Leasehold Reform Bill wins praise from industry body

Michael Gove’s Leasehold and Freehold Reform Bill, currently going through Parliament, has won praise from the industry body The Property Institute.

There is a growing number of households in England on private or mixed-tenure estates where residents, rather than the local authority, have to pay for the maintenance of communal areas and facilities including private roads, external lighting, play areas for children or electric gates.

The Property Institute says the provisions introduced in the new Bill seek to give homeowners living on managed estates new rights to make it easier to hold estate management companies to account. 

This includes the ability to challenge the reasonableness of the charges they pay and similar rights to leaseholders that are being proposed in the Bill around greater transparency of information over their estate costs and the ability to obtain other information. The Code of Management Practice under section 87 of the Leasehold Reform, Housing and Urban Development Act 1993, will also be extended to estate management.

Institute chief executive Andrew Bulmer says: “Homeowners living on managed estates currently have limited rights over the quality and costs of the services provided, with no regulatory framework or statutory rights to challenge poor services, or unreasonable charges by estate management companies. The extension of the codes of practice and aligning the rights of homeowners on managed estates with those of leaseholders is a step in the right direction towards transparency, fairness, and improved standards, and will ensure residents receive a high-quality professional service, for a reasonable fee.

“However, whilst this is a gap we are pleased to see being closed under the new Bill, we urge the government to be more ambitious and extend the regulation provisions to introduce mandatory qualifications and regulation of all property managers to help protect other all resident communities.”

The institute has also welcomed the inclusion of Clause 27 in the Bill, which will bring forward prescribed information and formatting of service charge bills – something proposed by the professional body two years ago.

The proposals in the new Bill seek to improve transparency of financial and non-financial information that leaseholders receive, including how service charge costs are presented; the provision of key information – such as insurance costs; greater financial information through the annual preparation of written statements of account; and the ability to compel landlords to provide other relevant information that the leaseholder needs to know as an occupier of a building where a service charge is payable. 

This means that in cases where a leaseholder moves to a different leasehold property, the service charges bill will be formatted in the same way, making the charges easier to understand.

The Property Institute previously called for such a measure in the Building Safety Bill to deliver transparency for leaseholders and proposed a mandatory standard Chart of Accounts to improve consistency and aid leaseholder understanding.