Landlord and tenant – Underletting – Consent – Commonhold and Leasehold Reform Act 2002 – Landlord and Tenant Act 1927 – Covenant in lease against underletting without consent of landlord – Appellant landlord seeking to charge fee for consent – Whether charging of fee permitted under section 19(1)(a) of 1927 Act where no provision for charge in lease – Whether such fee an administrative charge within Schedule 11 to 2002 Act – LVT determining no fee payable – Appeal allowed The appellant was the landlord under a lease that contained a covenant against underletting the demised premises without the consent of the landlord, not to be unreasonably withheld. The appellant sought to charge the tenants a fee of £135 for giving its consent to a proposed underletting and a further fee of £75 for registration of the underletting. The tenants applied to the leasehold valuation tribunal (LVT), under paragraph 5 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, for a determination of whether the fees were properly payable as an “administration charge”. Held: The appeal was allowed. The appeal was determined on the written representations of the appellant; the tenants did not respond to the appeal. Sally Dobson, barrister
The LVT found that the terms of the lease contained no covenant by the tenants to pay a charge or the costs and expenses incurred by the landlord in dealing with an application for permission to sublet. It held that section 158 of, and Schedule 11 to, the 2002 Act did not create an entitlement to make an administrative charge where the lease did not itself provide for this. It consequently found that the fees were not an administration charge as defined in Schedule 11 and that no fee was payable for consent to the underletting.
On appeal from that decision, the appellant relied on section 19(1)(a) of the Landlord and Tenant Act 1927, so far as it provided that the requirement not unreasonably to withhold consent for underletting did not preclude the right of the landlord to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such licence or consent.
Where a lease contained a covenant against underletting without the consent of the landlord, not to be unreasonably withheld or delayed, and the landlord sought to impose a charge for consent, the question was whether it was unreasonable for the landlord to refuse consent if the tenant did not pay that charge. If the charge was reasonable, it would not be unreasonable for the landlord to refuse consent. Section 19(1)(a) of the 1927 Act provided statutory recognition of that position. The fact that the lease made no provision for a charge would not make such a charge unreasonable: Holding & Management (Solitaire) Ltd v Norton [2011] UKUT 1 (LC); [2012] PLSCS 25 applied.
A charge for consent to underletting, provided it was reasonable, was an “administration charge” within Schedule 11 to the 2002 Act; it fell within the definition of an administration charge in paragraph 1(1) as an amount payable by the tenant as part of, or in addition to, the rent and payable, directly or indirectly, for or in connection with the grant of approvals under the lease. By para 1(3), a “variable administration charge” was an administration charge payable by a tenant that was neither specified in its lease nor calculated in accordance with a formula in the lease. If the charge for consent to the underletting was an administration charge, it was thus a variable administration charge for the purposes of Schedule 11. Since para 2 provided that a variable administration charge was payable only to the extent that the amount of the charge was reasonable, the LVT should have determined whether the fees that the appellant sought to charge were reasonable. That issue remained to be determined and further submissions were invited on it.
Landlord and tenant – Underletting – Consent – Commonhold and Leasehold Reform Act 2002 – Landlord and Tenant Act 1927 – Covenant in lease against underletting without consent of landlord – Appellant landlord seeking to charge fee for consent – Whether charging of fee permitted under section 19(1)(a) of 1927 Act where no provision for charge in lease – Whether such fee an administrative charge within Schedule 11 to 2002 Act – LVT determining no fee payable – Appeal allowed The appellant was the landlord under a lease that contained a covenant against underletting the demised premises without the consent of the landlord, not to be unreasonably withheld. The appellant sought to charge the tenants a fee of £135 for giving its consent to a proposed underletting and a further fee of £75 for registration of the underletting. The tenants applied to the leasehold valuation tribunal (LVT), under paragraph 5 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, for a determination of whether the fees were properly payable as an “administration charge”.The LVT found that the terms of the lease contained no covenant by the tenants to pay a charge or the costs and expenses incurred by the landlord in dealing with an application for permission to sublet. It held that section 158 of, and Schedule 11 to, the 2002 Act did not create an entitlement to make an administrative charge where the lease did not itself provide for this. It consequently found that the fees were not an administration charge as defined in Schedule 11 and that no fee was payable for consent to the underletting.On appeal from that decision, the appellant relied on section 19(1)(a) of the Landlord and Tenant Act 1927, so far as it provided that the requirement not unreasonably to withhold consent for underletting did not preclude the right of the landlord to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such licence or consent. Held: The appeal was allowed.Where a lease contained a covenant against underletting without the consent of the landlord, not to be unreasonably withheld or delayed, and the landlord sought to impose a charge for consent, the question was whether it was unreasonable for the landlord to refuse consent if the tenant did not pay that charge. If the charge was reasonable, it would not be unreasonable for the landlord to refuse consent. Section 19(1)(a) of the 1927 Act provided statutory recognition of that position. The fact that the lease made no provision for a charge would not make such a charge unreasonable: Holding & Management (Solitaire) Ltd v Norton [2011] UKUT 1 (LC); [2012] PLSCS 25 applied.A charge for consent to underletting, provided it was reasonable, was an “administration charge” within Schedule 11 to the 2002 Act; it fell within the definition of an administration charge in paragraph 1(1) as an amount payable by the tenant as part of, or in addition to, the rent and payable, directly or indirectly, for or in connection with the grant of approvals under the lease. By para 1(3), a “variable administration charge” was an administration charge payable by a tenant that was neither specified in its lease nor calculated in accordance with a formula in the lease. If the charge for consent to the underletting was an administration charge, it was thus a variable administration charge for the purposes of Schedule 11. Since para 2 provided that a variable administration charge was payable only to the extent that the amount of the charge was reasonable, the LVT should have determined whether the fees that the appellant sought to charge were reasonable. That issue remained to be determined and further submissions were invited on it. The appeal was determined on the written representations of the appellant; the tenants did not respond to the appeal. Sally Dobson, barrister
