Leasehold Market Reform

Thursday 28th March 2019 Written Statements

[The Secretary of State for Housing, Communities and Local Government (James Brokenshire)]

The Government are committed to tackling unfair practices in the leasehold market and to promoting transparency and fairness for leaseholders.

It is vital that we have a leasehold market that is transparent, fair and affordable for all those involved; where people know in advance what they are going to have to pay, are not saddled with mounting or unaffordable costs and are able to challenge fees if they feel they are unjustified or unfair.

Today I am announcing a package of measures to further support existing as well as future owners of leasehold homes.

This includes clamping down on unjustified legal costs for leaseholders, an industry pledge to tackle doubling ground rent charges and reforms to provide greater consumer protections and transparency around the use of event fees in retirement leasehold properties.

Under current rules, leaseholders may be liable to pay the legal costs of their landlord regardless of the outcome of a legal challenge. This has led to cases of leaseholders being forced to pay tens of thousands of pounds in legal fees, even when the court or tribunal has found in their favour. This can lead to leaseholders facing higher bills than the charges they were seeking to challenge in the first place. It can also deter leaseholders from taking their concerns to a tribunal.

We will bring forward legislation to close these legal loopholes that allow freeholders to unjustifiably recoup legal costs from leaseholders.

I am also pleased to unveil industry’s leaseholder pledge, which we have worked on closely with them. This will mean that developers, freeholders, lawyers and managing agents are committing to taking steps to help leaseholders, especially those who are affected by rapidly doubling ground rents. I would like to take this opportunity to commend all those who have already signed up, and to urge those who have yet to do so to do the right thing. We expect all those who are involved to help put right problems for people who are affected.

Today I am also announcing the Government’s response to the Law Commission’s 2017 report on “Event Fees in Retirement Properties”.

Implementation of these recommendations will help older people and their families to be better protected from hidden costs and unfair fees charged in some leasehold retirement properties, where owners are required to pay an event fee on certain events, such as sale, sub-letting or change of occupancy. A new statutory code of practice will ensure that these fees cannot be charged unexpectedly, while fees that breach it will be regarded as unenforceable. Developers and estate agents will be required to make all such fees crystal clear to people before they buy, so prospective buyers can make an informed decision before forming a financial or emotional attachment to a property.

I am committed to reforming the leasehold market so that it is fit for purpose and works for everyone and today’s package of reforms builds on our wider leasehold reform programme to reaffirm this commitment.

[HCWS1466]