Do you own a leasehold flat? Don’t forget to pay the ground rent!

2 March, 2017
by: Cripps Pemberton Greenish

If you are the owner of a leasehold flat you will be aware of the raft of obligations you have to comply with as tenant under the lease. They will vary from an obligation to pay a contribution towards the service charges to limitations as to what alterations you are permitted to undertake to the property. Failure to comply with these obligations can give rise to legal action being brought against you by the landlord.

Of particular importance is the obligation to pay the ground rent. In certain circumstances (where the lease falls within the definition of ‘assured tenancy’ set out below) the procedure by which the landlord can take possession of the property for breach of covenant (including failure to pay ground rent) is far simpler, so there is an even greater need for compliance.

The lease will fall within the definition of assured tenancy if it is occupied by you (or one of you if the property is owned jointly) as your principal home and the annual ground rent falls within thresholds prescribed by the relevant legislation. Those thresholds are currently £250 – £100,000 for properties outside London and £1000 – £100,000 for properties in London.

Where the lease is held by a company it cannot be an assured tenancy so that does reduce the level of risk.

Of course, by never falling into arrears with the ground rent and by complying with the other obligations under the lease you can ensure your landlord has no cause for complaint.