Many leases allow the landlord to claim an administration charge – for example, for providing information about subletting a property.
If you are uncertain about an administration charge, ask your landlord to highlight the clause in the lease which allows them to charge this. .
If the lease has such a clause, it should also tell you whether the charge is variable or fixed.
Challenging a variable charge
If the charge is variable, you may apply to the First-tier Tribunal (Property Chamber), or the Leasehold Valuation Tribunal if the property is in Wales, for a determination as to whether the amount charged is reasonable and whether you are required to pay it.
Challenging a fixed charge
If the charge is fixed by the lease or a formula in the lease, you may apply to the tribunal to vary the lease, on the grounds that the charge or formula is unreasonable. If you are successful, the tribunal may make an order to vary the lease to a reasonable charge or formula, either as requested by you or as it finds appropriate.
When you cannot apply
Please note that you cannot apply to the tribunal if you have agreed or admitted the administration charges, or the case is under arbitration or another court or tribunal has decided on the issue already.
Other ways to settle a dispute
You do not have to go to tribunal to settle your dispute about an administration charge. Sometimes you may be able to come to an informal agreement with the landlord about what a reasonable charge would be.
You could also try mediation through an impartial third party to help you reach an agreement.
Going to tribunal is a last resort, for which you should get legal advice.
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Usually, the buyer’s solicitor will send questions for the landlord to answer. Although the landlord is under no legal obligation to answer such questions most will be willing to do so. They may charge an administration fee for answering the questions.
The Service Charge Residential Management Code (3rd Edition) for England, at Section 13.10, states that such an administration fee should be reasonable and reflect the level of work carried out as a matter of best practice.
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The first thing to do is to check your lease to see whether consent is required from the landlord to sublet the property.
If your lease requires you to obtain consent to sublet the property, your landlord may be able to charge a reasonable administration charge.
Any administration charge demanded by the landlord must be accompanied by a summary of leaseholders’ rights and obligations in respect of administration charges, otherwise payment of the charge can be withheld until such time as a summary in proper form is served.
You can challenge administration charges by making an application to the Tribunal if you think the charges are unreasonable or too high.
This Guide explains briefly the different types of administration charges and gives examples of fee levels held by the Tribunal to be reasonable.
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If your lease requires you to obtain consent prior to carrying out an alteration to the property, your landlord may be able to charge a reasonable administration charge.
Any administration charge demanded by the landlord must be accompanied by a summary of leaseholders’ rights and obligations in respect of administration charges, otherwise the charge is not payable.
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You should refer to the terms of your lease to establish whether legal costs can be recovered through the service charge from all the lessees. If legal costs are recoverable as a service charge under the lease, you can make an application to the Tribunal under Section 20C of the Landlord and Tenant Act 1985 requesting an order that the landlord should not be allowed to recover such costs.
In some cases a lease also allows the recovery of legal costs from anindividual leaseholder. For example, when the costs incurred result from a failure to pay the service charge. In those circumstances the charges sought are technically classed as an Administration Charge. They must be reasonable, amongst other things, in order to be payable; but if they are reasonable and payable they are recouped from an individual leaseholder. This is unlike costs recouped as a service charge which are paid on an apportioned basis by all leaseholders. It follows that the lease should be reviewed to establish if there is an obligation on a leaseholder to pay an Administration Charge.
You may require the services of a solicitor.
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