Management company demand sublet fee for same tenants

spinwave

I have just bought a leasehold flat with the same tenants living in without any changes. Now the management company is demanding a sublet registration fee of £120. Do I have to pay them? What the lease says is "Upon every underletting.........to pay to the Management Company a reasonable fee of the said notice". The question is: Since it is the same tenants, it should be considered as the same underletting. Why should the management company get paid? Also how to justify £120 is "reasonable"?

HampshireH

I guess they are pursuing it on the basis of a new under let because you are now the person doing so. Therefore it has changed.

It isnt a new tenancy though for the tenants unless you issue them with one and they sign one.

AdrianC

But it's not the same tenancy, is it?

One party to the tenancy has not changed. The other has.

Perhaps the time to think about the management company's subletting fees is before buying a flat in the building for the sole purpose of letting...?

buglawton

OP is it the management company or the freeholder making this demand? With me it's the freeholder. Such a fee would make tenant changes quite expensive. I'm in the middle of chasing Lease-Advice to confirm that Schedule 11 Commonhold and Leasehold Reform Act 2002 clause (b) will allow me to take the case to the 1st Tier Tribunal. Purpose being to set what is a 'reasonable' level of fee on a very similar lease wording. Lease-Advice have so far been curiously reluctant to confirm the position.

davidmcn

AdrianC wrote: »

But it's not the same tenancy, is it?

It is if the OP is merely stepping into the previous landlord's shoes, rather than signing up a new agreement.

eddddy

buglawton wrote: »

I'm in the middle of chasing Lease-Advice to confirm that Schedule 11 Commonhold and Leasehold Reform Act 2002 clause (b) will allow me to take the case to the 1st Tier Tribunal. Purpose being to set what is a 'reasonable' level of fee on a very similar lease wording. Lease-Advice have so far been curiously reluctant to confirm the position.

You can apply to the tribunal to challenge the 'reasonableness' of an administration fee, if you want to.

The basis of the case would be along the lines of:

• The leaseholder believes the fee should be £x because of a, b and c

• The freeholder believes the fee should be £y because of d, e and f

But before doing that, it would definitely be worth saying to the freeholder "I believe that the fee should be £x because of a, b and c. If you don't agree, I'll challenge the fee at tribunal."

There are lots of stories of freeholders backing down in those circumstances (where a, b and c are good arguments).

buglawton

And yet there isn't one single documented 1st Tier Tribunal decision regarding what is reasonable against exactly this subletting scenario. You can search them via Lease-Advice.

eddddy

buglawton wrote: »

And yet there isn't one single documented 1st Tier Tribunal decision regarding what is reasonable against exactly this subletting scenario. You can search them via Lease-Advice.

I think you may be approaching this from the wrong angle. Every case could be different. You need to look at the facts of your spcific case.

For example:

• When 'freeholder A' gives consent to let, they just add the leaseholder's name to a list and send a template letter - it takes them about 30 mins of work. So maybe a fee of £40 is reasonable.

• When 'freeholder B' gives consent to let, they follow a more detailed process. It involves about 3 house of work. So maybe a fee of £180 is reasonable.

So you need to start by asking your freeholder for a breakdown of what they do in return for the fee you pay.

buglawton

In my case it's not a matter of consent in principle but of registering every new sublet tenant. Which is a close match with OP (where the landlords name changed so a new contract needs registering probably). I know my scenario but could not find a straightforward match setting a 'reasonable fee' in 1st Tier tribunal decisions. Hence I may need to be the first. Or, the Tribunal doesn't actually have the power to rule on this. Which would make me wonder why it's so restricted in scope.

SmashedAvacado

its not a new subletting - the sublease remains in place
A fee would not be payable where the landlord changes
You presumably did not sign a new sublease as landlord on the basis that the sublease in place continued as a matter of law

eddddy

buglawton wrote: »

I know my scenario but could not find a straightforward match setting a 'reasonable fee' in 1st Tier tribunal decisions. Hence I may need to be the first.

You're missing the point.

Assuming that the tribunal agree that the registration fee is an administration fee...

• Don't concentrate on looking at other tribunal decisions

• Concentrate on asking your freeholder what they do in return for whatever fee they are asking for

Then consider...

• a) Is whatever work they say they are doing 'reasonable' things for a freeholder to do for registering a sublet?

• b) Is whatever they are charging 'reasonable' for the work they say they are doing? (e.g. Assuming a rate of about £50 per hour) Plus out-of-pocket costs.

If either a) or b) is unreasonable, you can consider a tribunal application.

Unless you do the above, I think it's unlikely that you would be successful at tribunal.