In residential property management, it is not always that legislation is drawn up for the benefit of the leaseholder. But this has been done with new powers to the First Tier Tribunal regarding legal costs. For many years since the Leasehold and Tenant Act of 1985 the tribunal, then known as the Leasehold Valuation Tribunal has powers to make an order limiting the ability to recover professional fees incurred at the court or tribunal through the service charge. The power to make this order is found in Section 20c of the LTA Act 1985.
However, the lease may entitle a landlord to recover such professional fees directly from the leaseholder through a clause which refers to proceedings in anticipation of forfeiture whether forfeiture is granted or not.
The impact of this clause and the costs against the leaseholder in dispute over service charges has been to reduce the number of cases going to the FTT. The risk of a large bill to argue the leaseholder’s case was not worth it. It was agreed by the Upper Tribunal that such cost clauses can be used against leaseholders.
Now under Section 131 of the Housing and Planning Act 2016 courts and tribunals have been given discretion to limit the ability of the landlord to recover these fees from a leaseholder as an administrative charge.
On 6th April 2017 Statutory Instruments came into force to help leaseholders by entitling them to apply to the relevant court or tribunal for an order reducing or extinguishing their liability to pay such fees. The only restriction is that this regulation does not apply to litigation costs incurred in connection with proceedings begun before 6 April 2017.
For some leaseholders this is going to draw like pollen to a bee.
The details can be found here.