Many leaseholders do not realise just how serious it can be if they fall behind on their service charges or ground rent. These are regular payments owed under the lease. They are often treated like a bill to be paid when convenient, but in law, they are essential terms of your lease agreement.
If you do not pay, the freeholder may take action, and in some cases, you could lose your lease altogether.
Forfeiture: The Legal Power to Take Back a Property
In leasehold law, the freeholder has a right called forfeiture. This means that if the leaseholder breaks the terms of the lease, for example by not paying service charges or ground rent, the freeholder can apply to end the lease completely.
This is a very serious step. If forfeiture is granted by the court, it means the lease is treated as if it has ended. The freeholder can then take back the property. Your right to live there and your long-term lease can be lost.
This power is not used straight away. In most cases, the freeholder must follow a legal process. This includes sending notices and asking the First Tier Tribunal to confirm that the amount owed is due. But once those steps are taken, forfeiture becomes a real risk.
Can You Get Your Property Back After Forfeiture?
The law gives leaseholders a chance to apply for something called relief from forfeiture. This means asking the court to cancel the effect of the forfeiture, so the lease is treated as if it never ended.
But this is not automatic. Just paying the money you owe is not always enough. The court will look at the whole situation, including:
- How long the money has been owed
- Whether the leaseholder acted fairly and responsibly
- If there was any delay or refusal to deal with the issue
- Whether the freeholder also acted fairly
The longer the delay or the more difficult the leaseholder has been, the more likely the court will refuse to give relief. Relief must usually be asked for within six months of the possession order, but the time limit can vary depending on how the forfeiture was carried out.
The Risk Is Greater Than You Think
Some leaseholders believe that being a little behind on service charges is a small matter. But once the freeholder starts forfeiture proceedings, your leasehold interest is at risk. That means not just losing your home, but also losing any value you hold in the lease and possibly your mortgage investment as well.
This may also affect any plan to sell the property or rent it out, as most buyers and agents will carry out checks that reveal the forfeiture risk or arrears.
Even if the court later agrees to grant relief, the process is costly and stressful. You will usually have to pay the arrears, your own legal fees, and the freeholder’s legal costs too.
What You Should Do
If you receive a letter or notice about unpaid ground rent or service charges, do not ignore it. Deal with it quickly. If you are in dispute about the amount, get advice and try to resolve it before it becomes a legal issue.
At Lisa’s Law, we help leaseholders deal with arrears, defend against forfeiture claims, and apply for relief if needed. We can also speak to your freeholder or their legal representatives on your behalf and try to settle the issue early. If you are worried about non payment of service charge / ground rent, or are affected by a potential possession order, contact our team as soon as possible. Acting early can protect your home and your rights.
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