Buy to Let - expenses claimable from tenant

jjlandlord

Ulfar wrote: »

You also have to consider your leasehold which is a lawful contract which will state that the leaseholder is responsible for payment of the charges.

OK, but that's irrelevant with respect to a tenancy that OP might grant to a third party.

Ulfar wrote: »

Maintenance charges do not count as utility or council tax, they are for maintaining the fabric of the building and common areas. This is for your benefit and is are costs as detailed in law.

Yes, it is understood that OP could not charge his tenant for anything related to his obligations in relation to maintenance.
But this 'maintenance charge' may also include e.g. cleaning, gardening, utilities for common parts, etc. which could be passed on to tenant based on clear and negotiated agreement. But indeed, it's simpler to factor them into the rent.

zebbedee

Its would be considered and unfair term in a consumer contract, they are your costs not the tenants. These sort of terms have been specifically covered by the OFT.

Unreasonable and unexpected charges
4.7 The terms described above are considered unfair because they reserve to the landlord, expressly or in effect, the discretion to impose additional charges. But terms that themselves directly impose charges may be open to objection if, through lack of reasonableness and transparency, they too can result in unanticipated financial burdens for tenants. We do not regard ancillary payment obligations as transparent unless either they conform to what a reasonable person would expect to find in a tenancy agreement or they are drawn as clearly and fully to the tenant's attention as the obligation to pay rent itself – ie: rather than appearing ordinarily in the body of the contract.
oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

Sorry cant post proper links, add world wide web

jjlandlord

It's fine to quote the OFT here and there. But it'd be better describe why it is relevant or how it is relevant.

For example:

zebbedee wrote: »

Its would be considered and unfair term in a consumer contract, they are your costs not the tenants.

Unreasonable and unexpected charges
4.7 The terms described above are considered unfair because they reserve to the landlord, expressly or in effect, the discretion to impose additional charges...

I don't see how the above quote by the OFT implies that what OP wants to do would be an unfair term. Not the least because we don't know what that term would be, and we don't know what term the OFT quote is related to...

If anything the OFT quote above means that the charges OP may want to charge tenants must be transparent, specific, and prominently written in the tenancy agreement as an individually negotiated clause. All of which has already been pointed out.

Ulfar

The OFT guidance above is highly relevant as the service charges to be passed on would be at the landlord's discretion and could result in unanticipated burdens for the tenant.

In addition the leasehold of the property will state the charges are the reserve of the landlord as the leaseholder.

It would be unreasonable therefore to pass that burden onto the tenant directly.

jjlandlord

Ulfar wrote: »

The OFT guidance above is highly relevant as the service charges to be passed on would be at the landlord's discretion and could result in unanticipated burdens for the tenant.

You misread the OFT's quote: It says that the OFT objects to clauses giving the landlord discretion to impose additional charges.
Which is very reasonable since indeed it could result in "unanticipated financial burden" for the tenant.

The situation would be very different if, for example, a prominent clause states that the tenant would be liable for a £x pcm gardening charge.
As already mentioned...

Ulfar wrote: »

In addition the leasehold of the property will state the charges are the reserve of the landlord as the leaseholder.

Which means that the leaseholder is liable to the landlord (freeholder), no more, imho.

Again, obviously it would be easier to factor in everything in the rent. But the landlord (leaseholder) and tenant still have the possibility to agree on additional charges as long as these charges are not in relation to the landlord's obligations (e.g. repairs, inc. of the building) and that they are transparent and prominently displayed in the tenancy agreement as individually negotiated clauses. (c.f. OFT quote above)

Wobblydeb

This has been an interesting debate, and thanks to those folks who have posted extracts of guidance etc.

OP - Things seems a little muddled as to whether you are looking to recharge utilities or maintenance costs? At the start you said:

Dal_Whinnie wrote: »

I have a leasehold flat which I sublet and have an agent manage it on my behalf. As the leaseholder of the property I get charged an annual maintenance charge by the management company managing the overall development. These costs include cleaning of common parts, gardening, insurance, etc.

But then later:

Dal_Whinnie wrote: »

Utilities is very much the type of cost I am talking about. Where you have a single property unit (i.e. house) then the position is clear but where you have a collection of properties where those costs are shared through the service charge chargeable on the landlord.......

Does part of your maintenance charge include water or power, and is it variable based upon usage by your tenant?

Dal_Whinnie

Wobblydeb wrote: »

This has been an interesting debate, and thanks to those folks who have posted extracts of guidance etc.

OP - Things seems a little muddled as to whether you are looking to recharge utilities or maintenance costs? At the start you said:


But then later:


Does part of your maintenance charge include water or power, and is it variable based upon usage by your tenant?

I also said at the beginning that I would have thought that I could pass some of these costs to my tenant and that it appears odd that costs which are incurred purely for the benefit of the ultimate tenant cannot be charged on to them.

In answer to your question then yes, my maintenance charge does include items such as water, power, refuse, cleaning, etc which are variable based on usage by my tenant and other occupiers. I still consider that there is an argument to support charging some of these costs on to tenants directly rather than cover them within the rent and providing these are not in respect of maintenance of the property and are clearly spelt out in the lease with my tenant then this would also appear to be allowable.

However, there are clear difficulties around this approach and as such I will not be pursuing it at this time.