A ban on charging a fee for processing credit card payments came into force on Saturday 13th January 2018.
As landlords and managing agents - do you allow your leaseholders to pay service charges by credit card payment? If you do, it seems you will be affected by the new EU regulations and no longer be able to pass credit card processing fees onto leaseholders making the payments. Instead you will be liable for the cost associated.
There seems to be little you can do about this but have you considered the following:
Can the leaseholder transfer the funds via bank transfer, standing order of Direct Debit - these would be free of charge
Have the reviewed the lease? Can the costs of ‘running and administrating the development’ allow you to recover the costs through the service charge? As of yet, there is no case law on the subject so we cannot be sure how the First Tier Tribunal will interpret any such lease provisions, but it may be a commercial decision that some landlords may wish to take until the matter is determined by the courts/tribunals.
Subject to any such challenge and/or tribunal decisions on the matter, the lease terms could be varied to expressly permit such a charge to be put through the service charge provisions in the leases.
Upon renewal, your management fee could be adjusted to take into account such additional costs.
If you would like to review your lease, please contact Yashmin Mistry, Partner and Property Practice Group Leader.
