© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Insurance providers have offered legal expenses insurance policies in the property owner and property management sector for many years. Many of today’s insurance policies miss a critical component by not fully protecting the policyholder against legal costs incurred by defending applications made to the Leasehold Valuation Tribunal (LVT).
Today’s economic market, together with well informed leaseholders means that LVT applications and determinations are becoming more commonplace. This increase in numbers and the requirement to defend more vigorously can result in increased legal costs, increased pressure on resident management companies’ (RMCs) funds, cashflow and ultimately this will effect the service charges payable by the individual leaseholders.
The LVT has the power to award the sum of only £500 towards a party’s costs in the following limited circumstances:
The reality of today means that the legal costs incurred in dealing with an LVT application will usually far outweigh the limit of £500 the LVT is able to award. In addition, you may, despite favourable prospects in your case, not be awarded costs or in fact be barred from claiming your costs under the terms of the lease.
Consequently, RMC’s and freeholders are highly recommended to ensure their legal expenses policy sufficiently protects against the costs incurred at LVTs. Policy features should include:
Take a look at the case studies showing how legal expenses cover has worked for RMCs and Managing Agents:
Case Study 1
The insured, as managing agents of a block of flats, carried out works to communal areas and the exterior of the flats. The insured gave prior notice of the works to individual leaseholders and entered into a consultation process with them. During the consultation process, the insured provided detailed estimates from appointed contractors. No objections or suggestions were made by the leaseholders.
After the works had been completed, the leaseholders to four of the flats complained about the works. The leaseholders later sued the management company for breaches of the repairing and maintenance covenants in the lease. The leaseholders claimed that the work was of poor standard and took too long to complete thereby causing undue inconvenience and distress to the resident leaseholders. The leaseholders also sought to recover increased administrative charges related to the works and also claimed that the consultation process prior to the works was flawed.
The insured had the benefit of a legal expenses insurance policy that covered LVT proceedings. The policy included cover for legal expenses arising from a dispute over the use or maintenance of property. In this case, the insured argued that that they had fulfilled their duties under the lease in maintaining the property and they did so to a proper standard and in a timely manner. When the insured received the legal claim issued by the leaseholders, the insured called their insurers. The insured returned a completed legal expenses claim form along with the relevant paperwork and Insurers arranged for a solicitor to assess the paperwork and compile a report on whether the insured’s defence had a reasonable chance of success. The policy covered the costs of the solicitor writing to the leaseholders and persuading them not to proceed with the court claim. The case was promptly resolved with legal expenses at less than £1,000.
Case Study 2
In managing a block of leasehold flats, the insured collected and administered service charges for the day to day upkeep and maintenance of the building. Proceeds of the service charge were used to purchase a buildings insurance policy for the flats as well as to pay for administrative charges incurred by the insured. The leaseholders challenged the reasonableness of the service charges collected over nine years. The leaseholders issued legal proceedings at the LVT. The insured had to submit an initial response to the LVT within a strict deadline. The insured contacted their insurer and sought assistance under their legal expenses policy. Insurers arranged for a solicitor at short notice to review the claim, collate relevant paperwork and write a response to the LVT. The insured’s defence to the leaseholders’ claim was assessed to have reasonable prospects of success.
The legal expenses policy provided further funding for experts’ reports into all aspects of the service charge over nine years, including insurance costs, maintenance, cleaning expenses and administrative costs. The insured was successful at the LVT hearing, however the leaseholders appealed parts of the decision to the higher forum of the Lands Tribunal. The legal expenses policy continued to provide cover for the Lands Tribunal hearing and the insured remains on course to successfully defend the collection of service charges essential to the management of the flats. The legal costs of both the LVT case and the Lands Tribunal appeal totalled £28,000, which were covered by the policy.
Case study 3
In this claim, a leaseholder challenged the reasonableness of service charges already collected by the insured. The legal expenses policy provided cover in overcoming the leaseholder’s challenges. The past service charge items consisted of costs incurred in replacing boilers as well costs associated with hiring staff to service the apartments such as porters and cleaners. The legal expenses policy successfully arranged for a solicitor to visit the premises and collect paperwork, receipts and accounts spanning several years and present a defence to the LVT. The reasonableness of the service charges was demonstrated and the insured remained able to fund the management of the property while also having over £14,000 of legal expenses covered under the policy.
David Williams a Director of Blockinsure overseeing LVT Legal Expenses Insurance