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Leasehold Valuation Tribunal replaced by new Property Chamber

The new First-tier Tribunal (Property Chamber) will be taking over the work currently carried out by the Leasehold Valuation Tribunal (LVT) as from July 2013. The LVT deals with a wide range of work relating to leasehold property, such as valuations on enfranchisement and lease extension cases, as well as disputes about service charges and other property management matters.

This new Property Chamber involves more than just a change of name – it will operate under different rules and procedures. Anyone considering making an application, or defending an application by a landlord, will now need to familiarise themselves with the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.

These new rules were only published on 20th May, so there has been little time for owners of leasehold properties, as well as Surveyors and Solicitors, to find out how the new Property Chamber will operate.  

At present there does not seem to be much official information available so it is too early to say whether the new regime will be more or less beneficial to applicants. However a quick look at the new rules reveals some major changes.  

The change follows from the restructuring of the Courts and Tribunals services by the Tribunals, Courts and Enforcement Act 2007. The Act created a new judicial and legal framework bringing together many individual Tribunals into a new, unified structure.

The new Property Chamber of the First–tier Tribunal has been created to take on the work of a number of property-related tribunals, including that of the LVT.  

Tribunals have procedures that are less complicated and more informal than those typically associated with the courts. The idea is to provide a quicker and cheaper way of settling disputes, or determining a valuation under relevant legislation.

New rules should assist leaseholders

It is clearly the intention of the new rules for the Property Chamber to make it easier for cases to be dealt with. Rule 3, which is headed “Overriding objective and parties’ obligation to co-operate with the Tribunal, ” states

Rule 3.

  1. The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.  
  2. Dealing with a case fairly and justly includes—
    1. dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties and of the Tribunal;
    2. avoiding unnecessary formality and seeking flexibility in the proceedings;
    3. ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;
    4. using any special expertise of the Tribunal effectively; and
    5. avoiding delay, so far as compatible with proper consideration of the issues.
  3. The Tribunal must seek to give effect to the overriding objective when it
    1. exercises any power under these Rules; or
    2. interprets any rule or practice direction.
  4. Parties must—
    1. help the Tribunal to further the overriding objective; and
    2. co-operate with the Tribunal generally.

This sounds all well and good, but of course it remains to be seen how this works in practice. It has certainly been one of the complaints about the LVT that freeholders and managing agents have used (or abused) the system to their own advantage, so let us hope that the new Chamber is more user-friendly to leaseholders.

One of the complaints against the existing LVT is that freeholders and managing agents can delay cases and refuse to provide information which would help a leaseholder’s case. The new rules do appear to give applicants better rights to obtain documents and information from freeholders and managing agents.  

The Tribunal can itself order the disclosure and inspection of documents it considers relevant to the issues in dispute. It also has powers to penalise a party who delays a case.

Changes to costs rules could penalise claimants

The new rules provide details as to how cases are to be managed, and when a party’s claim may be struck out. These rules do seem quite complicated, and may be off-putting to someone trying to act for him- or herself. However the rules permit an applicant to appoint a representative, who does not have to be legally qualified.

The Tribunal can make an order requiring a person who has “acted unreasonably in bringing, defending or conducting proceedings” to pay the costs of the other party. One important difference from the old LVT is the removal of the current £500 limit on the amount of costs which can be awarded. This could deter a leaseholder from bringing or defending a case against their freeholder.

Another provision that could be a deterrent to leaseholders is the power for proceedings to be transferred to another court or tribunal in certain cases. This could result in an applicant finding their case transferred to a court with quite different rules of procedure, and the power to award unlimited costs against an unsuccessful applicant.

Leasehold cases being transferred to new Property Chamber

The First-tier Tribunal (Property Chamber) will now deal with the following work relating to leasehold property which was formerly handled by the LVT:

Valuations and terms of acquisition

  • the price to be paid and the terms of the new lease when a single leaseholder wants to extend or renew the lease of their flat and the value cannot be agreed with the landlord
  • the price to be paid when a group of leaseholders wants to buy (collective enfranchisement) the leases of their flats and the value cannot be agreed with the landlord
  • the price to be paid and the terms of acquisition when a single leaseholder wants to buy (enfranchise) the freehold or extend the long lease of their house and the value cannot be agreed with the landlord
  • the amount of landlord’s costs in dealing with an application to acquire a freehold or extend a lease

Leasehold Disputes

  • The liability to pay a service charge and administration charge and by whom, to whom, how much and when a charge is payable
  • Whether to dispense with or to modify the landlord’s requirement to consult with leaseholders before carrying out major works and recharging leaseholders for these works via the service charge
  • Whether an administration charge should be varied
  • The liability to pay an estate charge and by whom, to whom, how much and when a charge is payable
  • Whether an estate charge should be varied
  • Whether an estate management charge should be varied
  • Whether to vary long leases of flats
  • Whether a Right To Manage Company is entitled to acquire the right to manage on the relevant date
  • Whether a Right to Mange Company is entitled to acquire the right to manage where the landlord is missing
  • The amount of costs incurred by the landlord (or other party to the lease other than the landlord and tenant) or a manager appointed in association with the exercise of the Right to Manage
  • The amount of accrued uncommitted service charges to be paid by landlord/third party/manager to an Right To Manage Company
  • Whether to appoint a manager of premises containing flats and who that manager should be
  • Whether or not there has been a breach of a covenant or condition in a lease of residential property
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