Extortionate Leasehold management pack (LPE1) fees

Cpt_Kenrow · 17 May 2019 at 10:37PM

I am in the process of selling a flat as an executor of an estate. Having never owned a flat I find the hold leasehold / share of freehold / landlord / management company somewhat confusing so bear with me.

The flat has a share of freehold, but apparently still requires an LPE1 Leasehold Management pack so the purchaser (rightly) has all the necessary information on who owns the leasehold.

Today I received and email from my solicitor saying the management company wanted £900 for this. How much work can it possibly be to provide details of something which they must deal with daily? However, they have me completely over a barrel, if I don't want to pay I will lose the buyer - seems like extortion, pure and simple!

A little shocked I have looked into this and after a legal review the Commonhold and Leasehold Reform Act 2002 says administration charges must be "reasonable". Given this would seem above and beyond what most people would deem reasonable what is the next step?
I feel I will have to pay to keep things moving, but I would like at least to raise a formal complaint against this company.

At the end of the day I am acting as an executor as a favour, I personally have little to gain and this money will make practically no difference to the other beneficiaries. I will however probably have to front the payment.
It is however, the principle here - and I really resent people taking advantage...

da_rule · 17 May 2019 at 10:50PM

You own a share of the freehold so therefore have the power (with the other freeholders) to remove the management company. I would maybe give them a call and remind them of this fact.

Or just ring them and ask them each of the questions on the form and then fill it in as the personal representative of one of the freeholders.

Fletchasketch · 10 December 2019 at 9:31PM

Hi OP, I'm curious to know whether you got anywhere with challenging this fee. I'm in a similar situation with an extortionate fee to pay, with the added annoyance that this has already been paid once to the previous management company prior to them changing hands four months ago and my original sale then falling through. I'd love to know if you or anyone in a similar situation had any luck with getting the fee reduced.

Thank you.

Cpt_Kenrow · 11 December 2019 at 2:26PM

I did look into this but decided it was too complicated and time was of the essence. Also, it wasn't my money as I was acting for an estate. Additionally, the management company reduced the amount when I started asking questions.

Here is the response I got from the Lease Advisory Service which you may find of some use:

An Administration charge is an amount payable by a tenant as part of or in addition to rent, which is payable directly or indirectly for the grant of approvals under the lease, considering applications, providing information, failures by tenants to make payment or breaches of covenant in accordance with Schedule 11 of the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). This will include the administration charge for completing the LPE1 form.

An administration charge must be reasonable in order to be recoverable. A summary of the leaseholder’s rights and obligations in respect of administration charges must be included with the demand for the administration charge; otherwise the charge is not regarded as payable. http://www.lease-advice.org/publications/documents/document.asp?item=89

If you believe the administration charge is unreasonable and you are unable to settle matters amicably, you have a right to make an application to the First-Tier Tribunal (Property Chamber) (FTT) to determine whether the administration charge is unreasonable under the provisions of the 2002 Act. The FTT has the power to determine whether the administration charge is reasonable and can make an order that it is not payable or reduce the demand to a reasonable amount.

If you are considering making an application, in the first instance I suggest getting comparable quotes from other managing agents to gather evidence to prove what is competitive in the open market. You can find managing agents through the Association for Residential Managing Agents (ARMA): at https://arma.org.uk/

The solicitor acting for you in the sale should also be able to give you an opinion on what would be a reasonable administration fee to pay.

In addition, we have some of the Tribunal’s previous decisions on our website and you may wish to go through some previous cases to see what the Tribunal held was reasonable. The decisions of the Tribunal do not set precedence but they could be used as persuasive evidence. The Tribunal decisions can be found here: https://decisions.lease-advice.org/

With regards to paying, it is possible to pay the adminstration charge under protest and then challenge at the Tribunal and it is important that you do not agree to the amount. You can send a letter with you payment indicating that you do not agree with the amount even though you are paying.

The application form: Application for a determination as to liability to pay an administration charge or for the variation of a fixed administration charge can be downloaded from our website here: https://www.lease-advice.org/topics/
Please note that an application fee of £100 is payable with your application and if the matter goes to a hearing, there is an additional £200 hearing fee payable. Sometimes with straightforward cases, the matter would be dealt with a paper determination without a hearing.

If you make any such application to the FTT you should also make an application under Section 20C of the Landlord and Tenant Act 1985 to prevent the landlord from passing off his legal costs on to the tenants through the service charge. Please be aware that you will need to provide evidence to the FTT to support your case. Details of making an application to the FTT are provided in our booklet at the following link: http://www.lease-advice.org/publications/documents/document.asp?item=18

Fletchasketch · 14 December 2019 at 3:26PM

This is really helpful, thank you.

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Extortionate Leasehold management pack (LPE1) fees

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