On 27 January, we published the draft Commonhold and Leasehold Reform Bill, marking the beginning of the end for the feudal leasehold system and supporting millions of families with the cost of living. We are reinvigorating commonhold and capping ground rent. We are analysing the responses to our wide-ranging consultation to drive up transparency of service charges and make it easier for leaseholders to challenge unreasonable costs. We will implement these measures as soon as possible.
With service charge inflation rising by 50% and leaseholders, freeholders and tenants even facing 80% increases, this is a growing scandal. Too many of my constituents are trapped under charges they cannot afford, paying for defects caused by poor construction and stuck with properties they cannot sell. Will the Secretary of State strengthen the draft Commonhold and Leasehold Reform Bill to require fully itemised transparency, to penalise landlords who refuse disclosure and to create a faster, cheaper way to challenge excessive charges without a tribunal?
The Government recognise the considerable financial strain that rising service charges place on leaseholders and tenants. On 4 July last year, the Government published a consultation on strengthening leaseholder protections over charges and services, which included proposals to increase transparency of service charges and to scrap the presumption that leaseholders pay their landlord’s legal costs, thereby removing a significant barrier to challenging poor practice. The consultation closed on 26 September; we are analysing the responses and will publish our response shortly.
Leaseholders in Newcastle upon Tyne East and Wallsend contact me regularly about extortionate service charges, saying that tribunals are slow and stressful and that, ultimately, they feel powerless. The Minister for Housing and Planning has previously set out that retaining variable charges is important, so that necessary funds can be raised for legitimate purposes. Is the Secretary of State confident that, without directly limiting their rate of increase, the Government’s reforms will address the issue of unreasonable charges making properties unsellable?
We are determined to take action to address unfair and unjustified charges, and we are committed to implementing the measures in the Leasehold and Freehold Reform Act 2024 as quickly as possible.
I commend the Government and my right hon. Friend’s reforms to the leasehold sector, particularly capping ground rents, which will make a real difference to leaseholders across North Somerset. I have been contacted by numerous constituents in Portishead and across my constituency living in leasehold properties managed by FirstPort. They report persistent failures, poor communication, and opaque and unjustified service charges. Will the Secretary of State confirm that the Government’s leasehold reforms will go further by introducing robust, enforceable regulation of service charges and professionalising property management companies such as FirstPort so that they can genuinely be held accountable for poor management practices?
I recognise, of course, the situation my hon. Friend is describing and how unacceptable it is. The Government are committed to ensuring that those living in leasehold properties are protected from abuse and poor service at the hands of unscrupulous managing agents. On 4 July last year, we consulted on the introduction of mandatory qualifications for managing agents, and we are analysing responses right now. We are clear that this consultation is not the final step in the regulation of agents, and we will set out our full position shortly.
I have been working with leasehold groups in my constituency such as the aptly named Friends in High Places group. They inform me that the combined costs of the Building Safety Regulator’s fees, the purchasing of reports and various surveys, and the remediation works needed are giving rise to potentially enormous bills, which could lead to leaseholders becoming bankrupt and homeless, as the bills are not picked up by developers or freeholders for older buildings, or resident management companies. Will the Minister outline how upcoming legislation will clarify what counts as proportionate and/or reasonable costs that fall on to leaseholders in relation to the BSR’s work?
I commend the work of the Friends in High Places group, which my hon. Friend has been working with. We are now seeing improvements in the performance of the Building Safety Regulator, but she is right that unfair costs should not fall on leaseholders. If it would be helpful, I will happily arrange a meeting between her and the relevant Minister.
Far too many homeowners in Rochdale are subject to fleecehold, whereby they are fleeced for estate management company fees in return for little or no service or accountability. The Government are taking action to prevent future homeowners from falling into that trap, but will the Secretary of State set out how he plans to help current homeowners to avoid this rip-off charge?
I know the Housing Minister is looking forward to meeting my hon. Friend and his constituents next week. HorNets have been strong and vocal campaigners for homeowners’ rights, and I welcome their engagement. The Government are committed to ending the injustice of fleecehold. Leaseholders should not be subject to the kind of legalised extortion that they have experienced in recent years, and the Government remain committed to bringing these practices to an end.
I thank the Secretary of State for his response and welcome the support being given to leaseholders; however, many of the problems they face could be addressed through stronger regulation of managing agents. Persistent failings by companies such as FirstPort continue to fill my inbox. In Newbury, we have a block of flats where a lift has been out of order for two years, and one constituent told me that, because it was broken, her son had to carry her husband down the stairs when he moved into a care home. No family should ever have to face that. Will the Secretary of State outline what steps the Government have taken to strengthen the regulation of managing agents and ensure that they are properly accountable to residents, who pay for their services?
I recognise what the hon. Member says about FirstPort because Members across the whole House have been raising similar concerns for a very long time. He will be aware that we launched a consultation last summer that will include looking at how we can better and more tightly regulate managing agents so that leaseholders are not subject to the kind of abuses that he describes.
Many of my constituents live on new build estates where the roads and open spaces have never been adopted. Years after moving in, they are still paying private management charges on top of their council tax for basic infrastructure that homeowners should expect the council to maintain. Does the Secretary of State recognise that this gap between planning approval and adoption is fuelling the fleecehold scandal, and will the Government act to ensure that developers complete roads to adoptable standards and local authorities are supported to adopt them promptly?