In this feature we explain what admin fees are, why admin fees might vary from one housing provider to another, and how to find out what your own landlord charges for different administration services.
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Here are the key takeaways:
- Leasehold administration charges: Admin fees are a type of leasehold administration charge. They are different from service charges.
- Examples of admin fees: Examples of when you might be charged admin fees include: staircasing, lease extension, remortgaging, selling your home, applying to make a home improvement, subletting, or if you request a copy of your lease.
- Cost: Different housing providers are likely to charge different admin fees, even for the same thing.
- Transparency: Transparency is important. People need to know what costs they might have to pay in the future.
Read on….
What are admin fees?
There are three different types of leasehold administration charge: ground rent, service charges and admin charges. Admin charges are also known as admin fees.
Your lease will provide information about what sort of things you might pay an admin fee for. For example, the 2021-26 model lease for flats contains the following terms:
7.4 Service Provision
The relevant expenditure to be included in the Service Provision shall, subject to Schedule 9, comprise all expenditure reasonably incurred by the Landlord in connection with the repair, management, maintenance and provision of services for the Building and shall include (without prejudice to the generality of the foregoing):
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7.4.5. any administrative charges incurred by or on behalf of the Landlord including but not limited to:
(a) the grant of approvals under this Lease or applications for such approvals
(b) the provision of information or documents by or on behalf of the Landlord;
(c) costs arising from non-payment of a sum due to the Landlord; and/or
(d) costs arising in connection with a breach (or alleged breach) of this Lease.
What does this actually mean? You might find that you have to pay admin fees if you staircase (buy more shares), extend your lease or sell your home; when you remortgage; if you make a home improvement request; if you make an application to sublet your home; or request a copy of your lease. This isn’t an exhaustive list, but you get the picture.
Different housing providers might charge admin fees for different things, or calculate them in different ways. We’ll discuss this in more detail below.
Why don’t housing providers all charge the same admin fees?
In 2020 a representative from Shared Ownership Resources took part in a G15 project to review shared ownership admin fees. (The G15 is a group of London’s largest housing associations). The G15 were aware of a perception of unfairness around charges to shared owners, including admin fees. They were also aware of a wide disparity in charges for apparently similar activities across their member organisations.
Admin fees should simply cover administrative costs, rather than generate a profit. But it’s actually fairly challenging to set admin fees at a level which covers direct costs and overheads (rent, utilities, support staff, etc) without making either a loss or a gain. Some housing associations might be more skilled than others in carrying out the necessary calculations.
There were several other explanations for differing admin fees.
- Different fees might reflect different interpretations of administrative services. For example, some housing associations charge admin fees for leasehold extension, whilst others include those fees in the cost of the lease extension premium.
- Some housing associations might charge admin fees on an individual service by service basis, whilst others might simply cover fees off in an overall generic management charge. (Sometimes the time and effort involved in apportioning costs at a detailed individual service level could actually cost more than it’s worth).
Where can I find out what admin fees my housing provider charges?
Some housing providers publish this information on their website, but not all. If not, you will need to contact them to find out.
‘The GLA is aware that some housing providers publish a schedule of fees on their website which can help to improve transparency, however this is not consistent across the sector, and the information can be hard for prospective and current owners to find. One option to improve this would be to require all housing providers who are in receipt of GLA funding to clearly publish a schedule of additional fees related to shared ownership properties on their website, to ensure that there is transparency, and to enable prospective purchasers to compare the level of fees required from different providers to inform decisions about their purchase.’
Consultation on Intermediate Housing, Greater London Authority, August 2020
Transparency
Different housing providers charging different admin fees isn’t necessarily a problem, so long as the fees can be clearly explained and justified.
But transparency is a problem if first-time buyers don’t know that they could be charged admin fees for commonplace events such as remortgaging and home improvements.
What does the Shared Ownership Code say about admin fees?
The new Shared Ownership Code covers pet fees and the reasonableness of fees.
3.5 Restricting pet fees: Providers will not charge additional fees for processing the enquiry to allow pets into the home. Providers can, however, pass on fees charged by external freeholders to shared owners.
3.6 Charging reasonable fees: Providers must charge reasonable fees for administrative services, such as those related to resales, staircasing, and other customer transactions. Fees must be clearly explained, with transparency about what each fee covers. Fees should be appropriate to the nature and complexity of the service provided.
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