A question on the Commonhold and Leasehold Reform Act 2002, section 166

[ManInTheStreet]

Here is a part extract of this section:
http://www.legislation.gov.uk/ukpga/2002/15/section/166

166 Requirement to notify long leaseholders that rent is due

(1)A tenant under a long lease of a dwelling is not liable to make a payment of rent under the lease unless the landlord has given him a notice relating to the payment; and the date on which he is liable to make the payment is that specified in the notice.
(2)The notice must specify—
(a)the amount of the payment,
(b)the date on which the tenant is liable to make it, and
(c)if different from that date, the date on which he would have been liable to make it in accordance with the lease,
and shall contain any such further information as may be prescribed.

I have just received this year's notice for payment of my ground rent. Everything is in order except the amount, which is slightly more than it should be (£86.05 v £85.00). Reading through the whole of section 166 it does not say what the position is if they ask for the wrong amount.

My basic question is does this make the notice invalid?

Here is some background that may help to clarify my question.

The lease document itself says the payment is £95, with a £10 discount if paid by a specified date. It has always been this, and there is no provision in the lease document to increase the amount. I suspect the landlord (Estates and Management Ltd) is trying to offset the falling value of the payment by increasing it with inflation.

They tried this last year and when I challenged it they claimed it was a mistake. It's happened again. Now I don't have any problem paying the £85; but I do have a problem if they are trying it on, which is the impression I now have, given last year's conversation. If the notice is invalid when the amount is incorrect then I wish to put pressure back on them to inform them that they must provide an accurate notice as per the act quoted above; indeed if it is inaccurate, because in this case the amount is wrong, payment will be legally withheld until they correct it.

I wish to nip this sort of behaviour very much in the bud.

Can anyone please offer some advice?

[pochisoldi]

The notice is valid, but the amount isn't.
IMHO you can be pursued for the lower of the amount shown on the notice or the amount actually due.

Personally I would pay whatever is actually due when it's due, preferably in a manner which cannot be initially rejected (e.g. pay by bank transfer rather than a cheque which they can refuse to cash). That way you can say I paid £x on y day, and you won't lose the discount written into the lease.

[DiamondEcho]

You should find additional help on the LEASE website. For example I'd suggest going through > http://www.lease-advice.org/advice/find ... -option=61 inputting your circumstances to get an outline of their advice.
Not having read your lease I don't know your precise circumstances but it could be that the following applies to you:

'The landlord cannot insist that you pay more than the rent set out in the lease.
The ground rent is usually fixed in the lease, but some leases contain a rent escalation clause which allows the ground rent to be increased in certain circumstances. The ground rent may increase by fixed amounts at set intervals. For instance, the lease may start off with a ground rent of £50 pa and then after 33 years increase to £100 pa with another increase perhaps in 33 years time. Or it may increase after a set time in accordance with a formula such as a percentage of the rental value of the property. Alternatively, any increase may be in accordance with a recognisable and published formula such as the retail prices index.'
http://www.lease-advice.org/faq/can-my- ... ound-rent/

I'd pay what is due and put the ball in the court of whoever is demanding more to justify it. If possible I'd also be discussing this in passing with neighbours, collective action can be a powerful tool, and it's not unusual to find you're not alone, others are pondering the same thing as you are.

[ManInTheStreet]

ok thanks for the feedback.

I will ask them how I can pay the lower amount. I know they have an automated system whereby I give them my reference number and credit card/debit card number and it takes the amount from that card. Unfortunately that automated system does not let you specify how much you can pay.

From reading around I get the impression that the ground rent can be increased when both sides agree. I presume this means even if there is no mention of a change of payment in the document. I've gone through the document in some detail and I cannot see anywhere where it says the rent can be increased. (But it is in legalese, and there is no punctuation to give it any sense!)

If I use the automated system and it takes the increased amount, then that will probably mean I have accepted the rent rise.

I will try to do it by speaking to someone tomorrow, but no doubt they will push me to automated system. I will have to do what I did last year which is tell them the amount is wrong, they will tell me it is 'a mistake,' it will be corrected and we will move on for another year.

I wonder how many people just agree to the increase ('it's only a pound and they must be able to do it').

Thanks folks for your feedback. I hate ground rent and am very happy to let it wither via inflation. But I think this is very sneaky behaviour. I may be wrong but if it happens again next year then what conclusion should I draw?

[ManInTheStreet]

Just rang them up. 'Oh, our apologies, software error. I see it does seem to happen every year. We will look into it for you, sir.'

Grrr! Anyway, amended back to the correct amount of £85. I've asked for a new copy to be sent out to confirm.

I'm not holding my breath that next year will be any different.

[Clitheroekid]

The lease document itself says the payment is £95, with a £10 discount if paid by a specified date. It has always been this, and there is no provision in the lease document to increase the amount. I suspect the landlord (Estates and Management Ltd) is trying to offset the falling value of the payment by increasing it with inflation.

As soon as I saw the dreaded name of Estates & Management Ltd I knew your suspicions were probably correct. They are one of the most dreadful and exploitative companies involved in the business of freehold management, and as most of their competitors are lowlife extortionists that's saying something!

The starting point is that unless the lease expressly includes provision for an increase in the ground rent it cannot be increased at all. Obviously it could be increased by agreement, but nobody with more than one brain cell would ever agree to it in the absence of a quid pro quo from the landlord.

They tried this last year and when I challenged it they claimed it was a mistake. It's happened again.

The fact that it's occurred in consecutive years means that it probably is a deliberate scam - I certainly wouldn't put it past them.

If I use the automated system and it takes the increased amount, then that will probably mean I have accepted the rent rise.

This is absolutely not the case. The demand was wholly unjustified and if you had paid it the payment would have been based on an error, not a conscious agreement.

If I were you I'd write to them and ask how many other defective notices they have sent out and require their written confirmation that they will contact every recipient of such a notice and arrange to refund them. I'd say that in the absence of such confirmation you would, bearing in mind this happened last year, have no option other than to report them to Trading Standards.

E & M manage thousands of freeholds, and may well be running this scam on a widespread basis so that what's a trivial amount to each leaseholder becomes a significant sum in their bank account. As you say, it needs to be stopped and they need to be punished.

[ManInTheStreet]

Thanks Clitheroekid for your feedback.

If I were you I'd write to them and ask how many other defective notices they have sent out and require their written confirmation that they will contact every recipient of such a notice and arrange to refund them. I'd say that in the absence of such confirmation you would, bearing in mind this happened last year, have no option other than to report them to Trading Standards.

I'll give this a go and see what comes of it; while I expect not much you never know. I was curious as to their earnings, so I did a bit of digging: https://beta.companieshouse.gov.uk/comp ... ng-history I see a couple of First Gazette notice for compulsory strike-off followed soon after by Compulsory strike-off action has been discontinued. I don't know if they are that significant (a Google search returns a lot of similar results for other companies) but they don't on first view give me too much confidence.

[gryffron]

I see a couple of First Gazette notice for compulsory strike-off followed soon after by Compulsory strike-off action has been discontinued. I don't know if they are that significant (a Google search returns a lot of similar results for other companies) but they don't on first view give me too much confidence.

It's a fairly standard method of debt enforcement against a company. Like threatening to make them bankrupt, but without having to prove they actually are bankrupt. So yes, it is pretty common. But does mean the company has a habit of not paying its creditors.

Gryff

[Clitheroekid]

I see a couple of First Gazette notice for compulsory strike-off followed soon after by Compulsory strike-off action has been discontinued. I don't know if they are that significant (a Google search returns a lot of similar results for other companies) but they don't on first view give me too much confidence.

It's a fairly standard method of debt enforcement against a company. Like threatening to make them bankrupt, but without having to prove they actually are bankrupt. So yes, it is pretty common. But does mean the company has a habit of not paying its creditors.

I think you may be getting confused with winding-up petitions. These are used as a means of debt recovery, and are sometimes advertised in the Gazette (though if they are it usually means the company's not going to pay up).

Notices for compulsory strike-off are issued by Companies House, not by creditors. They are usually issued because the company has failed to file its accounts or annual return by the statutory time limit.

But although they don't necessarily indicate solvency issues they are certainly a sign of incompetent management.

[ManInTheStreet]

ok, for reference this is what has gone in the post today:

Dear Sir/Madam,

my recent experience of your notification system gives me some concern. This year the notice for ground rent payment was not as expected, being £86.05 rather than the correct £85.00. This was despite me informing you of this error last year, which was only amended when I contacted you. I would expect next year's notice to now be set at £85.00, but I do not have such confidence. Indeed I have checked my records and this 'error' also dates back to the notice you sent in 2013.

It may be that others have also received incorrect notifications, and perhaps paid the incorrect amount in ignorance. I am sure you will agree with me that this situation is unacceptable. Therefore please let me know how many other defective notices you have sent out. Furthermore, please provide written confirmation that you will contact every recipient of such a notice and arrange for a refund to be paid to them.

I trust that you give this matter your immediate attention and I expect a reply within a reasonable time, but no later than two weeks.

While the amount may be small, this matter is serious; in the absence of the above confirmation I will have no option other than to report your company to Trading Standards.

Yours faithfully,

I will wait and see what comes back.