Service Charges & Estate Management - April 2012 updates

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SERVICE CHARGES AND ESTATE MANAGEMENT

APRIL 2012 UPDATE

Holding & Management (Solitaire) Ltd v Cherry Lilian Norton [2012] UKUT 1 (LC); [2012] 7 E.G. 91 (C.S.)

Summary: the court considered the reasonableness of (administration) charges for consent to underletting.

Facts: In four conjoined appeals the appellant landlords (L) appealed against decisions of the LVT that they were not entitled to charge a fee for consenting to underletting by the respondent tenants (N, R, H and K).

N, R, H and K were long-lessees of newly-built property owned by L.  In each case the lease stated the consideration to be the payment of a premium and rent. Each tenant had covenanted not to underlet the property without L's consent, such consent not to be withheld unreasonably. N had covenanted to pay the costs and expenses reasonably incurred by L in granting consent, but none of the other leases provided for such a charge. Each tenant sought L's consent to underlet, and in each case L charged a fee. N, R and H were each charged £105, while K was charged £135. In each case the LVT held that, by reason of the Landlord and Tenant Act 1927 s.19(1)(b), L had not been entitled to charge a fee.  One of the issues on appeal was the reasonableness of the charges made.

Held: A charge for consent was a variable administration charge within the meaning of the Commonhold and Leasehold Reform Act 2002 Sch.11 Pt 1 para.1(3) and was only payable to the extent that its amount was reasonable. In the instant cases it had not been shown that either £135 or £105 was reasonable. L had sought to justify the charges by setting out a list of work that they claimed had to be done before consent could be granted. However, that list appeared to be a list of all the things that could conceivably be done in connection with the grant of consent, and not a list of the things that needed to be done in a typical case, or which had been done in the instant cases. Given the circumstances, and in the absence of information about what had actually done, by whom, and how long it took, the charges could not be regarded as justified. No fee greater than £40 plus VAT could be justified, and that would be set as the amount payable (paras 10, 17).

JONATHAN UPTON

TANFIELD CHAMBERS

APRIL 2012