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Member - 2 posts
Dear Andrew,
The resolution of this issue depends on the wording of the lease. Typically the heads of service charge expenditure will allow a landlord to recover the costs of employing an agent to carry out the services on its behalf and to prepare accounts etc. Sometimes a lease will limit managing agents fees to a percentage of the service cost.
Similarly a lease will usually permit the landlord to charge an admin fee if it does not employ managing agents. Again this should be specified in the heads of service charge expenditure. Sometimes a lease will specify that such fee has to be reasonable and/or should not exceed a specified percentage of the service charge expenditure.
Unless the lease sets out a percentage (which will either be charged correctly or not) it may be open to you to argue that these charges are unreasonable but again depending on the actual wording of the lease. If the OSCAR benchmark is currently running at 8% then this is a strong argument that 15% is unreasonable.
I would be wary about declining payment unless you are sure of your ground as this could give the landlord grounds to forfeit the lease.
Incidentally the RICS service charge code recommends that managing agents fees are not based on a percentage but are fixed and indexed as clearly a percentage fee does not incentivise to ensure best value.
I hope that this helps
Jenny Joint
Member - 2 posts
I would like to hear the response to the above questions also. It seems to me that Landlords are always in a win - win siutation.
Member - 13 posts
I would like landlords to also declare any income streams from insurance rebates
that they may enjoy.... in particular Insurance landlords.
Member - 4 posts
The landlord adds, what we deem to be a unreasonable 15% administration fee on the service charges and all invoices but not rent.
Are we able to decline payment of an administration fee that we deem to be unreasonable.
I am certain that it is not a lease particular. I understand that the OSCAR benchamrk figure for City of London landlords admi fees, is around 8%.
thank you.