It is also considering under what circumstances administration and permission fees are justified and if they should be capped or banned.
The moves will come as part of leasehold reforms which include banning the sale of new leasehold houses, restricting ground rents to zero for future leases, and giving freehold homeowners equivalent rights to challenge unfair charges.
Ministry of Housing, Communities and Local Government (MHCLG) parliamentary under-secretary Kelly Tolhurst confirmed the action in a written answer.
Tolhurst was responding to Labour shadow minister for international trade Gareth Thomas who asked what the Conservative government was considering to prevent freeholders of shared ownership properties from using funds from leasehold service charges to pay legal fees for defending action taken by leaseholders.
She noted that the Government believed “very strongly” that any fees and charges should be justifiable, transparent and communicated effectively, and that there should be a clear route to challenge or redress if things go wrong.
Tolhurst added: “Leaseholders may be liable to pay the legal costs of their landlord regardless of the outcome of a legal challenge – even if they win the case.
“This depends on the terms set out in their lease. This can lead to leaseholders facing bills that are higher than the charges they were seeking to challenge in the first place. It can also deter leaseholders from taking their concerns to a tribunal.
“The government believes leaseholders should not be subject to unjustified legal costs and will close the legal loopholes that allow this to happen.”
Conservative MP for Romsey and Southampton North Caroline Noakes asked when the new legislation would be brought to parliament.
Tolhurst replied: “This is a long-term reform programme; it is complex with many interdependencies and will take time to get the detail right.
“Once it is enacted the effect will be felt for generations and so we are determined this work considers all the implications with care.
“We will bring forward leasehold legislation as soon as parliamentary time allows.”