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

Annette Stone

16:54 PM, 1st July 2013
About 8 years ago

Firstly, can I say that all the advice being good is good advice and certainly everything Lauren says about Section 20 is correct. Perhaps I am just getting old and I am sorry to be a bit of a cynic but having been a managing agent for 25 years and seeing how some very large firms can and do collude with very large freeholders I would not have too much faith in the Section 20 process in regard to appointing the managing agent. I have seen qyite a ffew cases where ALL the firms on the tendering list had relationships with the freeholder and there were many reasons why the freeholder was not going to include small, independent firms on the tendering list. Normally you do not get this with small freeholders.

Some years ago we took over management of a building like this where one agent had 200,000 units under management from one freeholder; everyone knew that part of the high management fees were paid to the freeholder but it was impossible to prove. The lessees came to gml by recommendation and we were successful in dealing with all incorrect demands for funds for Licenses etc. but only forming an RTM worked and how we traced everyone is a very long story and the result of very careful planning.

With Rob's case I think that if the residents could get together and trace the relationship between the freeholder, the head lessee and e and m (who incidentally seemed to come up a lot on the blog in 2012 before I joined) that might throw up a few interesting connections and might convince them to form an RTM.

If Rob does not want to/cannot do this my best advice would be to keep fighting the charges as they arise. Almost all the big freeholders would rather lose a fee from one individual than risk a decision going against them at the LVT when it becomes a matter of record and can be blogged. What happens at the moment, to my certain knowledge, and confirmed by Mark in a conversation, is that some of these people have people policing the net and removing all reference to them.

If Rob is successful in doing this he needs to try and get a letter from the freeholder/managing agent confirming that this waiving of the fee is both retrospective and also valid for the duration of his ownership of the flat.

Chris Amis

17:17 PM, 1st July 2013
About 8 years ago

It could be worse, the FH could just let the contract for 364 days at a time and then there is no need for S20 consultation!

14:07 PM, 13th October 2013
About 8 years ago

Hi. Any advice on the following scenario would be gratefully received. Global licence entered into with landlord incorporating licence to underlet and confirmation that no deed of covenant required. Now there's a new landlord (SIMARC) asking for a licence to underlet and deed of covenant. Although the global licence was not registered against the freehold it did say that successors would be bound . Can SIMARC demand the money being requested (a few hundred pounds!) They say they are not bound as it was not registered against the freehold.

Thanks

16:11 PM, 13th October 2013
About 8 years ago

read the lease, we had exactly this problem a year ago, it is a scam. We took it to the solicitor who did the conveyance and he told us as long as the AST is for no more than a year it does not apply, just to longer leases, read the original lease, this apparently is a standard clause, but they hope you do not read it and just pay up, I claimed 200 pounds fee from the solicitor that I did not pay him, and they sent me it. had the last laugh.

Roger Hardwick

16:47 PM, 13th October 2013
About 8 years ago

Hi Joanne,

This is the problem with global licences of this nature; and one of the reasons I would never advise any of my leaseholder clients to enter into one.

It is arguable, at least.

Was the licence expressed to be personal to your previous landlord, or applicable throughout the term of the lease?

Does the licence stipulate that it is "collateral" to the lease? In relation to new tenancies (granted on or after 1st January 1996), any term, condition and obligation contained in a "collateral agreement" is a term, condition or obligation of the tenancy for the purposes of the LTCA 1995 (section 28, LTCA 1995), which will pass to an assignee or the freehold or leasehold titles on assignment (unless the covenant is expressed to be personal).

It is not clear from section 28 whether stating that an agreement is collateral to another is sufficient for it to be collateral for the purposes of the LTCA 1995.

Try the following arguments:

(i) Neither a variation of the lease nor a licence is a " registrable disposition"; and, accordingly, there is no requirement for it to be registered under section 4 or section 27 and schedule 2 of the Land Registration Act 2002.

Further, even if it is an "interest affecting a registered estate", a global licence of this nature is not an interest which is capable of being registered (as a unilateral or agreed notice) against SIMARC's title, because it is an interest "in respect of" a "restrictive covenant made between a lessor and lessee, so far as relating to the demised premises", which is excluded by virtue of s.33 of the 2002 Act.

The summarise: the global licence does not need to be registered against the freehold title (I assume it is the freehold title, rather than an intermediate leasehold title) to be binding on SIMARC.

(ii) You would presumably argue that the covenant itself has been permanently waived by agreement and the payment of consideration.

It is possible to waive a breach under licence, or for consideration (Stephens v Junior Army & Navy Stores [1914] 2 Ch. 516).

It is also possible to waive all future time of the right to complain of any breach of covenant under that provision. That is what you would have to argue here.

Where, for example, a covenant in a lease contained a covenant preventing the erection of buildings other than single storey villas, but high rise blocks had been erected on parts of the land over a period of over 45 years, it was held that the whole of the covenant had been abandoned, and could not be enforced by the landlord so as to prevent the erection of further high rise blocks (Att.-Gen. of Hong Kong v Fairfax [1997] 1 W.L.R. 149, PC).

I hope you have some success in arguing your case.

20:45 PM, 13th October 2013
About 8 years ago

Reply to the comment left by " " at "13/10/2013 - 16:11":

Thanks for you thoughts - I'll check the lease

20:47 PM, 13th October 2013
About 8 years ago

Reply to the comment left by "Roger Hardwick" at "13/10/2013 - 16:47":

Thanks for your detailed response, that's certainly given me something to go back with anyway.

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