Tenant Costs Determination Under Leasehold Reform Act

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : AGR/LON/00AZ/OC9/2024/0086

Property : 197a [ADDRESS], [POSTCODE]

Applicant : [redacted] : Mr [COUNSEL] of [NAME] Respondent: [redacted] [NAME] : Not represented Type of application : Costs under Section 60 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal members : Mr [NAME] Date of determination and venue : 12 March 2025 at 10 [ADDRESS] [POSTCODE] Date of decision : 12 March 2025

DECISION

Summary of the tribunal’s decision (1) The amount of costs payable is £2870.00. Background 1. This is an application made by the applicant landlord pursuant to section 60(1) of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for assessment of the costs payable

2 by the leaseholder following a notice of claim under section 42 which was subsequently withdrawn.

2. By a notice of a claim dated 18 April 2023 served pursuant to section 42 of the Act, the applicant exercised the right for the grant of a new lease in respect of the subject property. At the time, the applicant held the existing lease granted on 28 July 1987 for a term of 99 years from 24 June 1987 at an annual ground rent of £75 rising to £300. The applicant proposed to pay a premium of £24015 for the new lease.

3. On 19 June 2023, the respondent freeholder served a counter-notice admitting the validity of the claim and counter-proposed a premium of £45000 for the grant of a new lease.

4. Terms were not agreed, the leaseholder applied to the tribunal but subsequently withdrew the application.

5. On 27 June 2024 the applicant applied to the tribunal for an assessment of the costs payable.

6. The application form indicates that the applicant seeks costs under section 33 (1) of the leasehold reform, Housing and Urban Development Act 1993 whereas it should have been made under section 60 (1) of the Act. The issues The hearing 7. The case has been decided on the papers making use of the electronic documents received which consist of a bundle prepared by the applicant. No correspondence has been received from the respondent. The claim 8. The applicant has submitted a costs bill totalling £6846 made up of • £2160 solicitors fees, • landlord schedule 2 of the 1993 Act fee £250 • landlords valuation fee £1250 • landlord surveyors invoice £3186

3 The Law 9. Section 60 of the Leasehold Reform, Housing and Urban Development Act 1993 provides 60 Costs incurred in connection with new lease to be paid by tenant. (1)Where a notice is given under section 42, then (subject to the provisions of this section) the tenant by whom it is given shall be liable, to the extent that they have been incurred by any relevant person in pursuance of the notice, for the reasonable costs of and incidental to any of the following matters, namely— (a)any investigation reasonably undertaken of the tenant’s right to a new lease; (b)any valuation of the tenant’s flat obtained for the purpose of fixing the premium or any other amount payable by virtue of Schedule 13 in connection with the grant of a new lease under section 56; (c)the grant of a new lease under that section; but this subsection shall not apply to any costs if on a sale made voluntarily a stipulation that they were to be borne by the purchaser would be void. (2)For the purposes of subsection (1) any costs incurred by a relevant person in respect of professional services rendered by any person shall only be regarded as reasonable if and to the extent that costs in respect of such services might reasonably be expected to have been incurred by him if the circumstances had been such that he was personally liable for all such costs. (3)Where by virtue of any provision of this Chapter the tenant’s notice ceases to have effect, or is deemed to have been withdrawn, at any time, then (subject to subsection (4)) the tenant’s liability under this section for costs incurred by any person shall be a liability for costs incurred by him down to that time. (4)A tenant shall not be liable for any costs under this section if the tenant’s notice ceases to have effect by virtue of section 47(1) or 55(2). (5)A tenant shall not be liable under this section for any costs which a party to any proceedings under this Chapter before [F1the appropriate tribunal] incurs in connection with the proceedings.

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(6)In this section “relevant person”, in relation to a claim by a tenant under this Chapter, means the landlord for the purposes of this Chapter, any other landlord (as defined by section 40(4)) or any third party to the tenant’s lease.

10. Hague on Leasehold Enfranchisement 7th edition states 7-48 No premium is payable upon the grant of the extended lease. But, whether or not he is in fact eventually granted an extended lease (unless the landlord successfully resists the Notice of Tenant’s Claim on the ground of redevelopment184 or own occupation),185 the tenant must pay the following186: (1)The landlord’s costs of investigating his right to the extended lease. (2)The costs of the new lease. These will include the landlord’s solicitor’s costs and disbursements, and any stamp duty payable. (3)Any valuation of the house and premises obtained by the landlord before the grant of the extended lease for the purpose of fixing the rent payable thereunder as from the original term date; however, there can only be such valuation if that date has already passed or if there is only a year or less of the original term unexpired at the date of the grant of the extended lease.187 But the tenant is not liable to pay the landlord’s costs of negotiation of the rent or other terms of the extended lease. The obligation to pay costs under s.14(2)of the Leasehold Reform Act 1967 does not extend to costs in connection with an application to the First-tier Tribunal (in Wales, the leasehold valuation tribunal).188

The tribunal’s determination 11. The tribunal determines that the recoverable costs are the landlords solicitors fees for investigating the tenant’s right to a new lease and costs in preparing a new lease, the landlords valuation fee but not the negotiation fee.

12. There is no itemised cost bill from the landlords solicitor but there is an itemised bill from the landlord surveyor.

13. The landlord’s costs of dealing with the tribunal are not recoverable under this section.

5 14. In the absence of an itemised bill from the landlords solicitor which totals £1800 plus VAT I will make a summary deduction of 25% for correspondence with the landlord’s surveyors and correspondence with the tribunal. This comes to £1620 including VAT 15. The landlords valuation fee is £1250. 16. The total recoverable costs are £2870.

Name: [NAME]: 12 March 2025

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).