Freehold ‘Inequality Of Arms’ Scrapped Under Leasehold Reforms

Currently, leaseholders who successfully sue their freeholder are frequently liable to pay the legal costs incurred by the losing side.

As was reported in The Sunday Times, this legal loophole often leaves leaseholders burdened with far greater debts than they were originally fighting to reduce.

Following the report, the government intend to scrap this loophole when they update leaseholder reforms in a bid to eliminate an ‘inequality of arms,’ that could be deterring many people from seeking justice.

A spokesperson for the Secretary for Housing and Local Communities, said: “It is the secretary of state’s intention to close the legal loopholes that allow freeholders to unjustifiably recoup legal costs from leaseholders. This will form part of our broader package of leaseholder reforms. We will do this as soon as parliamentary time allows.”

James Brokenshire, Secretary for Housing and Local Communities, said: “I want to ensure that we have a leasehold market where people are able to challenge. If there are obstacles like costs of court that are getting in the way and stopping that from happening, then, absolutely, that’s something we need to respond to.

“I am concerned if this inequality of arms is preventing people from getting the outcomes, getting the fairness, getting the justice that they require.

“It troubles me to think that the costs of court and that imbalance might be preventing that.”

Richard Barclay, a 45-year-old health entrepreneur, won a tribunal case last year which reduced the annual service charge bill (£10,100) on his London flat by £1,200.

Despite this victory, freeholder Quadrant Property Management, invoked the clause in his freehold and attempted to claim over £61,000 in legal costs.

Now, it seems as though the government are prepared to step in and ensure that potential legal costs charged to the leaseholder are no longer used as a deterrent, preventing people from seeking justice.

Will these changes encourage more leaseholders to defend their rights in court? How important are these changes to leaseholders that feel trapped in their property?