Key topic(s): Ground rent, poor service, administration costs
Award - Agent is to reduce their administration charge payable by the leaseholder by 50%
What happened?
The complainant said:
- the agent charged them £190 administration charge after they paid ground rent late
- there were postal issues in the area at the time
- while the agent said they sent several reminders, they received none
- as soon as they received a final demand, they only paid the ground rent, not the administration charge
- the agent did not try to contact him in any other way other than letters through the post
The agent responded, saying:
- they sent the leaseholder several reminders today the ground rent, before they charged the administration fee
- as no response was received and no payment made, they instructed solicitors to recover the debt
- the solicitors added their own cost to the amount due and the agent has already agreed to remove these
- they are entitled to charge an administration charge under the lease
What evidence was provided?
Ground rent demands, invoice, communication
What was decided and why?
1. The evidence showed:
- the agent sent the leaseholder two letters requesting the ground rent be paid, before they added the administration fee to the third letter
- overall, the agent sent four letters in the space of two months requesting payment, before solicitors were instructed
- the complainant paid the service charge three days after the solicitor’s letter was sent to them
- all letters were sent to the correct address
- while there were postal disruptions, these occurred four months after the agent’s first reminder
- the lease allowed the agent to claim all costs and expenses due to potential legal proceedings with the complainant
2. The postal disruption happened after the agent’s letters were sent to the leaseholder and there was no reasonable explanation for these not having been received.
3. The leaseholder had owned the property for over three years and should have been fully aware that the ground rent was due, in line with the lease.
4. The leaseholder provided no evidence to show they had ever asked the agent to contact them using any other method.
5. The agent was entitled to charge a reasonable administration fee for the work carried out, after not receiving the ground rent from the leaseholder when it was due.
6. The agent provided no evidence to show how the administration fee was calculated and is only entitled to charge a reasonable amount, to cover their costs for the extra work carried out.
7. We found50% of the charge to be reasonable and proportionate to the extra work they had to perform, due to the leaseholder’s late payment of ground rent.
How can you avoid this happening in future?
- Agents should,rightly, send invoices in writing, by letter or in a way that all parties have agreed.Where an agent receives no reply, to avoid any issue, it is good practice toattempt to contact the relevant person using another method, which may avoid anissue like this from happening
- If a leaseholder wishes to be contacted by a different/alternative method, they should confirm this in writing to the agent
- Any fee must be reasonable and supported by evidence showing how the cost has been calculated and a summary of the leaseholder’s rights and responsibilities for any fees
- The First-tier Tribunal(Property Chamber) has the authority to decide if an administration cost is reasonable but if the parties agree to use our free service and listen to our recommendations, we can facilitate a speedy resolution
