Strengthening leaseholder protections over fees, charges and services: consultation

iii) Proposals to implement the 2024 Act litigation cost measures

166. In order to remove the barriers to access to redress for leaseholders, and to rebalance the litigation costs regime to make it fairer, measures in the 2024 Act seek to better protect leaseholders from unjust litigation costs from their landlord, and to enable leaseholders to recover their own litigation costs from their landlord where appropriate.

167. The 2024 Act does this by requiring landlords to apply to the relevant court or tribunal in order to recover their litigation costs from leaseholders – either as a service charge or as an administration charge (Section 62 of the 2024 Act). It also gives leaseholders the right to apply to the relevant court or tribunal to recover their own litigation costs from their landlord (Section 63 of the 2024 Act).

168. There are some costs which are governed by separate rules, and which do not form part of this consultation. This consultation does not include any proposals relating to litigation costs incurred as a result of relevant proceedings relating to enfranchisement, lease extensions, and applications for the Right to Manage. There are also separate rules which apply in certain circumstances to litigation costs incurred in relation to building safety.

169. For both landlord and leaseholder applications for litigation costs, the relevant court or tribunal will make a decision on costs that it considers just and equitable in the circumstances. Regulations will set out “matters” they will take into consideration when making an order on applications. This will give leaseholders and landlords an understanding of what the court or tribunal will consider when making a decision on an application for litigation costs.

170. The 2024 Act includes a power for the Secretary of State and Welsh Ministers to make regulations on how a landlord’s application to recover litigation costs from multiple leaseholders through the service charge is made; and how notice of the application is to be given to those specified and not specified in the application (for example, to non-participant leaseholders). Given the technical nature of this power, we are minded to develop the detail of the secondary legislation working directly with stakeholders.