The government has made further general pledges on its reforms to end the leasehold system.
In a statement yesterday it stated that the
key reforms set out in the Leasehold and Freehold Reform Act 2024 (LFRA) will give leaseholders greater control over their homes and their money, making it easier to see exactly what they are being charged for, understand how their service charges are being spent and challenge unfair costs when things go wrong.
Following consultation with leaseholders, landlords and industry groups, the government is confirming a series of measures to increase transparency around service charge costs and rebalance the system.
Coming into force as soon as possible from 2027, the changes include:
- An annual report, which landlords will need to provide to leaseholders, giving a clear insight into the health and condition of their building and plans for major works;
- A new service charge demand form, setting out detailed information about service charge payments and what they will cover;
- Where disputes arise, such as over service charges, new rules will protect leaseholders from footing their landlord’s legal bills without challenge, and enable them to apply to recover their own costs;
- Landlords will need to provide certain building information on request, such as fire safety information and invoices for maintenance works, going back up to six years and with clear timeframes for responses.
The government says: “This action will rebalance the system, increase transparency over charges and help minimise the costs falling to leaseholders.”
And Housing Minister Matthew Pennycook adds: “We are acting to enable more existing leaseholders to take control of their buildings and more easily convert to commonhold as and when they judge the time is right for them, and we are strengthening protections for existing leaseholders in the here and now by driving up service charge transparency and rebalancing legal costs so that leaseholders are empowered to challenge unreasonable charges.”
In addition, two further public consultations have been launched.
They will explore plans to set specific valuation rates in regulations, reducing disputes over costs and giving leaseholders greater certainty about the price they will pay to enfranchise, as well as protect leaseholders from covering their landlord’s solicitor, valuer or administrative fees when going through the process.
But the government is setting no deadlines for its action, merely saying:
“The measures set out today will be implemented as soon as possible and will complement the upcoming Commonhold and Leasehold Reform Bill, which will overhaul home ownership, ban leasehold for new flats and cap ground rents at £250.”
