Enfranchisement costs in service charges LTA 1985 s. 20J
Landlords cannot pass non-litigation enfranchisement or Right to Manage costs to non-participating tenants via variable service charges under LTA 1985 s. 20J.
Non-litigation costs incurred, or to be incurred, by a landlord in connection with a relevant claim are not to be regarded as relevant costs to be taken into account in determining the amount of a variable service charge payable by a tenant who is a non-participating tenant in relation to that claim. A lease, contract or other arrangement is of no effect to the extent it makes provision to the contrary. In this section and section 20K — “ the 1967 Act ” means the Leasehold Reform Act 1967; “ the 1993 Act ” means the Leasehold Reform, Housing and Urban Development Act 1993; “ the 2002 Act ” means the Commonhold and Leasehold Reform Act 2002; “ non-litigation costs ” means costs incurred, or to be incurred, other than in connection with proceedings before a court or tribunal; “ non-participating tenant ”, in relation to a relevant claim, means a tenant who is not a participating tenant; “ participating tenant ”, in relation to a relevant claim, means a tenant who— in the case of a claim under Part 1 of the 1967 Act or Chapter 1 or 2 of Part 1 of the 1993 Act, is making the claim; in the case of a claim under Chapter 1 of Part 2 of the 2002 Act, is or has been a member of the RTM company making the claim; “ relevant claim ” means— a claim under Part 1 of the 1967 Act (enfranchisement and extension of leases of houses); a claim under Chapter 1 or 2 of Part 1 of the 1993 Act (enfranchisement and extension of leases of flats); a claim under Chapter 1 of Part 2 of the 2002 Act (right to manage); “ RTM company ” has the same meaning as in Chapter 1 of Part 2 of the 2002 Act (see section 71 of that Act). For provision about when a participating tenant is and is not liable in respect of non-litigation costs in relation to a relevant claim, see— section 19A of the 1967 Act; section 89A of the 1993 Act; section 87A of the 2002 Act.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
Landlords cannot include non-litigation costs from leasehold enfranchisement or Right to Manage claims in variable service charges billed to leaseholders who did not participate in those claims. Any lease clause, contract, or other arrangement that attempts to make a non-participating tenant pay these costs has no legal effect.
Non-litigation costs cover legal, professional, and valuation expenses incurred outside of court or tribunal proceedings. Relevant claims include individual or collective lease extensions and freehold purchases under Part 1 of the 1967 Act or Chapter 1 or 2 of Part 1 of the 1993 Act, as well as Right to Manage claims under Chapter 1 of Part 2 of the 2002 Act.
A non-participating tenant is anyone who did not submit the claim or is not a member of the RTM company making it. The rules governing whether participating tenants must pay these non-litigation costs are set out separately under section 19A of the 1967 Act, section 89A of the 1993 Act, and section 87A of the 2002 Act.
When it applies
- A landlord includes solicitor fees for processing a neighbour's individual lease extension into the annual variable service charge billed to all leaseholders.
- A freeholder attempts to pass valuation costs from a collective freehold purchase onto a leaseholder who chose not to join the purchase.
- A landlord demands that a tenant pay professional fees for responding to a Right to Manage claim when that tenant is not a member of the RTM company.
What this section does not say
- Litigation costs arising from formal proceedings before a court or tribunal regarding lease extension or Right to Manage disputes.
- Non-litigation costs billed directly to participating tenants who made the claim or joined the RTM company.
- Tenant remedies for recovering money after being charged non-litigation costs contrary to this section, which are detailed under section 20K.
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This page reproduces the text of LTA 1985 s. 20J 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.