My Lords, by law, service charges must be reasonable and, where costs relate to work or services, the work or services must be of a reasonable standard. Leaseholders may make an application to the appropriate tribunal to challenge the reasonableness of their service charges. We are committed better to protect and empower leaseholders by giving them more information on what their costs pay for. This will help them to challenge their landlords more effectively if they consider their fees unreasonable.
My Lords, leaseholders are seriously disadvantaged in disputes with freeholders and management service companies about the service charges, ground rent or any other aspect of their tenure. The present arrangements are not fit for purpose. When will the Government take action on this matter?
The Government do indeed recognise that the existing statutory requirements do not go far enough to enable leaseholders to identify and challenge unfair costs. The Government have said that they will take forward further legislation on leaseholds in the next Session.
My Lords, would not the problems mentioned by the noble Lord, Lord Kennedy, and other problems faced by leaseholders be addressed by the promised leasehold reform Bill, originally planned for this Session but now delayed until the next? On 20 June, my noble friend Lord Greenhalgh told me that the delay would be used to draft the Bill. Would it not expedite the eventual passage of the Bill if it was published in draft and subjected to scrutiny by this House?
I can only agree that it would indeed expedite the eventual passage of the Bill. I know that my noble friend appreciates that the former Secretary of State said that it was unlikely, and that my noble friend Lord Greenhalgh also said that a draft Bill would be ideal but was dependent upon the capacity of parliamentary counsel. Everyone is looking forward to this legislation, and it has already been announced for the next Session. I can only relay to the department the oft-stated opinion of many Members on all sides of the House that this draft Bill will be welcomed.
My Lords, what are the Government doing to ensure that not only experts on these matters in this House but long-suffering leaseholders and their representative organisations are consulted prior to any draft Bill being published?
A number of consultations have taken place, including that of the noble Lord, Lord Best. As to the specific consultation to which the noble Baroness refers, one may well be happening but I am not aware of it. I will write with further clarification.
My Lords, can my noble friend help with a particularly invidious situation? A leaseholder may feel that he is being charged extortionate fees for gas and electricity by his supplier, but the supplier also happens to be his landlord.
My noble friend makes a very good point. Tenants who purchase their gas and electricity from their landlords, including when it is bundled with other service charges, are protected from excessive charges by the maximum resale price provisions from the regulator Ofgem. The provisions prevent landlords reselling energy to tenants at a higher price than they paid to the licensed energy supplier. Tenants are entitled to receive a breakdown of the landlord’s costs, on request. That should include details of the cost of electricity and/or gas, standing charges and the VAT paid.
My Lords, exorbitant and disproportionate fees, charges and commissions were a key reason why the Government’s Regulation of Property Agents Working Group, which I had the pleasure of chairing and which reported three years ago almost to the day, wanted there to be a regulator for property agents, including the managing agents of leasehold property. The Government have specifically promised this on many occasions. Is somebody within the Department for Levelling Up, Housing and Communities specifically working on the creation of a regulator for property agents? If someone is, I live in hope. If not, I go away very frustrated.
The noble Lord asks a very good question. I am not sure whether somebody is working on that specific point, but there is a large group within that department that works on all ways of raising professionalism. We are looking at the report of the noble Lord and his working group on the regulation of property agents and are continuing to work with industry to improve best practice. I will take his plea for a regulator back to the department.
The report of the working group chaired by the noble Lord, Lord Best, provided significant evidence of what I call the theft of moneys from leaseholders. These same companies are about to be handed huge sums, as they are responsible for the remediation of vast numbers of blocks of flats post-Grenfell. This area is ripe for exploitation and dubious practices, as outlined in the report of the noble Lord, Lord Best. Does the Minister share my concerns and those of that working group? If so, what needs to be done about it? Does she agree with me that this is white-collar crime affecting tens of thousands of ordinary leaseholders?