What Is an Administration Charge and the Reasonableness Test
Schedule 11 CLRA 2002 defines an administration charge as an amount payable by a tenant of a dwelling for or in connection with: grant of approvals (consent to assign, sublet, alter, mortgage, or change use); provision of information or documents (copy lease, accounts, replies to pre-sale enquiries, s.21 LTA 1985 information); costs arising from a failure to make a payment (late payment administration fees); or costs arising from a breach or alleged breach of a covenant. Administration charges are distinct from service charges (controlled by LTA 1985 s.18) and ground rent. The reasonableness test: variable administration charges are only payable if the amount is reasonable (para 2). Fixed charges stated in the lease are also subject to reasonableness challenge (para 3). FtT can determine whether the charge is payable and, if so, the amount, and can reduce to nil.
Common Disputes and Section 20C Applications
Most frequently disputed: consent fees (£100 to £500 for mortgage approval/subletting/assignment, FtT decisions suggest reasonable fees of £50 to £300 depending on complexity); copy document charges (per-page charges disproportionate to actual cost routinely reduced; flat fee of £25 to £100 typically accepted); solicitors' letters (only recoverable if authorised by the lease and amount is reasonable); LPE1/management information pack (£150 to £400 accepted as reasonable). Section 20C LTA 1985: leaseholder can apply for an order preventing landlord from recovering FtT litigation costs via service charge or administration charge, key protection where landlord has made inflated or unsuccessful claims in proceedings. Landlord best practice: publish schedule of administration charges; base charges on actual cost; keep records of time and cost; review lease basis for each charge.