Questions Of Cash: NS&I failed to notifyme when my bond was due to mature

Q. I held a three-year, fixed-rate bond with National Savings & Investments (NS&I). Other institutions provide advance notice when an investment is about to mature. I did not receive such a letter from NS&I.

Two days after the bond was due to mature, I phoned NS&I to find out what had happened. I was told to write, explaining the circumstances and enclosing my certificate. I did this and a few days later received a cheque for the value of the bond, less £307, but with no reply to my letter. The £307 represented a penalty of 90 days' interest.

It turned out that the bond had been automatically rolled over by NS&I into another fixed-rate bond, at a much lower rate of interest. Other institutions that have not received instructions move the funds into an easy-access holding account until they are told what to do with the money. I have complained, unsuccessfully.

NS&I says that it cannot take responsibility for a letter getting lost in the post. However, as a "goodwill gesture", it has sent me £20 for not replying to my letter of complaint. So I get fined £307 for not answering a letter I had not received, while NS&I fines itself £20 for not replying to a letter it has received! JR, Northants.

A. NS&I insists that it wrote to you 30 days before your bond matured. As you say, it emphasises that it is not responsible for post not being delivered and suggests you take this up with Royal Mail. Where instructions are not received, NS&I will automatically reinvest the maturing sum into a new bond of the same term as the matured bond. The £307 penalty imposed on you was the equivalent of 90 days' interest, as specified in its terms and conditions.

NS&I will waive this penalty where a bond has been rolled over into a new investment where it recognises extenuating circumstances that prevented an investor from issuing instructions. These situations include being in hospital or on holiday when the letter was delivered. However, NS&I does not accept non-delivery of post as an acceptable extenuating circumstance. It insists that the onus for proper management of investments lies with the customer. You can pursue your grievance with the Financial Ombudsman Service.

Q. I bought a leasehold flat 16 years ago. There is nothing in the lease to prevent or restrict me from sub-letting and I have had a succession of tenants. The freehold changed hands in March 2007 and the letter informing me of this mentioned only that the annual ground rent would be payable to the new freeholder, via the agents. Last month, all flat owners whose properties are sublet received a letter demanding £95 to register the sub-letting and a further £95 each time there is a change of tenant. Can they legally enforce a payment just by demanding it? AH, by email.

A. Fiona Duff of the Butchers Andrew law firm, whose practice includes litigious residential landlord and tenant work, says: "In general terms, in the absence of any covenant in a lease to the contrary, a lessee has the right to create subleases as, 'It is of the nature of a creation of a term of years that the owner of the term is capable of dealing with it as a piece of property' (per Lord Russell of Killowen in Old Grovebury Manor Farm Ltd v W Seymour Plant Sales and Hire Ltd). Accordingly, it is usual to see restrictions upon the right to sub-let within a lease – to include, for example, the requirement that you request permission to do so from the freeholder, that various fees are paid in connection with the sub-letting and that any under-lease shall be granted subject to 'like conditions and covenants as the head lease'. It is also usual to see an attendant clause allowing for forfeiture of the lease if the restrictions within it are breached. In your case, you clearly state that there is 'nothing in the lease about sub-letting, notification of sub-letting, or restrictions on sub-letting'.

However, a demand has been made by an agent of the new freeholder that you pay £95 to register a sub-letting and a further £95 each time there is a change of tenant. It's possible that the requirement to pay these sums is buried in the lease somewhere. It's usual to expect to see such a charge in the same clause that a charge is incurred for the assignment of the leasehold interest or its sale. If this is not the case, the freeholder is not entitled to make such a demand from you and if there is nothing in the lease about this then it can be argued that there was no intention for such a charge to arise. In addition, I would ask whether or not you were responsible for the payment of the ground rent and/or service charge and the upkeep and maintenance of the flat? If you are, and the freeholder knows your address for service of the relevant notices, then why would the freeholder need to know who was in occupation of the flat?

The next step would be to write to the freeholder's managing agents again, asking them to refer you to the relevant section of your lease – or any legislation – that enables them to legitimately make the demands for payment. As I have not seen a copy of the demand for payment made upon you I am unable to comment upon whether or not it was defective in some way. Incidentally, if you have a mortgage and you are responsible for insuring the flat, you must notify the relevant parties about the sub-lets to avoid potentially falling foul of your mortgage or insurance terms and conditions. You should also check with your accountant whether there are any tax implications for income that you receive from the sub-lets."

Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: questionsofcash@independent.co.uk