Q&A - Issuing Section 20 Notices and Administration fees

QUESTION

With the increasing work load involved in issuing Section 20 Notices, is there a fair and reasonable administration fee we can charge lessees for the additional work.
Company name withheld

ANSWER

The first port of call is always the lease – are such fees recoverable as service charges? If they are, you should then refer to your management agreement with your client – because Section 20 work is now more onerous, many managing agents contract a separate fee for this rather than include it in their day-to-day management fee. If your agreement is silent on this matter you will have to negotiate with your client if you want to charge a fee.
In terms of the amount you charge for this work (and I am ignoring here the professional fees for preparing specifications, managing the tendering process and supervising the works) some managing agents charge a very small percentage of the value of the contract while others have a schedule of fees based on time and costs. Your fees must be reasonable both in terms of the cost to lessees and your remuneration as a property professional.
David Hewett, ARMA