Query on Direct Debt Adminstration Fees

GMWalsh

Currently pay my Service Charges as a Leaseholder, on a "as required basis" so looking at moving to Direct Debt but the Building Management Firm wants to charge a "Direct Debt Administration Fees" of £27 per year, this is the first time I have ever heard of a specific Direct Debt Admin Fee and having a look around on the web it seems to indicate that there shouldn't be any fees associated with Direct Debts but I can't find a specific answer.
Could anyone point to where the rules/regulations are, to find out if this is legitimate charge or not? 

davidmcn

"Debit", not "debt".

What have you found suggesting there can't be fees? They don't need to offer payment by direct debit at all, so I think it's up to them whether they want to stick admin charges on. Seems counterproductive though as it should save them admin compared with chasing up ad hoc payments.

shaun_from_Africa

When charging consumers, businesses are not allowed to add payment surcharges when accepting payments by credit or debit cards or other direct payment methods (such as Apple pay) or electronic payment services (Paypal etc).
However, they can add a surcharge for cash, cheques, standing orders and direct debits provided that this surcharge only covers their direct costs for processing the payment.
Is £27 a fair admin fee? It seems a bit excessive to me as I can't imagine that they have much to do to confirm that the payments have been made.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/718812/payment-surcharges-guidance-update.pdf

davidmcn

shaun_from_Africa said:

When charging consumers, businesses are not allowed to add payment surcharges when accepting payments by credit or debit cards or other direct payment methods (such as Apple pay) or electronic payment services (Paypal etc).
However, they can add a surcharge for cash, cheques, standing orders and direct debits provided that this surcharge only covers their direct costs for processing the payment.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/718812/payment-surcharges-guidance-update.pdf

The regulations don't apply to charges under a lease:

"5.—(1) Regulation 4 applies only if the use is as a means for the consumer to make payments for the purposes of a contract with the trader, and only to the extent that that contract—
(a)is a sales or service contract..., and
(b)is not an excluded contract.

(2) An excluded contract is a contract—
...
(e)for the creation of immovable property or of rights in immovable property;"

shaun_from_Africa

Thanks for that.
I didn't know that property or property related contracts were exempted.

GMWalsh

Thanks all for the feedback, in the space of 20minutes found the item I couldn't after an hour searching. 
Definitely make use of this forum again

stragglebod

I wouldn't even consider paying my service charge by direct debit. If some huge item of work is needed at little notice I don't want my share to automatically be taken from my bank account. What don't you like about setting up a monthly recurring payment?

eddddy

stragglebod said:

I wouldn't even consider paying my service charge by direct debit. If some huge item of work is needed at little notice I don't want my share to automatically be taken from my bank account. What don't you like about setting up a monthly recurring payment?

The OP says that payment is on an "as required basis" - presumably whenever a maintenance / repair / electricity / insurance bill needs to be paid. So I doubt a monthly recurring payment would work.

I expect the freeholder wants to keep things simple - e.g. "The insurance renewal bill has just come in. It's £500 and there are 4 flats, so I want £125 from each of them." Then 5 weeks later there's an electricity bill for £217.37 which needs to be split 4 ways as well, etc.

The suggestion that you might not want to pay a service charge if it's bigger than expected is a bit risky. (A bit like a suggestion that you might not want to pay your phone bill, if it's bigger than expected.)

In the case of a service charge, non-payment might put you in breach of the lease, which can result in having to pay admin fees and legal costs etc.

stragglebod

eddddy said:

The suggestion that you might not want to pay a service charge if it's bigger than expected is a bit risky. (A bit like a suggestion that you might not want to pay your phone bill, if it's bigger than expected.)

I made no such suggestion. I said I wouldn't want it to be automatically taken from my account.