RTM - Admin Fees Charged by Freeholder

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    RTM - Admin Fees Charged by Freeholder

    We have RTM in place for our two flat building. Recently the other leaseholder put in a request to the RTM company to install an air vent. I duly wrote to the freeholder, notifying them of our intention to grant approval for the works, giving them the statutory 30 days notice.

    They have now responded saying they have no objection to the works but have also written to the leaseholder asking her to pay admin fees for them to give permission.

    Now I know this is all a bit blurry with admin fees and the like but I do know the freeholder can't actually authorise this work, so what are the admin fees actually for here? Presumably the only real option for the leaseholder is to pay the fees then challenge at tribunal?

    #2
    Obvious question, is it a reasonable charge ? No point in any hassle of it is.

    Comment


      #3
      I am always astounded by the requests some people put to freeholders and then express surprise that they charge for responding.
      Makes me think I should do a survey of all the air vents on my properties so I can spot any changes.

      Comment


        #4
        If the RTM company commences operating , then all fees except ground rent are due to the RTM.

        Comment


          #5
          There isn't much case law on this but even when an RTM is in place and it is the RTM that is responsible for dealing with consents, I believe the freeholder CAN charge a reasonable admin fee simply for the freeholder's time in reviewing the consent application. This is because the RTM company cannot grant consent without sending a notice to the freeholder first - granting the freeholder 14 or 30 days to object. Like Section20z, I do not believe that leasehold law expects a freeholder with an RTM in place to work for free for the benefit of the leaseholders or the RTM. Just think of the number of AST agreements a freeholder might have to deal with (via RTM notice) during the course of a single year ....

          Comment


            #6
            Its in section 98 of Commonhold &Leasehold Reform Act 2002.

            Where a person who is—

            (a)landlord under a long lease of the whole or any part of the premises, or

            (b)party to such a lease otherwise than as landlord or tenant,

            has functions in relation to the grant of approvals to a tenant under the lease, the functions are instead functions of the RTM company.

            Comment


              #7
              I don't think the current situation is what was intended in the legislation. I noted in the law commission's recent report on RTM that there is a good argument that the law doesn't allow Freeholders to charge admin fees in these circumstances and they are calling for the law to be clarified, so that admin fees cannot be charged and also to change the law so that if the Freeholder wants to object to an approval then they must apply to tribunal at their own cost.

              I understand what you are saying about the Freeholder's time but they aren't running the building anymore. The RTM company is. There are other legal routes for the Freeholder to go down if they are not happy with how the RTM company is running the building.

              Comment


                #8
                It remains the freeholders property . Why should he have no say when holes are made in the fabric of his building ?

                Comment


                  #9
                  Originally posted by chris1544 View Post
                  I don't think the current situation is what was intended in the legislation.
                  It doesn't necessarily matter what the original intention of a law was.
                  What tends to be more important is what a normal, reasonable person would interpret the law to mean, and what courts have previously interpreted laws to mean.



                  Originally posted by chris1544 View Post
                  I
                  I understand what you are saying about the Freeholder's time but they aren't running the building anymore. The RTM company is. There are other legal routes for the Freeholder to go down if they are not happy with how the RTM company is running the building.
                  Although the freeholder is no longer managing a building that is under RTM, they still have an interest in the building.
                  If freeholder's permission is needed, it should be considered reasonable for them to recoup any reasonable costs (which may include legal costs if they have a genuine reason to seek legal advice).

                  Another current thread asks about installing gas to a flat, in that type of situation the freeholder (if required to give permission) may wish to seek legal advice on safety, and whether they may become culpable if anyone else in a property is harmed as a result of changes that they have agreed to.

                  Comment


                    #10
                    Macromia - the legislation makes it clear that the RTM company is responsible for approvals under the lease, not the Freeholder:

                    https://www.legislation.gov.uk/ukpga/2002/15/contents

                    Sections 98 and 99 refer to approvals.

                    Of course the Freeholder can have a say but what we have is a duplication of effort, with both the RTM company and the Freeholder both assessing the same approval.

                    The RTM company is the one granting the approval, so if the RTM company is doing it's job properly then it will be doing all the same checks the Freeholder would need to do if granting it.

                    If the Freeholder is concerned the RTM company hasn't scrutinised an approval properly, then they can object (section 99 of the act) and force the matter to be decided at tribunal. I would say that is entirely reasonable.

                    What I find unreasonable is for Freeholders to completely ignore the involvement of the RTM company, conduct completely separate and duplicate checks and then charge this back to leaseholders for essentially, agreeing not to object to approval.

                    Comment


                      #11
                      Originally posted by chris1544 View Post
                      the legislation makes it clear that the RTM company is responsible for approvals under the lease, not the Freeholder:
                      Agreed, but the RTM company's approvals responsibility is nuanced as it cannot be exercised without first referencing the freeholder.

                      Originally posted by chris1544 View Post
                      Of course the Freeholder can have a say but what we have is a duplication of effort, with both the RTM company and the Freeholder both assessing the same approval.:
                      Not only can the freeholder have a say, but leasehold law states that the freeholder MUST be given the opportunity to have a say - e.g the RTM must serve the freeholder with notice and (in the case of alteration or subletting applications) copy documentation and then wait 14 or 30 days before granting approval. The only response the freeholder can make on receipt of the notice and copy documentation is an objection.

                      Originally posted by chris1544 View Post
                      What I find unreasonable is for Freeholders to completely ignore the involvement of the RTM company, conduct completely separate and duplicate checks and then charge this back to leaseholders for essentially, agreeing not to object to approval.
                      How else do you expect a freeholder to decide whether to object to an application without perusing the notice and the copy documentation first? Isn't it unreasonable for leaseholders and the RTM company to use up a freeholder's time and resources without recompense? This is why a freeholder CAN charge for its reasonable costs in perusing the notice and copy documentation. I alluded in my earlier post to a building that has 30, 40, 50 or even 100 flats in it - half of which are rented out on ASTs - all requiring prior consent for subletting. A freeholder of such a building with an RTM company in place could spend a significant portion of its time receiving notices and copy documentation - working for the benefit of leaseholders and the RTM company for free if the freeholder were not able to charge its reasonable costs for receiving and perusing the notice and copy documentation. RTM is a no-fault procedure, after all. The freeholder is not expected to do work for the leaseholders or the RTM company for no financial consideration.

                      Comment


                        #12
                        Originally posted by chris1544 View Post
                        Macromia - the legislation makes it clear that the RTM company is responsible for approvals under the lease, not the Freeholder...
                        Yes, but as Lorimer has said, the freeholder must be given the opportunity to object.


                        Originally posted by chris1544 View Post
                        Of course the Freeholder can have a say but what we have is a duplication of effort, with both the RTM company and the Freeholder both assessing the same approval.
                        I would suggest that the freeholder and RTM company should agree to share the results of any searches that need to be paid for, and that any refusal to do should mean that the costs involved are considered unreasonable if the same costs are incurred twice (e.g. if the freeholder considers that it is necessary to consult a lawyer and/or surveyor for advice, the findings are to be communicated in full to both the RTM and the applicant).
                        That way the only duplication of cost is the time taken to look over documents.


                        Originally posted by chris1544 View Post
                        The RTM company is the one granting the approval, so if the RTM company is doing it's job properly then it will be doing all the same checks the Freeholder would need to do if granting it.
                        The freeholder should have the right to be satisfied that all appropriate checks have been done by having their own checks done. If the RTM company, or applicant, don't consider the freeholders checks to be satisfactory, they can agree to pay for further checks and/or contest the cost of the freeholders checks.



                        There is a problem with all leasehold law, it that it tends to cost too much for leaseholders to contest freeholders decisions. It would be fairer all round if the reasonable costs of tribunals were awarded to the winning party as standard (the application, hearing fees and the reasonable cost of producing & sending hearing bundles at least, but perhaps not solicitors fees).
                        This would encourage both freeholders and leaseholders to reach agreement without the need to go to a tribunal, and would encourage them to get a better understanding of the relevant laws.
                        Currently freeholders can get away with quite a lot simply because it isn't worth the time and money it takes to challenge them.

                        Comment


                          #13
                          Originally posted by chris1544 View Post
                          I understand what you are saying about the Freeholder's time but they aren't running the building anymore. The RTM company is. There are other legal routes for the Freeholder to go down if they are not happy with how the RTM company is running the building.
                          These other legal routes are mostly the preserve of very serious breaches of duty by the RTM company. For example, where the human or financial impact of the RTM's breach of duty can run into the thousands or tens of thousands. For example, failing to keep the building adequately insured or even failing to serve the freeholder with 30 days prior notice and copy documents of a lease assignment - in a case where the lease states that prior consent is required. See the attached EWCA judgment where the freeholder successfully argued that the leaseholder (with an RTM company in place) had breached the alienation clauses in the lease.

                          Comment


                            #14
                            Internal alterations is often the area where consent is sought

                            In almost all lease although consent from the landlord is required it is almost always qualified by stating the the landlord cannot withold consent unreasonably. Therefore the landlord may want a surveyor to give an opinion and the RTM company must arrange this and discharge those costs . The RTM company may have to charge for its time in organising this request from the landlord. If the landlord is faced with a complex proposal he has to request that the RTM engages a surveyor at the RTM’s cost to explain and answer the landlords questions - the landlord cannot charge his own time

                            However if the works involve breaking into parts not demised in the lease to the lessee such as breaking through the main structure - the landlord can decline to give consent and if he seeks a fee then that fee will go to him

                            Comment

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