Leasehold Valuation Tribunals dealing with sub-letting issues are referring to the precedent established in February by the Land Tribunal by slashing landlords’ supposed administration fees.
The fees have long been resented by leaseholders as the consent and registration of a sub-letting are regarded as simply a try-on by landlords, even though a charge of some sort is usually referred to in the lease. £100-135 plus £75 for registration have been routinely charged.
In February the Land Tribunal under George Bartlett, QC, combined four appeals together and ruled that sub-letting fees should be around £40.
Anyone involved in a dispute with a landlord could offer this sort of sum and be in with a fair chance that that would be the end of it.
Justin Hempson-Jones, 33, a civil servant, is the latest to win an LVT ruling on sub-letting fees, and his case is interesting because the tribunal referred specifically to the Land Tribunal ruling, even though he began the action in December last year. The decision date was April 5.
In 2007, Hempson-Jones bought his one-bedroom flat at Barratt’s Vanguard House complex in Hackney, north east London, and let it out last year.
Like many other housebuilders, Barratt flogged off the freehold to the Tchenguiz empire, in this case Proxima GR Properties, the managing agent being the same owners’ Estates and Management Limited.
“When I first saw the fees E and M were asking for I was shocked: after all, what service were they providing other than some very basic administration – a couple of entries in a spreadsheet and a couple of emails?” asked Hempson-Jones.
“When I looked online I realised I was not alone. Estates and Management, and companies like them appeared to be effectively taxing leaseholders for sub-letting their properties.”
The sums demanded were £108 to grant a license to sub-let the property and £85 for registration.
The LVT cut the fees to £40 plus VAT and declared the registration demand as “not payable”. The tribunal also made a section 20 ruling so that none of the landlord’s costs can be passed on to the leaseholders.
In addition, Proxima GR Properties was ordered to reimburse Hempson-Jones’ £50 tribunal fees.
The tribunal president barrister Robert Latham referred to 13 LVTs on this issue, where both landlords and leaseholders have lost, and a total of five rulings in the Land Tribunal.
In making his ruling, Latham said: “I am wholly unpersuaded by the Respondent’s (the landlord’s) assertion that it would be necessary for a trained administrator under the supervision of qualified legal staff to take around two hours.
“The list of tasks said to be involved looks to me to be a list of all the things that could conceivably be done in connection with the grant of consent rather than the things that would need to be done in a typical case or that were in fact done in the case under consideration.
“I agree with the applicant that a large managing agent such as E&M will have standardised these processes.”
“I was very glad about the ruling – which seems to be common sense,” said Hempson-Jones. “I just hope Estates and Management and companies like them are changing their policy on consent – and other unfair administrative charges – rather than responding only to those who expend the effort of taking them to a tribunal. But this remains to be seen!”
The LVT ruling can be read here:
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Challenge to £100 leasehold subletting demand reveals nothing at all is owed
Troy Court £912 leasehold sub-letting fee cut by £400 thanks to LKP (with more to come?)
OFT cuts deal with Tchenguiz on leasehold retirement sub-letting fees, but exit fees on sale still stand
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Before offering any sum of money whatsoever to the landlord in respect of sub-letting, I would check my lease to see whether I am required to notify the landlord of subletting. If, as is the case with our lease at Mill Quay E14, we are not required to notify the landlord under the terms of the lease, then the lessee has no obligation to pay anything at all for what landlords commonly call a licence. It’s a compete ripoff. To their great credit, our landlord accepted this fact when I put it to them, admitting there was no requirement in our lease to notify and therefore no requirement to pay a licence fee. As a footnote, I would add that our lease (as do many others, I am sure) require us to notify the landlord of sub-letting within the last seven years of the lease “such consent not to be unreasonably withheld.”
Do, please, check your lease before parting with your money. Other areas where lessees can lose out financially are on the question of insurance policy excess – if the lease says this is payable by the resident/flat management company (as does ours) then make sure you get the money back and don’t be put off by managing agents or RMCs who prefer not to pay for fear of losing their commission. Another big area where the management can diddle you out of money is where the lease requires certain costs to be apportioned. The whole question of wrongful accounting for service charge is a minefield of litigation waiting to happen.
Mine was one of the four cases combined before George Bartlett. The other lessees and I were disgusted that Mr Bartlett completely ignored our evidence that proved that section 19(1)b of the 1927 Act applied to leasehold properties.
He also refused to review the decision, and refused leave to appeal.
We own 2 apartments in Gateshead which are apprx. 7 yrs old.
The landlord has tried this extortion quoting he has gathered evidence to show change of tenants, and surely this is an invasion of privacy if he has been watching the apartments?
Also as I have ignored him, he is now pursuing me for correspondence @£74/letter and threatening to enforce a lease condition which is forfeiture of lease. Is he meaning I would lose my properties?
Dear Claire Corcoran,
I have approved your comment on the LKP website. This is hot air and bluster from your landlord. Unless specific sums are mentioned in the lease, give him a cheque for £40 plus vat as a sub-letting fee and wait to see how he reacts.
My guess is that he is an out of touch landlord, who has not quite twigged that this money-making wheeze is busted.
Get in touch when you have had a look at your lease if you need advice on putting this landlord back in his box.
Best wishes,
Sebastian