First-tier Tribunal Rejects Administration Fee for Ground Rent Collection

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BH/LAC/2024/0002 Property : [ADDRESS] [POSTCODE] Applicants : [redacted] (2) [NAME] (Flat 1) (3) [COMPANY] (Flats 4, 5 & 6) (4) [NAME] (Flat 8) (5) [COUNSEL] (Flat 7) Representative : Ms [COUNSEL] Respondent : [redacted] : [RESPONDENT] of [NAME] : Schedule 11, paragraph 5 of the Commonhold and Leasehold Reform Act 2002 Tribunal member(s) : Judge Tagliavini Mr Duncan Jagger MRICS Venue : 10 [ADDRESS] [POSTCODE] Date of decision : 2 October 2024 14 October 2024 (amended pursuant to rule 50 of The Tribunal Procedure (First-tier Tribunal) Rules 2013

DECISION

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The tribunal’s decisions 1. The tribunal determines the administration fee in the sum of £648 i.e.

£72.00 (including VAT per lessee) charged by the respondent in respect

of the collection of ground rent is not due from or payable by the

applicants under the terms of their lease.

2. The tribunal makes an order under s.20C of the Landlord and Tennant

Act 1985.

3. The tribunal makes and order under paragraph 5A of Schedule 11 of the

Commonhold and Leasehold Reform Act 2002.

The [NAME] 4. This is an [NAME] for a determination of:

(i) Whether the respondent is entitled to impose an administration

charge of £72 for the collection of rent as referenced in the lease

at Schedule 7 Para 2.3.2. This appeared in an invoice dated 28

November 2023.

(ii) Whether costs in connection with forfeiture proceedings are

recoverable. These costs appear to relate to matters concerning

case reference LON/00BH/LSC/2023/0209.

(iii) Whether orders should be made under s 20C and Para 5A Sch 11. 5. Subsequently, the respondent was debarred from playing any further

role in this [NAME]. That debarring Order was partially lifted by an

Order dated 16 Augst 2024 and provided that ‘The Tribunal will be

determining the issue raised at para 2(i) of the 16 April 2024.’ This was

on the grounds that the question under 2(ii) above had already

been determined by the tribunal in its decision

LON/00BH/LSC/2023/0209. Background 6. The leaseholders of [ADDRESS] acquired the right to manage the

subject property with effect from 31 January 2023. Since then, the

respondent has issued demands to lessees for payment of ground rent

and added to this a ‘collection’ charge of £72.00 and has asserted this is

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an administration charge pursuant to Schedule 7 paragraph 2.3.2 of the

lease. 7. The respondent has also sought to make demands for the payment of

administration charges in the sum of £150 in respect of forfeiture

proceedings. However, similar charges were found by the tribunal in its

decision in LON/00BH/LSC/2023/0209 not to be payable by the

lessees. As stated above this will not be dealt with in this [NAME] as

it has already been the subject of a determination by a previous tribunal. Preliminary matters 8. Only those lessees who have made a signed written [NAME] to be

joined as a party, are applicants to this [NAME]. The property 9. The subject property at [ADDRESS] [POSTCODE]

(‘the Property’) comprises a purpose built block containing 9 flats. The applicants’ case 10. The applicants asserted that the administrative charge for the collection

of ground rents is not payable under the terms of the lease and in reliance

on [COMPANY] v Stampfer [2022] EWCA Civ 1375. 11. The applicants also asserted that a number of cases have come before the

First Tier Tribunal on the same point, i.e. whether charges may be made

for ground rent collection. A common feature appears to be that the

Respondents try to claim charges for ground rent collection after the

leaseholders have been awarded the Right to Manage the block. 12. The applicants stated that the respondents claim that a charge for

collection of rent on the [ADDRESS] building is billable under

Schedule 7 of the leases at paragraph 7-2.3.2 is wrong. The applicants

accepted that previous cases at the First Tier Tribunal, although are not

binding on the present [NAME] the present situation, it is clear

that the Respondents have been told on several occasions that there is

no basis for using service charge provisions in a lease to claim an

administration charge. The respondent’s case 13. The respondent asserted that the Rents are defined in the lease at clause

1.1.8 and at clause 2.1 it is to be paid by equal yearly payments on 1

January in each year. At clause (sic) 7-2.3.2 of the leases it is stated that:

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If the Landlord or a person connected with the landlord

attends (where permitted by law) to

...

7-2.3.2.4 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

[NAME] might property have charges for the same

work. 14. The respondent asserted that the cost charged for the year is £50 plus

vat and state that this is a reasonable fee which may properly have been

charged by an independent agent. The tribunal’s reasons 15. The tribunal determines that the respondent cannot be said to have

collected the ground rent that was said to due, after the service only of a

demand for payment. Therefore, the tribunal finds the respondent is not

entitled to demand an administration fee of £50 plus £72 including VAT

for the collection of the ground rent; [COMPANY] [2022] EWCA Civ 1375. Therefore, the sum of £50 plus £72

including VAT demanded for the collection of the ground rent is not due

from or payable by the applicants whether or not it has been properly

made due by the service of a notice under s.166 of the Commonhold

and Leasehold Reform Act 2002 (if any). 16. Further, the tribunal finds the leases make reference to the attendance

at the Building by the landlord or an agent for the purpose of the

collection of the ground rent. In this instance there has been no

‘attendance’ at the Building but simply letters and emails sent

demanding payment of the ground rent and administration charge and

the respondent has not asserted otherwise. Therefore, the

respondent cannot be said to have ‘collected’ the ground rent and is

therefore not entitled to seek an administration charge. 17. In light of this decision, the tribunal considers it reasonable to make an

order under section 20C of the Landlord and Tenant Act 1985 and

paragraph 5A of schedule 11 of the Commonhold and Leasehold Reform

Act 2002, so that none of the respondent’s costs of this [NAME] can

be sought from the applicants.

Name: Judge Tagliavini

Date: 2 October 2024

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Amended 14 October 2024

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the Tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First- tier Tribunal at the [NAME] which has been dealing with the case. The [NAME] should be made on Form RP PTA available at https://www.gov.uk/government/publications/form-rp-pta-[NAME]-for- permission-to-appeal-a-decision-to-the-upper-tribunal-lands-chamber The [NAME] for permission to appeal must arrive at the [NAME] within 28 days after the Tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the Tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

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