You
You in a moment, but first me.
An apartment I own has a lease. On the grand spectrum of leases, from the pleasant to the outrageously eye-gouging, it's not too bad an example. That is really more to do with the year the lease was written than anything else (2006.. although.. leases like mine do seem to be somewhat plagiarized/"inspired" from older ones, so who knows when the document was actually originally created).
It's 29 A4 pages long, filled with legalese and jargon, mind numbingly boring and tricky for the layman to read, and in the interests of brevity I highlight the only pertinent clause in the whole thing, at least for the purposes of this website:
17.4 To give to the Landlord and the Management Company notice of every dealing with or underletting or transmission of the legal estate in the Demised Premises including all mortgages or legal charges of the Demised Premises within twenty-one days after the same shall occur and to pay to each of the Landlord and the Management Company such reasonable registration fees (but being not less than £50.00) and any VAT properly chargeable thereon as the Landlord the Management Company and the Estate Management Company respectively shall from time to time determine.
Check your lease now (or ask your solicitor for a copy, if they hold it on your behalf). You may very well find the exact same clause.
Read my clause above and re-read it. It's really, really important.
I don't need consent to sub-let. I do need to notify them that I am doing so.
It's a little greyer about the registration fee. I do need to pay 'reasonable registration fees' but those fees are determined by the freeholder. See the difference? I notify them, they have to invoice me their fee, because they determine it. I notify and they don't invoice me? That's their problem, not mine (or yours).
You would be amazed how critical the tiny details like this are in the hard money game.
You can see, with respect to whether or not I have a tenant (underletting), I have an obligation under the terms of the lease, which I signed when I purchased the property. That is it.
I am not obligated to do anything else, including:
1. to submit a copy of the tenancy agreement, should there exist one
2. to submit details (like date of birth) of the tenant, should there exist one
3. to repeat the process annually if such a tenancy becomes periodic
4. to notify (give notice to) the companies stipulated in the clause in a particular manner or style (say, in writing or by printed letter - I could just as easily telephone them and leave a message.. seriously arguing this sort of point is exactly the sort of detail that makes for a great legal case)
But most importantly of all, I am not obligated to respond to any letter/allegation/accusation that the freehold management company, Pier Management in my case, might choose to send to me (including the postcard). Even if their allegation/accusation/assumption in said correspondence is correct.
It really is as clear cut as that.
And the freehold management company industry really, really, REALLY do not want you to know, or think too long, on that important fact.
YOU do not (unless clearly, expressly stipulated otherwise in the lease that you signed when purchasing your property.. I have yet to see a lease that says this, mostly because all the leases I have seen appear to have plagiarized the same original source) have to:
1. answer the questions/passive-aggressive accusations (my opinion) of a freehold management company, including the clear and explicit example postcard I received from Pier Management
2. answer or acknowledge the letters or phone calls of JB Leitch, the legal firm chosen in my example to contact me on behalf of Pier Management
3. in any way whatsoever cooperate or enter into correspondence with Pier Management or JB Leitch
Do you see the important distinction? The lease obligates me (or you) to do a thing.
That thing does not include responding to any correspondence Pier Management send me, however strong the language they use, and however large the 'charges' they add on become.
If a company like Pier Management sends you an invoice for a charge that they are not entirely sure is legitimate, that is colloquially referred to as 'speculative invoicing'.
The act of speculatively invoicing someone is, in my opinion, unethical.
You may choose not to pay a speculative invoice, even partially.
The legal argument here is quite straightforward.
Paying a speculative invoice, even partially (say, the part you agree with) could be construed to be a tacit acceptance or acknowledgement of the invoice proper and therefore the outstanding balance that remains.
Since you believe the invoice to be speculative, at least in part, you do not tacitly accept it's legitimacy.
(Nor is it good accounting practice to partially pay an invoice, and all good landlords are good accountants).
{Side note - do you find it annoying when legal firms sign their letters with the name of the legal firm itself? In my opinion it's really annoying, and rather rude. How can one possibly correspond politely with a legal firm that can't even sign a letter with a human name? There's nothing illegal about doing it by the way, and it doesn't necessarily detract from what is being said in the letter, but it is worth noting}
TIP ONE FOR YOU (make a note):
Unless your lease states otherwise, you are not obligated to answer the questions/assumptions/accusations (my opinion) of freehold management companies similar to Pier Management.
So never, ever, EVER, respond to any letter or allegation such companies, or Pier Management might send to you, unless you are specifically obligated to do so (for example, if it is the annual ground rent invoice, and the invoice is correct).
Even if what they are assuming/accusing you of in their letter is accurate.
Regardless of how fruity the language becomes, or how large the 'charge' bolted on to the actual, underlying obligated fee is, YOU DO NOT HAVE TO RESPOND.
There are specific rules around charges, and furthermore, specific levels before the charge can be dealt with legally (details here - if you don't like reading then the key takeaway is "before your landlord can serve a section 146 notice you must have agreed that you have broken the lease and that you owe any arrears; or the tribunal must confirm that you have broken the lease".
You can see, again, why they REALLY want you to respond, right?).
TIP TWO FOR YOU (make a note):
- since from tip ONE we don't want a tribunal to have found we have broken our lease, make doubly sure that when notifying companies similar to Pier Management of something you are obligated to notify them of, under the terms of your lease, that you can prove you did.
This is remarkably easy to do.
Choose your method of notification, unless your lease explicitly says it has to be using a particular method. Nothing to stop you calling their phone number out of hours and leaving a message - make a video of yourself doing it (note in English law, recording a call without the other party being aware is prohibited, but recording an answerphone message is somewhat grey. If you prefer, clip out most of the answerphone message, leave just the last word and the beep - you'll always have your itemised bill to prove that you made the call/for how long).
Make sure you are not on mute.
You want to ensure they hear your message. They didn't follow up after you left your message? That's their issue - you did as obligated and notified them.
If you want to (or have to) notify them in writing, make sure to send the notification by recorded mail, or, say, as part of a payment for another charge (which the act of them cashing e.g. a cheque in turn then proves they received it).
If you need to send notification of a tenant/sub-let, or a cat, then send that as part of the annual ground rent payment. They cash the ground rent? Then they got the notification of the tenant or cat, because it was in the same envelope.
They didn't follow up with the additional charge for kitty? THAT'S THEIR ISSUE - you have satisfied, and can prove you satisfied, your obligations as per the lease.
Keep the recorded mail confirmation of delivery (take a screenshot, and save it) for your records.
Make sure to send the envelope fully sealed, with the notification inside (don't forget to put it in the envelope).
This is to stop a freehold management company later accusing you of sending them an empty envelope, although I suppose in many respects that would be their word against yours, since they wouldn't know who sent the empty envelope in the first place.
They don't respond after you have proof you notified them? That's their issue.
Interestingly the law around whether you have to prove that you sent something is surprisingly.. cute. Ever noticed how the demands for payment of e.g. ground rent sent to you by freeholders/freehold management companies are not sent by recorded delivery? That's why. There's an actual rule (convention) all about that.
TIP THREE FOR YOU (make a note):
- always pay your charges like Ground Rent using a cheque. Cheques tend to cost money for companies to cash (unlike for individuals, who can do so for free). Barclays for example charge the fairly punchy amount of 65p (or £1.50!) per cheque. That differs from other payment methods like a credit card, because those payments (or any payment involving a payment processor) tend to attract a fee based on a % of the amount paid:
An apartment I own has a lease. On the grand spectrum of leases, from the pleasant to the outrageously eye-gouging, it's not too bad an example. That is really more to do with the year the lease was written than anything else (2006.. although.. leases like mine do seem to be somewhat plagiarized/"inspired" from older ones, so who knows when the document was actually originally created).
It's 29 A4 pages long, filled with legalese and jargon, mind numbingly boring and tricky for the layman to read, and in the interests of brevity I highlight the only pertinent clause in the whole thing, at least for the purposes of this website:
17.4 To give to the Landlord and the Management Company notice of every dealing with or underletting or transmission of the legal estate in the Demised Premises including all mortgages or legal charges of the Demised Premises within twenty-one days after the same shall occur and to pay to each of the Landlord and the Management Company such reasonable registration fees (but being not less than £50.00) and any VAT properly chargeable thereon as the Landlord the Management Company and the Estate Management Company respectively shall from time to time determine.
Check your lease now (or ask your solicitor for a copy, if they hold it on your behalf). You may very well find the exact same clause.
Read my clause above and re-read it. It's really, really important.
I don't need consent to sub-let. I do need to notify them that I am doing so.
It's a little greyer about the registration fee. I do need to pay 'reasonable registration fees' but those fees are determined by the freeholder. See the difference? I notify them, they have to invoice me their fee, because they determine it. I notify and they don't invoice me? That's their problem, not mine (or yours).
You would be amazed how critical the tiny details like this are in the hard money game.
You can see, with respect to whether or not I have a tenant (underletting), I have an obligation under the terms of the lease, which I signed when I purchased the property. That is it.
I am not obligated to do anything else, including:
1. to submit a copy of the tenancy agreement, should there exist one
2. to submit details (like date of birth) of the tenant, should there exist one
3. to repeat the process annually if such a tenancy becomes periodic
4. to notify (give notice to) the companies stipulated in the clause in a particular manner or style (say, in writing or by printed letter - I could just as easily telephone them and leave a message.. seriously arguing this sort of point is exactly the sort of detail that makes for a great legal case)
But most importantly of all, I am not obligated to respond to any letter/allegation/accusation that the freehold management company, Pier Management in my case, might choose to send to me (including the postcard). Even if their allegation/accusation/assumption in said correspondence is correct.
It really is as clear cut as that.
And the freehold management company industry really, really, REALLY do not want you to know, or think too long, on that important fact.
YOU do not (unless clearly, expressly stipulated otherwise in the lease that you signed when purchasing your property.. I have yet to see a lease that says this, mostly because all the leases I have seen appear to have plagiarized the same original source) have to:
1. answer the questions/passive-aggressive accusations (my opinion) of a freehold management company, including the clear and explicit example postcard I received from Pier Management
2. answer or acknowledge the letters or phone calls of JB Leitch, the legal firm chosen in my example to contact me on behalf of Pier Management
3. in any way whatsoever cooperate or enter into correspondence with Pier Management or JB Leitch
Do you see the important distinction? The lease obligates me (or you) to do a thing.
That thing does not include responding to any correspondence Pier Management send me, however strong the language they use, and however large the 'charges' they add on become.
If a company like Pier Management sends you an invoice for a charge that they are not entirely sure is legitimate, that is colloquially referred to as 'speculative invoicing'.
The act of speculatively invoicing someone is, in my opinion, unethical.
You may choose not to pay a speculative invoice, even partially.
The legal argument here is quite straightforward.
Paying a speculative invoice, even partially (say, the part you agree with) could be construed to be a tacit acceptance or acknowledgement of the invoice proper and therefore the outstanding balance that remains.
Since you believe the invoice to be speculative, at least in part, you do not tacitly accept it's legitimacy.
(Nor is it good accounting practice to partially pay an invoice, and all good landlords are good accountants).
{Side note - do you find it annoying when legal firms sign their letters with the name of the legal firm itself? In my opinion it's really annoying, and rather rude. How can one possibly correspond politely with a legal firm that can't even sign a letter with a human name? There's nothing illegal about doing it by the way, and it doesn't necessarily detract from what is being said in the letter, but it is worth noting}
TIP ONE FOR YOU (make a note):
Unless your lease states otherwise, you are not obligated to answer the questions/assumptions/accusations (my opinion) of freehold management companies similar to Pier Management.
So never, ever, EVER, respond to any letter or allegation such companies, or Pier Management might send to you, unless you are specifically obligated to do so (for example, if it is the annual ground rent invoice, and the invoice is correct).
Even if what they are assuming/accusing you of in their letter is accurate.
Regardless of how fruity the language becomes, or how large the 'charge' bolted on to the actual, underlying obligated fee is, YOU DO NOT HAVE TO RESPOND.
There are specific rules around charges, and furthermore, specific levels before the charge can be dealt with legally (details here - if you don't like reading then the key takeaway is "before your landlord can serve a section 146 notice you must have agreed that you have broken the lease and that you owe any arrears; or the tribunal must confirm that you have broken the lease".
You can see, again, why they REALLY want you to respond, right?).
TIP TWO FOR YOU (make a note):
- since from tip ONE we don't want a tribunal to have found we have broken our lease, make doubly sure that when notifying companies similar to Pier Management of something you are obligated to notify them of, under the terms of your lease, that you can prove you did.
This is remarkably easy to do.
Choose your method of notification, unless your lease explicitly says it has to be using a particular method. Nothing to stop you calling their phone number out of hours and leaving a message - make a video of yourself doing it (note in English law, recording a call without the other party being aware is prohibited, but recording an answerphone message is somewhat grey. If you prefer, clip out most of the answerphone message, leave just the last word and the beep - you'll always have your itemised bill to prove that you made the call/for how long).
Make sure you are not on mute.
You want to ensure they hear your message. They didn't follow up after you left your message? That's their issue - you did as obligated and notified them.
If you want to (or have to) notify them in writing, make sure to send the notification by recorded mail, or, say, as part of a payment for another charge (which the act of them cashing e.g. a cheque in turn then proves they received it).
If you need to send notification of a tenant/sub-let, or a cat, then send that as part of the annual ground rent payment. They cash the ground rent? Then they got the notification of the tenant or cat, because it was in the same envelope.
They didn't follow up with the additional charge for kitty? THAT'S THEIR ISSUE - you have satisfied, and can prove you satisfied, your obligations as per the lease.
Keep the recorded mail confirmation of delivery (take a screenshot, and save it) for your records.
Make sure to send the envelope fully sealed, with the notification inside (don't forget to put it in the envelope).
This is to stop a freehold management company later accusing you of sending them an empty envelope, although I suppose in many respects that would be their word against yours, since they wouldn't know who sent the empty envelope in the first place.
They don't respond after you have proof you notified them? That's their issue.
Interestingly the law around whether you have to prove that you sent something is surprisingly.. cute. Ever noticed how the demands for payment of e.g. ground rent sent to you by freeholders/freehold management companies are not sent by recorded delivery? That's why. There's an actual rule (convention) all about that.
TIP THREE FOR YOU (make a note):
- always pay your charges like Ground Rent using a cheque. Cheques tend to cost money for companies to cash (unlike for individuals, who can do so for free). Barclays for example charge the fairly punchy amount of 65p (or £1.50!) per cheque. That differs from other payment methods like a credit card, because those payments (or any payment involving a payment processor) tend to attract a fee based on a % of the amount paid:
If you pay £100 by credit card, and the processing fee is 2%, it costs £2 for the company to receive your payment from the credit card company.
If you pay £100 by cheque, it will cost the company cashing the cheque between 65p and £1.50 to cash it, or 0.65-1.5%.
But if you pay £100 by 4 cheques (because you budget quarterly) it will cost 65p*4 (or £1.50*4) = £2.60-£6.00. That would be 2.6-6%.
You can see how the costs of cheques can quickly eclipse the costs of credit cards.
Pay £100 by 12 cheques (because you budget monthly) = charges of £7.80-£18 or 7.8-18%.
Pay £100 by 52 cheques (because you budget weekly) = charges of £33.80-£78.00 or 33.8-78%.
BACS or direct transfers tend to be free for everyone (but not always).
But more importantly, if you pay by cheque, you'll have hard evidence (the stub and the act of cashing) of sending the payment.
Of course you could say you get evidence with an electronic transfer, too. But in this day and age, where paper statements are becoming less common, nothing quite beats the permanent record of a cheque stub.
Having proof like this is to prevent the recipient claiming you never paid a particular invoice.
Now, if you send 12 cheques, one for each month of the year, each with 1/12th of your Ground Rent, or 52 cheques, one for each week, then that is for freeholders or their freehold management companies to refuse to then cash (because of the fee they in turn will incur).
But here's the thing.
If it doesn't stipulate in the lease how you have to pay, or how many cheques you can or cannot send? Then it is their issue.
Always remember, the lease you signed rules all. If it stipulates you have to pay £x in manner Y, then do so. If it doesn't (and I've yet to see a lease that does), then you be you, okay?
Where this gets really interesting is if a particular payment method is refused. If the lease don't stipulate how you have to pay, then you are free to choose - yes, even showing up at the office with penny coins. A refusal to accept payment (if the lease doesn't explicitly forbid i)t? You guessed it - that's their issue.
You must remember that this obligation to pay exists in a very strict, very prescriptive set of words - the lease that you signed when purchasing your property.
It is not open for the interpretation of the freeholder/freehold management company.
There are very strict rules concerning how the freeholder/freehold management company can request payment, and when. It can literally come down to each word.
Here's my lease on what my obligation is with respect to Ground Rent, due annually:
"1. Ground Rent - to pay the Ground Rent on 1st January in each year."
That's it.
Nothing about the how or the how not.
Since Section 1 of the same lease ("MEANINGS") does not stipulate how payment must be made, or what the act of paying entails, so that is then my choice to make, and the freeholder's choice to refuse.
You argue. You go to tribunal. The tribunal looks at the lease. The tribunal rules based on the lease.
If you have a valid reason for sending multiple cheques, which budgeting/accounting certainly is, or even if you don't, that will be taken into account.
TIP FOUR FOR YOU (make a note):
Go read your lease. Right now. Please. You might be surprised:
1. do you need to send a copy of the AST? Only if the lease obligates you to. My opinion if it doesn't? NO.
2. do you need to send a fresh notification if the fixed term ends and the tenancy becomes periodic? And if so, is it every subsequent 12 months of periodic tenancy (since a periodic tenancy continues forever)? Only if the lease obligates you to. Seriously take a look into periodic tenancies, they can be pretty cool if you know the tenant is legit. My opinion if the lease doesn't? NO.
3. does your notification have to be in writing or would a phone call (an answerphone message left, say, if calling out of hours - record yourself leaving the message on a smartphone, make sure you are not on mute) be sufficient? If in writing, is an email or a postcard sufficient (clearly a postcard is sufficient for some things...hah). My opinion if the lease doesn't? CALL THEM AND LEAVE A MESSAGE MAKING SURE NOT TO BE ON MUTE.
If you'd like to get a flavour of how.. interesting.. the process of collecting all this money appears to be (specifically why the money is being collected, and for what purpose/what in return, and whether or not even the people collecting the money are sure what they are doing, or what they can do.. just read through this, it's an eye-opener).
Only do what the lease obligates you to do, no more, no less.
And remember - rarely does a lease obligate you to ever respond to a freehold management company's accusatory letter, making assumptions about you. Even if the accusation/assumption is true.
You can see why it is called hard money, right?
