Property Law uk

Maintained by Gary Webber

Ground rent notices

Notices to pay

Landlord and Tenant (Notice of Rent) (England) Regulations 2004 (SI 2004/3096) (Amended in 2011).
Landlord and Tenant (Notice of Rent)(Wales) Regulations 2005 (SI 1355; W 103)

Section 166 of the Commonhold and Leasehold Reform Act 2002 introduced a requirement for landlords of long leases (as defined in the Act, generally over 21 years) to send the leaseholder a notice requiring payment before the sum can be due. These regulations set out the form and content of notices requiring the payment of ground rent. The additional requirements specified in reg 2 include the provision of notes for both leaseholders and landlords. The content of the notes is set out in the Schedule to the Regs, as part of the prescribed form of notice under s 166(1).


Defects in notice

Using an old form - technical defects?

Cheerupmate2 Ltd v De Luca Calce
[2017] UKUT 377 (TCC)

There had been a failure to serve a tenant with a prescribed form of notice which was a condition precedent to the tenant’s liability for ground rent under a long lease. The consequence of this was that the notice was invalid.

Relevant statutory provisions

Section 166 of the Commonhold and Leasehold Reform Act 2002 provides that:
    (1) A tenant under a long lease of a dwelling is not liable to make a payment of rent under the lease unless the landlord has given him a notice relating to the payment; and the date on which he is liable to make the payment is that specified in the notice.
    (2) The notice must specify—
    (a) the amount of the payment,
    (b) the date on which the tenant is liable to make it, and
    (c) if different from that date, the date on which he would have been liable to make it in ac-cordance with the lease,
    and shall contain any such further information as may be prescribed.
    (3) The date on which the tenant is liable to make the payment must not be—
    (a) either less than 30 days or more than 60 days after the day on which the notice is given, or
    (b) before that on which he would have been liable to make it in accordance with the lease.
    (4) If the date on which the tenant is liable to make the payment is after that on which he would have been liable to make it in accordance with the lease, any provisions of the lease relating to non-payment or late payment of rent have effect accordingly.
    (5) The notice—
    (a) must be in the prescribed form, and (b) may be sent by post.
    ...
    (9) In this section—
    “dwelling” has the same meaning as in the 1985 Act,
    “landlord” and “tenant” have the same meanings as in Chapter 1 of this Part, “long lease” has the meaning given by sections 76 and 77 of this Act, and
    “prescribed” means prescribed by regulations made by the appropriate national authority”


Facts

The tenant (T) of a piece of land held it under a 900 year underlease from a landlord (L). The ground rent was £2.00 p.a. payable half yearly in March and September. The lease provided that L could forfeit for non-payment of rent in the following terms.
    "in case the said rent hereby reserved or any part thereof shall at any time or times ... be in arrear for the space of two years after the same shall have become due (whether any formal or legal demand thereof shall have been made or not ..."
Shortly after L bought the reversion it notified the tenant of this fact so complying with s48 of the Landlord and Tenant Act 1987. Enclosed with the letter was a notice, intended to be a notice under s166 of the Commonhold and Leasehold Reform Act 2002 (above) in respect of unpaid ground rent over a 5 year period amounting to £11. T did not pay.

Very shortly thereafter L forfeited the lease by peaceable re-entry, and applied the same day to the Land Registry to close T's title.

Although there was no dwelling on T's land, the lease referred to a dwellinghouse and both parties accepted that s166 of the Commonhold and Leasehold Reform Act 2002 (above) applied. This section makes reference to regulations, which are the Landlord and Tenant (Notice of Rent) (England) Regulations 2004. The form of notice referred to in the regulations was amended in 2011. However, L’s notice was in the pre-2011 format.

The parties also agreed that s167 of the 2002 Act applied to the lease. This restricts the power of a landlord to forfeit a lease for non-payment of rent by providing that there can be forfeiture only if either the arrears exceed a particular amount (currently £350) or the rent has been in arrears for more than three years.

First instance

The FTT held:
    (1) The s166 notice was invalid;
    (2) The two-year period referred to in the lease re-entry clause runs from the date in the s166 notice, rather than the due dates under the lease;
    (3) The three-year period referred to in s167 also runs from the date specified in the s166 notice, rather than the due dates under the lease.
L appealed to the Upper Tribunal.

Decision on appeal

Appeal dismissed. The Upper Tribunal held:

(1) The s166 notice was invalid. Whilst accepting that technical defects should not invalidate notices where the meaning remains clear, the Upper Tribunal held that, even though the change in form was to the explanatory notes for the tenant, rather than the form itself, nonetheless, "the defect was the use of wording which Parliament has specifically decided should not be used". Further, as "the amended wording is much clearer" the use of the old form was "not sufficiently clear for the Tenant to understand the position”. In light of this finding, the appeal was dismissed and the Tribunal did not therefore need, technically, to address the re-maining two points, but did so in any event.

(2) The two-year period in the lease re-entry clause was to be read in light of s166(4) of the 2002 Act. In other words, the impact of s166(4), "upon [the re-entry] clause ... of the [lease] is that the Landlord cannot forfeit for arrears until two years after the due date set by the section 166 notice served in respect of those arrears".

(3) The 3-year period referred to in s167 also runs from the date specified in the s166 notice. Section 48 of the Landlord and Tenant Act 1987 was drafted in a different way from s167 of the 2002 Act (and allows rent to be payable from the dates in the lease, but only once the notice has been served). The Upper Tribunal held that s167, "was enacted in order to protect tenants from forfeiture, or at least to ensure that forfeiture was used only as a last resort and after ex-tensive warning had been given, particularly where only a trivial amount was outstanding."



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