On 9 March 2015, Court fees for commencing civil proceedings increased significantly. The increase affects claims to recover sums over GBP 10,000. The fee is now calculated at 5% of the value of the claim, up to a maximum fee of GBP 10,000 for claims over GBP 200,000. This represents a dramatic 421% increase where the highest payable fee used to be GBP 1,920 for claims over GBP 300,000.
While it may at first seem that only the highest claims will be affected, this increase will in fact have an impact on many in the property industry. Notably, it is not uncommon for dilapidations claims in relation to commercial properties to exceed GBP 200,000. In such cases, the increased fees will not only put pressure on commercial landlords but also on their tenants, from whom the landlord will ultimately seek to recover the costs of proceedings including Court fees.
With fees this high, parties may be more likely to turn to alternative dispute resolution methods such as mediation to avoid the costs of proceedings. However, once issued, the increased upfront costs may have the opposite effect with some parties being inclined to get their “money’s worth”, which could get in the way of settlement.
Claims for the recovery of rental arrears are also likely to be affected by the increase as a GBP 10,000 claim would not be exceptional for commercial premises. Landlords are more likely to bear the burden of Court fees in this respect if the tenant is already unable to pay the rent and the prospects of recovering costs of proceedings may be scarce.
Unfortunately, the bad news does not stop there, as the Government has further plans for increased fees which will have a direct impact on the property industry. The proposals are to raise Court fees in relation to proceedings for the recovery of land from GBP 280 where proceedings are commenced in the Country Court to GBP 355. Again, this will primarily affect landlords who are bringing proceedings to evict tenants in arrears or are seeking to evict trespassers, as in both situations the landlord will have little prospects of recovering any costs. This could also potentially have a direct impact on the tenancy terms offered to tenants if the increase is seen by landlords as a barrier to eviction.
The Ministry of Justice’s consultation on these further proposals is now closed and the Law Society, along with other bodies in the property industry have voiced their concerns over these further increases. There remains to be seen whether the proposals will go ahead notwithstanding these objections.