If terms are not agreed within two months from the date the counter notice was received, you can apply to the FTT to determine the premium and other terms of the new lease.
Whenever the landlord and tenant’s surveyors are unable to agree the premium amount for the lease extension, an application will have to be made to the First Tier Tribunal.
If an application is successful, your costs incurred in relation to proceedings before the Tribunal are not recoverable unless the other side acts ‘unreasonably’. In this case you may recover costs of up to £500 from the landlord, according to Schedule 12, paragraph 10(2) of the Commonhold and Leasehold Reform Act 2002. And under Section 60(5), the landlord may not recover from you any costs incurred in relation to FTT proceedings.
The Tribunal Procedure Rules 2013 (S1 2013/1169) have modified this position and extended its scope, meaning that costs can now be awarded under Rule 13:
- Wasted costs and costs incurred in applying for such costs, Section 29(4), 2007 Act
- If a person has acted unreasonably in bringing, defending or conducting proceedings
- If it is an order requiring a party to reimburse to any other party the whole or part of the amount of any fee paid by the other party
In essence there is no longer a cap on the amount of costs that the tribunal can award, but in practice this power is used sparingly. There are many different applications that can be made and careful attention must be paid to the deadlines for making them.
You have six months to agree terms or to make an application to the FTT, but you cannot apply to the FTT within two months of the date the counter notice was received. Thus you effectively have a four month window to apply to the tribunal. If you miss this deadline your offer notice is deemed withdrawn and, under Section 42(7), you must wait 12 months from the date of withdrawal before issuing another offer notice..