Quiz - how well do you understand your lease?
Understand the key things you should know about your lease. If you are a purchaser, this can help make sure your solicitor has covered all of these points and explained them clearly to you.
By Nicholas Kissen, Senior Adviser at Leasehold Advisory Service
You bought a flat in Manchester six months ago. Your solicitor took you through the terms of the lease advising that the annual ground rent of £250 was payable in equal monthly instalments every six months. He also told you that no payment need be made unless and until you received a formal notice of ground rent from the landlord or their agent as required under s166 of the Commonhold and Leasehold Reform Act 2002 and in the form and with the content set out in regulations made by Parliament.
The next instalment was due on 24 June. That date came and went. On 1 July the notice arrives through the post. It asks you to pay £125 by 8 September. You take nothing for granted. Cross-checking the notice from the landlord against the prescribed form of notice posted on the LEASE website you notice a discrepancy.
The Schedule to the Landlord and Tenant (Notice of Rent) (England) Regulations 2004 included a note to leaseholders that the notice had to include the words:
Section 167 of the Commonhold and Leasehold Reform Act 2002 and regulations made under it prevent your landlord from forfeiting your lease for non-payment of rent, service charges or administration charges (or a combination of them) if the amount owed is £350 or less, or none of the unpaid amount has been outstanding for more than three years.
Following an amendment made in 2011, the prescribed words at the end of note to leaseholders became;
“…. unless the amount owed is more than £350, or consists of, or includes, an amount that has been outstanding for more than three years.”
So what was the discrepancy?
The ground rent notice received on 1 July included the wording of the note to leaseholders as it appeared before the 2011 amendment.
Would this make the ground rent notice invalid?
According to the recent decision of the Upper Tribunal (Tax and Chancery Chamber) in Cheerupmate 2 Limited v De Luca Calce the answer is yes where the leaseholder received a ground rent notice with the same wording.
What were the Upper Tribunal’s reasons for coming to this decision?
Complying with s166 was a condition that has to be followed before a leaseholder is liable to pay ground rent. Getting the wording right is important. The notice was defective because one of the notes to the leaseholder was in an out-of-date format following the pre-amendment wording.
Whilst the meaning of the two words was the same, the modern form avoided the double negative and was much clearer.
Technical defects in notices should not render them invalid where the meaning remained clear.
In this situation the defect was the use of wording which Parliament had specifically decided should not be used.
The notes for the leaseholder were an important element in the notice and were the subject of regulations that prescribed the form of the notice.
The pre-2011 wording with its double negative was hard to understand and the amended wording was much clearer.
Therefore the Upper Tribunal concluded that the section 166 notice was invalid. It was not sufficiently clear for the leaseholder to understand the position.
- Do not assume that every bill or invoice you receive from the landlord is technically correct. It is down to the landlord or their agent to get it right.
- Ground rent notices are important and involve procedural and technical requirements which must be followed before you are required to make payment.
- If you are not sure about the ground rent notice you have received please speak to any of our advisers at LEASE.
- Advice guide – Service charges and other issues
- Article – Ground rent – ‘a demanding notice’
- Podcast – Ground rent
- FAQ- My landlord has not demanded ground rent- What shall I do?