In order to redress the problem of landlords arbitrarily recovering payments which leaseholders could not challenge as to their reasonableness, Schedule 11 of the Commonhold and Leasehold Reform Act 2002, introduced them as a new legal category, administration charges. They are neither service charges or ground rent and can be levied for the following:
Fixed or Variable?
Such charges will either be fixed, meaning they are calculated by reference to a formula, or 'variable'. If the administration charge is fixed then the only way to challenge it is to apply to the LVT for a lease variation on the grounds that either the calculation formula is unreasonable or the adminstration charge specified in the lease is unreasonable. Any lease variation will however only affect future payments so even if the charge is clearly unreasonable, it will still have to be paid until the variation comes into effect.If the charge is variable then under s158 of the 2002 Act, leaseholders have the right to ask the LVT whether it is payable. The request can be made before or after payment because the LVT doesn't presume that because the charge has been paid that the issue of reasonableness doesn't arise. If the Tribunal determines that the charge is payable it may also determine:
WITHOLDING PAYMENTAs with service charge demands, under s153 Schedule 11 of the Service Charges (Summary Of Rights And Obligations And Transitional Provision) (England) Regulations 2007 leaseholders are legally entitled to withhold administration charges from the landlord if they do not receive a summary of rights and obligations in respect of these demands otherwise it is not payable. A landlord will not be able to apply to the LVT to dispense with the requirement to serve these summaries and any clauses of the lease relating to non-payment or late payment (i.e. interest charges etc) are deemed to have no effect during the period that administration charges are withheld.
While this website is constantly checked and updated for accuracy, the information and articles provided by Leasehold Life and it's guest contributors are not to be construed as legal advice.
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