Issues with costs of registering lease

thebooth1993

Hello,

I don’t know if anybody has had dealings with Simarc before but they currently manage the freehold for a property I am in the process of purchasing. I have just been advised that they are demanding £360+ VAT to register me as the new leaseholder on completion. I have reviewed the lease and it clearly states that a fee of £3 + VAT should be paid to the freeholder within 1 calendar month of a change of leaseholder to register the change.

I have discussed this with my solicitor who has stated that the fee quoted in the lease is correct however he’s dealt with Simarc previously and they have refused to register the new leaseholder until they’re full fee has been paid and have then added admin fees and demands too.

I'm now unsure where to go with this. What’s the point of having a lease is the freeholder can just hold you to ransom and charge what they want? 

Any help would be appreciated. 

JM68

Obviously check with your solicitor as you have one.

However, my understanding is you don't actually need to change the leaseholder name.  When the sale is registered by your solicitor you will be shown as the owner of the property, the rights conveyed in the lease that is registered will be transferred to you, and you legally become the new 'leaseholder' without any need to change the original name.

See link below.

https://www.lease-advice.org/faq/ive-recently-purchased-a-flat-but-the-lease-shows-the-names-of-a-different-landlord-and-leaseholder-should-my-name-be-on-the-lease-now/

EssexHebridean

I think the OP is talking about the fee being charged by the Freeholder for "Notice of Transfer/Charge" - the lease will remain with the same details on it, but the Freeholder is entitled to be given details about who it has been transferred to. 

It's usual that a fee is charged for the freeholder to accept notices like these, £3 is pretty low (although some charge nothing at all) but equally the fee quoted in the lease should be accurate. What does the leasehold pack that your solicitor would have sent to you during the transaction say about these fees? They should be noted in there? 

eddddy

JM68 said:

Obviously check with your solicitor as you have one.

However, my understanding is you don't actually need to change the leaseholder name.  When the sale is registered by your solicitor you will be shown as the owner of the property, the rights conveyed in the lease that is registered will be transferred to you, and you legally become the new 'leaseholder' without any need to change the original name.

See link below.

https://www.lease-advice.org/faq/ive-recently-purchased-a-flat-but-the-lease-shows-the-names-of-a-different-landlord-and-leaseholder-should-my-name-be-on-the-lease-now/

As suggested above, you're talking about something else - so what you say isn't relevant to the OP's question.


@thebooth1993 - you're correct that if the lease says the charge is £3 + vat, that should be all you are required to pay. But are you sure there isn't a lease variation to change that charge?

If the freeholder believes that an administration charge is not reasonable - they can apply to a tribunal for a lease variation. So I'm wondering if that has been done.

In your position, I might write to the freeholder saying something like...

• The lease specifies that the freeholder's charge for registering a new leaseholder is £3+vat. Please explain why you are demanding £360+vat. If you still believe that £360 + vat is the correct charge, please provide a breakdown of how you arrive at that figure.

• If I do not hear from you, I plan to pay the £360 + vat demanded under protest, and then challenge it at a tribunal.

• However, I am happy to pay a charge of £3+vat.

thebooth1993

All, 

Thanks for the advice thus far. 

I am confident that there has not been a variation to the original lease dated 1978.

Both I and my solicitor are of the opinion that the fee due is £3+VAT however we then disagree on the best course of action. He is of the opinion that having dealt with Simarc previously they will refuse to action the transfer and add admin charges until the full fee is paid. He believes it would be best to pay the £360+VAT as requested despite what the lease says.

My issue is mainly one of principle. While I can afford to pay the fee why should I if the lease states it’s only £3? If freeholders/ managing agents are allowed to simply make the fees up as they go along then what is the point of the lease in the first place?

This leaves me in the position of debating whether to stick with my principles and instruct my solicitor to issue them the documents, a copy of the lease and £3+ VAT or to cede to their demands.

@eddddy My intention is to buy the freehold reversion asap either voluntarily or via tribunal in two years if they quote something silly. I believe they want around 5,000+ legal fees for a £25 per year lease with no rent reviews and over 950 years left on it. Plus they want £120 just to quote! I’m unsure of what legal fees they could have to fill out a form and have somebody witness it but that’s another story! I bought the freehold reversion on my current property for a reasonable fee (still more than it was worth) and they simply actioned the transfer.

Anyway, thanks for the help thus far! 

eddddy

thebooth1993 said:

My issue is mainly one of principle. While I can afford to pay the fee why should I if the lease states it’s only £3? If freeholders/ managing agents are allowed to simply make the fees up as they go along then what is the point of the lease in the first place?

This leaves me in the position of debating whether to stick with my principles and instruct my solicitor to issue them the documents, a copy of the lease and £3+ VAT or to cede to their demands.

That's a high risk approach - unless the freeholder agrees to accept £3+vat.   

As I say, it's much safer to pay the £360+vat, and then challenge it at tribunal - and hopefully get £357+vat back.


What might if happen if you don't pay the £360+vat is...

• The freeholder won't register you as the new leaseholder/owner 

• The freeholder will continue to send service charge demands (and other notices) to the previous owner

• The previous owner probably won't pay those service charges - so the freeholder will add late fees to the account

• Then the freeholder will instruct solicitors - and add the solicitors' fees to the account

• The the freeholder might serve notice to the previous owner - saying the lease will be forfeited for non-payment of service charges. (i.e. the property will be repossessed) The previous owner might not tell you this is happening.

You've now got a serious mess to sort out.

If the tribunal decide that you should have paid the £360+vat in the first place, you now might have thousands of pounds of late fees, solicitors fees and legal fees to pay.

eddddy

thebooth1993 said:

@eddddy My intention is to buy the freehold reversion asap either voluntarily or via tribunal in two years if they quote something silly. I believe they want around 5,000+ legal fees for a £25 per year lease with no rent reviews and over 950 years left on it. Plus they want £120 just to quote! I’m unsure of what legal fees they could have to fill out a form and have somebody witness it but that’s another story! I bought the freehold reversion on my current property for a reasonable fee (still more than it was worth) and they simply actioned the transfer.

So I assume the property is a house (as opposed to a flat).

The freehold should cost less than £500 - if you do a statutory enfranchisement.

But total fees might be £2k to £4k.

EssexHebridean

I'll ask again - what fees were stated in the Leasehold pack?