Landlord SubLet Fee - Max GBP40 - where?

ihshaikh

Hi all

I seem to remember Martin saying that the max a Landlord / Managing Agent can charge for subletting an apartment is GBP40.

I am in a situation where my managing agent wants to charge 160 for a new tenant & GBP65 for renewing an existing tenancy - I am sure you will agree that the charge is excessive so any help appreciated.

Regards

imi

need_an_answer

There have been proposals put forward for a consultation on letting agent fees, but my understanding is that nothing has yet to be agreed in respect of the maximum charges that can be passed on.

At the moment the fees that you are quoting are high but no higher than most other letting agents.

Until firm guidelines are in place then the fees are still set by each agent but are broadly those figures across the board in certain areas

eddddy

I assume that you are a leaseholder, and you are talking about a freeholder giving consent to sub-let.

If so...


There is no maximum fee for a freeholder to give consent to sub-let.

But... all fees charged by a freeholder must be 'reasonable'. i.e. they must reflect the amount of work the freeholder has to do (or the costs they have to pay).

Some cases about sub-letting fees went to the Land Tribunal Upper Chamber in 2012. In those specific cases, the Tribunal ruled that the fee should be £40.

If a freeholder asks for significantly more than £40, it might be worth referring them to those cases, and asking for a breakdown of the work they are doing in return for the fee.

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

ihshaikh

eddddy wrote: »

There is no maximum fee for a freeholder to give consent to sub-let.

But... all fees charged by a freeholder must be 'reasonable'. i.e. they must reflect the amount of work the freeholder has to do (or the costs they have to pay).

Some cases about sub-letting fees went to the Land Tribunal Upper Chamber in 2012. In those specific cases, the Tribunal ruled that the fee should be £40.

If a freeholder asks for significantly more than £40, it might be worth referring them to those cases, and asking for a breakdown of the work they are doing in return for the fee.

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

Yes, I am the leaseholder and have rented out the property under AST.

This is very helpful - can I ask is there is a letter template that I can use in order to send it across to the management agent for the attention of the LL

I find the whole charge unreasonable as there is nothing for the LL to actually do here, however am OK to pay a "reasonable" amount towards this unreasonable charge....

imi

eddddy

ihshaikh wrote: »

I find the whole charge unreasonable as there is nothing for the LL to actually do here, however am OK to pay a "reasonable" amount towards this unreasonable charge....

The Freeholder/Landlord (or their managing agent) has to deal with your application... which might mean finding details of your lease, recording the details on their systems, sending you a letter etc.

In those cases in the link, the tribunal seemed to accept that £50 per hour was a reasonable charge for doing this.

So... I guess they assume its about 45 minutes work for the freeholder/landlord/managing agent to deal with an application.

(That's why you could ask for a breakdown of the work they do and how long it takes - to see if they are charging you a 'reasonable' hourly rate.)

Tedz1

A First Tier Tribunal "increased" the £40 to £50 +VAT in the early part of 2019.



That's a rate of increase greater than the rate of inflation.

eddddy

Tedz1 wrote: »

A First Tier Tribunal "increased" the £40 to £50 +VAT in the early part of 2019.

That's a very misleading statement.

As explained above, the tribunal does not set a fee for consent to sub-let.

They will look at the facts of each individual case, and determine whether a fee is reasonable.

As an example, in a case in Jan 2019, the tribunal agreed that £187.50 fee for consent to sublet was reasonable.

See: https://decisions.lease-advice.org//app/uploads/decisions/act85/13001-14000/13157.pdf


Here's an extract:

Such tasks as described by the Respondent (and not challenged by the Applicant) would probably take about 3 hours to complete. The Tribunal finds therefore that a fee of £187.50 (including VAT) which amounts to an hourly rate of £60 is not excessive and having regard to its own experience and judgement and having regard to the tasks involved, determines that the fee charged is reasonable.

Perhaps you're referring to a specific case where the freeholder spent 45 mins to 60 mins dealing with a consent to sub-let, so the tribunal agreed that £50 was a reasonable fee.