Leaseholders – you must pay your Ground rent! Or risk losing your property.

All Homeowners and Landlords should read this! Missed Ground Rent payments on Leasehold Flat can cost you your whole investment!

🗒️ Introduction to Leasehold – skip this bit if you know the basics and jump too the 🧨

In England, the Leasehold system is particularly common in cities, especially in buildings that are divided into flats or apartments. Under this arrangement, the Freeholder owns the land and structure of the building, while the individual flats are sold on long leases—often lasting 100 years or more. The Leaseholder (the flat owner) buys the right to live in the flat for the duration of the lease, but does not own the land or building itself.

The Leaseholder is typically required to pay an annual ground rent to the freeholder, which is usually a small amount (around £250-£500 per year). This is separate from other charges, such as the service charge, which covers the cost of maintaining common areas (hallways, lifts, etc.), insurance, and general building upkeep. The Freeholder is legally responsible for the maintenance of the building, and they typically employ a block management company to handle these services, which are then billed to the leaseholders through the service charge.

While Leasehold is a common system, it’s crucial for Leaseholders to keep track of their payments and obligations, as failure to do so can lead to serious consequences.

🧨 A Cautionary Tale: £400K Buy-to-Let Leasehold Flat Nearly Repossessed by Freeholder

In a shocking case, a £400K leasehold flat was almost repossessed by the Freeholder over a relatively small amount of ground rent arrears. The owner, who had been renting out the property for 15 years, was sent a letter (out of the blue) regarding a summons for repossession.

It turned out the flat was being repossessed because the ground rent had not been paid for two years—totalling just £480. According to the lease, any ground rent arrears over £350 could trigger repossession of the property. Despite the owner paying the service charge on time, she had missed the ground rent invoices because they were not sent by email and were sent to an old address after she moved house, and her post forwarding service had expired after one year.

Crucially, the Freeholder did not make any attempt to contact her via email (which they had access to, through the Block Management Company, who were responsible for Service Charge payments). Instead, they sent the repossession notice directly to the rented flat, which the tenants might have discarded, and the owner might never have received it in time. Had this gone unnoticed, the owner could have lost her property.

This case highlights the importance of staying on top of all correspondence related to leasehold properties, especially when it comes to ground rent, as failure to address even small amounts of debt can lead to catastrophic consequences.