- Competition and Markets Authority
- 1 June 2009
- 1 April 2012
- Case type:
- Consumer enforcement
- Case state:
- Market sector:
- Distribution and service industries
- Consumer enforcement - changes to business practices agreed
Office of Fair Trading (OFT) closed consumer enforcement case.
Case reference number: CRE-E-24905
Complainant: OFT own-initiative investigation
Investigation into: Hanover Housing Association, an Exempt Charity with Industrial and Provident Society Number: 16324R, whose registered office address is Hanover House, 1 Bridge Close, Staines, TW18 4TB
The fairness of transfer fee terms enforced by Hanover Housing Association in leasehold agreements with tenants of its retirement home properties.
The Unfair Terms in Consumer Contracts Regulations 1999 (‘UTCCRs’)
Enterprise Act 2002 (‘EA’)
Commonhold and Leasehold Reform Act 2002/Landlord and Tenant Act 1927
Hanover Housing Association ('Hanover') is parent of the Hanover Group, which owns over 4,400 freehold interests in leasehold retirement properties. Hanover aims to provide housing for active and independent retired people.
As part of an industry wide investigation, the OFT investigated the use of transfer fee terms by Hanover Housing Association in leasehold agreements with tenants of some of its retirement homes. The OFT was concerned about the fairness of such terms, which it considered may breach the UTCCRs.
Whilst Hanover did not agree with the OFT’s views and believed that its
lease terms were clear and did not breach the UTCCRs or other
legislation, it engaged constructively with the OFT during the
The OFT closed its investigation on the basis of the satisfactory clarification by Hanover of the principles it currently applies when enforcing transfer fee terms. In particular:
- Hanover confirmed that in all but one of the sample leases reviewed by the OFT, the transfer fee is charged in respect of services undertaken by the landlord (referred to as an ‘administration’ transfer fee) and is therefore subject to a test of reasonableness under the Commonhold and Leasehold Reform Act 2002 and can be challenged in the Leasehold Valuation Tribunal if they are excessive. As such, where the lease entitled Hanover to an 'administration' transfer fee, stated to cover Hanover's costs, of 'up to' or 'not exceeding' a certain amount (such as a percentage of the sale price or open market value), or to a fixed percentage of the sale price or open market value, Hanover only collected a fee that reflected justified and reasonable administration costs
- In relation to those remaining leases that contained transfer fee terms arising from an event, but not related to the provision of services (referred to as a ‘non-administration’ transfer fee), Hanover addressed a number of the OFT's concerns about how, and in what circumstances, such clauses were enforced in practice. In particular, Hanover confirmed that it will only charge such fees where the tenant is selling the property - where they are subletting, Hanover will only normally charge a reasonable sum to cover the landlord's costs, and where the property is inherited, the fee would generally be charged only when the heir has sold the property; the OFT reserved its position on its remaining concerns
- Hanover confirmed that where it was the author of a new lease, it did not intend to insert a transfer fee term other than to enable it to recover its reasonable costs in dealing with a transfer.
Opened: 1 June 2009
Closed: 1 April 2012
Case type: Consumer enforcement
Case state: Closed
Market sector: Distribution and service industries