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Freeholders: How to recover arrears

Posted on: 06/05/2022

In this month’s Q&A, Property Litigation specialist Will Bartley provides advice for freeholders on how to recover Service Charges and Ground Rent from Leaseholders.

Leaseholders, their obligations and what happens when they can’t pay

It is estimated that there are approximately 5 million leasehold homes in the UK.

Many of the leaseholders occupying these homes will be obligated to pay service charges and ground rent to the freeholder.

However, it is not uncommon for leaseholders to fall into arrears for service charges or ground rent, and on occasion, both.

What can a freeholder do to recover these arrears? How long do they have to do so? Are Court proceedings needed?

This guide will address these issues.

What is a service charge on a property?

Service charges are fees payable to the freeholder from the leaseholder for the services that the freeholder is obliged to provide under the terms of the lease.

The amount payable for a service charge can vary depending on the lease and the works required for the upkeep of the property.
They are usually split between the leaseholders of the block or property.

What is ground rent?

Ground rent is a payment payable to the freeholder from the leaseholder, that they are contractually obliged to pay.
It is essentially the charge that the leaseholder has to pay to rent out the land from the freeholder.

Typically, the ground rent is not of tremendous value and frequently falls below the £200 mark per annum.

Related Article: Why are increased ground rents such an issue for leaseholders?

What can I do if my leaseholder is in arrears?

Click here to read the full article.

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