A new consultation paper published by the MHCLG is aiming to provide leaseholders with “stronger rights, powers and protections”.
The paper details plans to activate measures in the Leasehold and Freehold Reform Act 2024, which it says will give five million leaseholders more transparency to hold landlords to account and challenge unclear service charges.
Under the paper, leaseholders will receive standardised service charge documentation, which will spell out clear and detailed information about how their service charges are calculated and spent.
This will make it easier for them to challenge unreasonable bills and potentially save money where expenses are unjustified, with further reforms to stop them from having to automatically pay for landlords’ litigation costs even where they have won their case.
Housing and planning minister, Matthew Pennycook, said: “The cost of living remains a pressing concern for leaseholders and many are struggling financially as a result of high and rising service charges, and other opaque and excessive leasehold costs.”
“This bold package of reforms will arm leaseholders with greater rights and protections and empower them to challenge poor practice and unreasonable charges and fees – driving up leaseholder living standards as we work to bring the feudal leasehold system to an end as part of our Plan for Change.”
RICS chief executive, Justin Young, said: “Today’s announcement is an important step forward in raising standards and improving transparency in the leasehold sector. Accountability and professionalism in property management are essential to give leaseholders confidence.”
“Mandatory qualifications for managing agents will help to achieve this.”
“We fully support the government’s ambition to deliver meaningful, proportionate reform that has lasting benefits for consumers. The consultation recognises that professional bodies play a critical role in delivering trust and confidence. RICS’ work seeks to ensure the highest level of professionalism across our membership, and around 30% of leasehold properties are managed by an RICS Regulated Firm.”
“Qualifications alone, however, are only part of the solution. RICS looks forward to working with MHCLG to achieve their vision, drawing on our deep regulatory experience and existing infrastructure.”
Under current laws, service charge demands are only required to include a limited amount of details, which may leave leaseholders unaware of what services or works make up their bill and put them at risk of being overcharged.
The government is moving forward with plans to implement reforms and is consulting on the best way forward to ensure they are robust, workable and protect leaseholders effectively.
Further reforms – in addition to measures in the Act – will see the Section 20 ‘major works’ process improved to ensure leaseholders are not hit by one-off, unexpected and very large bills with little or no notice as is the case currently. LEASE will shortly be publishing an insight report into the challenges currently experienced by leaseholders going through this process.
Other measures will give leaseholders the power to demand a switch or veto a landlord’s choice of managing agent and introduce mandatory qualifications for the role to avoid bad practice in line with Lord Best’s 2019 recommendations.
The MHCLG says that the reforms will help drive up living standards as part of the government’s Plan for Change and complement work to bring the feudal leasehold system to an end and make commonhold the default for new flats, ahead of publication of a draft Leasehold and Commonhold Reform Bill later this year.
