Property Litigation Costs in 2026: Forum Choice, Conduct Risk and Recoverability

Lauren Godfrey considers why costs risk in property disputes now turns on forum, procedure and conduct as much as merits.

Costs economics in property disputes are now set by forum and procedural route

1. Property litigation in England and Wales now carries a different costs profile depending on forum. Lauren Godfrey argues that in 2026 costs risk is shaped primarily by forum choice, procedural route, conduct and tribunal fee reform, not merely by the merits of the underlying dispute.
2. That matters at the outset of service-charge, possession, restrictive-covenant, boundary and land-protection disputes. The solicitor should identify the forum, applicable rules, recoverability route and client exposure before advice hardens into litigation strategy.

The July 2026 fee changes reprice tribunal litigation

1. The Ministry of Justice increased 80 fees across the Residential Property Division of the First-tier Tribunal (Property Chamber) with effect from 13 July 2026. The changes reach leasehold cases, most residential property cases, and park and mobile home cases. The figures below are the published figures checked against official sources as at 16 October 2026.

2. The revised framework is not just an administrative change. It requires solicitors to price the application fee, hearing fee, and any later Lands Chamber step when advising whether the claim is commercially worth bringing.
3. The highest-fee rules for multiple applications and joined hearings also matter. Consolidation may still be efficient, but the fee consequences should be checked before issue. Development disputes, rights of light claims and restrictive covenant applications need a fee budget at feasibility stage.

Section 20C and paragraph 5A remain the principal costs protection in service charge disputes

1. The First-tier Tribunal is, in service charge cases, a no-costs forum save for unreasonable conduct. The commercial risk lies elsewhere. A landlord who loses on the substance may still recover its legal costs through the service charge or as an administration charge under the lease.
2. Section 20C of the Landlord and Tenant Act 1985 and paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 answer that risk. Lauren Godfrey emphasises that these are not conventional costs orders. They are discretionary mechanisms asking the tribunal to override, reduce or extinguish contractual recovery where just and equitable.
3. Jamieson v London & Quadrant Housing Trust [2026] UKUT 103 (LC) (Upper Tribunal substituted full costs protection, setting aside the FTT’s 50 per cent limitation) is the current authority. The First-tier Tribunal had limited protection to 50 per cent. The Upper Tribunal held that order could not be regarded as fair and substituted orders covering the whole of the landlord’s legal costs. The Upper Tribunal substituted full protection because the tenant had succeeded in full; the decision turns on that degree of success rather than laying down a general rule that any partial protection must be justified on the facts. David Peachey examined the parallel contractual route in “Service charge demands and tenant liability for litigation costs: Court of Appeal hands down important judgment”, published by Gatehouse on 22 November 2021, on Kensquare Ltd v Boakye [2021] EWCA Civ 1725 (Court of Appeal considered interim demand timing and contractual recovery of FTT litigation costs).

Building safety and service charge decisions continue to reshape recoverability

1. Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point [2025] EWCA Civ 856 (Court of Appeal considered the Building Safety Act paragraph 9 and retrospective recovery of professional costs) concerns whether paragraph 9 of Schedule 8 to the Building Safety Act 2022 prevents service charge recovery of legal and professional costs relating to relevant defects, including costs incurred before the provisions came into force. The Court of Appeal dismissed the appeal by a majority (Nugee and Holgate LJJ), holding that paragraph 9 does bar such recovery even for costs incurred before the provisions came into force; the landlord-favouring reasoning against retrospectivity was the minority view of Newey LJ. Permission to appeal has been granted in part on retrospectivity, and a Supreme Court hearing is listed for 18 November 2026. In the premises, any advice given now should flag that the position may change. Lauren Godfrey addressed related Schedule 8 protections in “Leaseholder responsibility for post-Grenfell remediation of defective cladding (Lehner v Lant Street Management Co Ltd)”, published by Gatehouse on 26 September 2024, on Lehner v Lant Street Management Co Ltd [2024] UKUT 135 (LC) (Upper Tribunal explained leaseholder protections and cladding-remediation service-charge liability).
2. Three decisions refine the analysis. Rose v Bracknell Gate Properties Ltd [2025] UKUT 386 (LC) (demand invalid on lease construction, with professional-fee consultation issues) held a disputed December demand was not payable on the true construction of the lease. Talbot Group Ltd v Kotecha [2026] UKUT 67 (LC) (advance service charges judged for reasonableness at the demand date) confirms interim charges demanded in advance are payable only so far as reasonable at the time of demand. Rana v Assethold Ltd [2025] UKUT 19 (LC) (prima facie challenge shifted the evidential burden; procedural default attracted Rule 13 costs) restates the evidential sequence: the leaseholder raises a prima facie case, after which the burden shifts to the landlord.

Rule 13 conduct costs are the real exposure in a no-costs forum

1. Willow Court Management Company (1985) Ltd v Alexander [2016] UKUT 290 (LC) (Upper Tribunal set the three-stage Rule 13 test) established the three-stage approach: decide objectively whether the conduct was unreasonable, decide whether to make an order, then decide the amount. Lea v GP Ilfracombe Management Company Ltd [2024] EWCA Civ 1241 (Court of Appeal approved Willow Court and the reasonable-explanation test) approved Willow Court and confirmed that an absence of reasonable explanation may render conduct unreasonable.
2. Rana v Assethold Ltd [2025] UKUT 19 (LC) shows the consequences. The Upper Tribunal made a Rule 13 order of £4,767.60 arising from unexplained failures to comply with directions and disclosure. Procedural discipline is a costs strategy, not merely good housekeeping.
3. Gatehouse’s existing Rule 13 coverage includes “Rule 13 costs – when is conduct unreasonable?”, published on 01 July 2016, “Unreasonable Conduct in the First-tier Tribunal”, published on 14 July 2016, “Clearer on costs”, published on 05 August 2016, and “Costs recovery for tribunal claims”, published on 24 April 2017. The “Unreasonable Conduct” piece records that Simon Allison and Rupert Cohen appeared for the respondent in one conjoined appeal. The tribunal-claims Q&A was written in conjunction with Faiza Ahmad of Estates and Management Ltd.
4. Jaysen Sharpe’s Gatehouse article, “First Tier Tribunal cautions against unreasonable costs in negotiating MSV Agreements under the Electronic Communications Code”, published on 17 July 2025, considers Cornerstone Telecommunications Infrastructure Ltd v The Timberyard Plot 2 Nominee (No1) Ltd and The Timberyard Plot 2 Nominee (No2) Ltd (First-tier Tribunal reduced disproportionate Electronic Communications Code transactional and litigation costs). The article shows the point in a different property forum. The First-tier Tribunal reduced claimed costs sharply, criticised the use of Grade A fee earners above guideline rates for a straightforward agreement, and applied its costs discretion by reference to proportionality and conduct.

Possession claims now have two procedural tracks

1. The Online Procedure Rules for possession proceedings came into force at midday on 29 September 2026. In-scope claims are governed by those rules and the associated Practice Direction rather than the CPR.
2. Scope is narrow at first. From 29 September 2026 the rules apply to registered social landlords in England bringing claims in the postcode areas served by Bradford, Huddersfield and Wandsworth County Courts. From 15 October 2026 they apply to community landlords in Wales in the areas served by Caernarfon County Court. Out-of-scope claims remain under the CPR, as do appeals and enforcement until further provision is made.
3. The first question in any possession retainer is whether the claim is in scope. William Golightly’s Gatehouse article of 27 October 2025, “Costs in English possession claims”, remains the practical reference on the extended fixed costs regime, contractual costs clauses, section 8, section 21 and trespasser claims, guideline rates and VAT.

Budgeting in Business and Property work follows a pilot, not CPR 3.13

1. Practice Direction 51ZG1 establishes a costs budgeting pilot for Business and Property Courts claims and Business and Property work in the County Court, applying to claims issued on or after 06 April 2025 and before 06 April 2028. The 183rd Practice Direction Update aligned the start dates of PD51ZG1, PD51ZG2 and PD51ZG3 to that date.
2. The pilot disapplies CPR 3.13 and CPR 3.14 and substitutes simplified costs budgets and budget discussion reports. The familiar sanction for late filing does not operate in the usual way, so practitioners should read the pilot rather than rely on habit.
3. Practice Direction 57AA determines what counts as Business and Property work. It includes Property, Trusts and Probate List work, and in the County Court claims under the Trusts of Land and Appointment of Trustees Act 1996, boundary and easement disputes raising no conveyancing issues, and Access to Neighbouring Land Act 1992
4. Peter Petts wrote Gatehouse’s “Making the most of Cost Budgeting”, published on 20 November 2017, addressing Precedent H, Precedent R, incurred costs and budget revision. Gatehouse’s “Gatehouse Costs Breakfast and Seminar Morning: Costs Budgeting and Costs Risks”, published on 28 March 2025 and hosted by PJ Kirby KC, Robin Dunne and Jake Rowley, examined costs management conference orders, proportionality and assumptions.

ADR and appeal deadlines carry direct costs value

1. Lands Chamber guidance updated on 13 July 2026 confirms the tribunal will allow a six-week stay where the parties agree to alternative dispute resolution and will not charge the usual £128 stay application fee. Parties should be advised of that fee-free settlement window early.
2. Appeal timetables are tight. An application for permission to appeal must be received within 14 days after the Property Chamber sends notice refusing permission. Where permission has been granted, the appeal form must be received within one month of the date permission was sent. Diarise both dates at the point of decision.

A practical framework for early costs advice

It is advisable in every property dispute to answer six costs questions with the client:

1. Which forum will hear the dispute, and what is its costs rule?
2. Is there a contractual route by which the opponent may recover costs regardless of outcome?
3. Should section 20C or paragraph 5A protection be sought, and what evidence supports the application?
4. Is the claim governed by the possession Online Procedure Rules or by the CPR?
5. Does the PD51ZG1 pilot budgeting regime apply?
6. What are the fee disbursements across the likely lifetime of the dispute, including appeal?

Answering those questions produces a costs’ estimate the client can rely on and a record that protects the retainer. Merits decide who wins. Procedure decides what winning is worth, particularly where significant costs are in play.

The practical lesson is simple. Lawyers and their clients should identify the forum, fee exposure, costs rule and recoverability route before taking the next procedural step. Counsel should be involved early where the choice of forum, costs protection or budgeting route may alter the economics of the dispute. Costs advice in 2026 is not an appendix to merits advice. It is part of the merits analysis itself.

Article by Lauren Godfrey