New guidance on the judicial power to limit landlords’ recovery of litigation costs as an administration charge

In the Housing and Planning Act 2016 (HPA 2016), the government introduced a series of provisions that were intended to increase transparency and fairness for residential tenants.

Section 131 of the HPA 2016 inserted a new paragraph 5A into Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (CLRA 2002), which deals with reasonableness of administration charges.

This provision came into force on 6 April 2017 and gave courts and tribunals the ability to restrict a landlord’s recovery of its costs of legal proceedings from residential tenants as an administration charge.

The Ministry of Housing, Communities & Local Government has recently issued a guidance note on this change, including details of which court or tribunal a tenant should apply to, depending on where the relevant proceedings were heard.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/684250/Section_131_HPA_Guidance_note.pdf