6-week consultation begins on unfair leasehold practices in England

19OCT

6-week consultation begins on unfair leasehold practices in England

Thu 19 Oct 2017 by Frances Traynor

The government has launched a six-week consultation into the practices used by lettings and management agencies in dealing with leasehold properties in England. Communities Secretary Sajid Navid has led the "call for evidence" into what have been described as rogue practices that hit leaseholders and tenants with excessive or unreasonable bills for repairs and service charges.

Mr Javid said: "Our proposed changes to regulate the industry will give landlords, renters and leaseholders the confidence they need to know that their agents must comply with the rules."

In England, there are around 4.2 million leaseholders and 4.5 tenants in leasehold properties. In leasehold properties, the actual land on which the property stands is owned by a third party and the leaseholder is liable for ground rent and annual service charges to cover, for example, communal repairs and maintenance.

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Regulatory body may be created

According to Which?, in 2016 UK leaseholders paid up to £3.5 billion in service charges, but the issue is around how reasonable or fair those charges are. The current consultation will examine the practices employed by the management and lettings agencies who usually act on behalf of the freeholder (or land owner).

It's expected to consider introducing a regulatory body to oversee this part of the market; to look at whether leaseholder tenants should be given more say in the managing agents who take over their properties; and examine how to increase transparency in the charges system so leaseholders and tenants are clear on what they are paying for and why.

You can have your say

This latest intervention into this element of the property market follows a similar consultation in the summer that proposes to ban the sale of leaseholds with newbuild homes and to reform a system that allows ground rent to be increased annually, leaving some homeowners with crippling costs that prevent them selling their property.

You can participate in the consultation at the Department for Communities and Local Government website.

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