How Do I Challenge an Unreasonable Registration Fee (Not an Administration Charge)?

[Joe Forit]

One of the reasons they are unreasonable is because people roll over too easily. Send £20.

I agree, and will follow your advice. I will post the outcome in due course. Thanks again!

[eagle2]

If you search long enough, you will find examples of the FTT setting reasonable registration fees, so there is inconsistency within the decisions. From memory, I think that there was one which set a fee at £40 but that was some time ago. I agree that the Proxima case creates too much of a risk for you to commence a case before the FTT on that issue alone.
I agree entirely with lawcruncher, £20, or £23 including VAT, is more than adequate but don’t expect a Tribunal or Court to reduce the charge by 80%. In more recent decisions, the FTT has accepted an hourly rate of £168 and a Court or Tribunal is likely to be more generous to the freeholder than allowing the 5 minutes time which we consider to be reasonable.
If you pay £20 or £23, I would send a cheque and state that it is in full and final settlement of the charge.
It is unlikely that the freeholder will withdraw the charge, it will more likely carry forward the balance and add other unreasonable administration charges for a “breach of the lease” and then contact your mortgage company and charge you for the privilege of sending a standard letter. It will then threaten legal action and charge you even more for sending your file to an inhouse or connected solicitor.
These freeholders are rogues and will only be stopped by legislation. I cannot blame leaseholders for “rolling over” to avoid all the hassle.

[Joe Forit]

Thank you again eagle2. I think the well known decision setting £40 plus VAT fees was Holding and Management (Solitaire) Ltd v Norton and three other cases heard at the same UT sitting in 2012. In all cases, the UT said £40 was the reasonable fee - and in each case that was the consent fee, so a reasonable registration fee should be much less! I think in each of those cases the FTTs had ruled that a £75 registration fee was unreasonable, and they all came to different conclusions on what was reasonable - the UT did not consider that aspect in detail. Given that nobody can say what the right amount is, I might as well send the £20 plus VAT minimum amount under my lease and see where that leads.

It will be interesting if the freeholder does seek to impose administration charges for breach of covenant - a tribunal will have jurisdiction over those charges, but not over the fee that is the cause of the alleged breach. Anyone's guess what they might do with that!

Happily I have a few things in my favour. There is no mortgagee to involve, I do not plan to sell any time soon, I can find time to deal with the freeholder's nonsense and I know they are beatable - the same freeholder tried to make me pay annual renewal fees for a sublet, but they eventually gave up after I told them numerous times that no fee was due. I also can understand busy leaseholders choosing to roll over. That is why I think it is important for those of us who can challenge them to do so. Thanks again!

[eagle2]

Good luck and please keep us informed.

[Joe Forit]

UPDATE

I sent the freeholder (care of their agent) my notice of underletting along with a copy of the tenancy agreement and a cheque for £24 including VAT, “this being a reasonable fee for the registration of this notice” [my wording, taken from the lease].

I now have a fairly brief reply (no formal invoice or any other enclosures) thanking me for those documents and saying, “Please note the registration fee is £120.00 including VAT, upon receipt of the full funds we will update your account and provide a Formal Registered Document confirming that our client approves of the underletting that you have in place.”

I intend to reply as follows:
“I do not require a ‘Formal Registered Document’ or the approval of your client for the underletting that is in place. Your suggested registration fee of £120 including VAT is manifestly unreasonable for the simple registration of a notice, and is therefore not payable.”

If anyone thinks I should say something different or additional, I would be glad to hear it. Thanks in advance.

[Lawcruncher]

Sounds fine to to me. Sock it to 'em - and don't let the bar stewards grind you down!

[JK0]

Hmm. Won't the b*ggars just keep adding up the deficit every time you give notice, and ask you to pay up with interest when you come to sell?

[Joe Forit]

Sounds fine to to me. Sock it to 'em - and don't let the bar stewards grind you down!

Thanks for the advice and encouragement!

[Joe Forit]

Hmm. Won't the b*ggars just keep adding up the deficit every time you give notice, and ask you to pay up with interest when you come to sell?

Thanks, that sort of goes back to my original post and is part of the reason why I would like to be taking action myself, to have their fee declared unreasonable now.
Fortunately, I have little to lose by arguing with them. It is likely that the worst they can do without me taking them to a tribunal is as you suggest. When I do come to sell, I am unlikely to be in a hurry and will have the argument with them at that point if they are still trying to charge me unreasonable fees.
The downside for them is massive. When we do reach court, and it is established that their fees are unreasonable, the publicity will alert hordes of leaseholders to refuse to pay crazy fees. It will not just be my freeholder who suffers - I doubt they would be welcome at any 'Shyster Landlord Club' meetings thereafter!!

[Section20z]

Thanks, that sort of goes back to my original post and is part of the reason why I would like to be taking action myself, to have their fee declared unreasonable now.
Fortunately, I have little to lose by arguing with them. It is likely that the worst they can do without me taking them to a tribunal is as you suggest. When I do come to sell, I am unlikely to be in a hurry and will have the argument with them at that point if they are still trying to charge me unreasonable fees.
The downside for them is massive. When we do reach court, and it is established that their fees are unreasonable, the publicity will alert hordes of leaseholders to refuse to pay crazy fees. It will not just be my freeholder who suffers - I doubt they would be welcome at any 'Shyster Landlord Club' meetings thereafter!!

Will they not just deduct the debt from your service charge account?

[Lawcruncher]

Will they not just deduct the debt from your service charge account?

They may do, but it is not allowed. If money is tendered for a specific purpose it must applied to that purpose.

[Joe Forit]

Will they not just deduct the debt from your service charge account?

At this property the service charges are collected and administered by a leaseholder-run management company, which operates properly. The freehold company just collects ground rents and these registration fees, so their options are limited. Pity the leaseholders didn't buy the freehold from the original developer when they were given the opportunity - before my time, unfortunately.

[eagle2]

The downside for them is massive. When we do reach court, and it is established that their fees are unreasonable, the publicity will alert hordes of leaseholders to refuse to pay crazy fees. It will not just be my freeholder who suffers - I doubt they would be welcome at any 'Shyster Landlord Club' meetings thereafter!!

These freeholders do not seem to worry about losing some cases, they would argue that they only apply to the parties involved and it would not stop them from overcharging other leaseholders. They appear to operate on the basis that 70% to 80% of leaseholders will pay in order to avoid the hassle of challenging them, it is a lucrative business for them. If too many cases go against them, they will simply close their company and form a new one and start again,

Parliament is to consider leasehold reform over the next 12 months so I suggest that you contact your MP and request changes to the legislation.

[Joe Forit]

Parliament is to consider leasehold reform over the next 12 months so I suggest that you contact your MP and request changes to the legislation.

Ultimately that seems to be the only way forward with many of life's inequities. Unfortunately these days, even the formal 'consultations' prior to legislation seem to be greatly restricted by their online format. You are only given the opportunity to comment on how the deckchairs should be arranged on the Titanic, because the Government has already made the decision to steer towards the iceberg.

[flyingfreehold]

I hesitate to defend the freeholder, but there can be more involved than just receipting the notice and returning it. Some insurers want to know if an insured premises is let rather than owner occupied (perceived to be slightly worse loss history) so the broker may need to be informed by email or letter and there is likely to be the need to change the contact details both for the lessee and to add into tenancy management programmes contact details for the sub lessee, so that in the event of water pouring from the flat, it is possible to access sub-tenants contact details in a hurry or even remotely. I don't think £20 plus VAT is enough to cover the cost of the work involved, bearing in mind the huge costs of operating a property management office with professional staff and IT systems. The big managing agents do try to charge a bit too much for notice fees, and for most other services come to that, and a reasonable fee is probably somewhere around £75 plus VAT