Frequently Asked Questions – Ground Rent Arrears

What does the term ‘ground rent’ mean?

The terms of a lease usually include a requirement for a nominal fee to be paid by the leaseholder to the freeholder. This fee, often around £100-200 is known as the ‘ground rent’ and it is important that leaseholders understand how much this can increase by and the penalties for failing to pay it. It may be the case that ground rent does not have to be paid, however most leases will still include a requirement for it (often referred to as ‘peppercorn rent’). The lease should detail the amount of ground rent due, when it should be paid (it is usually an annual charge), who the payee is (either the freeholder or a managing agent in most cases).

Ground rent should not be confused with service charges [click here for information about service charge disputes]

What are the consequences for failing to pay ground rent? Is forfeiture possible?

If you fail to pay ground rent, the freeholder will only be able to pursue legal action against you if they have formally demanded payment (in compliance with the requirements set out above), they have given between 30 and 60 days of notice for payment and you have failed to pay by the specified date.

If these requirements are satisfied, the freeholder is likely to pursue the payment of the ground rent through the small claims court. Theoretically, the freeholder could pursue forfeiture of your lease – legal action which, if successful, would result in your eviction from the property. However, such action is only granted in very extreme circumstances and requires the freeholder to prove that more than £350 is owed in ground rent (alone or along with admin and service costs) and if you have owed payment for 36 months or more. Starting such proceedings requires a unique legal process. If this process is not followed correctly, the freeholder could evict you illegally and thus commit a criminal offence themselves.

What do I do if I’m taken to court?

Should the leaseholder not pay up before the court hearing date and the court then orders them to pay within a set timescale and they fail to make that payment, the freeholder becomes empowered to, should they wish, instruct bailiffs to evict them.

 

Looking for specialist advice for a ground rent dispute? Contact us now

Ground rent can be a tricky concept to get your head around but disputes over it can be very serious. It is therefore crucial that you seek legal advice from specialist lawyers if you are involved in a ground rent dispute. The property dispute experts here at Bonallack & Bishop are waiting to help you, so:

  • Call our team today on [01722] 422300, or
  • Send us an email using the contact form below.

Comments or questions are welcome.

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