Rebalancing the legal costs regime
Under the terms of a lease, leaseholders may be liable to pay the legal costs of their landlord, regardless of the outcome before the relevant court or tribunal. Currently, leaseholders must apply to the relevant court or tribunal to limit their liability to pay their landlord’s legal costs recovered either through the service charge or as an administration charge. In addition, leaseholders are only able to claim their own legal costs from their landlord under very limited circumstances. This may deter some leaseholders from bringing challenge.
	The Government announced 5 its commitment to ensuring leaseholders are not subject to any unjustified legal costs and can claim their own legal costs from their landlord if appropriate.
	The measures in the Act flip the requirement that leaseholders have to apply to limit their liability for their landlord’s legal costs, and instead require landlords to apply to the relevant court or tribunal to pass any or all of their legal costs on to leaseholders as an administration charge; or on to participant and non-participant leaseholders through the service charge. The relevant court or tribunal will make a decision on applications that is just and equitable in the circumstances. An implied term in all leases gives leaseholders a new right to apply to claim their legal costs from their landlord. The relevant court or tribunal will make a decision on applications that is just and equitable in the circumstances.