Automated Summary
Key Facts
The First-tier Tribunal ruled that leaseholders must pay £30 plus VAT for each ground rent collection demand, finding this a reasonable charge under the lease. It also determined it had no jurisdiction over fees for registering subleases, following the precedent set in Proxima GR Properties Ltd v McGhee. The case involved 11 leaseholders challenging charges by Avon Ground Rents Ltd for collecting ground rent and registering subleases at a property in London E1 3BT. The tribunal rejected the applicants' arguments that the charges were unreasonable or unauthorized, citing prior decisions and industry standards.
Issues
- Whether fees charged for collecting ground rents are payable under the lease and if the amount charged is reasonable.
- Whether fees for registering subleases constitute a valid administration charge under paragraph 1(1)(a) of Schedule 11 to the 2002 Act.
Holdings
- The Tribunal determines that the sum of £30.00 plus VAT is payable by the Applicants in respect of each demand of ground rents made by the Respondent. The charges in question are collection fees of £36.00 including VAT for the periods 1 July 2019 to 31 December 2019 and 01 January 2020 to 30 June 2020. Although the amount is small, the decision addresses a significant point of principle regarding the recoverability of such charges under the lease.
- The Tribunal concludes it has no jurisdiction in respect of the payment of fees required for the registration of subleases. This determination is based on the binding decision of Mr Martin Roger QC in the Upper Tribunal case of Proxima GR Properties Ltd v McGhee [2014] UKUT 59 (LC), which held that registration fees do not fall under the scope of Schedule 11 to the 2002 Act.
Remedies
- The Tribunal determines that the sum of £30.00 plus VAT is payable by the Applicants in respect of each demand of ground rents made by the Respondent. The specific charges include a collection fee of £36.00 including VAT for the periods 1 July 2019 to 31 December 2019 and 01 January 2020 to 30 June 2020.
- The Tribunal also determines that it has no jurisdiction in respect of the payment of fees required for the registration of subleases. This conclusion aligns with the Upper Tribunal's decision in Proxima GR Properties Ltd v McGhee [2014] UKUT 59 (LC).
Legal Principles
- The tribunal applied a purposive approach to interpret Schedule 11 of the Commonhold and Leasehold Reform Act 2002, determining that the service of a s.166 notice and associated work are part of the collection process for ground rent, thus justifying the administration charge.
- The tribunal was bound by the Upper Tribunal's decision in Proxima GR Properties Ltd v McGhee [2014] which held that registration fees for subleases do not fall under Schedule 11's administration charges, leading to a lack of jurisdiction over this issue.
Precedent Name
- Proxima GR Properties Ltd v McGhee
- 5 Flats at 104 Torrington Way
- Newton House
Cited Statute
- Commonhold and Leasehold Reform Act 2002
- Consumer Credit Act 1974
Judge Name
- Judge S. Brilliant
- Mr A. Lewicki
Passage Text
- The Tribunal also determines that it has no jurisdiction in respect of the payment of fees required for the registration of subleases.
- Paragraph 7-2.3.2 of Schedule 7 provides: 'If the Landlord or a person connected with the Landlord or employed by the Landlord attends (where permitted by law) to... the collection of rents from the Building... Then an expense is to be deemed to be paid or a cost incurred by the Landlord, being a reasonable fee not exceeding that which independent agents might properly have charged for the same work.'
- The Tribunal determines that the sum of £30.00 plus VAT is payable by the Applicants in respect of each demand of ground rents made by the Respondent. The particular charges referred to us are a collection fee of £36.00 including VAT for the period 1 July 2019 to 31 December 2019, and a further collection fee of £36.00 including VAT for the period 01 January 2020 to 30 June 2020.