Shared Ownership resale fees - ambiguous? Contestable?

StripeyStan

Hello

I wonder if anyone here has any tips on how to deal with the current situation - we may have no options open to us but to pay an exorbitant fee:

 We're selling our one bed shared ownership flat and have just been stung by resale fees. On the HA's website it says there's an admin fee of £1200 (high, given our share is only worth £112500 - but not unexpected). This is in addition to actual conveyancing costs so we're at a loss to what this covers beyond the HA's general office fees. We have of course been paying the HA's office fees anyway, for years, as part of our service charge. We assumed we'd have to stump this up and treat it as one of those annoying 'life costs' that just have to be written off.

The £1200 would be just about manageable but we've now read the fee of £1200 can be swapped out by the HA for 1% of the 'marketable price' of the flat, as the 1% figure is mentioned in the lease. Reading this, we assumed if we have a £112,500 share of a £450,000 home, we'd be paying £1125 (i.e. 1% of the share that was marketed on the website - the flat was sold as a £112,500 flat on every website where it was listed - I'd call that the 'marketable price'). £1125 is close to the default £1200 fee - and admin costs aren't likely to vary much between one bedroom flats - so this felt like a reasonable assumption. However we were gobsmacked to discover the lease meant 1% of the price of the entire flat ie. £4500, even though we only owned a 25% of the flat. So the HA is asking for a 4% of the share that we own, just to cover admin. And this is for a flat that was advertised on the cheapest online estate agent imaginable - so cheap we had to do all the bookings, calls viewings etc. So it feels completely disproportionate. 

I appreciate the £4500 is in the lease so we may have no option but to pay it, even though it feels like daylight robbery. But the meaning of the lease was ambiguous to say the least - we assumed it must mean 1% of what we own i.e. 1% of the price advertised to buyers. So my questions are:

- Has anyone else come across this issue?

- Do we have a right, as leaseholders, to ask for a breakdown of the costs of this 'admin'? 

- Is there any way, in law, we have a right to contest unreasonable applications of the lines in a lease?

..and yes, we know SO is a rip-off so please don't feel the need to tell us this. Trouble is, as poor Londoners who can't afford to continue paying full rent into old age it is, right now, our only option. And the flat's pretty nice! 

Thanks

Stan

Slithery

Perfectly standard practice.

You agreed to this when you bought the property - ignorance of what you were signing is never a legal defence.

user1977

Can you quote the exact wording of the clause in the Lease?

dell12

It seems likely it's for the marketing and sale of the flat during the period of time the Housing Assoication get to sell it.

Essentially it's the commission you'd pay an estate agent.

eddddy

I think it might depend on whether the 1% mentioned in the lease is an "Administration Fee" or an "Event Fee".

• If it's an "Administration Fee" and it's unreasonable, in theory, you can apply to a tribunal to get it changed. But that would probably take many months.

• See the info on administration charges "fixed by the lease or a formula in the lease": https://www.lease-advice.org/faq/what-can-i-do-if-i-disagree-with-an-administration-charge/

• But if it's an "Event Fee", I don't think you can do that. https://www.lease-advice.org/faq/event-fees/

• You can book a free call with LEASE to ask about the above: https://clients.lease-advice.org/#/

I guess there's also the argument that your conveyancing solicitor should have highlighted the 1% fee as unusual or onerous when you bought. If they didn't, you can try the route of complaining to them that they were negligent.

Here's what the SRA say about solicitors advising on onerous terms in leases:
https://www.sra.org.uk/solicitors/guidance/leasehold-provisions-including-ground-rent-clauses/


If you bought the house direct from the Housing Association after 2008, the HA should have been bound by the Consumer Protection from Unfair Trading Regulations 2008. That means that they should have disclosed all "material information" (like the 1% fee) to you during the sales process. So if they didn't, you could try complaining to them that they broke the law.

(But whilst the HA might have broken the law, it doesn't mean you'd get any compensation - unless the HA chose to make a "goodwill gesture".)



To be honest, I don't think any of the routes above will be easy, and I'm not sure the chances of success.