LTA 1985 s. 20C

Stop landlord legal costs as service charge LTA 1985 s.20C

LTA 1985 s.20C: tenant can apply to stop landlord's legal costs being added to service charge. Court/tribunal decides if just and equitable.

Official text LTA 1985 s. 20C — United Kingdom

A tenant may make an application for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with proceedings before a court , residential property tribunal or leasehold valuation tribunal or the First-tier Tribunal , or the Upper Tribunal , or in connection with arbitration proceedings, are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant or any other person or persons specified in the application. The application shall be made— in the case of court proceedings, to the court before which the proceedings are taking place or, if the application is made after the proceedings are concluded, to the county court ; in the case of proceedings before a residential property tribunal, to a leasehold valuation tribunal; in the case of proceedings before a leasehold valuation tribunal, to the tribunal before which the proceedings are taking place or, if the application is made after the proceedings are concluded, to any leasehold valuation tribunal; in the case of proceedings before the First-tier Tribunal, to the tribunal; in the case of proceedings before the Upper Tribunal , to the tribunal; in the case of arbitration proceedings, to the arbitral tribunal or, if the application is made after the proceedings are concluded, to the county court . The court or tribunal to which the application is made may make such order on the application as it considers just and equitable in the circumstances.

Text in force at .

Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.

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What it actually says

Section 20C addresses a specific unfairness in leasehold litigation: a leaseholder wins a challenge to a service charge and then finds the landlord's legal costs of losing it added to next year's service charge, so that the leaseholder pays for both sides. The section lets a tenant apply for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with proceedings - before a court, the First-tier Tribunal, the Upper Tribunal, or in arbitration - are not to be regarded as relevant costs in determining the service charge payable by the applicant or by any other person specified in the application.

Subsection (2) tells you where to apply, and the answer is normally the body hearing the case: the court before which the proceedings are taking place, or the tribunal, or the arbitral tribunal - and, where the application is made after the proceedings are concluded, the county court. It is therefore usually made at the end of the substantive hearing rather than in separate proceedings.

Subsection (3) gives the test, and it is short: the court or tribunal may make such order as it considers "just and equitable in the circumstances". There is no presumption either way in the text. The order can extend beyond the applicant to other leaseholders named in the application, which matters where one leaseholder litigates and the whole block would otherwise share the landlord's costs.

When it applies

  • A leaseholder who has just succeeded before the tribunal and expects the landlord's costs to reappear in the service charge.
  • A landlord's lease clause allowing legal costs to be recovered as a management expense.
  • One leaseholder bringing a challenge that benefits every flat in the block.
  • A dispute settled part way through where the landlord's costs are still in play.
  • Arbitration under a post-dispute agreement where costs are being recovered through the charge.

What this section does not say

  • It is not an order that the landlord pays your costs. It only prevents the landlord's costs being passed back to leaseholders through the service charge.
  • It is not automatic on winning. The test is what is just and equitable in the circumstances, and the outcome of the case is only one factor.
  • It does not cover administration charges for costs. Those are dealt with under separate provisions.
  • It does not apply to costs unconnected with proceedings. The section is limited to costs incurred in connection with court, tribunal or arbitration proceedings.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

Leaseholders succeed at the tribunal on a major works challenge. Months later the freeholder's solicitors' fees for defending it appear as a line in next year's service charge, so the leaseholders would end up paying for both sides.

How the wording applies

Section 20C lets a tenant apply for an order that the landlord's costs of the proceedings are not to be regarded as relevant costs in determining the service charge payable. The test in subsection (3) is simply what is just and equitable in the circumstances - there is no presumption either way, and winning does not make the order automatic. The fact of timing matters: subsection (2) points the application at the body hearing the case, so it is normally made at the end of the substantive hearing rather than later.

How the parties settled it

The freeholder agrees to remove the legal costs line from the service charge account in full, and the leaseholders agree to make no application for their own costs.

Illustrative example

One leaseholder in a block of twelve brings a challenge that, if it succeeds, benefits every flat. The lease allows the freeholder to recover legal costs as a management expense.

How the wording applies

The order can extend beyond the applicant to other people specified in the application, which is what makes it useful where one leaseholder carries a case for the block. The fact worth getting right at the outset is who is named: an order limited to the applicant leaves the other eleven paying a share of the landlord's costs of a case they benefited from.

How the parties settled it

The freeholder agrees not to charge the costs of the proceedings to any flat in the block, and the block agrees to fund future challenges through a jointly agreed contribution rather than leaving one leaseholder to carry them.

Related sections

LTA 1985 s. 19 Service charges capped at reasonable costs: LTA 1985 s. 19 LTA 1985 s. 20 Caps contributions without consultation: LTA 1985 s. 20 LTA 1985 s. 27A Challenge paid service charges: LTA 1985 s. 27A

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We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.

This page reproduces the text of LTA 1985 s. 20C in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.

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