We are commonly asked about charges that a freeholder may make in respect of giving consent for a tenant of a long leasehold property to sub-let that property. A further case decided in the Upper Tribunal is worthy of a short note.
Long leases in residential property often have covenants requiring consent from the landlord before the tenant sub-lets (such consent not to be unreasonably withheld) and to pay all reasonable costs related to the consent. Such a charge is a variable administration charge as found in Schedule 11 Commonhold and Leasehold Reform Act 2002. A tenant is only required to pay the charge to the extent that it is reasonable and either party may apply to the Leasehold Valuation Tribunal (LVT) (First-tier Tribunal (Property Chamber) from 1 July 2013) for a determination as to whether or not such a charge is reasonable.
In this case, Mr Piatti was the leaseholder of a flat in a building owned by Freehold Managers (Nominees) Ltd. The lease prohibited subletting without the consent of the landlord, such consent not to be unreasonably withheld. The freeholder became aware that Mr Piatti was subletting without consent and asked him to apply for permission. The parties were unable to agree the fees suggested which varied depending on the time and circumstances of each letting and Mr Piatti applied to the LVT in relation to a particular sub-letting. The LVT found that no fee was payable as the lease did not provide for one.
An appeal by Freehold Managers (Nominees) Ltd was allowed. The landlord was entitled to charge a fee as part of the condition for granting consent. On the facts of this particular case, a fee of £165 for the sub-letting in question was reasonable.