Please Note: This Article is 2 years old. This increases the likelihood that some or all of it's content is now outdated.

Sub-Letting Licenses: (SOLITAIRE) LIMITED Appellant and CHERRY LILIAN NORTON and other cases [2012]

Landlords of leasehold buy-to-let flats are often asked to pay a fee (sub-letting licence or registration fee) to the freeholder when seeking permission to sub-let their flat, and this fee is usually due each time a new tenancy is signed.

This is a “nice little earner” for the freeholder, but some freeholder landlords and their managing agents abuse this by charging buy-to-let landlords exorbitant fees.

However, a little known ruling, a binding ruling by the Upper Chamber (Lands Tribunal) in 2012 comes to these flat owner landlords’ rescue so to speak.

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The ruling could be quoted in all correspondence where freeholders or their agents are demanding sub-letting fees of more than £40 plus VAT, which are not specified in the lease

UPPER TRIBUNAL (LANDS CHAMBER)

These fees charged by freeholders are an endless source of resentment between flat owners and freeholders, and in the scheme of things are small beer to the freeholder, but when the charges are excessive, that’s when people get really annoyed.

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, and indeed since.

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.”

Freehold, Shared Freehold or Leasehold?

Please Note: This Article is 2 years old. This increases the likelihood that some or all of it's content is now outdated.

12 COMMENTS

  1. I am currently getting threatening letters about a licence to sublet – they want £130 and also more for renewals and possibly past tenancies. Is there nothing more recent than the case in 2012 above? I can’t believe the internet is not awash with stuff about this as I have same demands for 2 different flats totally unconnected in different areas. Surely people are not just giving in to these ridiculous large demands.

  2. Is there a way to enforce this? Freeholder recently decided to add a subletting fee of £126. I did question the amount and mentioned the Upper Tier Tribunal ruling however they argued the ruling is not binding, rather on a case by case basis and there have been other cases with higher subletting fee accepted. Additionally, they stated that the reason the Freeholder’s fee is £126 is because this covers all the costs incurred by the Freeholder for the subletting process. They have to carry out this process as it is now a legal requirement under The Insurance Act 2015 and it is also in leaseholders interest for this process to be carried out or else the building insurance for your building will become invalid.
    Any suggestion on if that the freeholder mentions with the new insurance act is more reasonable or recommendations on how to proceed would be great. thanks in advance

  3. Same here, XXX have sent a letter asking for £130 to register new tenants and £65 to renew. They are also asking for retrospective payments going back. Tenants that have moved out already. It’s the first letter I received from them and have a potential bill of £1000-£2000. Is this something they can enforce? What have others done in this situation. Does not feel correct t just sit back and let them charge whatever they want and introduce this whenever they like.

  4. Same here. XXX Uk asking for retrospective payments. Surely this is not permissible. Also is there an issue re privacy laws of providing tenants details to the freeholders agents? Has any one had any success fighting em?

  5. I have the same issue with XXX [removed for legal reasons] and have challenged them about this fee. There is nothing in my lease document to indicate that a fee such as this can be levied by the freeholder, at will. We are obliged to pay the ground rent but not the subletting fees. The original freeholder never asked for this fee to be paid. XXX has introduced this new little earner for themselves for doing absolutely nothing. If XXX wants to keep tenants’ details then they need to abide by the recently introduced GDPR policies. This fee is extortionate and totally unjustified. I’m pleased to see that other people feel the same way. They asked me to pay £130, I paid £50 under duress. I’ll not pay more than £40 + VAT in future.

  6. I have received the same letter from XXX also asking for back dated lettings. Although I have consent from peverell the previous freeholder and XXX have proof of that they are now demanding I produce that again.

  7. I have been asked for sublet charge for £120 plus legal fee together £256.
    in my case, i would point out some of my views, In our lease, we should do registration to tenant but no mention we need to pay, so i would do that but no payment.
    Second, legal fee not my responsibility, good try, but they should ask freeholder for their fee
    third, if they happy to pay the court fee, i would fight for my right.

  8. I took this up with XXX and they confirmed that they would accept £40 (although surprise, surprise, they would not provide either a receipt or a certificate to sub-let!!) I used the template response below:
    “I am prepared to offer your clients the “reasonable” fee of £40 for registration and permission to sub-let based on the case of HOLDING AND MANAGEMENT (SOLITAIRE) LIMITED vs CHERRY LILIAN NORTON as heard in the Upper Chamber (Lands Tribunal) of January 2012. Please see this reference:

    http://landschamber.decisions.tribunals.gov.uk//judgmentfiles/j823/LRX-33-34-76-102-2011.pdf

    Should your client not wish to accept this offer then reference to the above will be the basis of our defence should your clients wish to take the matter to Court. We feel very strongly about this and have a direct access barrister lined up to fight this case for us on a conditional fee arrangement basis, i.e. “no win no fee”.

    I look forward to your response.

  9. I have just had a bill for deed of covnernent and permission to let £270 then £95 each 6 month for the same tenant I have told I m prepared to pay £50 which is reasonable and they have said if I don’t pay I could get more charges, so unfair with the extra tax and if the council bring in licensing as they re threatning will sell

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