Q: We are not sure whether the lease allows us to raise administration charges as per the Commonhold and Leasehold Reform Act.
We would like to say how much we appreciate the helpful advice that you have given us in the years that we have been members.
FPRA Legal Expert Nick Roberts replies:
I found your query slightly curious and I am wondering whether you are clear what an ‘administration charge’ is, within the terms of the Commonhold and Leasehold Reform Act 2002. The CLRA 2002 does not permit any landlord (or management company) to levy administration charges except where these are already permitted by the lease (or, occasionally, by common law). The purpose of the provisions in the Act about administration charges (which are contained in s.158 and Schedule 11) is to ensure that administration charges, if chargeable, are not excessive. (The provisions were included as previously there was a gap in the law: service charges could be recovered only insofar as they were reasonably incurred, and a Tribunal could rule on this, but there was no similar provision regulating administration charges).
The sort of things which count as administration charges are:
(1) Fees to approve plans if a leaseholder wants to make structural alterations (e.g. Clause 8 in Schedule Six of your lease);
(2) fees chargeable if a landlord serves a Notice under s.146 of the Law of Property Act 1925 (in other words, a notice alleging breach of covenant and threatening forfeiture) – see Clause 13 of the same Schedule;
(3) fees for consent to assignment (in your case, only in the final years of the lease: see Clause 17(c) of the same Schedule)
(4) fees for the Deed of Covenant required on an assignment (clause 17(b))
(5) fees for giving notice of assignment, so that the landlord and/or management company can register a change of ownership (Clause 18 of the same Schedule: though, as a fixed fee of £4.20 is chargeable, no one is likely to claim that that is excessive!)
An area which has proved controversial – and has been raised in several of the (relatively few) cases on administration charges which have been take to a Tribunal – is that of the fees which are chargeable under some leases for obtaining the landlord’s consent to subletting (i.e. the approval that, under some leases, a leaseholder must obtain before renting to a tenant). This sort of provision is not included in your lease.
I am not saying that these are necessarily the only administration fees that might arise under your lease, but they give you the gist of what administration charges cover.
If you have any more specific query on this then I shall do my best to answer it.