This section of our Case Law Library looks at cases related to:
- A Leaseholder’s liability to pay Administration Charges under the terms of their Lease
- The definition of an Administration Charge
- The reasonableness of an Administration Charge
Right to challenge a proposed Administration Charge:
In this case the Lands Tribunal decided that Schedule 11 of the Commonhold and Leasehold Reform Act 2002 grants a Tribunal the authority to determine the payability and reasonableness of an Administration charge already incurred, whether or not formally demanded, but that it has no authority to make a determination on an Administration Charge not yet incurred. Landlords cannot ask for a decision on whether an Administration Charge would, if it were to be incurred in the future, be reasonable in the same way a Landlord could ask a Tribunal to determine the reasonableness and payability of a proposed (but not yet incurred) Service Charge cost.
Reasonableness of the amount of an Administration Fee:
Case where the Upper Tribunal decided, in relation to the facts and circumstances of the case, that it was reasonable for the Landlord to charge £165 for granting consent to sub-let the property.
Reasonableness of charging a fee for Sub-letting:
Decision by the Upper Tribunal that unlike cases involving service charges where the tenant must demonstrate that the reasonableness is questionable, a landlord must justify that the fee they charge as a condition of providing consent to sublet is reasonable.
In this case the Upper Tribunal decided that section 19(1)(a) of the Landlord and Tenant Act 1927 applied, and that asking for payment did not imply that a Landlord was unreasonably withholding consent. However, the Upper Tribunal also decided that “where a landlord is asked for consent to the grant of an underlease or tenancy and seeks to impose a condition requiring the payment of an unreasonable sum, therefore, the tenant is not obliged to pay that sum and is instead entitled to proceed with the proposed underlease without the need to obtain the approval of the landlord“.
Some 2015 First Tier Tribunal Decisions on the reasonableness of the amount charged as an Administration Fee:
None of these cases set any legal precedents. They do though provide an indication of how the FTT is currently assessing the reasonableness of Administration Charges:
FTT decided that £158 per hour was a reasonable rate for a professional managing agent on the South Coast, but decided that the amount of time claimed was unreasonable and reduced the level of the Administration Charge due.
A number of Administration Charges were reduced or disallowed in this case, including purported Administration Charges of £345 and £540 to issue 10 section 20 notices (2 notices each for 5 flats) which were disallowed in their entirety on the basis that these costs should have been covered by the management fee and not charged separately.
In this case the FTT decided that on the basis of the evidence given regarding the time it took to process the grant of approval for a new sub-let, and the extension of an existing sublet, the fees of £108 and £38.40 respectively were reasonable.
In this case the FTT found that an Administration Charge of £690 in respect of a Leaseholder’s breach of Lease (they were using the flat as business premises contrary to restrictions in their Lease) was reasonable. This conclusion was based on the volume of correspondence that was sent, and the per hour rate (£175) charged by the Solicitor employed by the Landlord which the FTT considered ‘modest’.
In this case the Administration Charge for cost of ‘in-house’ debt collection was reduced from £300 to £75 and the cost of preparing a Court Summons was also reduced from £180 to £75. No breakdown or supporting evidence was provided by the Landlord to support the charges and the FTT considered that they were high in relation to the work involved in undertaking these tasks.