Another Underletting Fee Question, sorry!

[fc1892]

Hi,

I have read a number of threads about challenging the underletting fee and have gathered a lot of useful information from this and other forums which I will now use to respond to the MA who has written to me on behalf of the FH. I do have some specific questions regarding the wording of my lease and how I can use that in my response to the MA who are demanding £144 to register the underlet and then £96 for renewal when the tenancy expires. I have had this BTL property for a number of years but they have only just contacted me now after a recent audit.

My lease (dated 1971) states
(14) WITHIN one month after any assignment or under-letting or the assignment of an underlease or the grant of any sub-underlease out of an underlease or after any devolution on death of otherwise or mortgage reconveyance or vacating receipt affecting any site of part thereof to produce to the solicitor for the time being of the lessor or the deed assent other instrument affecting or evidencing the same and pay his reasonable fee for the registration thereof and permit him him to endorse a memorandum of registration thereof.

Cutting through the irrelevant parts of this clause I see this a being

(14) WITHIN one month after any under-letting….. to produce to the solicitor for the time being of the lessor…. evidencing the same and pay his reasonable fee for the registration thereof and permit him to endorse a memorandum of registration thereon.

So if I underlet I need to send the solicitor (via the MA) the AST and a reasonable fee (which they have determined as being £144).

All clear so far.

The property in question is a 2 bed ground floor flat in a terrace of 2 storey self contained flats with no communal areas, no communal insurance and no service charges for any landlord provided services. The letter they sent is generic and references 'the building' and insurance premiums as if this was a block of flats.

I am intending to respond to their letter offering £50+VAT as a reasonable fee for them to register the underlet. I am making this £50 to differentiate it from the £40 I have seen other people use on the basis of previous case law based on FTT ruling on reasonable administration charges but which has previously been dismissed by Smirca as it is a registration fee not admin fee.

Some specific questions about my lease and how I should tailor my letter accordingly.

The lease doesn't state that I need the FH's consent, I just need to advise them so no background checks of the AST, no tenant checks and no need for them to give consent which reduces the work they need to do. Do I reference this in my letter as my estimation of their fee or keep my powder dry for when they inevitably write back with a long list of action their solicitor needs to perform?

The lease doesn't reference frequency of paying the registration fee i.e. what happens at the end of a fixed period (noting this was drawn up in 1971 long before AST's). As my tenant is now on SPT after the initial 12 month term I was intending to state that the tenant is now on SPT and I shall advise when there is a change of tenant. As an aside I saw this link which states that Smirca have been told that there is no need to request multiple fees which I would reference but the link doesn't work - any idea why or does anybody have a different link to this case - http://www.residential-property.judi...y/10001AMR.htm

I have seen in other threads about the MA needing to advise on Summary Rights and Obligations before a demand for administration charges are requested. It is my understanding that case law has decreed that registering an underlease is not administration so I believe this is irrelevant?

Is there anything else in the lease wording which I can use to strengthen my, or weaken their position? Smirca aren't referenced in the Lease and the freeholders address is not referenced in the Smirca correspondence. Is there any relevance in this?

Thank you in advance for any assistance.

[Gordon999]

Why not ask the "solicitor" to show his appointment letter by the freehold company to receive the registration fee. The reasonable fee in a lease commencing from 1971 might only be £20, not £144 .

A "reasonable fee" under the lease must be "reasonable" to both sides ( both freeholder and leaseholder). The managing agent is an agent and the agent does not determine the amount of fee. The demand for £144 fee is not coming from a solicitor and therefore does not apply to your lease.

[Lawcruncher]

The terms of the lease are clear. The notice is to be given to the landlord's solicitor. No one, whether landlord, solicitor or managing agent, can require you to give notice to anyone else. All you have to do is write to the managing agent and tell them (a) the lease requires notice to be given to the landlord's solicitor and (b) you will give that notice if they tell you who the landlord's solicitors are and their address. If given the details send the notice to the solicitors with a cheque for £10. If they ask for more, let us know.

Bear in mind that the obligation to pay the fee is owed to the landlord. Neither the agent nor solicitor has any legal standing to sue for the fee. Further, the fee cannot be due until it is agreed or determined what is reasonable.

[Gordon999]

Lawcruncher,

What you say is interesting : "The fee is not due until it is agreed or determined what is reasonable".

This means "the fee" agreed by both sides. If the fee is not stated in the lease, the leaseholder does not have to agree.?

[Lawcruncher]

The fee needs to be quantified before it becomes payable. The tenant cannot be required to agree as that would be an agreement to agree, which is void for uncertainty. However, the courts have held that a requirement to pay a reasonable sum is not void for uncertainty. What is reasonable has to be assessed, not unilaterally decided by one party or the other. So, if the landlord wants to enforce the provision an assessment will have to be made by the court.

[Gordon999]

So what fc1892 should be demanding ?

It seems to me that before payment , the leaseholder should be demanding from the freeholder a judgement from a court to confirm that the Solicitor's charge of £144 for registration and £96 for renewal is justified and reasonable under the terms of the 1971 lease.

[Lawcruncher]

He should do as I suggest in post 5. If he is told who the solicitor is he can send the notice with £10. If the solicitor come back saying he wants more he replies asking on what basis the fee demanded is considered reasonable for merely registering a notice. The solicitor cannot legitimately threaten to sue as he is not a party to the lease and in any event it would not be worth the effort. When I was working I always sent £10 if the lease specified a reasonable fee and no one ever came back asking for more.

[fc1892]

Thank you for the responses. I have written to the managing agent asking them to advise the name and address of the Lessors solicitors.

[fc1892]

I have received a response from the Freeholders Agent to my request for them to advise who the Freeholders Solicitor is as that is who I shall be advising of any under-letting arrangement, in accordance with my lease. They write.

Please be advised that we act on behalf of the Freeholder/Lessor and have been instructed to accept all Notices on their behalf, thus saving the leaseholders costs which would be levied by the Lessor's solicitors, which far exceed own own, however, we acknowledge that under the terms and conditions of the lease Notice is to be served on the Lessor's solicitors.

Therefore should you now wish to deal with our clients solicitors direct their fee for accepting and lodging the Notice is £204 inclusive of VAT and should you wish to deal with them direct please confirm this in writing and upon receipt of which we shall provide their contact details.

We hope this clarifies the matter and look forward to receiving confirmation that Notice has been served and the requisite fee paid within 21 days of the date of this letter.

So, after all this time of me thinking the Freeholders Agent were despicable money grabbing chancers it turns out they're on my side and only want to save me money!

This letter is clearly intended to frighten me into thinking that I should pay the agent as the solicitor would be more expensive. I intend to write back requesting the contact details of the Freeholders Solicitor and that I will discuss reasonable costs direct with them in the event that a Notice needs to be issued (noting that if I do get their details I shall do as Lawcruncher advises above and issue any Notice with a cheque for £10).

Is this the most appropriate course of action?

[Lawcruncher]

Just write back and say thank you for your letter, please let me have your client's solicitors' details. Say nothing else.