We recognise that ground rent represents much valued income to many landlords and for those with large portfolios of freeholds multiple tenants defaulting on ground rent can amount to very significant sums.
Ground rent is usually a relatively modest annual sum payable to a landlord by a tenant with a long leasehold interest in a property. However just because the sum is modest does not relieve the tenant of the obligation to pay up. Increasingly tenants are defaulting on their ground rent payments leaving landlords out of pocket and reluctant to instruct solicitors to enforce payment under the terms of the lease for fear of incurring expensive and disproportionate costs.
The fear of expensive and disproportionate costs may however be inappropriate as we are often able to recover the entirety of our legal costs from the tenant or mortgagee meaning the landlord receives repayment of the debt in full and incurs no costs.
When are lawyers able to help?
We are able to recover ground rent up to 6 years in arrears.
Ideally before instructing us a landlord will have served on the tenant a statutory notice along with mandatory Notes for Leaseholders.
Only once the date specified on the notice has passed does the ground rent become due and legal action is possible. At this stage we can issue proceedings against the tenant to recover the debt.
There are two options at this stage:
1. If the lease in question contains a forfeiture clause and the ground rent debt either exceeds £350 or is over 3 years old then we can issue forfeiture proceedings to recover the property from the tenant; or
2. If the lease in question does not contain a forfeiture clause or the ground rent debt is less than £350 or less than 3 years old then we can issue proceedings in the County Court for the recovery of the debt along with interest and fixed costs.
In the vast majority of cases leases will contain a forfeiture clause and tenants or their mortgage providers will pay up to prevent the property being repossessed. In the small minority of cases where a lease does not contain a forfeiture clause then a tenant will want to pay the debt to avoid having a County Court Judgment against their name which has a devastating effect on their credit rating.
If you are a landlord or a managing agent chasing ground rent arrears and want legal advice please get in touch on either 01392 210700 or email@example.com.