Types of Leasehold Valuation Tribunal application (Wales)
Administration charges
These rights are set out in Section 158 and Schedule 11 of the Commonhold and Leasehold Reform Act 2002.
An administration charge is one payable by a tenant as part of or in addition to the rent which is paid directly or indirectly for:
- considering applications or providing approvals, for example, for consent to alterations
- providing information or documents by or on behalf of the landlord or other party to the lease, for example on the sale of the flat
- charges arising from a breach of the lease
- charges arising from the non-payment of a sum to the landlord or other party to the lease. These may include legal costs of serving notices, correspondence and interest charged on unpaid sums
An administration charge can be fixed by the lease or may vary. A ‘variable administration charge’ is one where neither the sum nor a formula for calculating the sum is specified in the lease.
An application may be made to the Leasehold Valuation Tribunal (LVT) to determine the tenant’s liability to pay an administration charge, whether the charge is reasonable, or for the variation of a charge fixed by the lease.
Application Form – Liability or Variation of an Administrative Charge
Reasonableness
The legislation provides that ‘a variable administration charge is payable only to the extent that the amount of the charge is reasonable’. The LVT can determine what is reasonable to be paid, if anything, in the circumstances of each case, and that becomes the amount that can be recovered.
For example, where the administration charge is for the recovery of the landlord’s legal costs arising from a breach of the lease, the questions to be addressed might be:
- was the landlord’s action, in raising legal costs, appropriate and reasonable to the circumstances?
- how is the cost justified, in terms of the hours charged for and the level of fees?
Where the charge is simply a fee for, for example, a consent or provision of information, is the charge reasonable in terms of the work the landlord had to carry out in order to provide it?
Where the amount is fixed in the lease, or according to a formula in the lease, the LVT can make an order that the lease is varied to amend the sum or to change or delete the formula, or require the parties to the lease to vary it in the manner the LVT specifies. The variation will change the lease for the remainder of its term.
Where the charge is fixed or based on a formula in the lease, this may relate the charge to a multiple or proportion of the rent or the service charge or to the present market value of the dwelling. In all three cases, the question of reasonableness may centre on the charges or increases in the base figures since the original grant of the lease.
Liability to pay
As with service charges, the LVT may determine:
- the person by whom the charge is payable
- the person to whom it is payable
- the amount which is payable
- the date at or by which it is payable
- the manner in which it is payable
Similar rules apply as with service charges. The application may be made whether or not the payment has been made, but not where the matter has been:
- agreed or admitted by the tenant concerned
- determined by a court
- referred to arbitration. Any reference to arbitration must be with the tenant’s agreement following the dispute arising
- the subject of determination by arbitration as a result of an agreement after the dispute has arisen
Any clause in a lease or any other agreement which appears to commit the tenant to arbitration in advance of a dispute arising is deemed to be void and will not bind the tenant nor prevent an application to the LVT.
Application Form – Liability or Variation of an Administrative Charge
- Last updated:
- 8 December 2020
- Next review:
- 18 December 2026