Freehold Managers Unreasonable Fees for Subletting Consent

Hi John

Call their bluff, I do and the template letter below has never failed me. I always ignore their initial demands if the are unreasonable and wait for them to instruct debt collectors as that costs them money. In 100% of cases to date they have accepted my offer without going to Court. I wish they would go to Court as I would make sure they got a bloody nose as a result of it (metaphorically speaking of course!) I would employ a barrister to defend me on a "no win no fee" basis.

My template is below ....

"Dear Sirs

Thank you for your letter dated [insert date] - your reference [insert here]

We are prepared to offer your clients the "reasonable" fee of £40 for registration and permission to sub-let based on the case of HOLDING AND MANAGEMENT (SOLITAIRE) LIMITED vs CHERRY LILIAN NORTON as heard in the Upper Chamber (Lands Tribunal) of January 2012. Please see this reference link >>> http://www.landstribunal.gov.uk/judgmentfiles/j823/LRX-33-34-76-102-2011.pdf

Should your client not wish to accept this offer then reference to the above will be the basis of our defence should your clients wish to take the matter to Court. We feel very strongly about this and have a direct access barrister lined up to fight this case for us on a conditional fee arrangement basis, i.e. "no win no fee".

We look forward to your response.

Yours faithfully"
.

Believe it or not those fees are not too bad. I've come across people being charged over £300. I pay nothing for some, and the worst for me are Haringey Council who charge similar amounts to what you are being asked to pay (though I do not get billed for letters).

Your options are to:

1. Pay
2. Argue
3. Go to the First Tier Property Tribunal (was LTV) and try to force a judgement on them

As long as it's not too outrageous I follow 1 as my time is valuable, but I may well go to the FTT one day as I hate the arrogance of some freeholders.

I suggest anyone having problems with freeholders keeps an eye on matters from two leasehold sources:
- News on the Block, subscription mag
- Leasehold Knowledge Partnership, who are campaigning against these sorts of freehold abuses. Their blog is essential reading for all leaseholders. http://www.leaseholdknowledge.com/

Mark's letter sounds good, though unfortunately rulings are not binding, so although worth a shot, they may call your bluff and then you have to decide whether to go to the tribunal or not. With the tribunal there are risks that if you lose, you have to pay very extensive legal costs for the other side. Be careful and get good advice.

Are you sure the fee isn't due every 12 months, even if the same tenant is still living there? It is for me and i am currently in an argument with my freeholder on 6 flats (Simarc Ltd) they have sent me a copy of the section in the lease where it says they can charge me no less than £50+vat so that's what I am going to pay. As for charging me every 12 months, the section in the lease where this is apparently stated makes no sense to me it may as well be written in Chinese so until they can produce a document that explains it in English I am not falling for it! I apparently owe them subletting fees going back 2 years to which they have not applied any charges or instructed debt collectors so I am inclined to believe this is because they cant because there pulling a fast one and just trying it on. Check in your lease what the minimum charge is and when it is due, if you cant understand it refuse to pay it on the grounds of "“contra proferentem rule” This rule states,Where there is doubt about the meaning of the contract, the words will be construed against the person who put them forward. Good luck!

Mark's template letter is good but for anyone to give you definitive information you need to let us know whether your building has a management company enshrined in the lease and/or whether an rtm has been formed. If there is an rtm then the question of fees for subletting etc. are not relevant and the freeholder cannot enforce them. If there is a managing agent discuss this with them.

I can tell you that many freeholders charge much more than the figures you have quoted.

We had a trail on Property 118 a few months ago which dealt with registration of lettings which are actually sensible as all managing agents should know who is living in a flat and insurers may require this information but the fees should be reasonable.

There are also lessees who do not want to register lettings because they have them on residential mortgages not buy to lets and they do not want anyone to know the flat is let which can lead to other issues arising.

I doubt the First Tier Tribunal would consider these fees exhorbitant, particularly as you acknowledge they are levied only on each change of tenancy. Some freeholders levy them yearly, irrespective of whether it is the same tenant.

Hi John,

In addition to Mark's very good advice advice ( and the template is very good!!) check your lease to see a) If subletting is allowed. If it does not mention it i.e the lease is "silent" then it is assumed you can, and b) Does the lease allow the Landlord to charge for subletting? If it's not in the lease it cannot be charged. And there is a whole raft of stuff on the leasehold advice website about administration charges etc and what is reasonable. I recently had a demand for subletting fees in the same vein as yours. Until I pointed out that there was no provision in the lease for fees to be applied and that the action would be referred to the LVT (or Lower Tribunal) as it is now. And they have to comply with the law as follows from the lease -advice website: http://www.lease-advice.org/information/faqs/faq.asp?item=224

"I want to sublet my property. Can my landlord charge a fee for granting permission?

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"

So with all this plus Marks advice I think you can send a "fire and forget" letter and not hear much else from them. They all try it on and think leaseholders are a bit backward. Well they can think again.......

OK, also see >>> http://www.leaseholdknowledge.com/sub-letting-fees-should-not-be-more-than-40-landlords-are-told-four-times-by-the-land-tribunal

"Sub-letting fees should not be more than £40, landlords are told (four times by the Land Tribunal). This binding ruling by the Upper Chamber (Lands Tribunal) of January 2012 should be quoted in all correspondence where freeholders or their agents are demanding sub-letting fees of more than £40 plus VAT which are not specified in the lease"

Reply to the comment left by "Rob walsh" at "02/12/2013 - 10:41":

Rob, not paying leasehold charges is potentially very dangerous. It likely puts you in breach of your lease which could lead to forfeiture. You may then end up saddled with very high legal fees. A recent case involved a leaseholder being hit with over £70,000 in freeholder legal fees.

If you're going to dispute leasehold fees my understanding is it is best to pay whatever is asked, and THEN dispute it through the appropriate channels. I'm not a lawyer though, so do get formal advice.

I think the first thing to do it take a good look at your lease.
I am regularly sent bills by the freeholder of a leashold house, charging for my sub-letting. I contact them in writing and ask them to tell me where in the lease it allows them to charge. I never get a reply, nor do them chase the original invoice.

However about 12 months later they try the whole thing again, and again I write to them again, and so the cycle goes on.

Costs me a sheet of paper and a stamp every 12 months - better than paying their invoice - but I do wonder if people sometimes pay just because it looks like it may be due, and if you phone them they always say that the lease allows the charge.

So - check your lease before you do anything else.

Reply to the comment left by "Mark Alexander" at "02/12/2013 - 10:49":

Mark, LEASE told me this ruling is not binding, and each case is looked at individually by the tribunal. What is your source to say it is binding?

Reply to the comment left by "Ollie Cornes" at "02/12/2013 - 10:50":

I not saying I don't pay the fees I am saying I am only paying what it says in the lease being no less that £50+vat. What I am not doing is paying them every 12 months for the same tenant because I fail to see where it says in English in the lease that they can do this.