Strengthening leaseholder protections over fees, charges and services: consultation
Litigation costs: proposal for leaseholder right to apply to claim their litigation costs from their landlord
ix) Proposal for the types of cases the leaseholder right to apply to the court or tribunal for their litigation costs should apply to
- The 2024 Act implies a term into all leases which gives leaseholders a new right to apply to the relevant court or tribunal to claim their litigation costs from their landlord. Similar to the landlord application to recover their litigation costs through the service charge or as an administration charge, the relevant court or tribunal will make a decision on costs that it considers just and equitable in the circumstances and regulations will set out matters the court or tribunal must take into consideration when making an order.
- The legislation sets out that leaseholders will only be able to apply to the court or tribunal to claim their litigation costs from their landlord where there are “relevant proceedings” concerning the lease. Among other things, “relevant proceedings” must be those to which a landlord and leaseholder are both party; concern a lease of a dwelling to which that landlord and that leaseholder are both party; and relates to a matter of a description specified in regulations. These regulations will seek to ensure that the leaseholder right to apply to claim their litigation costs from their landlord broadly aligns with the right to recover litigation costs which we understand many landlords are able to recover under the terms of the lease.
- Below in Table 2 and Table 3, are lists of cases (split into claims generally made in the civil court and applications generally made in the relevant tribunal – though some cases can be heard before either court/tribunal) that we are proposing to include in the regulations which will set out the types of cases the relevant proceedings must relate to for the leaseholder right for costs to apply.
Table 2. Cases generally made in the civil court
|
Issue |
Type of claim |
Leaseholder making or defending a claim, including appeals |
|
Possession and forfeiture |
Breach of covenant |
Defending a claim made by a landlord |
|
Arrears (this could include arrears of a service charge, administration charge or ground rent) |
Breach of covenant |
Defending a claim made by a landlord |
|
Other breach of the lease |
Breach of covenant |
Making a claim or defending a claim made by a landlord |
|
Nuisance claims |
Breach of covenant |
Making a claim or defending a claim made by the landlord |
|
Landlord unreasonably withholding consent for improvements (Section 19(2) of the Landlord and Tenant Act 1927) |
Breach of covenant/statutory duty |
Making a claim against the landlord |
|
Service charge monies not held in trust (Section 42 of the Landlord and Tenant Act 1987) |
Breach of trust/statutory duty |
Making a claim against the landlord |
Table 3. Applications generally made in the relevant tribunal
|
Issue |
Type of application |
Leaseholder making an application or opposing an application made by a landlord, including appeals |
|
Determination of breach of covenant or condition |
Section 168, Commonhold and Leasehold Reform Act 2002 |
Opposing an application made by a landlord
|
|
Service charge reasonableness |
Section 19, Landlord and Tenant Act 1985 |
Making an application |
|
Liability to pay service charge |
Section 27A, Landlord and Tenant Act 1985 |
Making an application |
|
Enforcement of duties relating to service charges (not yet brought into force) |
Section 58, the 2024 Act |
Making an application |
|
Administration charge reasonableness |
Paragraph 2, Schedule 11, Commonhold and Leasehold Reform Act 2002 |
Making an application |
|
Liability to pay administration charges |
Paragraph 5, Schedule 11, Commonhold and Leasehold Reform Act 2002 |
Making an application |
|
Enforcement of duty to publish administration charge schedules (not yet brought into force) |
Section 61, the 2024 Act |
Making an application |
|
Challenge to a landlord’s nominated insurer (where a lease requires the leaseholder to insure the property with an insurer nominated by the landlord) |
Paragraph 8 of the Schedule, Landlord and Tenant Act 1985 |
Making an application or opposing an application made by a landlord |
|
Right to claim where excluded insurance costs charged (not yet brought into force) |
Section 59, the 2024 Act |
Making an application |
|
Enforcement of duty to provide insurance information (not yet brought into force) |
Section 60, the 2024 Act |
Making an application |
|
Dispensation of consultation requirements for major works |
Section 20ZA, Landlord and Tenant Act 1985 |
Opposing an application made by a landlord |
|
Appointment of a manager |
Section 24, Landlord and Tenant Act 1987 |
Making an application |
- We are minded to provide that the leaseholder right to apply for their costs from their landlord is broadly in line with the right to recover litigation costs that we understand many landlords currently have under the terms of the lease. We would welcome views and further evidence on whether lease terms allowing for the recovery of litigation costs from leaseholders generally give landlords the right to recover their costs for varying a lease (i.e. an application to the relevant tribunal under Section 35 of the Landlord and Tenant Act 1987); and views on whether leaseholders should be given the right to apply to the court or tribunal to claim their litigation costs from varying a lease from their landlord under Section 35 of the Landlord and Tenant Act 1987, either by making an application or opposing an application made by a landlord.