the LL of whom is the owner of a leasehold property; or if the OP is the owner-occupier of a leasehold property themselves.

In this case, if the OP is a tenant renting under an Assured Shorthold Tenancy, the LL of whom is the owner (but not occupier) of a leasehold property, then unless the AST explicitly makes the tenant responsible for the ground rent and/or service charges, it's the LL's (LL as in leasehold owner of the property, not GL) problem, pure and simple.

Of course your right.

I read the OP's post as being concerned whether he might have to leave the flat if his landlord failed to pay the ground rent and service charges.

So it can be a cause of concern to the tenant even though he has no liability in respect of his landlord's arrears.

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I read the OP's post as being concerned whether he might have to leave the flat if his landlord failed to pay the ground rent and service charges.

So it can be a cause of concern to the tenant even though he has no liability in respect of his landlord's arrears.

Seems to me that we're in a similar scenario to LLs who rent their flat out with an OO mortgage (not a BTL one) on the basis that what the lender doesn't know won't hurt him, and then gets into mortgage arrears. Are there any legal protections for tenants living in a leasehold property under a lawful AST, whose LL is then the subject of action over debts owed to the GL? Come to think of it, don't the ground leases of some leasehold properties specifically ban the owner from sub-letting it? I have a vague recollection that the lease on my childhood home did.

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Seems to me that we're in a similar scenario to LLs who rent their flat out with an OO mortgage (not a BTL one) on the basis that what the lender doesn't know won't hurt him, and then gets into mortgage arrears. Are there any legal protections for tenants living in a leasehold property under a lawful AST, whose LL is then the subject of action over debts owed to the GL? Come to think of it, don't the ground leases of some leasehold properties specifically ban the owner from sub-letting it? I have a vague recollection that the lease on my childhood home did.

From the Tenants points of view:

http://england.shelter.org.uk/get_advice/eviction/repossession_by_a_landlords_lender

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I am indeed a tenant on an AST - although it's now gone periodic.

These flats were specifically developed to suck in the more gullible amateur BTL-ers, so letting them out is not prohibited. In fact the letting agent was the original freehold company, which very soon went bust.

The current LA is now also the same company that the recievers appointed to manage the freehold.

It has occured to me that this does not necessarily mean that they have put both halves of the picture together. So I am thinking of writing the LA a letter to point out that I am aware of the situation regarding the LL's arrears and that I am also a very reliable tenant, and finally requesting that, even though they may not be legally obliged to do so, would they be considerate enough to respect my past record as a tenant and keep me informed of any developments such as commencing repo proceedings.

In the meantime, I think the best advice so far has been to get off my backside and move somewhere else.

Which is probably not a bad thing at all, as I've seen plenty on for rent that is both nicer and cheaper.

My LL is toast :)

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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