Part 2Leasehold enfranchisement and extension
Costs of enfranchisement or extension
38Costs of enfranchisement and extension under the LRA 1967
1
The LRA 1967 is amended as follows.
2
In section 9 (costs of enfranchisement)—
a
in the heading, omit “and costs of enfranchisement,”;
b
omit subsections (4) and (4A);
c
omit subsection (5)(b).
3
In section 10(1A) (landlord’s covenants on enfranchisement), omit the words from “and in the absence” to “assurance)”.
4
In section 14 (costs of extension)—
a
omit subsections (2) and (2A);
b
omit subsection (3)(b).
5
In section 15(9) (landlord’s covenants on extension), omit the words from “and in the absence” to “assurance)”.
6
After section 19 insert—
Costs
19ALiability for costs associated with enfranchisement and extension claims
1
A tenant is not liable for any costs incurred by any other person as a result of the tenant’s claim to acquire a freehold or extended lease under this Part, except as referred to in—
a
subsection (4),
b
section 19B (liability where claim ceases to have effect), and
c
section 19C (liability where tenant acquires the freehold or lease).
2
3
A lease, transfer, contract or other arrangement is accordingly of no effect to the extent it would provide to the contrary.
4
A tenant or former tenant is liable for costs incurred by another person in connection with proceedings before a court or tribunal if—
a
the court or tribunal has power under this Part or another enactment to order that the tenant or former tenant pay those costs, and
b
the court or tribunal makes such an order.
5
A former tenant is liable for costs incurred by a successor in title to the extent agreed between the former tenant and that successor in title.
6
a
“claim” includes an invalid claim;
7
In this section, “former tenant” means a person who was a tenant making a claim to acquire a freehold or extended lease under this Part, but is no longer a tenant.
8
19BLiability for costs: failed claims
1
A tenant is liable to the landlord for a prescribed amount in respect of non-litigation costs if—
a
the tenant’s claim to acquire a freehold or extended lease of a house and premises under this Part ceases to have effect, and
b
the reason why the claim ceases to have effect is not a permitted reason.
2
The permitted reasons are—
a
the claim ceasing to have effect under regulations under section 4B (landlord certified as community housing provider);
b
the claim ceasing to have effect under section 5(6) (compulsory acquisition);
c
an order being made under section 17(2) (landlord’s redevelopment rights);
d
an order being made under section 18(4) (landlord’s residential rights);
e
the claim ceasing to have effect under section 28(1)(a) (land required for public purposes etc);
f
the claim ceasing to have effect under section 32A (property transferred for public benefit etc);
g
the claim ceasing to have effect under section 74(2) of the Leasehold Reform, Housing and Urban Development Act 1993 (estate management schemes).
3
For the purposes of this section—
a
where Schedule 1 (enfranchisement or extension by sub-tenants) applies to the claim, “the landlord” means the reversioner (see paragraph 1(1)(b) of that Schedule);
b
“prescribed” means prescribed by, or determined in accordance with, regulations made—
i
in relation to England, by the Secretary of State;
ii
in relation to Wales, by the Welsh Ministers;
c
“non-litigation costs” are costs that are or could be incurred by a landlord as a result of a claim under this Part other than in connection with proceedings before a court or tribunal;
d
a reference to a claim “ceasing to have effect” includes—
i
the claim having been withdrawn or deemed withdrawn;
ii
the claim having been set aside by the court or the appropriate tribunal;
iii
the claim ceasing to have effect by virtue of the tenant failing to comply with an obligation arising from the claim;
e
a claim does not cease to have effect if it results in the acquisition of the freehold or extended lease;
f
where a claim ceases to have effect by virtue of a person who was a tenant assigning their lease without assigning the claim under section 5(2), “tenant” includes that person.
4
Regulations under this section are to be made by statutory instrument.
5
A statutory instrument containing regulations under this section is—
a
where it contains regulations made by the Secretary of State, subject to annulment in pursuance of a resolution of either House of Parliament;
b
where it contains regulations made by the Welsh Ministers, subject to annulment in pursuance of a resolution of Senedd Cymru.
19CLiability for costs: successful claims
1
A tenant is liable to the landlord for the amount referred to in subsection (2) if—
a
the tenant makes a claim to acquire a freehold or extended lease of a house and premises under this Part,
b
the tenant acquires the freehold or extended lease,
c
d
the landlord incurs costs as a result of the claim,
e
the costs are incurred other than in connection with proceedings before a court or tribunal,
f
the costs incurred by the landlord are reasonable, and
g
the costs are more than the price payable.
2
The amount is the difference between—
a
the price payable by the tenant, and
b
the costs incurred by the landlord, or, if those costs exceed a prescribed amount, that prescribed amount.
3
In this section—
a
where Schedule 1 (enfranchisement or extension by sub-tenants) applies to the claim, “the landlord” in this section means the reversioner (see paragraph 1(1)(b) of that Schedule);
b
“prescribed” means prescribed by, or determined in accordance with, regulations made—
i
in relation to England, by the Secretary of State;
ii
in relation to Wales, by the Welsh Ministers.
4
Regulations under this section are to be made by statutory instrument.
5
A statutory instrument containing regulations under this section is—
a
where it contains regulations made by the Secretary of State, subject to annulment in pursuance of a resolution of either House of Parliament;
b
where it contains regulations made by the Welsh Ministers, subject to annulment in pursuance of a resolution of Senedd Cymru.
19DPower to require allocation of amounts paid under section 19B or 19C
1
The appropriate authority may by regulations provide for circumstances in which, if—
a
Schedule 1 (enfranchisement or extension by sub-tenants) applies to a claim, and
the reversioner is required to pay a proportion of that amount to one or more of the other landlords (see paragraph 1(3) of Schedule 1).
2
In this section, “appropriate authority” means—
a
in relation to England, the Secretary of State;
b
in relation to Wales, the Welsh Ministers.
3
Regulations under this section—
a
may make provision for the appropriate tribunal to order payment;
b
are to be made by statutory instrument.
4
A statutory instrument containing regulations under this section is—
a
where it contains regulations made by the Secretary of State, subject to annulment in pursuance of a resolution of either House of Parliament;
b
where it contains regulations made by the Welsh Ministers, subject to annulment in pursuance of a resolution of Senedd Cymru.
19ESecurity for costs
A lease, transfer, contract or other arrangement is of no effect to the extent it requires a tenant to pay another person an amount in anticipation of the tenant being liable to a person in respect of their costs as a result of a claim under this Part.
7
In section 20 (jurisdiction of county court), omit subsections (4) and (4A).
8
In section 22(3)(a) (deposits), omit “and landlord’s costs”.
9
a
in section 9(5)(c) (landlord’s lien as vendor), for “him” substitute “the tenant”
;
b
in section 14(3)(c) (conditions for grant of extended lease), for “him” substitute “the tenant”
;
c
in section 17(4)(b) (redevelopment rights), omit the words from “but” to “the notice”;
d
in section 18(6)(b) (residential rights), omit the words from “but” to “the notice”;
e
in section 19(14)(b) (management powers), omit the words from “and” to “withdrawn”;
f
g
in section 32A(5) (property transferred for public benefit), omit paragraph (a).