1. This section states that a Leaseholder is not required to make payment of Rent unless the Landlord has sent to them a notice under Section 166 of the Commonhold and Leasehold Reform Act 2002 in the prescribed format and containing the correct information.
2. This notice is commonly known as a ‘Ground Rent Notice’.
3. Please see the last section of this article for a link to the template for the prescribed format of a Ground Rent Notice.
What is meant by Rent in Section 166?
1. Section 166 specifically states that the Rent being referred is not:
i. A Service Charge
ii. An Administration Charge
2. The type of Rent referred to by Section 166 is an amount which is stated in a Lease as rent for the Ground upon which the building which is leased occupies. This is commonly known as ‘Ground Rent’.
3. For properties purchased under the Right to Buy or Right to Acquire schemes the Ground Rent is typically set at a low amount of £10 per year.
4. For other leasehold properties it can be as much as several thousands of pounds per year.
5. The amount is not restricted by the Law, but by what is stated in the Lease, for all properties other than those purchased under the Right to Buy or Right to Acquire schemes.
Content of a Ground Rent Notice
1. Section 166 states that a Ground Rent Notice must include:
i. The amount which the Landlord is demanding to paid.
ii. The date upon the payment is demanded.
iii. The date upon which the Lease states the payment is due.
iv. Any other information which the Law says must be included.
Payment Date on Ground Rent Notice
1. Section 166 gives very specific rules on the date upon which the Notice can state that payment of Ground Rent is due. This date is referred to as the ‘Payment Date’. The rules are:
i. The payment date cannot be less than 30 from the date the Notice is given to the Leaseholder, or more than 60 days after the date the Notice is given to the Leaseholder.
ii. The payment date cannot be before the date when the Lease states that payment of the Ground Rent becomes due.
2. If a Landlord sends the Notice too soon before, or too long after, the date upon which payment is being demanded, or is due under the terms of the Lease, then the Notice itself is not valid.
3. For instance, if a Landlord sends a Notice out in May for a Ground Rent payment which a Lease states is due in August then the Notice is not valid because the payment date is more than 60 days after the Notice is given to the Leaseholder. Likewise, if a Ground Rent Notice was sent on the 1st May for payment on the 28th May (ie. less than 30 days) it would also not be valid and the Leaseholder could legally withhold payment.
4. Some Leases state that Ground Rent is payable at intervals during the year, rather than all at once during a year. When this is stated in a Lease a Landlord either has to send a Ground Rent Notice more than once during a year to coincide with the dates when the Lease says payment becomes due, or if they want to send only one Ground Rent Notice in a year then they must do so at the end of the year and ask for payment in arrears for all the Ground Rent payments which became due during that year.
What happens if my Landlord does not send a properly drafted Ground Rent Notice?
1. The law says a Leaseholder is entitled to withhold payment until such time as they receive a properly drafted Ground Rent Notice.
2. The law entitles a Landlord to send the Ground Rent Notice out late and demand payment of any Ground Rent which is due under the term of the Lease in arrears, so long as this stated properly in the Notice.
3. This means that even if a Landlord does not send a properly drafted Notice out at the correct time, there is nothing stopping the Landlord correcting their mistake later on and lawfully demanding payment.
Where must the Ground Rent notice be sent by the Landlord?
1. Unless the Leaseholder has notified the Landlord of another address in England or Wales where all correspondence should be sent, the Law requires that the Notice be sent or hand delivered to the Leasehold property even if the Leaseholder does not live there. The Leaseholder is responsible for providing the Landlord with an alternative mailing address if they do not live at the property.
Prescribed Format of a Ground Rent Notice
1. The prescribed form of the Notice, referred to in Law as a ‘Rent Demand Notice’, is given in the Schedule of The Landlord and Tenant (Notice of Rent) (England) Regulations 2004. Click on the link to view the prescribed format and content of the Notice.
Click on the link to read more about the Commonhold and Leasehold Reform Act 2002