Global Licence or a Standard Licence to let required by Freeholder – is this a scam?

by Readers Question

11:20 AM, 19th June 2013
About 8 years ago

Global Licence or a Standard Licence to let required by Freeholder – is this a scam?

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Global Licence or a Standard Licence to let required by Freeholder – is this a scam?

Permission from freeholder - Global Licence/Standard Licence to letTwo years ago we received a letter from the freehold manager of our leasehold flat saying we now require a standard or global licence to let, and if we did not obtain either within 14 days a solicitor would continue with legal action.

When we purchased the property nothing was ever mentioned about these licences but we still informed the freeholder that we would finance the purchase with a buy to let mortgage.

I am wondering if any other landlords have been placed in this position. I called the E&M sub-let department (never heard of it before) and queried what this was all about and asked that before I part with any money I wanted to receive breakdown of costs etc. and why I was not made aware of this 6 years ago!

I did not receive a letter until 2 months ago, again asking for us to obtain either licence in the next 14 days.

At this time I asked around but no one knew of this so I did not reply. One week ago I received another letter but the standard licence had now been changed to consent licence, reduced from £135.00 to £100.

Another charge is also payable, £75 when a tenant changes or the term expires or roll on. The global licence is not much better £330 for a max period of 5 years but with a added benefit of a 50% reduction for new tenants or tenancy expires or renewals. Personally I think this is a complete rip off.

I will be pleased to copy the letter into the comments section if anybody feels it is necessary to provide guidance. I’ve not added it yet though due to its length, same goes for the relevant page of our lease.

Any help or advice would be most welcomed as I am really not sure who to believe.

Thanks in advance

Kind regards
Rob Durack

Comments

Mark Alexander

22:10 PM, 20th June 2013
About 8 years ago

@DC - why not do what Annette Stone did? See her comment a bit further up this thread. I'm sure she would be delighted to help, contact details and a testimonial from me are on her Member Profile 🙂

Lauren Wadey MIRPM, AssocRICS, CIHM

9:12 AM, 21st June 2013
About 8 years ago

DC- you comments about entering into Leasehold responsibly are spot on.

I also like Marks style with the address situation!

Once thing I would say though is if DC is happy with hard working agent, they need to be sure they can reasonably reduce the crippling charges (which i presume would be the main reason for action ) before taking on the responsiblility and further financial burden of Enfranchisement or RTM. Its not a panacea and definately not suited to every landlord/leaseholder.

Happy to discuss the pro/cons further with you DC if you did want to consider that option.

11:20 AM, 21st June 2013
About 8 years ago

Hi guys
First of all I want to thank you for all your comments and feedback.
Sorry I am unable to respond quicker to posts. We are currently living in Australia. (time difference can be hell)
We purchased the property when interest rates were between approx 7% & 8%.
At the time we were lucky to break even after deductions etc but this was seen as a long term investment and something to fall back on if required.
Had we known about the licenses at the time this would have changed myself and my wife’s mind about the property.
Fortunately we got a little lucky when interest rates fell and now the property is positively geared. So at present paying for the licences would not be too much of a hassle but as we all know things add up.
When we purchased the property, Estates and Management were not involved so I assume that explains why nothing was ever brought to our attention until fairly recently.
We will dispute the licenses as I have been digging around on the net and have located a number of very similar cases regarding Estates & Management standard and global licences and it would appear that a number of tribunals have concluded that the fees are unjust. (Just concerned with the costs involved)
 Quick question if I was to dispute this will I require a solicitor at a later stage? Annette is right - costs can spiral out of control. I do feel though that I and my wife have constantly had to fight many bureaucratical red tape situations, some with success, unfortunately  I think it’s part of life now!  But I am starting to think too much is not good for our health!
 
I am wondering that because we have not yet paid for the licenses they may not be able to backdate them as hardly any work would have been carried out by Estates and Management apart from sending out a total of 3 letters since 2011. However I am sure they will charge for some form of leg work at some over-the top-hourly rate!  

Hopefully I can argue that on our lease the freeholder was St George and it would appear now that RQ Blocks E&F Ltd are now the freeholder, Surely a new lease would have had to have been drawn up? But I suppose they will have an answer for that! Thanks again for your feedback

Lauren Wadey MIRPM, AssocRICS, CIHM

12:51 PM, 21st June 2013
About 8 years ago

"Freehold and their successors" will be probably be written into your lease I'm afraid Rob, but might be able to argue if not.You should have received a statutory notice to advise of the sale/change of ownership but if not.... thats another topic!!

You will only need a solicitor if they dont back down but if it comes to take you can withdraw and settle up if you think its getting ridiculous cost wise.

Lauren WADEY

Annette Stone

13:11 PM, 21st June 2013
About 8 years ago

very important to follow the trail here. When you bought your flat were St. George the freeholders. If so, when the freehold changes were you served Notice. If E and M were not the Agents for St. George then it is likely that the new freeholders have instigated this charge. You need to try and find out if there is a connection between the freeholders and E and M and If Section V Notices were ever served on the lessees which is a legal requirement giving the lessees the opportunity to purchase the freehold BEFORE it can change hands. Also important is when the first ground rent statements were sent out with the name of the new freeholder on them. I think you can only be expected, in the worst case scenario, to pay the license fee to the new freeholder since his ownership of the building began and E and M would have a very hard job convincing anyone that they were collecting funds for the old freeholder for whom they presumably did not manage the block. As I said this is all a bit difficult and you have to be a good detective.

I would send the freeholders a letter setting out why you do not think the fees are reasonable, giving the above dates and suggesting that in the first instance the invoice is amended to show only the dates since e and m began managing. Let them know you are challenging this and that they should not send any final demands or institute any proceedings for breach of lease and see what they say. Your recourse would be to the LVT not the civil court to challenge these fees and there is a good chance that the freeholders would prefer to forfeit the money from you rather than face a blanket verdict from the LVT that what they are doing is wrong as this would cost them very dear. . It's not a perfect solution but it may help you.

Every managing agent will have a different way of approaching issues like this and some are very ruthless. It just depends on what sort of a fight you are up for.

As I said much of this depends on whether the licence fee is disproportionate to the rent you are getting in terms of whether you want to fight and whether or not you feel you want to try and contact other lessees and perhaps form an rtm. In my experience managing agents that start with these kind of fees charge for everything and I have just helped someone who was asked for £1,200 for a retrospective consent to change their windows. They asked me to intervene and eventually the charges were reduced and then dropped altogether so there is always hope but you have to be up for the fight.

Puzzler

12:37 PM, 22nd June 2013
About 8 years ago

You say you pay a letting agent for full management but this is not the same thing. Your agent manages your property only. This charge is being levied by the block management which is appointed by the freeholder to mange the communal and freehold aspects.

mike wilson

12:45 PM, 22nd June 2013
About 8 years ago

Being based in Scotland I frankly am amazed at the leasehold system in England. There is little leasehold property in Scotland for obvious reasons. However having just bought a leashold property in England and negotiated the right to develop at the same time I can highly recommend the governments advisory service:
http://www.lease-advice.org/
Loads of advice - freely available.
Also advice on how to get rid of greedy freeholders/management companies.
Also advice on what is reasonable.
Frankly what is the actual 'cost' of registering a sub-lease? £5
And of course you can take them to a tribunal ....

Most important lesson. Know what you are buying, know your rights. Then you don't get ripped off.

Ian Simpson

14:35 PM, 22nd June 2013
About 8 years ago

I have had similar dealings with a company called SIMARC. I bought two flats from a block of ten off plan in 2004. The builders then offered the freehold to all the leaseholders a year later but due to general dis-organisation, it never got bought by the leaseholders in the time period required (I spent a lot of time and effort unsuccessfully whipping up support amongst the other six leaseholders) - SIMARC then purchased all ten freeholds for £13,000. They then started sending regular letters asking for the "reasonable" sum of £100 to serve notice of subletting upon the Freeholder : GR Portfolios Ltd , which has the same address as Simarc, so is likely the same company, or same owners at any rate. My solicitor advised me that a reasonable fee for this work would be no more than £15.00 as all it involved was some photocopying. I thus sent copies of sub leases by registered post to the freeholder myself as that is considered service, and heard nothing more for five years. They perhaps got a new account manager, who is looking for a (moderated), and the letters have started again... I will have to serve notice yet again, which seems silly.

I thought the IFA and other related organisations were supposed to stop this sort of thing?
I had another go at getting a residents association together to purchase the freehold and self-manage, but met with apathy, short-termism and resistance, so had to give up. SIMARC wanted £25,000 for the freeholds in 2011 when I made the last attempt... Now we have just had our managing agents, AUstin Rees, who did a reasonable job, to move to PBM _ Premier Block management. We have not had a bill yet but I suspect it will be substantially higher than the previous lot, despite there being a surplus in the accounts for last year of some £2900. I suppose I shall have to try yet again to get the freeholds purchased of the (moderated) ... But by this stage they will probably be £40,000 !!

Currnetly all gone quiet, but I suspect they are not far away!!

Kev Brooke-stowe

18:49 PM, 22nd June 2013
About 8 years ago

Rob,
Ref all leasees. I am in a constant dispute with my leaseholder company and have been for 15 years. I asked my solicitor recently if I went to court to fight them, could I get his costs for a defence to their action which has absolutely no chance of success. I was informed that if I go to the small claims court niether applicant can get costs irrespective of the rusult of the case. So I represented myself and won the case.
It shows me that if you can force the case into the small claims court you are pretty safe whatever the outcome.
Thanks for the post.
Kev

9:03 AM, 23rd June 2013
About 8 years ago

It is a (moderated), we had this recently, we consulted our solicitor who read the lease and confirmed that there is an exemption for rental agreements of no more tan 12 months, read the original lease, do not pay.

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