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New powers limit landlords recovering cost of litigation from leaseholders

At present the courts or tribunals can make an order limiting the ability to recover professional fees incurred at the court or tribunal through the service charges. The power to make such an order can be found in s20C of the Landlord and Tenant Act 1985. However, the lease may entitle the landlord to recover such professional fees directly from the leaseholder.

Under Section 131 of the Housing and Planning Act 2016 courts and tribunals have been given a discretionary power to limit the ability of a landlord to recover these fees from a leaseholder as an ‘administration charge’. On 6th April 2017 Regulation 4(h) of The Housing and Planning Act 2016 (Commencement No. 5, Transitional Provisions and Savings) Regulations 2017, section 131 will come into force. This means that from this date a leaseholder will be entitled to apply to the relevant court or tribunal for an order reducing or extinguishing their liability to pay such fees.

The relevant court or tribunal may make whatever order it considers to be just and equitable.

This does not apply in relation to litigation costs incurred, or to be incurred, in connection with proceedings begun before 6th April 2017.

Section 131 applies to England only.

The following tribunal application forms have been amended:

LEASEHOLD 1 – Admin charges – See section 8

LEASEHOLD 3 – Service charges – See section 10

The following form is the standlone form which enables a leaseholder to make an application to the FTT(PC) under paragraph 5A to Schedule 11 of the Commonhold and Leasehold Reform Act 2002.

LEASEHOLD 1a – Application for an order under paragraph 5A to schedule 11 of the Commonhold and Leasehold Reform Act 2002.

LEASE is governed by a board, appointed as individuals by the Secretary of State for the Ministry of Housing, Communities & Local Government.