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Construction of the lease
Statutory control - reasonableness
Service charge demands
Administration charges
Summary of leaseholder's rights
Insurance
Managing agents
Reserve funds
The 18-month rule
Consultation of tenants
Compromise of service charge dispute
Legal costs
Transfer to First-tier Tribunal

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Administration charges

Introduction

Administration charges include landlords’ costs of considering licence to assign/sub-let/alter, the provision of information(for example, a letter to a potential purchaser confirming the service charge is paid up to date), “default charges” for non-payment of money (for example, “chasing letters” requesting payment) and charges arising out of any breach or alleged breach of the lease. As it can be seen, the net has been cast wide. Administration charges are not service charges.

By the Commonhold and Leasehold Reform Act 2002, s.158 and Sch 11 variable administration charges must be reasonable. Where the administration charge is not variable (i.e. where it is specified by the lease or calculated in accordance with a formula) any party to the lease may apply to the LVT for an order varying the lease on the grounds that the charge or formula is unreasonable.


Consent - reasonableness of administration charges

Holding & Management (Solitaire) Ltd v Norton
[2012] UKUT 1 (LC)

A charge for consent is a variable administration charge within the meaning of the Para.1(3) of Sch.11 Pt 1 of the Commonhold and Leasehold Reform Act 2002 and is only payable to the extent that its amount is reasonable. It was not good enough to give a list of all the things that could conceivably be done in connection with the grant of consent. 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


Payment to vary a lease

Mehson Property Co Limited v Pellegrino
[2009] UKUT 119 (LC)

A charge made by a landlord for varying a lease is not an "administration charge" for the purposes of the Commonhold and Leasehold Reform Act 2002. The LVT therefore has no power to reduce the amount of the landlord's charge on the basis it is unreasonable.


Parking fees

Issue estoppel

Moorings (Bournemouth) Ltd v McNeill
[2013] UKUT 243 (LC)

Summary

Having withdrawn a challenge to the validity of a parking scheme in the county court, the tenant was estopped from challenging the legitimacy of parking restrictions in LVT proceedings. The tenant was liable to pay the administration charges for parking in breach of the parking regulations made under his lease.

Facts

The respondent was a tenant of a flat in a block of 18 flats and garages. Each tenant of the flats owned one garage. The lease to each of the flats provided no right to park, save for the right to use the garage. The leases also included a tenant’s covenant “to observe such reasonable restrictions and regulations as the lessor may from time to time make for the good running and management of the Estate.”

There had been a problem with parking, which had lead to obstruction of access to one or more of the garages. The managing agents circulated details of a parking scheme in an attempt to alleviate the difficulties. A vehicle belonging to the respondent tenant (T) was clamped for being parked in breach of the parking scheme and T was required to pay a release fee. T issued county court proceedings for the repayment of the release fee and In those proceedings T attacked the legitimacy of the parking scheme. At the hearing, T made an admission that he was not seeking to challenge the parking scheme. T then discontinued the county court claim.

The landlord (L) had incurred solicitors and managing agents costs in connection with these proceedings of over £3,000. L sought to recover these costs incurred as a result of the breaches of covenant by T in failing to comply with the parking scheme. As the costs had not been paid L decided to issue a s146 notice in respect of that breach of covenant. Consequently L required a declaration pursuant to the provisions of s168 of Commonhold and Leasehold Reform Act 2002 that the respondent was in breach of covenant.

L therefore applied for a determination pursuant to Schedule 11 of Commonhold and Leasehold Reform Act 2002 that administration charges were to be paid by T. The LVT rejected L’s argument that T was estopped from challenging the validity of the parking scheme. L appealed to the Lands Chamber of the Upper Tribunal

Decision

The Lands Chamber allowed the appeal and found for L. The Tribunal pointed out that for an issue estoppel to arise, or for a matter to be res judicata, it is necessary for the issue to have been an issue that was raised in earlier proceedings and that point to have been the one which was conceded in a clear manner in the face of the court. If those two requirements are fulfilled, then a party will be estopped from raising the same issue in subsequent proceedings (see Khan v Gollechha International Limited [1980] 1 WLR 1482 and SCF Finance Co Limited v Masri (No.3) [1987] QB 1028).

Here it was clear that T had raised the issue as to the legitimacy of the parking scheme in the county court proceedings. He had then conceded the legitimacy of that parking scheme and that concession was recorded in the court’s order.

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