Honourable and personal residential letting experts

10Oct Are you paying too much to your leaseholder?

Are you paying too much to your leaseholder?

We found a very interesting piece in our legal feed the other week which will effect Sub – letting Licences

“Landlords of leasehold buy-to-let flats are often asked to pay a fee (sub-letting licence or registration fee) to the freeholder when seeking permission to sub-let their flat, and this fee is usually due each time a new tenancy is signed.

This is a “nice little earner” for the freeholder, but some freeholder landlords and their managing agents abuse this by charging buy-to-let landlords exorbitant fees.

However, a little known ruling, a binding ruling by the Upper Chamber (Lands Tribunal) in 2012 comes to these flat owner landlords’ rescue so to speak.

The ruling could 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

UPPER TRIBUNAL (LANDS CHAMBER) Sub-Letting Licenses: (SOLITAIRE) LIMITED Appellant and CHERRY LILIAN NORTON and other cases [2012]

These fees charged by freeholders are an endless source of resentment between flat owners and freeholders, and in the scheme of things are small beer to the freeholder, but when the charges are excessive, that’s when people get really annoyed.

Now though, flat owners have this ruling on their side. The upper tier Land Tribunal has decreed that following four different cases brought before it, sub-letting fees should be limited to £40 plus VAT.

So, in practice, any flat owner billed with an amount in excess of this should simply offer up that amount and quote the ruling, which should mean that that will be the end of the matter.

These sub-letting fees vary quite a bit, but charges of £100 plus have been common up to this ruling, and indeed since.

The four appeal cases were brought by landlords to the Land Tribunal in February 2012 and they were heard together by George Bartlett, QC, president of the Upper Tribunal.

In all of these cases the leases made clear that the properties could not be rented out “without the prior written consent of the lessor and the management company, such consent not to be unreasonably withheld or delayed”.

The landlords had argued that preparing and registering the sub-letting agreement (licence) involved a considerable amount of work, but the tribunal was having none of this:

Mr Bartlett QC concluded:

“The appellants seek to justify the consent fee in terms that apply to all consents, and they do so by setting out a list of work that, it is claimed, their agents do.  It 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 cases under consideration”

In all four cases the QC concluded: “that a fee greater than £40 plus VAT could not be justified, and I determine that this amount is payable.”