Jurisdiction and Role of the First-tier Tribunal (Property Chamber)

The First-tier Tribunal (Property Chamber) is the primary forum for resolving substantive disputes in lease extension claims under LRHUDA 1993, with its jurisdiction rooted in Section 48(1). This provision empowers the FTT to determine the premium payable and any disputed terms of the new lease when negotiations between the leaseholder and landlord fail after the statutory period following a Section 42 Notice and Section 45 Counter-Notice. The tribunal applies valuation principles outlined in Schedule 13 of LRHUDA 1993, assessing the diminution in the landlord’s reversionary interest, marriage value (where the lease has fewer than 80 years remaining), compensation for losses, and the impact on intermediate leasehold interests.

The FTT’s jurisdiction extends beyond core valuation disputes to ancillary matters, such as the reasonableness of non-statutory lease terms (e.g., modified covenants) or preliminary issues like the validity of a Section 42 Notice, provided they are tied to the premium or terms. Cases may be transferred from the county court under Section 176A of the Commonhold and Leasehold Reform Act 2002 when specialised leasehold expertise is required. The tribunal’s composition, typically a legally qualified chairperson, a professional valuer or surveyor, and occasionally a lay member, ensures a balanced evaluation of legal and technical issues. Proceedings are designed for accessibility, with informal hearings, property inspections where necessary, and the ability to issue consent orders if parties settle pre-hearing.

Costs jurisdiction is limited. Under Section 60(1) of LRHUDA 1993, leaseholders are liable for landlords’ reasonable pre-proceeding costs (e.g., investigation and Counter-Notice preparation), but tribunal hearing costs are generally non-recoverable unless a party acts unreasonably. The FTT’s jurisdiction is confined to England, with equivalent functions in Wales handled by the Residential Property Tribunal Wales. Professionals can find guidance on application processes at See more on how to apply to the FTT or via the official form at Form Leasehold 9.

Jurisdiction and Role of the Upper Tribunal (Lands Chamber)

The Upper Tribunal (Lands Chamber) primarily serves as an appellate body for FTT decisions in lease extension disputes, reviewing determinations on points of law or procedural irregularities under Section 31 of the Tribunals, Courts and Enforcement Act 2007. Appeals require permission, sought from the FTT within 28 days of its decision; if refused, direct application to the UT is possible. The UT’s role includes clarifying legal interpretations of LRHUDA 1993, such as Schedule 13 valuation methodologies or permissible lease terms, establishing precedents that guide future cases. For example, in Harding v 81-83 Balham High Road RTM Co Ltd [2025] UKUT 75 (LC), the UT addressed development value inclusion in premiums, reinforcing legal consistency.

In rare cases, the UT assumes direct jurisdiction, such as through FTT referrals for complex cases with significant financial or precedential implications, or applications to modify restrictive covenants impacting lease extensions. Comprising senior judges (often High Court-equivalent) and expert members, the UT adopts a more formal procedure than the FTT, with broader costs powers that increase financial risks. As a superior court of record, its decisions carry authoritative weight, influencing tribunal practice across England. Appeals from the UT proceed to the Court of Appeal, discussed below.

Limitations of Tribunals’ Jurisdiction

Both tribunals have defined jurisdictional boundaries in lease extension disputes. The FTT cannot adjudicate non-statutory contractual disputes, such as breaches of existing lease covenants unrelated to the new lease’s terms, nor can it enforce procedural compliance (e.g., compelling notice service or resolving timing disputes). It lacks authority to award interest, statutory penalties, injunctive or declaratory relief, or handle criminal matters like fraud in valuations. Third-party disputes, such as those involving mortgagees or superior landlords not tied to valuation, are also excluded. The tribunal’s remit is limited to England, with Welsh cases handled separately.

The UT’s jurisdiction is narrower, confined to appellate reviews or referred cases. It cannot hear primary disputes or reassess factual evidence (e.g., surveyor valuations) unless a legal error is evident, nor can it address issues outside the FTT’s original scope, such as procedural notice disputes. Both tribunals are restricted to LRHUDA 1993 matters and cannot extend to other leasehold rights (e.g., collective enfranchisement) unless ancillary. Remedial powers are limited, precluding enforcement orders like specific performance.

Circumstances Requiring County Court Applications

Certain lease extension disputes fall outside tribunal jurisdiction, necessitating county court applications. Procedural challenges, such as disputes over the validity of a Section 42 Notice (e.g., service errors or eligibility under Section 39), require court determination before tribunal involvement. If a landlord fails to serve a Section 45 Counter-Notice, leaseholders must seek a vesting order under Section 49 to secure the extension. Enforcement of FTT decisions, such as compelling lease execution post-premium determination, requires county court orders for specific performance.

Disputes over the reasonableness of landlords’ costs under Section 60(1), beyond valuation contexts, or issues arising from notice withdrawals (e.g., the 12-month reapplication bar under Section 42(8)), are handled by the county court. Third-party consents, redevelopment objections under Section 47, or cases involving untraceable landlords (requiring vesting orders under Section 50) also mandate court applications. Complex legal issues or preliminary eligibility disputes may prompt transfers to the county court under Section 176A of the Commonhold and Leasehold Reform Act 2002, ensuring appropriate forum allocation.

Challenging Upper Tribunal Decisions: The Court of Appeal

Parties seeking to challenge a UT decision in a lease extension dispute must appeal to the Court of Appeal, as the UT is a superior court of record under Section 3 of the Tribunals, Courts and Enforcement Act 2007. Permission to appeal is required, initially from the UT within 28 days, or directly from the Court of Appeal within 7 days of refusal, per Civil Procedure Rules Part 52. Appeals are limited to points of law, such as misapplication of Schedule 13 valuation principles, procedural irregularities, or failure to follow binding precedents like Earl Cadogan v Sportelli [2008] UKHL 71, which clarified deferment rates.

The Court of Appeal cannot directly rule a premium “wrong” by reassessing factual valuations or surveyor evidence, as its jurisdiction excludes factual re-evaluations. However, it can intervene if the UT’s decision reflects a legal error, such as misinterpreting marriage value or statutory disregards. For instance, in Nailrile Ltd v Earl Cadogan [2009] EWCA Civ 289, the Court corrected errors in valuation assumptions. If successful, the Court may set aside the UT’s decision, remit the case for redetermination, or, rarely, substitute its own ruling. Costs risks are significant, with broad powers to award costs under CPR Part 44, necessitating careful strategic assessment.

In lease extension disputes under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993), the powers of tribunals and courts to award costs are governed by a combination of statutory provisions, procedural rules, and case law. A key principle stems from Section 60 of LRHUDA 1993, which makes the leaseholder liable for the landlord's reasonable non-litigation costs related to investigating the claim, valuing the flat, and granting the new lease, but explicitly excludes costs incurred in tribunal proceedings (Section 60(5)). However, as of August 2025, the Leasehold and Freehold Reform Act 2024 (LFRA 2024) has amended this regime, introducing a general "each party bears their own costs" rule for non-litigation costs in enfranchisement claims, including lease extensions, with tribunals and courts able to award costs only for unreasonable conduct. Below is a detailed examination of the costs powers for each relevant body, focusing on what they can and cannot award in lease extension cases.

First-tier Tribunal (Property Chamber)

The First-tier Tribunal (Property Chamber) (FTT) has limited powers to award costs in lease extension disputes, primarily governed by Rule 13 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. The FTT operates on a "no costs shifting" basis, meaning each party generally bears their own costs, regardless of the outcome. This aligns with the tribunal's emphasis on accessibility and informality, particularly for leaseholders who may not have legal representation.

What the FTT Can Award:

• Costs for Unreasonable Conduct: Under Rule 13(1)(b), the FTT may order a party to pay costs if it finds that the party has acted unreasonably in bringing, defending, or conducting the proceedings. This includes behaviors such as failing to comply with directions, providing misleading information, or pursuing frivolous arguments. The amount awarded is limited to costs incurred as a direct result of the unreasonable conduct, assessed on the standard basis (proportionate and reasonable). For example, in cases where a landlord unreasonably disputes a valuation, the FTT might award the leaseholder's costs related to that specific issue.
• Wasted Costs Orders: Under Rule 13(1)(a), the FTT can order a legal representative to pay costs wasted due to improper, unreasonable, or negligent conduct on their part. This is rare in lease extension cases but could apply if a solicitor causes unnecessary delays.
• Reimbursement of Tribunal Fees: Rule 13(2) allows the FTT to order reimbursement of application or hearing fees paid by a party, often if the other party has acted unreasonably.
• Interest on Costs: Where costs are awarded, the FTT may add interest under Rule 13(3), typically at the judgment rate (8% per annum) from the date of the order.
• Determination of Reasonable Costs Under Section 60: While not a direct award, the FTT can determine the reasonableness of the landlord's pre-proceeding costs (e.g., investigation and valuation fees) that the leaseholder is liable for under Section 60(1) of LRHUDA 1993, as amended by LFRA 2024. Post-2024, such costs are only recoverable if the tribunal deems them reasonable and not related to litigation.

What the FTT Cannot Award:

• General Costs Following the Event: Unlike courts, the FTT cannot award costs to the successful party simply because they won; there is no automatic "loser pays" rule.
• Landlord's Litigation Costs: Section 60(5) of LRHUDA 1993 explicitly prohibits the leaseholder from being liable for the landlord's costs in tribunal proceedings, reinforced by LFRA 2024, which bans such costs as service charges or otherwise recoverable unless for unreasonable conduct.
• Indemnity Basis Costs: Awards are typically on the standard basis; indemnity basis (higher recovery) is not available unless specified in exceptional circumstances.
• Costs of Ancillary Proceedings: The FTT cannot award costs for related but separate matters, such as county court enforcement actions.
• Punitive or Exemplary Costs: Awards are compensatory only, not punitive.

In practice, costs awards in FTT lease extension cases are infrequent, with tribunals encouraging settlement to avoid escalation. For instance, in a 2021 decision, the FTT assessed costs at specific amounts for a lease extension but limited recovery to reasonable pre-proceeding expenses.

Upper Tribunal (Lands Chamber)

The Upper Tribunal (Lands Chamber) (UT) has broader costs powers than the FTT, governed by Rule 10 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, as it handles appeals and complex referrals. However, it still follows a restrained approach in leasehold matters, influenced by LRHUDA 1993 and LFRA 2024 amendments.

What the UT Can Award:

• Costs for Unreasonable Conduct: Similar to the FTT, Rule 10(3)(b) allows costs orders where a party has acted unreasonably. This threshold is low in appellate contexts, covering failures to comply with directions or pursuing meritless appeals. Awards are on the standard basis, limited to costs caused by the conduct.
• Wasted Costs: Rule 10(3)(a) permits orders against legal representatives for improper or negligent conduct leading to wasted costs.
• General Costs in Appeals: In some cases, the UT may award costs following the event if the appeal involves significant legal points, though this is discretionary and rare in lease extensions. For example, in Dashwood Properties Ltd v Christostom-Gooch [2012] UKUT 215 (LC), the UT considered costs linked to premium determinations.
• Interest on Costs: The UT can add interest to awarded costs, typically at 8% from the order date.
• Assessment of Section 60 Costs: On appeal, the UT can review or determine the reasonableness of landlord's recoverable costs under Section 60, as amended, ensuring they are not litigation-related unless unreasonable conduct is proven.

What the UT Cannot Award:

• Automatic Costs to Winner: No general "costs follow the event" rule; awards require unreasonable conduct or specific discretion.
• Litigation Costs Under Section 60: As with the FTT, Section 60(5) excludes tribunal (including UT) proceeding costs from leaseholder liability, with LFRA 2024 further restricting recovery to unreasonable behavior cases.
• Costs for Factual Re-evaluations: Since the UT reviews on points of law, it cannot award costs for reassessing valuations absent legal error.
• Punitive Damages: Awards are limited to compensatory costs.

UT costs awards are more common in appeals due to higher stakes, but remain cautious to promote access to justice.

County Court

The county court handles procedural and enforcement aspects of lease extensions, with costs powers under Civil Procedure Rules (CPR) Part 44, providing wide discretion. This contrasts with tribunals, as courts follow a "loser pays" principle.

What the County Court Can Award:

• Costs Following the Event: Under Rule 44.2, the unsuccessful party typically pays the successful party's costs, on the standard basis (proportionate and reasonable) or indemnity basis (higher recovery for strong cases). For example, in vesting order applications under Section 49 (landlord non-response), the court may award costs to the leaseholder if successful.
• Assessment of Section 60 Costs: The court can determine and award reasonable landlord costs under Section 60(1), limited post-LFRA 2024 to non-litigation and reasonable amounts.
• Interim and Partial Costs: Orders for costs from a certain date, proportions, or specific issues (Rule 44.2(6)).
• Interest on Costs: Automatic under the Judgments Act 1838 at 8% from judgment date.
• Costs for Misconduct: Under Rule 44.11, orders for costs due to unreasonable conduct or non-compliance.
• Summary or Detailed Assessment: Immediate summary assessment or referral for detailed assessment (Rule 44.6).

What the County Court Cannot Award:

• Costs Excluded by Statute: Cannot award landlord's tribunal costs as recoverable from the leaseholder (Section 60(5)), nor litigation costs as service charges under LFRA 2024.
• Unreasonable or Disproportionate Costs: On standard basis, cannot allow disproportionate amounts (Rule 44.3).
• Costs in Transferred Matters: If transferred to FTT, costs follow tribunal rules.

County court costs risks are higher, encouraging settlement in procedural disputes like notice validity.

Court of Appeal

The Court of Appeal's costs powers in lease extension appeals are under CPR Part 52 and Part 44, with full judicial discretion. As an appellate court, costs often reflect the appeal's outcome.

What the Court of Appeal Can Award:

• Costs of the Appeal: Under Rule 52.20, discretion to award costs, typically to the successful party on the standard basis (Rule 44.3). For example, in Nailrile Ltd v Earl Cadogan [2009] EWCA Civ 289, costs followed corrections to valuation errors.
• Limited Costs Orders: Under Rule 52.19, can cap recoverable costs in low-value or access-to-justice cases, considering means and circumstances.
• Costs Below: Can vary lower court/tribunal costs orders if the appeal succeeds.
• Interest: At 8% on awarded costs.
• Misconduct Costs: Orders for unreasonable appeals or conduct (Rule 44.11).

What the Court of Appeal Cannot Award:

• Statutorily Excluded Costs: Cannot override Section 60(5) exclusions for tribunal costs.
• Disproportionate Amounts: Limited by proportionality on standard basis.
• Costs Without Permission: No award if appeal lacks permission or merit.

Court of Appeal costs are significant, often deterring appeals unless strong legal grounds exist.