Pay Your Ground Rent On Time Or Risk Losing Your Property28th Jun 2017
Is your ground rent more than £250 per year (or £1,000 in London)? Pay it promptly or you risk forfeiting your leasehold property.
Many residential leaseholders view ground rent as a minor irritation, a peppercorn to be paid alongside the maintenance – but beware, not all ground rents are fixed at such a benign level!
Be absolutely certain to pay the ground rent on time – and be very careful what you agree to when you purchase leasehold property or sign any new lease/lease extension.
You should pay your ground rent immediately on demand. There are very serious consequences if you fail to do so!
Where a leasehold property rent exceeds £250 per annum (outside London), then it will be deemed to be an Assured Tenancy.
If you don’t pay the rent promptly, the freeholder can apply to the court – and it is mandatory for a court to order possession of the property (subject to further criteria).
You could lose ownership of your property and (in principle) with a limited ability to defend any such application.
So pay your ground rent on time!
The consequences of non-compliance can affect the value of a property. Also, it may have a negative impact on any mortgage lender’s security.
So if you are extending your lease or if you are purchasing a leasehold property you should consider the rent provisions very carefully – and take advice from an expert before signing up.
If your lease contains a rent provision exceeding £250 per annum outside London (or £1,000 in London), you should:
- review all possible addresses where any ground rent demand could be sent to you
- pay the ground rent immediately on demand and in accordance with your lease provisions
- in the case of a flat, investigate the opportunity to extend lease length, with reference to the Leasehold Reform Housing and Urban Development Act, where the rent will be reduced to a peppercorn, ie virtually nothing at all.
There are also various other leasehold ground rent pitfalls that you need to be aware of – find out more here.
Always Read The Small Print!
Continue to exercise the utmost caution.
- Always pay the ground rent immediately on demand.
- Get expert advice – leases can be complicated documents with pitfalls hidden in the small print.
Contact Partner Matthew Lewis, head of Coles Miller’s Residential Leasehold Department, for more information, 01202 355697.