Latest News : Blog : Pay Your Ground Rent On Time Or Risk Losing Your Property

Blog

Pay Your Ground Rent On Time Or Risk Losing Your Property

Posted on Wednesday 28th June 2017 by Matthew Lewis

Pay your ground rent on time or risk handing over your keys


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!


The Problem

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: 

  1. review all possible addresses where any ground rent demand could be sent to you 
  2. pay the ground rent immediately on demand and in accordance with your lease provisions 
  3. 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.
 

Found this post useful?
Why not share it with your network:

Make An Enquiry

I am writing to thank you for all your help without which I would not now be happily settled with a substantial sum in the bank