Rooftop MortgagesPublic Complaints & Decisions Archive

Topic hub

Leasehold, ground rent and service charges

A recurring pattern in published decisions: a service charge or ground rent goes unpaid, the lender pays the freeholder to protect its security, and the amount plus fees appears on the mortgage account as arrears. This page explains how that happens and collects the records that deal with it.

Why your lender cares about the service charge

If you own a leasehold flat, your home is a lease. If the lease is brought to an end because the ground rent or service charge has not been paid, the lender's security largely disappears with it. That is why mortgage conditions normally require you to keep those payments up to date and allow the lender to pay them if you do not.

Forfeiture

Forfeiture is the freeholder's right to end the lease where lease obligations are broken. In practice a freeholder must follow set steps and a court or tribunal is involved for service-charge debts, and relief from forfeiture is commonly granted once the debt is paid — but the threat is real enough that lenders act on it quickly.

Why it lands on your mortgage statement

Where the lender pays the freeholder to protect the security, the amount paid is added to the mortgage account, usually with an administration fee under the tariff of charges. It then behaves like the rest of the balance, which is how a service-charge dispute can turn into mortgage arrears.

Disputing the underlying charge

A dispute about whether a service charge is reasonable is between you and the freeholder or managing agent, and in England and Wales it is decided by the First-tier Tribunal (Property Chamber), not by your lender or by the Ombudsman. What the Ombudsman can look at is how the lender handled it: whether it told you, what it charged you for doing so, and how it treated the arrears afterwards.

Check what you were actually charged for

Two different amounts usually arrive together: the sum paid to the freeholder, and the lender's own fee for dealing with it. Rooftop's published tariff of charges lists a separate fee for unpaid ground rent and service charges, and field agent fees can be added where a visit or property check is instructed.

Published records concerning leasehold and service charges

Every record in this archive tagged Leasehold or Service charges, with the outcome as recorded in the source.

Complaint not upheldOfficial source – Financial Ombudsman11 September 2024

DRN-4964739 – Payment of disputed leasehold service charges added to the mortgage balance; complaint not upheld

A mortgage taken out in 2006 on a leasehold property. The borrower had been in a long-running dispute with a property management company about service charges. This service had already decided an earlier complaint about payments made up to August 2020. The Ombudsman dismissed the part of the new complaint covering that earlier period and decided the merits of one further payment. In January 2021 Rooftop received a county court judgment dated 25 November 2020 recording that the borrower owed the management company money. Rooftop wrote to her, told her she was in breach of her mortgage terms, and said that if it did not receive confirmation of an arrangement within ten days it might make the payment to protect its security. It made the payment on 16 February 2021 and added it to the mortgage account.

DRN-4964739Service chargesLeaseholdChargesComplaint handlingInformation requests
Complaint not upheldOfficial source – Financial Ombudsman15 September 2020

DRN-1852552 – Service charge payments made to a managing agent and charged to the mortgage; complaint not upheld

A complaint that Rooftop made payments to a managing agent claiming service charges on a leasehold property and added the cost to the mortgage balance. Rooftop had received copies of county court judgments recording that the borrower owed the managing agent money, and a copy of a section 146 notice said to have been served on her. Rooftop wrote to the borrower each time it received a request for payment. The complaint was not upheld.

DRN-1852552Service chargesLeaseholdChargesPossessionInformation requestsCommunication
Complaint not upheldOfficial source – Financial Ombudsman20 April 2019

DRN9682716 – Service charges paid after a forfeiture notice, field agent visits and disputed arrears; complaint not upheld

A leasehold mortgage originally taken out with another lender and later transferred to Rooftop. Rooftop paid service charges claimed by a management company after receiving a county court judgment and, later, a notice of proposed forfeiture, and charged a fee for making those payments. It also asked the borrower to pay arrears said to have been capitalised by the previous lender and sent field agents to visit. The management company later accepted that its notice was incorrect in parts and refunded the money paid by Rooftop, which put the account back into the position it would have been in. The complaint was not upheld.

DRN9682716Service chargesLeaseholdChargesField agentsArrearsPossession

For the charges added on top, see the fees and interest hub. For the standard the Ombudsman applies when deciding whether handling was fair, see the fairness test.

If this is your situation

The practical steps for this topic, taken from the "Auditing your account: what is principal, what is interest, what is a fee" playbook.

What to collect

  • Annual statements and arrears statements. MCOB 13.5 requires regular arrears statements showing payments due, the shortfall, charges and the total debt, and identifies legal fees and interest as arrears-related charges.
  • The transaction history in full, not a summary.
  • The tariff of charges in force at each relevant date.
  • Invoices or fee notes behind third-party costs, which are usually the last thing to be provided.
  • A one-page spreadsheet of your own: date, description, amount, category, tariff provision, queried yes/no.

What to ask for

  • An itemised breakdown of every fee, charge and cost, with date, amount, description and the tariff provision or contractual clause relied on.
  • The version of the tariff in force on the date each fee was applied.
  • Copies of invoices or fee notes for every third-party cost passed to the account.
  • Confirmation of whether interest has been charged on fees, the rate and the basis.
  • The transaction history covering the whole period in dispute.

Relevant published decisions

Read the full playbook: Auditing your account: what is principal, what is interest, what is a fee