The Commonhold and Leasehold Reform Act 2002 introduced rights relating to administration charges. These are defined in the 2002 act as ‘an amount payable by a tenant as part of or in addition to rent, which is payable directly or indirectly for:
- the grant of approvals under the lease or applications for such approvals;
- for or in connection with the provision of information or documents by or on behalf of the landlord or a party to the lease other than the landlord or tenant;
- costs arising from non-payment of a sum due to the landlord;
- costs arising in connection with a breach (or alleged breach) of the lease.’
Any administration charge the landlord asks for must be reasonable and the landlord must provide a summary of your rights and responsibilities relating to administration charges with the demand. If the summary is not included, you do not have to pay the charge until the landlord issues the demand with the summary.
In some cases, your lease may also allow your landlord to recover from you legal costs arising as a result of court action or a tribunal decision. These costs may arise as a result of you:
- failing to pay an amount that was due to the landlord; or
- breaking (or allegedly breaking) the terms of the lease.
If the costs result from one of the situations listed above, they will be classed as an administration charge. Administration charges should be reasonable, and you can challenge them by applying to the tribunal for a decision if you do not believe they are fair. However, as with service charges, you cannot challenge an administration charge which:
- you have already agreed or admitted responsibility for paying;
- has been (or will be) referred to arbitration following a dispute; or
- has already been decided by a court or tribunal.