My Lords, I thank the noble Baroness, Lady Taylor, for her Amendments 47 and 48, which seek to remove the exception on costs arising from low-value lease extension or freehold acquisition claims. While the Bill includes a new general rule that each side will bear its own costs, we believe that there need to be exceptions in certain circumstances so that the regime is fair for both sides. The low-value cost exception entitles landlords to receive a portion of their process costs from leaseholders in low-value enfranchisement and lease extension claims for flats and houses respectively. We believe that these are necessary provisions that protect landlords from unfair costs.

The noble Baroness, Lady Thornhill, said that this is sometimes like wading through mud. I say from the Dispatch Box that she is not alone in that feeling. Also, it is great to hear another northern and Lancastrian accent in the Chamber.

On the issue of balance, it would be unfair if landlords incurred a net financial loss when leaseholders wished to exercise their statutory right to extend their lease or buy their freehold. If the exception were removed from the Bill, this could happen in claims where the premium the landlord receives is less than their process costs.

The noble Baroness, Lady Taylor, cited some cases, which I was very sorry to hear, but my understanding is that, if landlords seek to demonstrate that costs are marginally below the low-value claim threshold to receive a prescribed sum, that is not how the low-value exception works. Landlords are not eligible for a fixed proportion of their claim if the low-value costs exception applies. Instead, they are eligible to receive the difference between their costs and the low-value threshold. For instance, if costs were a few pounds below the threshold, the landlord would be eligible to receive a prescribed sum of that amount only, and not a large proportion of their overall costs.

The exception for low-value claims is a necessary provision to protect landlords from unfair costs and, as has been noted, it implements the Law Commission’s enfranchisement recommendation 84. I kindly and respectfully ask the noble Baroness not to press her amendments.