Freeholders plans to extort more profit from property owners

by Readers Question

A month ago

Freeholders plans to extort more profit from property owners

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Freeholders plans to extort more profit from property owners

In 2012 I bought a flat in Manchester as an investment and I have rented out the flat for the last five years however I recently received a letter from the management company stating they were introducing a new annual charge of £126 to “Provide a notice and registration fee upon granting of a shorthold tenancy”.

In my lease under Tenant’s Covenants it states,

11.3 “Not to underlet the premises without prior written consent of the Landlord which shall not be unreasonably withheld and paying the Landlord’s reasonable administrative and legal costs in respect of the same, but such consent shall not be necessary in respect of any lettings on an Assured Shorthold Tenancy for a period not exceeding two years”.

I advised the management company that I was letting my flat on an AST and offered to provide a copy of the tenancy agreement as proof. The management company stated I had to pay the annual charge and quoted another clause in the lease as their “legal basis”. It states,

“At all times during the term to deliver to the landlord a notice of every assignment disposition or devolution of or charge on or transfer of title to the premises or any part thereof whether by way of mortgage or otherwise within one month after the execution of any deed or document or after the date of any probate letters of administration or other instrument or any order of court by which such assignment disposition devolution charge or transfer is effected or evidenced such notice to specify the name address and description of the person or persons to whom or in whose favour the assignment disposition devolution charge or transfer shall be made to take effect and also at the time of delivering every such notice to produce the deed document instrument or order by which such assignment disposition or devolution charge or transfer shall purport to be effected or evidenced as aforesaid for the purpose of having a memorandum thereof entered in the registers to be kept by the landlord for that purpose and to pay to the landlord a reasonable fee (not being less than £50.00 plus VAT) for each such registration”.

I sought legal advice from the Solicitor that did the conveyancing when I bought the flat and he advised that clause 11.5 refers to transfer of title (ie the sale of the property) and not subletting. Although I advised the management company of this they have now issued a threatening letter from their Solicitor to say I now have to pay £126 registration charge and £180 legal costs.

Are there any legal professionals that specialise in leases able to advise me on this?

Many thanks

Lesley

Comments

Neil Patterson

A month ago

Hi Lesley,

I am not a legal professional, but having read only the two clauses you have included then I would personally agree with your solicitor.

This looks like getting needlessly expensive so I would try talking with the Freeholder first to see if you can get them to back down before you involve your solicitor further.

Ian Narbeth

A month ago

Hi Lesley

On the basis of the information you have provided which may be incomplete:
Under s205 Law of Property Act 1925
"“Conveyance” includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument, disclaimer, release and every other assurance of property or of an interest therein by any instrument, except a will; “convey” has a corresponding meaning; and “disposition” includes a conveyance and also a devise, bequest, or an appointment of property contained in a will; and “dispose of” has a corresponding meaning;"

Disposition therefore includes a lease. Clause 11.3 makes it clear you don't need consent for underletting on an AST for up to two years. However you have to register it under clause 11.5 and pay a reasonable registration fee to the landlord. There is nothing difficult about registering the lease and so it is hard to see why the fee has increased by over 100% since 2012.
The problem is that if the landlord does not back down you risk getting into a dispute with escalating costs. When you come to sell/mortgage the managing agents will refuse to co-operate until the outstanding fees have been paid and you will have to tell the buyer about the dispute.

If you are within one month of the grant of the AST you are in a better position as you can give notice in time. If not then you are in breach. What you should do now is give notice in duplicate with a copy of the AST and send it to the landlord with a cheque for £60. In a covering letter state that the demand for £126 is not reasonable. However, if they don't back down you are best advised to grit your teeth and pay up.

Jim Swallow

A month ago

Lesley, I had the same in Leeds was it B****** estates who you are dealing with on behalf of the Ground rent company? I ended up paying £126 that rings a bell!! 404 apartments on the development making a tidy sum eh?

terry sullivan

A month ago

the lands tribunal has recently said that max=£40--i personally refuse to pay and i also own a freehold of 12 flats and i do not charge them for ast lettings

terry sullivan

A month ago

Reply to the comment left by Ian Narbeth at 09/10/2017 - 10:34
what is the legal definition of a lease?

Lesley Clarke

A month ago

Thanks for the comments.
In reply to Jim - yes it is B****** Estates. Did no one fight the new charge and is it an annual charge?
In reply to Ian - are you a Solicitor? It's interesting that Solicitors have different interpretations of the lease which is probably why the management company are hoping to extract more money this way. I am not the only one fighting this new annual charge - there are over 200 flats in the development. A Solicitor representing one of the other property owners stated that "Under English law a AST does not constitute an assignment, disposition, devolution charge or transfer of the lease.

Ian Narbeth

A month ago

Reply to the comment left by terry sullivan at 09/10/2017 - 12:22
Hi Terry, it includes an Assured Shorthold Tenancy. A more expansive definition is not helpful here.

David Price

A month ago

If you possibly can form a right to manage company as this takes a lot of power away from the freeholder. It may not solve your current problem but it will solve many other "freeholder" problems.

Jim Swallow

A month ago

Reply to the comment left by Lesley Clarke at 09/10/2017 - 12:41
Yes we did fight it through the letting agent to no avail It is an annual charge I am afraid just got the new one through. The lease hold changed about 2 years ago hence the rip off started...
They quotes the following. On our leases.
7.3.6 Produce for the purpose of registration to the Lessors' solicitors and to the
Management Company within one calendar month after the documentor
instrumenting question shall be executor shall operate or take effect or purport
to operator take effect a verified copy of every transfer of this Lease or
mortgage or legal charge of this Lease and also every under lease and a verified
copy of every assignment of every such under lease and also every Probate
Letters of Administration or order of Court to order instrument effecting or
evidencing devolution of title as regards the said termoras regards any such
underlease as aforesaid and for such registration pay to such Solicitors a
reasonable registration fee of not less than thirty pounds plus vat in respect of
each such document or instrument so produced.
you get the idea. Notice "fee of not less than thirty pounds plus vat"!! Unreasonable we said....

Puzzler

A month ago

Contact LEASE for free legal advice; your solicitor is correct. An AST is a lease but not in this context. Why don't all you leaseholders of B****** Estates get together and form a united body. If you all act together it will have more force. You can also apply to the FTT but get good legal advice as it can turn on a technicality.

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