tenant costs
📖 What is tenant costs? Meaning and definition
Tenant costs typically involve financial liabilities a tenant incurs during specific legal interactions, often with their landlord or in tribunal settings. For instance, under the Leasehold Reform, Housing and Urban Development Act 1993, a tenant seeking a new lease may be responsible for the landlord's reasonable costs associated with investigating the tenant's right to a new lease, valuing the property, and the legal work involved in granting the new lease itself. These costs are considered 'statutory costs' and are determined by the Act.
Beyond statutory costs, tenants can also apply for or be subject to costs in tribunal proceedings. For example, if a party in a tribunal case behaves unreasonably, such as being obstructive or evasive, the tribunal may consider an application for costs against them under Rule 13 of the Tribunal Rules. However, the tribunal takes into account factors like whether the individual was representing themselves without legal advice, which might influence the decision on whether their conduct was unreasonable enough to warrant a costs order.
In practice, when a tenant applies for a new lease, the landlord's legal and valuation costs are often passed on to the tenant. These costs must be reasonable and directly related to the process initiated by the tenant's notice. If the parties cannot agree on the amount of these costs, either the landlord or the tenant can apply to a tribunal for a determination of the payable sum. The tribunal will then assess the reasonableness of the claimed costs based on the evidence presented.
📋 Requirements
- Tenant gives notice under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 for a new lease.
- Costs are incurred by a relevant person (e.g., the landlord) in pursuance of the tenant's notice.
- Costs are reasonable and incidental to investigating the tenant's right, valuing the flat, or granting the new lease.
- For tribunal costs, one party's conduct must be deemed unreasonable under Rule 13 of the Tribunal Rules.
📝 Procedure
- Tenant gives notice to the landlord for a new lease.
- Landlord incurs costs for investigations, valuations, and legal work related to the new lease.
- Landlord presents their costs to the tenant for payment.
- If costs are unagreed, an application is made to the First-tier Tribunal for a determination of statutory costs.
- The Tribunal reviews written submissions and determines the payable costs.
💡 Examples
- A tenant applying for an extension of their lease under the 1993 Act is found liable for the landlord's legal fees of £700 and disbursements of £25.20 for the process.
- A landlord seeks an order from the Tribunal to determine the amount of costs payable by a tenant in connection with negotiations for a new lease of a London property.
- A tenant's application for costs against a landlord in a tribunal case is dismissed because, despite some obstructive behaviour, the landlord was a litigant in person and their conduct was not deemed unreasonable in the legal sense.
- A tribunal determines the statutory costs payable by a tenant to a landlord for matters arising from the tenant's attempts to secure a new lease.
📚 Legal basis
- Leasehold Reform, Housing and Urban Development Act 1993
- Landlord and Tenant Act 1985
❓ Frequently asked questions
What kind of costs can a tenant be liable for when getting a new lease?
When a tenant applies for a new lease, they can be liable for the landlord's reasonable costs related to investigating the tenant's right to the lease, valuing the property, and the legal work involved in granting the new lease, as outlined in the Leasehold Reform, Housing and Urban Development Act 1993.
Can a tenant claim costs against a landlord in a tribunal?
Yes, a tenant can apply for costs against a landlord in a tribunal, typically under Rule 13 of the Tribunal Rules, if they believe the landlord has behaved unreasonably during the proceedings. However, the tribunal will assess the conduct carefully, considering factors like whether the landlord had legal advice.
What happens if the tenant and landlord disagree on the amount of costs for a new lease?
If the tenant and landlord cannot agree on the amount of costs payable for a new lease, either party can apply to the First-tier Tribunal (Property Chamber) for a determination. The tribunal will then assess the reasonableness of the costs based on submissions from both sides.
Are there situations where a tenant's application for costs might be dismissed?
Yes, a tenant's application for costs might be dismissed if the tribunal does not find the other party's conduct to be 'unreasonable' in the legal sense, even if it was somewhat obstructive. The tribunal may consider if the party was a litigant in person without legal advice.
Does 'tenant costs' only refer to money paid to the landlord?
No, 'tenant costs' can also refer to costs a tenant might be ordered to pay to another party in tribunal proceedings, or even their own legal costs if they are unsuccessful in a claim for costs against another party.
What does 'reasonable costs' mean in the context of a new lease?
'Reasonable costs' means that the expenses incurred by the landlord, which the tenant is liable for, must be proportionate and necessary for the process of granting a new lease. The tribunal will scrutinise these costs if there is a dispute.