Excessive charges for licence to underlet

Excessive charges for licence to underlet

16:16 PM, 25th September 2018, About 3 years ago 11

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Our 90 year lease requires us to obtain a licence to underlet each time we get a tenant.

The managing agent charges about 250 pounds and the lessor insists using their solicitor for a further £400 plus vat.

Can this be challenged?

If so can I recover my own legal expenses for doing so?

Many thanks

Clive



Comments

by Neil Patterson

16:25 PM, 25th September 2018, About 3 years ago

These consent to let fees are a very comment question and yes you need to check the conditions in your lease first.

However, this fee plus the solicitors fees is the most I have seen yet by some margin!

From the Leasehold Advisory Service >> https://www.lease-advice.org/article/your-rights-when-subletting/

"An Absolute prohibition on subletting is rare but can be found in some leases. If present, then it is hard to avoid. It is not a term that an individual leaseholder could apply to the “Appropriate Tribunal” to vary under section 35 of the Landlord & Tenant Act 1987.

In England the Appropriate Tribunal is the First tier Tribunal(Property Chamber) and in Wales it is the Leasehold Valuation Tribunal.

An absolute bar on subletting could be the subject of an application under section 37 of the 1987 Act, provided a substantial majority of the leaseholders are in favour of variation. The most common clause requires the leaseholder to obtain the freeholders consent to subletting (a qualified covenant). The clause may require the leaseholder to provide a copy of the tenancy agreement and covenants to be entered directly with the freeholder.

The clause may also say consent should not be unreasonably refused, but in any event the Landlord & Tenant Act 1927 section 19(1) provides that the landlords consent should not be unreasonably refused for subletting.

Also, where a written application is served on the person who may consent to the subletting they owe, pursuant to Section 1 of the Landlord & Tenant Act 1988 , a statutory duty to the leaseholder, within a reasonable time: –

To give consent unless it is reasonable not to do so
To serve notice of their decision whether to give consent including any conditions and if withheld, the reasons.
The onus of proof is on the person refusing the consent, or imposing conditions, to show that these are reasonable and that they notified the leaseholder within a reasonable time.

The leaseholders remedies against unreasonably refused consent to subletting are as follows:-

To proceed without consent. This is not advisable as it is a breach of the lease and enforcement action could be taken by the freeholder, e.g. forfeiture.
To apply to a County Court for a declaration that the freeholder is unreasonably withholding consent. This can be expensive, even if successful.
To apply to the County Court for damages for breach of statutory duty if the landlord has failed to comply with the provisions of section 1 of the Landlord & Tenant Act 1988. This is an additional remedy to applying for a declaration that consent has been unreasonably refused.

Schedule 11 Part 1 of the Commonhold & Leasehold Reform Act 2002 defines an administration charge.

The lease may specifically refer to an administration charge being payable for the freeholder’s licence or consent. If not, the Landlord & Tenant Act 1927, section 19 allows the freeholder to “…require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such licence or consent..”

A variable administration charge, such as a fee for subletting, must be reasonable.

Any demand for an administration charge should be accompanied by a summary of leaseholders’ rights and obligations. There is a right to withhold payment if the summary is not provided."

by Chris @ Possession Friend

10:51 AM, 26th September 2018, About 3 years ago

There was a case ( I don't have access to for a few weeks ) that said £40 was a reasonable figure for Permission to sub-let ( Leaseholder to grant a Tenancy )

by J C

7:38 AM, 27th September 2018, About 3 years ago

I am currently buying a property that requested £240 per tenancy application. Seems excessive to me and can they really justify that money just to give permission to sublet?

by Adrian

8:40 AM, 7th August 2019, About 2 years ago

Reply to the comment left by Ian Simpson at 29/09/2018 - 18:12
Hello, sorry if I should have checked somewhere else but came across this thread after a similar threat by Simarc. My problem is that they point out that it is not an 'administration fee' but a 'notice to sublet' fee and the leasehold valuation tribunal has ruled in the past that it can't touch these fees (why I cannot understand as it seems to just be a respelling of administration). They won't detail to me what is involved either.
In my lease it says '...unless there shall previously have been executed at the expense of the Tenant and delivered to the Management Company respectively for retention by it a Deed in duplicated expressed to be made between the Landlord of the first part the Tenant of the second part and the Management Company of the third part and the person or persons to whom it is proposed to assign sublet..'
Any tips on breaking through here and getting the £138 fee dropped to something sensible?

by Jonathan Samuels

19:21 PM, 5th October 2021, About 2 months ago

Was there ever any update on this?
The freeholder charges me 450 (inv vat) per tenant which just seems a total rip off

by Chris @ Possession Friend

23:44 PM, 5th October 2021, About 2 months ago

Reply to the comment left by Chris @ Possession Friend at 26/09/2018 - 10:51
Holding and Management (Solitaire) Ltd v Norton [2012] UKUT
Found that £40 was a reasonable charge. - not aware of any more recent cases on the subject of the level of fee a F/H can charge a Leaseholder for permission to let.

by Jonathan Samuels

8:56 AM, 6th October 2021, About 2 months ago

Reply to the comment left by Chris @ Possession Friend at 05/10/2021 - 23:44
I had had heard of that but the lawyers involved in my case never seem to lose any case when it comes to freeholder rights which makes me think they know something I don't

by Chris @ Possession Friend

9:42 AM, 6th October 2021, About 2 months ago

I would make an offer to pay a reasonable sum, and go ahead and re-let.
Let the F/H take you to Tribunal and F/H try to justify their charges.
I'd be very confident the tribunal wouldn't find £450 ' reasonable '

by Adrian

11:49 AM, 6th October 2021, About 2 months ago

As in my comment, my problem was that, in my lease it is a 'notice to sublet' and therefore apparently and amazingly it was ruled that this wasn't within the things over which the tribunal has power. If it is stated as an 'administration fee' then you are home and dry and as others have said it is limited to £40 but if it is something else then they seem to be able to charge whatever they like. If someone else has found a way to beat this please let me know.

by Chris @ Possession Friend

11:57 AM, 6th October 2021, About 2 months ago

Ask them for a breakdown of the Invoice ( for £450 ) - gives you more ammunition to defend any action they may bring to recover ( highly unlikely )

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