Worried about late registration of sublet

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  • DrShona
    replied
    Also, although you do not need to pay anything, for those who actually have a clause about subletting rather than just a change in deed Title (AKA who owns the property or has a lean on the property). When subletting the Title does not change, so the following is not relevant to you but might be relevant to others reading this post or for those who have paid...

    (SOLITAIRE) LIMITED Appellant and CHERRY LILIAN NORTON and other cases [2012]
    The four appeal cases were brought by landlords to the Land Tribunal in February 2012 and they were heard together by George Bartlett, QC, president of the Upper Tribunal.
    In all of these cases the leases made clear that the properties could not be rented out “without the prior written consent of the lessor and the management company, such consent not to be unreasonably withheld or delayed”.
    The landlords had argued that preparing and registering the sub-letting agreement (licence) involved a considerable amount of work, but the tribunal was having none of this:

    Mr Bartlett QC concluded:
    “The appellants seek to justify the consent fee in terms that apply to all consents, and they do so by setting out a list of work that, it is claimed, their agents do. It looks to me to be a list of all the things that could conceivably be done in connection with the grant of consent rather than the things that would need to be done in a typical case or that were in fact done in the cases under consideration”
    In all four cases the QC concluded: “that a fee greater than £40 plus VAT could not be justified, and I determine that this amount is payable.”
    Now though, flat owners have this ruling on their side. The upper tier Land Tribunal has decreed that following four different cases brought before it, sub-letting fees should be limited to £40 plus VAT. So, in practice, any flat owner billed with an amount in excess of this should simply offer up that amount and quote the ruling, which should mean that that will be the end of the matter. These sub-letting fees vary quite a bit, but charges of £100 plus have been common up to this ruling

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  • DrShona
    replied

    In spite of being aware that I was renting out the property, [first company that sold me the property] never requested a registration/consent fee or information about the tenants. As such, the CONTRACT WAS VARIED BY [first company]'s CONDUCT. In addition, [second company that bought ground rent] also did not request this information, in spite of my address being different to the property address. Please note the following cases that support the variation of a contract by conduct, and the waiver of the right to rely on a written variation, inferred by conduct:

    In Globe Motors Inc & others v TRW Lucas Varity Electric Steering Limited & another, the Court of Appeal clarified that even if an agreement contains a clause which provides that it can only be varied if the variation is in writing and is signed by all parties, the agreement can in fact be varied orally or by conduct. The Court of Appeal, Globe Motors, Inc and Others v TRW Lucas Varity Electric Steering Limited and Another (2016) EWCA 396 (decided on 20 April), confirmed the general principle in English contract law that parties have freedom to agree whatever terms they choose to undertake, and they can do so in a document, by word of mouth or by conduct. The fact that an agreement may include a clause requiring any variations to be in writing will not prevent parties from later making a new contract varying the contract by an oral agreement or by conduct. However, even where there is a no-variation clause, an oral variation or a variation by conduct could be effective where the evidence establishes - on the balance of probabilities - that the variation was agreed.


    That position was then consolidated in a case later in 2016 between MWB Business Exchange Centres and Rock Advertising. Waiver is where one party voluntarily agrees to a request by the other not to insist on the precise performance method outlined in the contract. In these circumstances, it may be said that that party has waived its right to insist on performance in that particular way. A waiver can be oral or written, or can even be inferred by conduct - so a party can waive (or be taken to have waived) its right to rely on a written variation where the way it has acted after the contract has been varied by oral agreement.


    In the recent case of Reveille Independent LLC v Anotech International (UK) Ltd [2015] EWHC 726 (Comm), the English Commercial Court has ruled that even where a contract clearly contains completion formality requirements, the conduct of the parties may amount to a waiver of those requirements and both acceptance of the offer and communication of acceptance.

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  • Gordon999
    replied
    PeteM,

    My opinion after carefully reading clause (b), the fee of £100 + VAT applies to registration of any documents which affect the lease title resulting in disposal to others or taken as security for mortgage loan; and renting of property under AST agreements is not a disposal of the lease title and does not require registration of the AST.

    Who is the "company" in your lease ?. It uses the term "company's solicitor" and not "landlord's solicitor". .

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  • leaseholder64
    replied
    My understanding is that headings in legal documents are navigation aids and don't contribute to the meaning, unless the meaning is otherwise ambiguous.

    Also, "assign" in layman's terms means "sell". Landlords don't assign leases. A tenant can assign a lease.

    The purpose of the registration is so that the superior landlord knows who he is dealing with, both directly, and if the sub-tenants cause problems, indirectly. Although they don't get to dictate the terms of your tenancy agreement, they do, at least, know what you can do to discipline your tenant, and, if good, may advise you how to make it better next time. (Off the shelf tenancy agreements don't seem to adequately protect landlords against covenants being breached by their tenants.)

    £100 may seem a bit steep, but seven years ago, our solicitors said the would not accept less than £50, as that is what they would charge for the registration service.

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  • Bay
    replied
    Hi Pete,

    My lease has exactly the same terms as noted above under Disposals and I wanted to check how you progressed with the request for the fees from the agents..? Thanks

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  • PeteMckern
    replied
    Gordon999,

    The flat's lease started 1/1/2010. I am the first and only owner and leaseholder. The AST running (and renewed in Nov 2016) started May 2016.

    So, thanks Gordon999 and, Scriv, no problem at all with any misunderstanding of the word Disposal - this is news to me too - it sounds like good news, but I'd like to show the entire clause in its context to Gordon999 if that is OK:


    9 Disposals

    (a) Not to transfer underlet or otherwise part with possession of part only of the Property

    (b) Within one calendar month of every transfer underletting assignment other form of disposal mortgage or legal charge of this Lease of the Property and also of every Grant of Probate or Letter of Administration Order of Court or other instrument effecting or evidencing a devolution of the title of this Lease being executed or operating or taking effect or purporting to operate or take effect to provide the Company's solicitors or agents and the Management Company's solicitors with a certified copy for the purpose of registration and to pay the solicitors or agents for the Company a reasonable fee of not less than £100 per notice (together with any Value Added Tax which may be payable in respect thereof) and if appropriate to pay the Management Company such reasonable fee as the Management Company shall require (together with any Value Added Tax which may be payable in respect thereof)


    So in your own opinion, there is no requirement to register the AST as all this comes under the heading Disposals?

    Sorry - a real newbie on all this and reading leases is not something I know much about... but I did think this would mean any sort of subletting.

    Thanks again for your time.

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  • scriv
    replied
    Oh dear. Sorry if I have confused the situation by not understanding the concept of Disposals.

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  • Gordon999
    replied
    The requirement to pay £100 + VAT for registration appears under " Disposal" means after the flat has been transferred to another person who becomes the new leaseholder.

    Letting under AST agreement is not a disposal of the flat and does not change the name of property title holder and therefore does not require registration . As you say there are no clauses requiring you to obtain consent for subletting.

    What was the commencing date of your leases ?

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  • scriv
    replied
    Pete -

    Our freeholder's pattern was to follow up their generic letter four months later with a more specific one requiring completion of their form re subletting arrangements/consent and payment of their fees - and then if you do not comply, they write again 2 months later, the letters getting increasingly more nasty and legal sounding and threatening action for breach of lease in the style of a debt collection agency.

    It all depends on the wording of your lease though and it does sound from what you say that a fee of 'not less than £100 + VAT' for registration is due to them on a new assignment according to the terms of your lease so you will be obliged to pay them registration fees and submit the AST agreement when you have a new AST agreement.

    I am not sure whether they have the right to demand registration for a tenancy renewal or extension though unless specifically stated in your lease - but they may claim you are in breach of your lease until you do register your AST. However, I would not think that they are entitled to inflict penalty charges for late registration/payment as these are administration fees and come under a different set of rules from the paying of Ground Rent.

    You may also find that their fees are significantly more than the £100 + VAT and that they may also try to charge you for granting of consent even though your lease does not require it. Whether you argue the toss or pay up what they demand depends on whether you have the stomach for battle.

    I'm not sure it makes much difference whether you write to them now with your payment and offer of the £120 or whether you wait until they write to you. It depends on what will give you a greater peace of mind,

    Again I must emphasise that my comments are just based on our personal experience rather than legal expertise.

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  • PeteMckern
    replied
    Gordon999 - yes we were. Sadly we collectively didn't do this. If I remember correctly the freehold for 6 flats was sold on for around £36K total, so quite a lot for each flat anyway at the time. There are other parts of the lease (onerous grounds rent reviews for e.g.) coming to light now (alerted by recent press) but that's for another topic...

    Does the right of refusal have any bearing on my original worry about not yet registering the current AST with the new freeholder (my argument being there has been no change of tenant since the new freeholder took over - although there has been a renewal of the AST)...

    Beginning to regret ever buying a leasehold property!

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  • Gordon999
    replied
    Were leaseholders offered "right of first refusal" on the freehold title before it was sold by the developer ?

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  • scriv
    replied
    Oh dear. This does sound a bit like the outfit that we had dealings with in which case I think you would benefit from more informed advice as to how best proceed.

    We were in a collective group action on a large development and our solicitors sorted it out in the end as there were many other issues involved.

    Hope someone comes along soon to offer more informed advice.

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  • PeteMckern
    replied
    Thanks again - yes, they did send a letter initially when they took over. It was very generic and mainly about ground rent collections and penalties for being late with the payments - it was a one-size-fits-all letter for leasehold houses and flats for which they they seem to be scooping up the freeholds of. It mirrored pretty much exactly the general text from their website! It also had a paragraph warning about not seeking permission and paying possible fees to them before commencing any home improvements such as conservatories (not relevant for flats!) and also that "if you are thinking about renting your flat in the future you may need permission - please fill in our on-line form" - again, at the time I didn't really think this was valid as, 1) mine was already let and 2) my lease doesn't require permission to be granted.

    The letter didn't mentioned registering any current running AST / sublets and no demand for this or the fee has been received to date. It's only through looking at my lease for something else recently that I focused and deciphered the registration thing and thought, I bet the new freeholder will be wanting to enforce this and collecting the fee!

    The apartment block is some distance away - I am very hands off really, leaving it all to my managing agent, but as far as I know none of them apart from mine (6 in total) are currently let out - all owner occupiers.

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  • scriv
    replied
    Pete, I understand completely how you feel as regards paying them to avoid the worry.. the sad thing is that sometimes this does open the door to further hassle from them.

    Has the new freeholder written to you introducing themselves and their requirements? It is my understanding that they should have done this and given you all your rights etc when asking for admin fees etc.

    And also, do you know what the other leaseholders in the block are doing? It can be helpful to get together in situations like this and sort out the requirements collectively?

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  • PeteMckern
    replied
    Thanks so much for your reply. Totally understand you qualifying this to say it is just in your experience.

    I have been though my lease over and over now and there are only two clauses referring to subletting. One which restricts me from subletting part (but not all) of the property - which is fine - the whole flat is let. The other which mentions the registration and registration fee. There is definitely no clause about needing to seek consent before subletting and I know through talks with the developer before purchasing there would not be any objections or the need to seek permission before subletting written into the lease.

    So my best case scenario seems to be the same as your experience - i.e. do nothing for now as, since the new freeholder took over, there has not been any change in assignment .... BUT if the AST does change to a new tenant in the future I will definitely need to register it and pay the their fee.

    I guess my worry is I am now aware that the new freeholder (an investment co.) has not registered my current AST and I don't want to be open to big future hassles from them - I'd rather say "sorry it's a month or two late but here is a copy of my AST for your register and £120" .... but even then I am concerned this will just start a whole heap of avoidable grief....

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