Part 2 - Leasehold enfranchisement and extension Section 38: Costs of enfranchisement and extension under LRA 1967
Section 38 replaces the separate costs regimes for enfranchisement and lease extension claims under the LRA 1967. The new regime is contained in new Sections 19A, 19B, 19C, 19D and 19E.
	New Section 19A sets out the general rule that neither a tenant nor a former tenant is liable for any costs incurred by another person because of an enfranchisement or lease extension claim, and introduces some exceptions to the general rule. Subsection (3) prevents arrangements to the contrary; however, subsection (5) ensures a former tenant and their successor in title may agree how to split their costs. The general rules do not apply to litigation costs awarded by the court or tribunal (subsection (4)). Subsection (6) clarifies what is not included under "costs" and subsection (7) defines "former tenant" for the purpose of the new regime. Subsection (8) cross-refers to prohibitions on recovering enfranchisement costs via a service charge (see Sections 62 and 64 in Part 4).
	New Section 19B sets out an exception to the general rule where the tenant’s claim ceases for a reason other than a "permitted reason", as defined in the new Section. Where the criteria are met, the tenant is liable to pay the landlord a prescribed amount.
	New Section 19C sets out an exception to the general rule where the price payable for the freehold or extended lease is below a prescribed amount. Where the costs incurred by the landlord are reasonable and do not exceed the prescribed amount, the tenant is liable to pay the difference between the price payable and the reasonable costs incurred. Where the costs incurred by the landlord are reasonable and do exceed the prescribed amount, the tenant is liable to pay the difference between the price payable and the prescribed amount.
	New Section 19D gives the Secretary of State and Welsh Ministers the power to set out the circumstances in which the reversioner is required to pay part of the prescribed amount received under new Sections 19B or 19C to other affected landlords.
	New Section 19E prevents any arrangement from having effect to the extent that it requires a tenant to pay security for the costs of an enfranchisement or lease extension claim.