Fees for applications for consent to sublet in long leaseholds

28 February, 2012

The Upper Tribunal of the Lands Chamber (‘the Tribunal’) has considered recently in four joined appeals from the Leasehold Valuation Tribunal (‘LVT’) whether a landlord can charge a fee for considering a tenant’s application to sublet its property where there is no provision for payment of costs in the lease. The point hinged on how section 19 of the Landlord and Tenant Act 1927 (‘LTA 1927’) is interpreted. Section 19 states it can be reasonable for a landlord to charge a fee as part of its deeming provision that a lease which provides assignment cannot be without the landlord’s consent, should be read so that such consent cannot be unreasonably withheld. The LVT interpreted section 19 to mean that where the tenant’s lease contains an additional clause allowing the landlord to charge administrative fees, this right was preserved. However three of the leases did not contain such a provision and the LVT decided in these circumstances that section 19 prevented the landlords from charging a fee.

The Tribunal disagreed. It held that the absence of an express costs provision did not necessarily preclude the landlord charging a fee for considering a tenant’s application to underlet their property. Section 19 was not intended merely to preserve the right under a lease to charge a fee; where it was reasonable for a landlord to ask for payment of its costs in consenting to the application it could do so.

All the landlords had charged a fee of over £100 to consider the tenants’ applications. The Tribunal sought further submissions from the parties on the size of the fees so they could consider whether these were reasonable and later determined that the amount payable in each case was £40 plus VAT.

Case references:

Holding & Management (Solitaire) Limited v James Knight

[2012] UKUT 1 (LC)