The LTA 1985 is amended in accordance with subsections (2) and (3).
Omit section 20C (limitation of service charges: costs of proceedings).
Before section 20D insert—
The CLRA 2002 is amended in accordance with subsections (5) to (7).
In section 172(1) (application of provision to the Crown)—
omit the "and" at the end of paragraph (g);
in paragraph (h), at the end insert , and i Schedule 12 (leasehold valuation tribunals), as it applies in relation to paragraph 5B of Schedule 11.
In section 178(4) (orders and regulations), after "171" insert .", paragraph 5C of Schedule 11"
In Schedule 11 (administration charges)—
omit paragraph 5A (limitation of administration charges: costs of proceedings);
before paragraph 6 insert— Limitation of administration charges: litigation costs 5B 1 No administration charge is payable by a tenant of a dwelling in respect of the landlord's litigation costs. 2 But the relevant court or tribunal may, on an application by a landlord, order that sub-paragraph (1) does not apply to an administration charge in respect of all or any of the landlord's litigation costs. 3 An order may be made only in respect of an administration charge— a that would, but for sub-paragraph (1), be payable by the tenant; b that is for litigation costs that are not incurred, or to be incurred, in connection with relevant proceedings arising under— i Part 1 of the 1967 Act (enfranchisement and extension of leases of houses), ii Chapter 1 or 2 of Part 1 of the 1993 Act (enfranchisement and extension of leases of flats), or iii Chapter 1 of Part 2 of this Act (right to manage). 4 The relevant court or tribunal may make such order on the application as it considers just and equitable in the circumstances. 5 The relevant court or tribunal must, in deciding whether to make an order, take into account any matters specified in regulations made by the appropriate national authority. 6 See paragraph 5C for powers of the appropriate national authority to provide for other exceptions to sub-paragraph (1). 7 A lease, contract or other arrangement is of no effect to the extent it makes provision contrary to this paragraph, regulations made under this paragraph, or an order made under this paragraph. 8 In this paragraph— "litigation costs" means any costs incurred, or to be incurred, by a person in connection with relevant proceedings to which they are party; "relevant proceedings" means proceedings— that are before a court, residential property tribunal, leasehold valuation tribunal, the First-tier Tribunal or the Upper Tribunal, or are arbitration proceedings, to which a landlord and a tenant are party, and that concern a lease to which that landlord and that tenant are party; "the relevant court or tribunal" means— where the relevant proceedings are court proceedings, the court before which the proceedings are taking place or, if the application is made after the proceedings are concluded, the county court; where the relevant proceedings are before a residential property tribunal, a leasehold valuation tribunal; where the relevant proceedings are before a leasehold valuation tribunal, the tribunal before which the proceedings are taking place or, if the application is made after the proceedings are concluded, any leasehold valuation tribunal; where the relevant proceedings are before the First-tier Tribunal, the Tribunal; where the relevant proceedings are before the Upper Tribunal, the Tribunal; where the relevant proceedings are arbitration proceedings, the arbitral tribunal or, if the application is made after the proceedings are concluded, the county court. 9 The reference in the definition of "relevant proceedings" to proceedings concerning a lease includes— a proceedings concerning any matter arising out of— i the existence of the lease, ii any term of the lease, or iii any agreement or arrangement entered into in connection with the lease; b proceedings concerning any enactment relevant to— i the lease, or ii any agreement or arrangement entered into in connection with the lease; c proceedings that otherwise have a connection with the lease. Paragraph 5B: powers to provide for exceptions 5C 1 The appropriate national authority may by regulations provide for circumstances in which— a paragraph 5B(1) does not apply, or b the effect of paragraph 5B(1) is to be suspended until an event of a specified description occurs. 2 The circumstances may include, among other things, that—are of a specified description. a the litigation costs, b the relevant proceedings, or c the landlord, 3 Where, by virtue of regulations under sub-paragraph (1)(b), the effect of paragraph 5B(1) is suspended until an event of a specified description occurs— a paragraph 5B(1) does not have effect before the event, but b paragraph 5B(1) does have effect on or after the event in relation to an administration charge paid or payable before the event. 4 Accordingly, if an administration charge was paid before the event in respect of the landlord's litigation costs because the effect of paragraph 5B(1) was suspended, the landlord may retain the amount of that charge after the event only if the relevant court or tribunal makes an order under paragraph 5B(2) in relation to that charge. 5 In this paragraph— "litigation costs", "relevant proceedings" and "the relevant court or tribunal" have the same meaning as in paragraph 5B; "specified" means specified in regulations under this paragraph.