Housing: Leasehold Valuation Tribunal System

Lord Beecham Excerpts

Monday 13th January 2014 Lords Chamber

[Lord Ahmad of Wimbledon]

My noble friend comes to this issue with great experience and has been a long-standing campaigner in this regard. She raises the issue of administration charges on leases. Some leases contain covenants for the recovery of legal costs, which is a slightly different issue from the recovery of costs as service charges. I understand there have been calls for the Government to consider the feasibility of creating a provision to prevent the recovery of administration charges, similar to the protection over service charges already provided under Section 20C of the Landlord and Tenant Act 1985. We understand the concern that this topic provokes but, as I am sure my noble friend will agree, we need to look at this very carefully and consult quite widely before deciding on any action that can be taken in this regard.

[Lord Beecham (Lab)]

My Lords, I declare an interest as I have some interest in a leasehold flat. The former cap of £500 on costs has been removed, as the Minister has said, and the Church Commissioners, of all people, recently persuaded the court that a default judgment over service charges allowed them to forfeit a lease. Furthermore, in another case, a landlord recovered from two pensioners £40,000—not £500—as an administrative charge in a dispute over service charges. Is it not time that the Government acted to replace leaseholds for residential properties with commonhold?

[Lord Ahmad of Wimbledon]

My Lords, as the noble Lord will know, the Government have already taken forward the issue of legal costs in relation to service charges. I have already alluded to the Section 20C order, as provided for in the Landlord and Tenant Act 1985, which allows a leaseholder to seek for those service charges—if the landlord is claiming that—to be voided. He also raised the point about the £500 fee. Normally in tribunal cases, we have found that parties pay their own costs, and it is rare for costs to be awarded in the property chamber itself. Only where the tribunal considers that a party has behaved unreasonably could it make a costs order against them.