Freeholders plans to extort more profit from property owners

by Readers Question

10:10 AM, 9th October 2017
About 3 years ago

Freeholders plans to extort more profit from property owners

Make Text Bigger
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


Share this article

Twitter Facebook LinkedIn

Comments

Satvir Sidhu

14:31 PM, 9th October 2017
About 3 years ago

I own and manage 8 flats and 5 commercial units.
All leases have got written ( not less than £30 or £50 charge will be payable) but it doesn't mean to apply an extortionate amount of £126!
I have a leasehold properties in a nearby development the management company & Directors of the Freeholder's company are in bed and apply grossly extortionate amount of
charges of £300+. Its sickening at times of greed by some.
Common sense has to prevail. Sometimes Calmer approach works better.
Its not worth making solicitors rich.

Dave S

15:05 PM, 9th October 2017
About 3 years ago

Estates and management have tried the same with me on 3 different flats on two different estates wanting i think £160 for registration and then a charge every 6/12 months at renewal of tenancy. we all know this is just a money making racket and something should be done about it. I offered them £45 with a threat of legal action against unreasonable costs if they didnt accept . They did but every couple of years they try the same thing again

Lesley Clarke

15:32 PM, 9th October 2017
About 3 years ago

Reply to the comment left by terry sullivan at 09/10/2017 - 12:21
Did the freeholder take you to court/tribunal? Have you tried to sell one of the properties in dispute? Problem is if I refuse to pay the charge will remain outstanding and if I want to sell it will have a negative impact on this.

Gary Nock

23:48 PM, 9th October 2017
About 3 years ago

This is an administration charge and requires the freeholder to serve proper notice in the prescribed format. Check it out on the LEASE website. Advise them that you dispute the legality of the charge and you will take it to First Tier Tribunal.

"If your lease requires you to obtain consent to sublet the property, your landlord may be able to charge a reasonable administration charge.

"Any administration charge demanded by the landlord must be accompanied by a summary of leaseholder’s rights and obligations in respect of administration charges, otherwise the charge is not payable"

Jon D

18:24 PM, 28th October 2017
About 3 years ago

It sounds like one of those rare examples where many of the owners are 'onside' and not indifferent about right to manage, so could pursue that.

The CMA are looking to change the leasehold system, where possibly the managing agent is appointed by the owner (tenant) and not the freeholder.
Ideally this admin layer can be switched as per the billing function of utility bills. The managing agent would compete for tenants with low prices and still meet basic requirements for the freeholder. This way, legal frameworks remain intact but managing agents fees would deflate in a competitive environment.
I filled in a requests for comment about this last week; the CMA questions and tone suggested the leasehold game is up. But we shall see.

Dave Smith

18:35 PM, 29th October 2017
About 3 years ago

Reply to the comment left by Puzzler at 09/10/2017 - 13:41
Frustratingly matters pertaining to 'Registration' fall outside the FTT remit (we are reliably advised) and our only recourse is via the County Court route - expensive, time consuming and risky!

Dave Smith

18:41 PM, 29th October 2017
About 3 years ago

Reply to the comment left by Gary Nock at 09/10/2017 - 23:48
Thanks Garry - it is not however a charge for 'permission to sublet' but a charge to register the tenants - again we have been advised by solicitors that the fee for registration is not an 'administration charge' according to the definition and can't take it to the FTT. Apparently we can take the £180 Legal Fee they have added on top though for chasing it - bizarre, quite bizarre.

Puzzler

17:40 PM, 30th October 2017
About 3 years ago

Reply to the comment left by Dave Smith at 29/10/2017 - 18:35
I meant to try to get a ruling that the charge is unreasonable, I think that will be covered. In any case call the LEASE people, they will give you free advice and are very helpful

Dave Smith

10:45 AM, 31st October 2017
About 3 years ago

Reply to the comment left by Puzzler at 30/10/2017 - 17:40
Thanks however already had advice from Lease and it is they who have confirmed the FTT won't deal with the charge (as it is not an 'admin charge' (go figure) as it related to registration and the only recourse is via the County Courts.

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Can I purchase a freehold title AFTER freehold enfranchisement has taken place?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More