Sub Letting Can They Do This?

Mercurial

Due to not being able to sell my flat (I would make too much of a loss) I have been sub letting it since 2005. Peverel were the managing agents for collecting service charges, ground rent and sub letting fees (leasehold flat and have to get freeholder's permission to rent out).

However, the ground rent and sub letting fees are now being collected by another company.

I usually pay a transfer fee once I get a new tenant. The new company are now asking for nearly two hundred pounds for consent to let in addition to the transfer fee.

I have checked my lease and there is only mention of a transfer fee nothing about a consent to let fee. Since I have been letting the property out for nearly 10 years and the tenancy agreement has never changed (obviously tenant's details and dates etc but nothing else). Do they have a right to ask me to pay?

I have challenged them and waiting for a response.

TIA

princeofpounds

They can only charge you on the basis of the lease agreement. If it is silent on subletting then they cannot. Ask them to specify the clause they are relying on.

As for the transfer fee; are you sure you need to pay this? When you have a tenant you are not transferring your long lease. Maybe this is just an odd term for a valid charge, but it sounds odd!

G_M

I do not believe you are subletting.

You have a lease, yes? You have not passed on this lease to anyone, you have let (not sublet) the property on an AST (I assume). Yes?

OK - your lease requires you to get the freeholder's permission to le the property. This is a once-only act. You have received permission? Sorted.

Yes, the freeholder (or his agent) may charge an admin fee for this, but once you have permission you can continue to let without problem. No need for further fees!

But to assist us, what exactly does the lease say about letting.

Mercurial

princeofpounds thank you, yes I do need to pay it is specified in the lease if I want to let out the property. The invoice I receive for them for the transfer fee states it is a sublet. Thanks I will check with them.

G_M that's right yes, as I said above the invoice I receive states it is a sub-let but what you say is correct I don't pass the lease onto anyone else (first time I have thought about that to be honest).

My lease states "Not to offer to assign underlet or otherwise part with possession of the premises without first notifying in writing the Management Company and paying to it a transfer fee of 0.25% of the gross sale price or open market value.........

The transfer fee used to cost around 232 pounds but since 2012 it was bought down to 85 pounds due to the Office of Fair Trading review. There is no mention of consent to let and since I have been letting out the property since 2005 they should not be asking me for this?

G_M

Mercurial wrote: »

My lease states "Not to offer to assign underlet or otherwise part with possession of the premises without first notifying in writing the Management Company and paying to it a transfer fee of 0.25% of the gross sale price or open market value.........

I am no expert on lease law, but will throw in my thoughts;

* clearly you will "underlet or otherwise part with possession of the premise" so yes, this clause applies

* if you advertise the property to let, then you will " offer to..", so it appears each time you re-advertise, the clause applies

* however "a transfer fee... " applies if you transfer. What are you transferring? The lease? No. So the implication of this is that the clause is designed for sale of the lease, not for letting under an AST.

* This is further supported by the cost " fee of 0.25% of the gross sale price or open market value........." This would apply if you were selling the lease for a fixed amount (eg £150,000), Not letting for a monthly rent. Does the 0.25% apply to a single months rent? Or 12 months rent? Or the total rent over the lifetime of the tenancy? In the context of a tenancy the fee makes no sense - since as already argued, it applies to a sale of the lease.

I suspect that if the freeholder/management company wished to enforce payment of this fee there would be a comlex legal dispute with a very uncertain outcome.

So my advice would be to not pay, explain why, nd see if hey have the confidence (which I doubt) to take it futher.

But as I said at the start: I am no lease law expert!

You could also sek help from:

http://www.lease-advice.org/

Mercurial

G_M thank you that's a great help.

princeofpounds

I'm not sure I agree with G_M's interpretation on this one.

or otherwise part with possession of the premises without first notifying in writing the Management Company and paying to it a transfer fee of 0.25%

The key bit being parting with possession, which is something that you do when you grant an AST.

At least the consent to let part is clear - so ask them to explain their basis for a charge.

G_M

princeofpounds wrote: »

I'm not sure I agree with G_M's interpretation on this one.



The key bit being parting with possession, which is something that you do when you grant an AST.

At least the consent to let part is clear - so ask them to explain their basis for a charge.

Always happy to be corrected prince, as you know, but... see my first bullet point which makes the same point as yours.

And CTL is clear? I saw no mention that CTL was included in the lease - have I missed it?

jjlandlord

I agree that 'underlet' and 'parting with possession' are each individually clear that the freeholder must be notified (which is not the same as seeking consent).

The transfer fee used to cost around 232 pounds but since 2012 it was bought down to 85 pounds due to the Office of Fair Trading review.

I would just notify them when you get a new tenant, and enclose a cheque for that amount with the notification.

Mercurial

jjlandlord thanks that's what I informed them just waiting for them to get back to me.

Mercurial

There is no mention of consent to let in the lease only the transfer fee.