Leaseholders across England and Wales could soon benefit from stronger protections and greater transparency over service charges, legal costs and property management, after ministers unveiled an ambitious new consultation designed to clamp down on poor practices in the leasehold housing system.
Matthew Pennycook MP, Minister of State for Housing and Planning, and Jayne Bryant MS, Cabinet Secretary for Housing and Local Government, issued a joint ministerial foreword to the consultation on Friday July 4, describing the experience of many leaseholders as “a constant struggle with punitive and escalating ground rents; unjustified fees; and onerous conditions imposed with little or no consultation.”
The consultation forms part of a wider programme of reforms to overhaul the “feudal” leasehold system and transition towards commonhold as the default form of home ownership.
A draft Leasehold and Commonhold Reform Bill is expected later this year, building on the government’s Commonhold White Paper published in March.
KEY PROVISIONS
In the meantime, the focus is on implementing key provisions of the Leasehold and Freehold Reform Act 2024, particularly in relation to service charges—a frequent source of complaint among leaseholders.
“The Act contains a number of provisions designed to standardise and increase the transparency of service charges so that leaseholders are better able to scrutinise and challenge costs,” the ministers said.
“The Act also includes provision to scrap the presumption for leaseholders to pay their landlords’ legal costs, thereby removing a significant barrier to challenging poor practice.”
SECTION 20 REFORMS
The consultation also proposes reforms to the Section 20 process, which governs how major works – such as roof repairs or lift replacements – are carried out and funded. Too often, the ministers said, leaseholders face “one-off, unexpected, and often very large bills” with little or no notice.
Elsewhere, the proposals aim to strengthen the regulation of managing agents through the introduction of mandatory qualifications in England – part of a broader push to ensure agents are better trained and held accountable.
The consultation also seeks views on whether current protections for leaseholders paying fixed service charges are sufficient, given they enjoy fewer rights than those paying variable charges.
“This is an ambitious package of measures,” the ministers concluded, “designed to empower and protect leaseholders currently suffering as a result of unfair and unreasonable practices.”
IMPROVED TRANSPARENCY
Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “Propertymark has long campaigned for reform of the leasehold system, including reducing costs and improving transparency to support agents and protect consumers.
“Proposals for new standardised service charge demand forms are welcome, but the reforms should go further. It must include implementation of a code of practice and disclosure document concerning event fees in specialist retirement developments as drafted by the Law Commission in March 2017.”
MANDATORY QUALIFICATIONS
And he adds: “We continue to engage constructively with the UK Government on measures to introduce mandatory qualifications for managing agents. It is vital that professional bodies, continued professional development and a code of practice are utilised as part of the plans.
“We must also ensure that any proposals involve mandatory qualification requirements for sales and letting agents to drive up standards and protect consumers when buying, selling and renting homes regardless of tenure, whilst also forming an integrated blueprint for regulatory reform across the property sector.”
Read the consultation HERE.
