Ground rent “demands”?

Many landlords and tenants of residential properties are aware that a tenant is not liable to pay for service charges which have been incurred more than 18 months before a demand for payment is served on them, unless they have been notified in writing that the costs have been incurred.

In addition, any demand for payment of service charge must be accompanied by a summary of the rights and obligations of residential tenants. The consequences for non-compliance are severe as the Landlord and Tenant Act 1985 provides that tenants can withhold payment if the demand fails to contain the summary. Where a tenant withholds service charge as a result of this failure, any provision in the lease relating to non-payment or late payment of service charges does not have effect in relation to the period in which payment is withheld.

Please see our previous blog on service charges by clicking here.

But what is the position concerning demands of ground rent?

Well, the “18 month bar” does not apply to ground rent which can generally be recovered up to 6 years from the date that it falls due and many leases state that the tenant is liable to pay ground rent whether “demanded or not”.

As such, many landlords and tenants are unaware of the obligation to serve a notice requiring payment of ground rent pursuant to Section 166 of the Commonhold and Leasehold Reform Act 2002 (“the Act”).

Section 166 of the Act states that:

“(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.

(3)         The date on which the tenant is liable to make the payment must not be—

        (a)        either less than 30 days or more than 60 days after the day on which the notice is given, or

        (b)        before that on which he would have been liable to make it in accordance with the lease”

In addition the notice must be in prescribed form and served in accordance with the Act.

In addition the notice must be in prescribed form and served in accordance with the Act.

In the circumstances, it seems that a tenant is not liable to pay for ground rent unless a proper demand is served on them (despite any wording in the lease to the contrary). However, once a notice is served the landlord can demand rent, if unpaid, going back 6 years!