In June the house of Lords held a debate on the current state of building insurance on leasehold properties, with Baron Evans of Rainow, (Lord in Waiting (Government Whip)) answering on behalf of the Government. Lord Kennedy of Southwark (Labour) asked the Government:
“What action they are taking to deliver greater transparency over the commissions paid to freeholders and managing agents by insurance companies when arranging building insurance for leasehold properties; and what action they are taking to deliver greater value for money for leaseholders in this regard?”
Lord Rainow replied:
“The Government remain determined in their promise better to protect leaseholders and empower them to challenge unreasonable costs, and to make it easier and cheaper for them to extend their lease or buy their freehold. We wish to extend the benefits of freehold ownership to more homeowners, and in line with our manifesto commitments, we will continue leasehold reform within this Parliament. We are working closely with the Law Commission to bring forward game-changing reforms to the system and we thank the commission for all the work it has done in this area to date. However, the Government cannot pre-empt the King’s Speech, which we expect by the autumn, by confirming what will or will not be in future legislation.”
During the same debate, Lord Best (Chairman of the Regulation of Property Agents Working Group made comment and raised a question:
“Taking commission surreptitiously on insurance premiums is one of the many ways that managing agents, unfortunately, sometimes behave very badly, and that includes exit fees, permission fees and service charges that go up. I think there is now almost universal recognition that we need a regulator for property agents—estate agents, letting agents and managing agents—and that is certainly what the industry itself is asking for. Would the Minister welcome an amendment to the Renters (Reform) Bill or a leasehold reform Bill, when we get it, to introduce a regulator for property agents?”
Baron Evans of Rainow responded:
“The noble Lord is absolutely right. This Government are committed to promoting fairness and transparency for tenants and homeowners and to making sure that consumers are protected from abuse and poor service. I assure him that we remain determined to drive up professionalism and standards among all property agents, and we continue to work with the industry on improving best practice across the property agent sector.”
A full transcript of the debate may be downloaded here.
Separately, in the house of Commons, Priti Patel asked the Secretary of State for Levelling up, housing and Communities:
“What action he is taking to help support leaseholders to contest charges levied by property management companies?”
Minister for housing and Planning, Rachel maclean mP responded:
“We are committed to better protecting and empowering leaseholders by giving them more information on the things for which their charges pay. We will legislate to ensure service charges are transparent and communicated effectively, removing barriers to challenge when things go wrong. This will help leaseholders more effectively challenge their landlord if they consider their fees are unreasonable. We are due to bring forward further leasehold reforms later in this Parliament.”
As mentioned in the CEO column, there have also been a number of newspaper articles concerning increases in service charges, the justification for such increases and the stress that the increases have caused leaseholders:
The Times – Why service charges are soaring — and it’s not just inflation (27th June)
The Times – Service charges soar after Grenfell fire drives stronger safety rules (26th June)
And hamptons’ research report on service charge levels can be downloaded here.
