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Court of Appeal Update: Whether a freeholder could charge fees for service of s.166 notice that ground rent is due (Stampfer v Avon Ground Rents Ltd – 2022)

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In our previous report, the Upper Tribunal considered an appeal as to whether a freeholder was entitled to charge a £30 fee for service of a s.166 notice to leaseholders that ground rent was due.

The Upper Tribunal allowed the appeal, finding that the lease contained no provisions entitling the freeholder to charge the ground rent collection fee. The case is now proceeding to the Court of Appeal, with the decision set to create an important precedent in the leasehold management sector.

The background

In Stampfer v Avon Ground Rents Ltd [2022], the appellant was the leaseholder of a flat held under a 125-year lease where the respondent was the freeholder of the building. The lease obliged the leaseholder to pay the landlord’s costs for pursuing arrears or service of notices where the tenant was in default of ground rent payments or other lease covenants.

Ground rent for the flat was paid every 6 months. S.166 of the Commonhold and Leasehold Reform Act 2002 requires service of a notice by the freeholder to advise the leaseholder that rent is due. The freeholder in this case charged a fee of £30+vat for service of 2 notices each year, referred to as a ‘ground rent collection fee’. The leaseholder, together with others in the building, applied to the First-tier Tribunal for determination as to reasonableness and payability of the £30+vat. The FTT found the fee to be reasonable, considering it a sum incurred in the administration of ground rent collection. The freeholder needed to serve the notice in order to collect the ground rents. The leaseholder appealed, and the UT allowed the appeal to find that collection of the ground rent collection fee was not supported by the terms of the lease.

Case progress

This matter is progressing through the courts, and the Court of Appeal hearing will be held by 3rd April 2023. JB Leitch will report further on the decision once handed down.

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