The Leasehold Knowledge Partnership is frequently contacted for advice on freeholder’s try-on subletting demands.
These include the subletting consent and the registration, and involve absolutely minimal bureaucracy by the freeholder and his managing agent. Yet charges are routinely £100 – £135, and then there are registration fees of around £75.
Our advice to leasehold owners when faced with these demands is:
1/ To cite the Upper Tribunal cases of last year, where George Bartlett, QC, ruled that £40 plus VAT was a reasonable fee. Leasehold owners renting out their properties (where no sum is specified in the lease) should offer to pay this sum.
2/ If the freeholder persists and threatens legal action, our advice to leasehold owners is to pay the money, stating that the sum will be disputed at the Tribunal and you will be seeking costs (as this issue has been clearly ruled upon in the Upper Tribunal).
3/ It is important that leasehold owners pay and launch their action as the applicant to avoid freeholders do the usual: winning by the bullying threat of legal costs. If you are the applicant, having paid the disputed sum, the chances of you having to pay legal costs is minimal (that is, if you mess up the case – or don’t turn up to an oral hearing (if there is one) – and lose).
4/ It is important not to just ignore the demand as it could be logged as a charge against the property, which will surface as an issue when you try to sell it.
Today we have been informed of a case where a leasehold owner has discovered that no subletting fee was due in his lease and the management caved in once this was pointed out.
The email exchange is below:
Sebastian,
I have just read your article dated June 15, 2012 relating to sub letting and lease agreements.
It sounds like an area you are highly knowledgeable on and wondered if I could ask you a very quick question.
I have received a letter from XXX Management who have asked me to pay them £100 + VAT for consent to sub let my flat. I have checked through the lease and at no point is the requirement to sub let needed or mentioned in the lease.
This is not the first time that XXX Management have requested money from me that I do not owe them so I am being very vigilant.
My question is can they still try and get me to pay for consent?
I appreciate any quick advice you could give me.
Kind regards, TB
Dear TB,
It is a game of bluff and your decision.
I recommend disputing it, then paying up if they are persisting and then demanding the money back at LVT – which means they cannot stiff you for legal fees.
The threat of legal fees is the issue here and if you mess up any aspect of this (as the respondent) you could be liable for them.
In any case, you cannot sublet without informing the freeholder or his agent.
Also, do not let a debt linger on the property or they will pop up with demands when you come to sell and you need the freeholder’s co-operation.
Best wishes, Sebastian
Sebastian,
Thanks for your response and advice on this.
As this is your area I thought you may be interested to know the outcome.
I replied by e-mail to XXX Management with the following;
I am writing in response to your letter dated **** regarding the sub letting of ****.
I have to inform you that this is the first correspondence I have received regarding this issue. It appears from your letter that you have made contact previously.
Secondly I would like to point out that as detailed in the lease that I signed when purchasing the flat prepared by (solicitor) does not require any approval to sub let nor does it state that any fee shall be payable for this.
Can you please come back to me as soon as possible on the above matter?
Kind regards,
TB
And received the following response;
I refer to your email dated 10th September 2013, the contents of which are duly noted.
I concur, having reviewed your Lease I note that there are no restrictions to prevent you from subletting the property so I apologise for this oversight. Our accounts have been noted and the subletting charge removed and I have personally noted on there that Consent is not required.
I apologise for any inconvenience that this may have caused.
Kind Regards.
Since taking over the management of the block this is the second threatening letter I have received from the management company asking for further money, both times when questioned they have then agreed not to pursue the charges.
Kind regards, TB
Michael Epstein
Often when a dispute arises over the applicability of sub -let fees, the managing agent/freeholder will say “refer to your lease”.
They tend to do this when the managing agent/ freeholder has either not got a copy of the lease, or believes the mere mention of the lease scares enough people into paying.
You could begin by asking the managing agent /freeholder, which schedule of the lease they are referring to when asking for sub-let fees?
Some managing agents /freeholders will try and use the “administrative charge” option to get money for a sub-let. In this they are on stronger ground, in that it is reasonable that a managing agent/freeholder should know who is occupying a particular property and it would be reasonable to cover the costs of recording the information. That said many tribunals have ruled that £40 is reasonable. they have also ruled against managing agents/freeholders trying to charge full fees for consent and registration as both actions are largely repeating work already done.
When leaseholders first rose up against unfair charges, they refused or withheld the amounts disputed. This was “meat and drink” to the managing agents/freeholders as those leaseholders put themselves in breach of the lease, and one by one they were, like lambs to the slaughter defeated at huge cost in court.
Gradually lessons were learned. If you are in dispute over fees, pay and object. That way nobody can get you for breach of lease.
This puts the managing agent/freeholder in a very difficult position at a tribunal, as the onus is on them to prove they are entitled by the terms of the lease to impose a charge.
If they can’t, you win.
Karen
There is a tranch of letters going out at the moment from a notorious landlord mentioned on this site based in the UK…
They are sending out what I would call ‘fishing letters’ hoping to catch a few little fish……
They are sending out demands for sub letting fees as though it is an annual fee payable, it is not! so do not pay it unless you have changed your tenant and have to register a new tenant!
These piranhas prey on the week and if you have caved in before you are fair game to them……. do not cave in and do respond to their letters as ignorance is no excuse in court….
Landlords/Managing Agents hope and pray you will ignore their demands as then they get to send you another nice little letter at a cost to you of a further £78.00!!!!
Simin Abbasian
In our case freeholder is asked to supervise and check the tenancy agreement and sub-letting.
unfortunately in our block who ever comes first can have tenancy without checking necessary references. This has been created unpleasant result.
Hilary Rowley
I own a leasehold flat which I sublet, and have done since 2004. The lease clearly states that I do not need consent from the freeholder to sublet but they have tried and failed to charge me for consent twice in the past. On both occasions they have agreed that they cannot charge me for consent to sublet.
Now they have sent a demand for retrospective Notice of Registration £120. My lease does say that I should notify them within 21days of a sublet…” (if so required by the Landlord)”. However I have never received notice from them that they do require such notification. They are well aware that I sublet and have done for several years evidenced by them trying to charge me for consent!
If I accept that they are now saying that they want me to register each tenancy, is £120 reasonable? It feels as if they are trying to charge me for consent by another name! If Bartlett QC says £40 is reasonable for sublet consent has he said anything about a reasonable fee for Registration of a sublet?
Chas
Hilary,
Do you have a tripartite lease where the landlord can be the Managing Agent.
It could be that the freeholder KNOWS THAT IT IS NOT COVERED BY THE LEASE.
If the landlord is also the managing agent then they MAY CHARGE as they FEEL THAT NO HARM IN TRING?
Who are we talking about as landlord, please name them?
If they have the head lease, managing agents have been known to send out demands, knowing that only a percentage will be conned into paying.
WHO ARE THE PROTAGONISTS?