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Rebecca Paul (Reigate) (Con)
I beg to move,
That this House has considered property service charges.
It is a privilege to bring this important debate to the House today. I thank the Backbench Business Committee for granting it.
I remember vividly the day, over 20 years ago now, when I picked up the keys to my first flat in south-east London. It took time to get to a position where my salary was sufficient to secure a mortgage and to save up the deposit, but I managed to do it. I spent the first few weeks on a mattress on the floor while I saved for a bed, but it was the most amazing feeling in the world to own my own home. I was fortunate enough to have purchased the freehold, so I never had to face paying service charges that I could not afford and I never had to rely on a third-party management company to make essential repairs. When the time was right for me to move on, my flat was easy to sell.
Others have not been so lucky. They have bought leasehold on a private estate, and with that comes a life sentence. Today, I want to give a voice to those people on the hook for ever-increasing service charges, trapped in homes they cannot afford but cannot sell either, who thought they were buying their dream home when actually it was the start of a nightmare. Make no mistake—this is no exaggeration on my part—people’s lives have been and are being ruined by excessive service charges.
Let me start, Madam Deputy Speaker, by telling you about Park 25, a housing estate in Redhill. It was built 18 years ago and has 500 homes, a mixture of houses and flats. It is a contemporary and stunning site, with the type of homes that people want to live in. It is particularly attractive to key workers, such as doctors and nurses, due to its proximity to East Surrey hospital. Like many new estates, it was built by private developers with no arrangements made for the local authority to adopt the communal land after completion, so FirstPort was appointed as the property manager to maintain the estate. This means that residents of Park 25 pay an expensive service charge to FirstPort, on top of their mortgage and on top of their council tax, for pretty basic services. Those service charges are going up significantly every year, driving some homeowners to the absolute brink.
I first became aware of the issue when I met Louise, a single mum, at my first ever surgery last year—a meeting I will never forget. She told me how she had purchased a one-bedroom flat on Park 25 when they were first built, but the service charges quickly increased, becoming unaffordable for her, in part due to the expensive biomass communal heating system. In desperation she tried to sell, but three times over she lost her buyer. She now lets out the flat and has moved back in with her family, unable to access the equity that would allow her to buy somewhere else. She is trapped, not able to move on with her life.
Then there is Alfie, who purchased a two-bedroom flat in 2018. He was
“thrilled to get on the property ladder at the age of 23, thinking it was a valuable investment.”
His first service charge payment was just under £2,200 per annum. Six years later, it is over £3,600—a 70% increase. For that, he says
“they basically cut the grass and insure the building”.
When heating is included it gets even worse, due to the biomass system. The first amount becomes £3,400, going up to a whopping £8,000 per annum—a 135% increase. Again, Madam Deputy Speaker, I remind you that he is paying council tax and a mortgage on top.
Alfie did consider challenging the service fees at a tribunal, but he was advised by the Leasehold Advisory Service that for any chance of success he would need to appoint a surveyor to review the service charges. However, to do that there needed to be a recognised tenants’ association, and to set that up, over 50% of leaseholders needed to agree. In the case of Park 25, he quickly found that to be an impossible task as many rent out their properties and so are not easily traced. With that door closed to him, he tried to sell his property for over two years—even for £50,000 less than he bought it for just to cover the mortgage. There was lots of interest, but every time the potential purchaser found out about the service charges, they withdrew. Alfie says:
“Understandably, nobody wants to buy it. The ‘we buy any property’ companies won’t touch it and even the auction sites which run a ‘no sale no fee’ policy don’t want to take it on”.
Jim Shannon (Strangford) (DUP)
I commend the hon. Lady for securing this important debate—the fact that so many Members are present is an indication of its importance. In my constituency I have seen an increase in the number of people who bought their house or flat many years ago and are now facing difficulties with the level of charges, unexpected cost increases, and poor communication and service quality. Does she agree that a service charge can never be seen as a blank cheque for the owners, and that what those charges are spent on must be itemised and made clear?
Rebecca Paul
I completely agree.
To add insult to injury, Alfie told me that FirstPort charges an £80 administration fee if payment is not made within 30 days of demand. In 2023 he received his fee on Christmas day while in discussions about a payment plan to settle outstanding fees. FirstPort refused to remove the charge despite his financial struggles. Alfie has now left the UK and is renting his flat out at a loss, because that is the only option available to him.
Sam Carling (North West Cambridgeshire) (Lab)
The hon. Lady highlights the problem of residents being charged late payment fees. I have a number of constituents who never received an original letter demanding payment, but who are then charged late payment fees despite not knowing a payment was due. Does she agree with me that the lack of communication is another critical issue that we must address?
Rebecca Paul
I thank the hon. Member for raising that point. I completely agree that is very much an issue, as I have heard that too.
Alfie and Louise, sadly, are not alone. So many other people on Park 25 find themselves in the same situation: trapped, unable to sell and move on with their lives, and wishing they had never bought the property in the first place. Sam, another resident, said that
“it’s not an exaggeration to say this is ruining people’s lives”.
He has a wife and child and wants to have another, but he cannot move to a bigger property as he cannot sell this one. It is literally stopping them growing their family. He even tried selling his flat for £80,000 less than the valuation, and he still could not sell it due to the service charges. This is devastating for them as a family.
Mr Mark Francois (Rayleigh and Wickford) (Con)
As a constituency MP, I have had some appalling experiences with FirstPort, at Oak Lodge in Hockley and at King Georges Court in Rayleigh. The latter is a four-storey McCarthy Stone development that it manages, where the lift was out of action for almost a year. Is not the fundamental problem with FirstPort that it is ultimately owned by several offshore venture capital companies that are very aggressive in seeking revenue from their tenants, but do not seem very willing to provide a decent quality of service in return?
Rebecca Paul
I thank my right hon. Friend for providing that very useful context. I will come on to that in my speech. One of the challenges we have is that property service companies are seeking to make a profit, yet they are unregulated and free to do as they will. It is for this place to get a handle on that. I hope that today we can think constructively about potential solutions to address the problem, the scale of which, across the House, we all recognise. We do not want our constituents to continue to face it. I am afraid to say that FirstPort is not covering itself in glory. I have now heard hundreds of times over about its lack of responsiveness, lack of transparency on costs and inadequate explanations of service charge increases. Residents have told me about being billed for services they have never received, like window cleaning, with no avenue to formally challenge and remediate. Any opportunity to charge a resident is used to the full.
These things are all symptomatic of an industry that prioritises extracting maximum value from leaseholders, regardless of the human cost. There is no incentive for property service companies to act any differently. It is incredibly hard for leaseholders to remove them, so the companies have free rein to do pretty much what they like. This fundamental power imbalance must be addressed, and it must be made easier for leaseholders to take their business elsewhere.
The Park 25 service charge for the year ending 30 April 2026 is estimated to be just under £1.9 million— 13% higher than last year’s estimate. The increase in costs is primarily to cover the future replacement of playground equipment, street lighting, road repairs and other infrastructure. Park 25 residents are also paying council tax for exactly those types of things outside the estate. Out of the £1.9 million service charge, FirstPort keeps around £142,000 in fees, which works out at just under 8% of the total service charge. How easy was it for me to find that £142,000 figure in FirstPort’s costs breakdown? Not very—I had to total up numbers across many pages of costs, as there is no nice, neat summary at the front showing the total amount.
That 8% may or may not be out of kilter with industry—I found it difficult when researching to confirm one way or another, which is an issue in itself. The key point to recognise here, though, is that there is absolutely no incentive or requirement for FirstPort to keep the cost base low. In fact, the more money it spends on maintaining the estate and the more people it employs to deliver services, the smaller the percentage proportion its management fee appears to be—a perverse incentive indeed.
It would be very easy for me to berate property service companies throughout my speech, and I suspect that others will take up that mantle during the debate. However, we must recognise that it is the current system that allows the companies to operate in this way.
Samantha Niblett (South Derbyshire) (Lab)
South Derbyshire district council has taken the bold and rather commendable decision to ban any new property management fees, and to backdate that to January 2025. However, that does not help those who already have homes they bought before 2025. Does the hon. Lady agree that we should press our Government to legislate to help those who are tied into these arrangements to come out of them?
Rebecca Paul
I thank the hon. Member for that point. An important debate for us to have today is about what we do going forward, both for those who have not yet bought a leasehold and to help our constituents who are in this situation right now. I am really interested to hear everyone’s views on that.
These companies are a symptom of the problem; they are opportunists making money from an inequitable system. It is this House that must take responsibility for addressing the intrinsic unfairness and urgently make the changes needed to unshackle leaseholders. I hope that we will today hear hon. Members’ views on the solutions, not just the issues. We cannot keep building new housing estates under this same model, perpetuating the problem. This is increasingly important in the light of the Government’s ambitious plan to build 1.5 million new homes over the next few years. I have to say, if nothing has changed when the time comes for my children to purchase a property, I will be strongly advising them not to purchase a leasehold on a private estate.
To start us off, I will give the House my view. I think making it easier for leaseholders to change property service company is important, as is better regulation and higher standards, but that will not fundamentally transform the situation. What is needed—what is critical—is a change to the default model, so that homeowners are not paying both the council and a private company for the exact same services.
One sensible and equitable option would be that local authorities are obliged to adopt communal land and infrastructure on completion of new estates in all but the most exceptional cases. For that to work in practice, developers would need to be obliged to ensure that the infrastructure meets the council’s standards before transfer. That way, owners of leasehold properties would be put on an equal footing with everyone else, paying for communal services once through their council tax. That would certainly deal with future issues.
But what about those who, like our constituents, are already trapped? It may be that something more radical is needed, such as a mandatory direction to all local authorities to adopt communal land where requested by existing estates. It would be difficult, I know, in this current financial environment and with the likely variability of estate quality, but it would certainly address much of the issue and allow my constituents to sell their properties and move on with their lives.
I know that this Government are also keen to move forwards and towards commonhold arrangements, especially for flats, which essentially put management of the estate in the hands of leaseholders themselves. There are some benefits to commonhold over the current model, but it is not the silver bullet that is needed and brings its own set of problems. Anyone who, like me, has been involved in a residents’ association or similar organisation—or, indeed, who simply understands human nature—will know that most people do not want to pay out for significant works, so the works will not get done, which in time will result in crumbling roads, failing roofs and falling home values. Again, it will become difficult for residents to sell their properties. It is just another version of the same trap, and one that pits neighbours against each other. I urge the Government to think again on plans to make commonhold the default tenure for new build flats.
Bobby Dean (Carshalton and Wallington) (LD)
The hon. Lady is making some excellent points. I really think it is the radical solutions that we need to consider. I should probably declare an interest as a director of a right-to-manage company—we got so fed up with the freeholder failing to manage our building properly that we took back control. However, as she points out, that is not the end of the story, and we still need to get a lot of people to agree on a lot of things, and building up the reserve fund is particularly difficult. I encourage the hon. Lady to keep coming up with ideas that are bolder than the ones that are out there at the moment, because it is a sticky problem to fix.
Rebecca Paul
I thank the hon. Member for his encouragement and I will keep coming up with radical ideas.
Before I finish, I want to raise the issue of education and information provision to homebuyers. If most people knew the current problems with leasehold arrangements, they would not buy them—or they certainly would not pay as much for them. I am sure that conveyancers include warnings and information when managing the sale and purchase process, but it is not cutting through. People are sleepwalking into purchases with little or no understanding of the uncapped service charges they are signing up to, and we must do more to ensure that people are adequately advised and informed before signing on the dotted line.
I would be most grateful if the Minister could today give his view on a few things. How can we best address the current power imbalance between leaseholders and property service companies? What role does he see an industry regulator playing in driving up standards? What default tenure model should be used for future housing estates to reduce the incidences of these issues in the first place? I would also appreciate his views on my suggestion to move to a mandatory adoption model after development completion.
Several hon. Members rose—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. All Back Benchers are now on a six-minute speaking limit. I call Justin Madders.
Justin Madders (Ellesmere Port and Bromborough) (Lab)
I congratulate the hon. Member for Reigate (Rebecca Paul) on her excellent speech and on securing the debate. I state for the record that I am a patron of the Leasehold Knowledge Partnership, which does such good work in advising leaseholders.
It was eight years ago that I stood on the Opposition side of the Chamber and described the use of leasehold in new developments as the payment protection insurance of the house building industry. I am pleased to say that the previous Government eventually started to tackle that, and the current Government will hopefully complete that work soon so that we can finally condemn leasehold to the history books.
It was four years ago that I stood on the Opposition side of the Chamber and warned that estate management fees could replacement leasehold as the new PPI of the house building industry—or, as the indomitable women of the National Leasehold Campaign termed it, “fleecehold.” Now that has come to pass; it seems that just about every new development built in this country adopts the same exploitative model, and the public are rightly asking what we are going to do about it. The Minister has amassed great expertise in this area, and I know he is keen to crack on with reform.
There are a number of legal cases ongoing. I am pleased to see that the bogus argument about human rights has been dispatched by the High Court. However, there are a number of others where well-resourced freeholders are trying to preserve the status quo, and not every court is as wise as the High Court was in the human rights case. The Court of Appeal recently found in the Romney House case that where a tenant goes to the first-tier tribunal to challenge a service charge, the tribunal needs only to consider whether the process was reasonable, and not whether the charges themselves were reasonable. That is absurd, and has had the effect of requiring those leaseholders to pay for the refurbishment of a gym that they do not actually own. It is freeholders with their seemingly limitless resources that can challenge and delay actions by leaseholders to preserve their rotten system at every turn, so the sooner we implement the leasehold Act in full the better.
There is a clear warning here as to why we must crack on with tackling estate management fees more broadly. I look forward to the Government’s response to the consultation. When it comes to stopping any more estates being built in this way, and we must end this practice as a matter of urgency, I suggest, as the hon. Member did, that it will actually be much easier to do this than it has been for ending leasehold. I urge the Minister to send a clear instruction to local authorities that estate management arrangements will no longer be accepted in planning applications, and to legislate to ban them on any new developments if necessary. The longer we put off fixing that, the longer it will take to fix this mess.
I fear the Minister will be told that such a move would have an impact on the ambitious house building plans that we rightly have and would damage the housing market more generally, but were we not faced with the same arguments when we tried to abolish leasehold? After all, these developers do not have to pay a community sum to the local authority—indeed, they have an additional lucrative income stream—but despite those new income sources, it does not seem to have had any impact on the price they charge for people to buy their homes in the first place.
The reality is that an estate management company is nothing more than a calculation on a balance sheet. The developers have zero interest in keeping the verges neat and tidy after they have gone. If they can make the bottom line look more attractive by creating the management company, they will, and they keep getting away with it because we let them.
Of course, we must act to protect those already caught in this trap. It is also clear, as we have heard, that many people are not aware of the implications of an estate management company or how much it will cost them when they buy their home. Often, first-time buyers are excited by the prospect of owning a new home, and they place their trust in the system—the lenders, the developers, the lawyers—and the echoes of the leasehold scandal with this are loud. Glitzy sales staff paint a very different picture. They never set out the reality that, in addition to the significant commitment people are making when they buy a home, they are also agreeing to pay an unspecified sum to often unspecified recipients for as long as they stay in that home.
The mis-selling and failure to properly advise has all the hallmarks of the leasehold scandal. We should not be surprised by that because the same actors are involved in that industry as are involved in these rip-offs. An example of some of the novel ways that this financial trap can be described by sales staff came to my attention when constituents on a recently built estate all had the common explanation given to them that this service charge was for a storm drain, but that it would be paid off in a few years so they did not need to worry about it. Well, they are still paying it 15 years later. They are not even sure if there is a storm drain and, even if there is, who is actually responsible for it, and yet the invoices and threatening letters still come.
We also recently met interested parties on another new development where we were trying to clarify who was responsible for maintaining what and who they were accountable to. Because the estate had been developed over several years by different developers, about 10 different organisations were represented at that meeting. It is little wonder that we struggle for transparency with so many people involved.
The fundamental question from the homeowner is: why are we paying twice for the maintenance of open spaces, once through a management fee and once through council tax? We should start from the basic principle that the local council should be doing all the work and that estate management companies are an unnecessary tax on homeowners. How long will it be before we see a concerted campaign for people to get reductions on their council tax on the basis that they are being taxed twice? In the wrong hands, that sort of campaign could pit communities against one another.
Let us not forget that buying a home is the biggest single purchase people will ever make. We need far greater accountability for what developers say and what they build. Housing is of course a critical part of our infrastructure and a fundamental part of a person’s life, but it has been shown time and again that we cannot rely on the market alone to deliver that in a responsible way. Let us get control over these companies, empower homeowners and legislate if necessary so that this rotten, avaricious model becomes history, just like leasehold eventually will.
Katie Lam (Weald of Kent) (Con)
I congratulate my hon. Friend the Member for Reigate (Rebecca Paul) on securing this debate in the House. Earlier this year, I wrote to hundreds of residents across the Weald of Kent to get a better understanding of how property management companies operate across our home. What I discovered was very worrying and, as many Members here will recognise, it is an all too common story. To date, I have heard from nearly 100 people across 11 estates all complaining about their property management company FirstPort. The pattern is as depressing as it is predictable: steep and unexplained increases in service charges, slow and inadequate responses to maintenance issues, and a serious lack of accountability and transparency.
Let me share a few examples. Constituents in Yalding and Headcorn have told me that they face a 70% and a 40% rise in their management fees respectively. Those are not minor uplifts, and nobody can tell them clearly what they are paying for. I understand that costs are rising not least for things like insurance, but at the very least, hikes like that should be clearly explained. Constituents in Marden and Kingsnorth have documented cases where no maintenance at all was carried out for months, despite repeated chasing—grass not cut, lights not fixed and rubbish not cleared—and yet the bills keep coming.
Finally, constituents in Tenterden and Coxheath have told me that it is beginning to affect the value of their homes, as my hon. Friend mentioned. Some have said that their properties are becoming unsellable because buyers will not take on the liability of these charges and this management. In one case, two sisters are trying to sell their late father’s flat. He bought it for £150,000 and they now cannot even sell it at £60,000. At auction, the price has fallen below £20,000. They told me that local estate agents refuse to list it because of the fees associated with managing the property.
Much of this is part of a wider pattern. Many residents on these estates pay twice for what most people would regard as the same basic services. They pay full council tax to their local authority, as everyone does, but on a growing number of estates, the council has not taken over the roads, street lighting or green spaces and therefore does not maintain them.
Richard Foord (Honiton and Sidmouth) (LD)
To that point about councils not having yet adopted such things as the roads or pavements, I have the example of Pebble Beach in Seaton where I represent, where residents have been charged fees and even threatened with legal action before the estate has been handed from the developer to the property management company. Has she come across that, too?
Katie Lam
I am afraid so, and fairly regularly in fact. The legal action that the hon. Member mentions is important to reflect on because it can in some cases be deeply distressing and seem very aggressive for people just trying to get what they have already paid for, which in some cases does not even exist yet.
Residents are required to pay a second set of charges on top of the council tax to a private management company, such as FirstPort. They pay council tax for street lighting and then they pay a private company for street lighting. They pay council tax for maintaining the verges, and then they pay again for someone to cut the grass—except of course in many cases the grass is not cut. In these situations, the homeowner has almost no practical leverage. The council says, “It is private land”; the management company says, “You are contractually obliged to pay us anyway”; and the person who lives there, who cannot simply switch provider and who must disclose the charges when they come to sell, is left with little ability to challenge poor value. People are paying more and getting less. There is a continuing lack of transparency, with residents routinely denied a proper breakdown of charges, not given meaningful answers and, in some cases, not even given the dignity of a reply.
FirstPort is one of many property management companies that have been allowed, in some respects, to conduct themselves with impunity, largely because local residents have almost no consumer power or transparency. I have met representatives of FirstPort, and they assure me that the company is changing and improving. I very much hope that this is true. But, in case that does not happen, the last Government took important steps to address this through the Leasehold and Freehold Reform Act 2024.
The purpose of the Act is to give residents clear information about what they are being charged and why; to widen access to redress when something goes wrong, which is crucial; and to ensure that disputes with management companies can be resolved fairly. But residents will not see those benefits until all the secondary legislation is brought into force, guidance is published and management companies are given a clear expectation that they will need to comply.
I caution the Government against assuming that the answer might be to layer on fresh regulation or to draft a new Bill. I encourage the Government to accelerate the implementation of those elements of the Act. My constituents do not want to wait, say, another year to see itemised, comprehensible service charge bills and prompt access to redress. They accept that the streetlights must be maintained, the gutters cleared and insurance bought—they know all of that costs money—but what they will not accept, and nor should they, is paying more for less with no answers and no accountability.
Fleur Anderson (Putney) (Lab)
I welcome this important debate and thank the hon. Member for Reigate (Rebecca Paul) very much on behalf of the many constituents who come to my surgeries, who write to me, and who I meet when I am out and about in the many developments across Putney, Southfields, Roehampton and Wandsworth town.
I speak today on behalf not just of my constituents, but of leaseholders across the country who feel that they are being let down by the broken system—one that continues to allow unfair and sharply rising service charges, poor communication, and substandard services to persist unchecked. The limited rights to challenge such changes leave people feeling as if they are fighting the battle on their own. As we know from the number of Members present and from many other meetings, people across the country face these issues, so there is something wrong not just with the individual managing agencies that we are all thinking of, but with the system itself.
The hon. Member for Weald of Kent (Katie Lam) mentioned regulation. Do we need more layers of it? We must also consider the checks and balances in the system. Asking people to go to the first-tier tribunal as a last resort is so daunting and cumbersome that it is not a proper check on the system. I welcome the Government’s decisive action to tackle long-standing injustices in leasehold and estate management. I thank the Minister for all his work on that, including the incoming changes. This debate is full of hope about those changes making a difference.
Ahead of the closure of the Government’s recent consultation on strengthening leaseholder protections, I conducted a service charge consultation in my constituency, where it is a big issue in so many developments. The results, which I have submitted to the Government, were deeply troubling. More than 200 constituents responded to my consultation, and I think they speak for hundreds more. Almost 90% of respondents reported significant increases in their service charges. Even more—96%—said that they felt those increases were unjustified. That comes down not only to poor communication, but to the fact that many of those services charges do seem to be unjustified.
Those are not isolated cases, as we are hearing in the debate. In 2024, service charges rose by 11% on average—well above the 2.5% rate of inflation—and, in my constituency, they average £2,300 per year. I see countless examples of eye-watering hikes. One constituent reported that their annual service charge had increased from £1,600 to £6,660 per year, for example, while another told me they were sent a large additional bill right before Christmas as their managing agent clawed back more money after an “error” in its accounting. That often happens during years in which the amount has already risen a lot, before rising more still because of extra charges and services provided—or not provided, as many constituents see it.
Too many leaseholders are ignored by managing agents and charged for services that are sub-standard or not delivered at all, including cleaning services that show no signs of leaving the building cleaner, painting in communal areas that do not need to be painted or for which the charge should be lower, and, in one case, gardening services for gardens that do not exist. One of the most shocking examples in my consultation was a large development in my constituency. Leaseholders reported a revolving door of housing managers who are inexperienced, unqualified, overstretched and unfamiliar with the building’s history. The managing agent presents accounts that simply do not add up. Contractors are paid without checks, faults go un-penalised and residents are left to clean up the mess time and again. The managing agent has ignored numerous industry experts who have stated that important plumbing works need to be carried out. Some have said that the building is in serious danger of complete structural failure. Basic services are not carried out, yet leaseholders continue to foot the bill. The managing agent is supposed to paint the exterior at least every 10 years, but nothing happens. It is the same old story again and again.
Six managing agents were named many times in my consultation. I will not name them here, because that would be damaging for the people who live in those developments. Clearly, there are some good managing agents and landlords, but there are also some very bad ones, and those are the ones that we need a new Bill to deal with. The Leasehold and Freehold Reform Act 2024 contains proposals for greater transparency through standardised accounts, mandatory reserve funds and easier routes to challenge unreasonable service charge rises, and managing agents will face mandatory qualifications and enforced membership of professional bodies. Those measures are all welcome. The previous Conservative Government had 14 years to act on these matters but passed leasehold reform law only in the dying days of the last Parliament, so their measures were rushed, poorly drafted and failed to ban new leasehold homes.
I am very glad that this debate offers us the chance to talk about going further on industry regulation and to welcome the commonhold Bill. Leaseholders in my constituency and across the country have waited long enough. The system is broken, the injustice is real, and the need for reform is urgent.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call David Reed. Many congratulations on baby Reuben!
David Reed (Exmouth and Exeter East) (Con)
Thank you very much, Madam Deputy Speaker. It is nice to have his name on the record.
I am very grateful for the opportunity to speak in this debate, and I thank my hon. Friend the Member for Reigate (Rebecca Paul) for bringing the topic to the House’s attention. In my constituency, this is rapidly becoming one of the most frequently raised issues. The biggest problem is that people who have worked hard, saved responsibly and bought a home in good faith find themselves trapped in a system that is opaque, unaccountable, and, in the worst cases, exploitative.
Like other Members, since being elected I have been inundated with complaints about one company in particular. We all know its name: FirstPort. It is, by some distance, the most problematic housing management company operating in my constituency. My office is dealing with almost 40 open cases relating to developments that it manages. The stories are depressingly consistent: residents describe unexplained charges, unclear billing and long delays in resolving the simplest issues—we have heard many such examples today. They send long chains of unanswered emails. They attend my surgeries exhausted and frustrated. When my team contacts FirstPort on residents’ behalf, we often wait an unacceptable length of time for a reply, and progress—if it comes at all—is slow.
Earlier this year, I and other Members of this House met FirstPort’s managing director. I hope, Madam Deputy Speaker, that you see me as a chilled-out kind of guy, but I left that meeting with my blood boiling, and other Members had a similar experience. We asked straight- forward questions but received vague answers, rehearsed corporate language and no clear commitment to improving customer service. A group of MPs will meet FirstPort again soon, and I hope that the company has set to work in earnest. On reflection, what angered me most was that many of the people caught up in these issues are elderly. They feel intimidated by the complexity of the system. They are passed from pillar to post, ignored when they raise legitimate concerns, and made to feel like an inconvenience simply for asking what their money is being spent on.
However, when FirstPort wants payment—this is something that it is very good at—its communication becomes clear and very persistent. When residents in several developments tried to move away from FirstPort, essential financial documents, including sinking fund balances and reconciliation statements, were withheld. In some cases, large sums of residents’ money were retained for months, preventing new management companies from planning maintenance or accounting properly. In my constituency, local resident directors Karen Wheeler and David Buller—fierce campaigners—have documented delayed fund transfers, missing paperwork and opaque accounting.
Karen eventually gave up trying to reconcile the final balance because the spreadsheets were, in her words, “unfathomable”. For Karen’s development, the cost was about £500—quite a significant sum for many elderly residents—but, as my hon. Friend the Member for Reigate rightly said, the real issue here is the power imbalance. Residents have no transparency, no clarity and no meaningful route to resolution, despite FirstPort’s own code of conduct, which promises transparency, value for money and excellent customer service. I think we can all agree that that does not stack up.
This is neither an isolated concern nor a partisan one. Former Ministers have highlighted FirstPort and other companies being consistently associated with high charges and poor service. The BBC has reported homeowners being billed for things such as “terrorism insurance”, without any context, while basic grounds maintenance is not completed. More than 30 MPs have written jointly to FirstPort demanding action.
We all know that the problem is structural. Far too many homeowners are locked into contracts they never chose, are forced to pay service charges for poorly maintained communal areas, and have no ability to change providers when the services fail. As we have heard, many homeowners on private estates—the so-called “fleecehold” estates—are effectively paying twice: once through council tax, and once through service charges. Leaseholders trying to sell their homes frequently face long delays and eye-watering administration fees, and what should be a proud milestone—owning or selling a home—becomes a source of stress and financial burden.
We have heard that legal protections exist, but they are not enough. The Leasehold and Freehold Reform Act 2024 will bring mandatory transparency—
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Will the hon. Gentleman give way?
David Reed
I have one minute left and I will make my final points. The Act aimed to bring mandatory transparency, through standardised billing, greater rights to challenge charges, and easier routes to taking over management, but those reforms are not yet implemented. Why is that? I hope that the Minister, in his closing remarks, will set out a course for when those measures will be implemented, and will say what new legislation will be brought in to ensure that people are protected. I finish on a point on which I think we all agree: residents who are on these schemes do not need more consultations; they need action, and this Parliament must deliver.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. It is up to Members if they wish to take an intervention. If they do, they have an extra minute on their speaking time.
Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)
I often hear the same story across Doncaster East and the Isle of Axholme about bills that jump without warning, charges that people cannot control, invoices that are hard to decipher and work that arrives late or not at all. If we pay for services, we should know what we are paying for, the standard we can expect, and how to put things right when they go wrong.
There has been some progress on what has been coined “fleecehold”, and on the rights of homeowners. I welcome steps to protect leaseholders from unjustified service charges and to raise standards in managing the agent sector, but many people still feel powerless when a bill lands. Change must bite on the ground.
We have heard that many households pay estate rent charges on top of council tax, and in the worst cases there are excessive or unexplained fees, charges for services that would normally be provided by local authorities, arbitrary administration costs and fees imposed during a sale. Too many discover too late that roads, verges and play areas are not adopted. No family should be ambushed by a large one-off bill for works that they could not foresee. Clear pre-sell disclosure and sensible reserve planning are essential.
There are good actors. Resident-led management companies, responsible freeholders and professional agents already publish clear breakdowns and engage on works early. They should feel backed by a system that raises the floor and rewards good practice. I therefore ask the Minister today for four things. First, will the Government promptly bring forward secondary legislation? We need to define what insurance fees are permitted, end hidden commissions and require standardised, transparent statements, so residents can see where every single pound goes. Secondly, will they set professional standards for managing agents? We need mandatory qualifications and a robust code of practice that will lift the quality bar and give residents confidence that estates are run properly. Thirdly, will they fix the major works regime? We need clear pre-sale information to be provided, early engagement on big projects to be required, sensible reserves to be planned, and safeguards put in place, so that households are not hit by avoidable spikes. Fourthly, will the Government make redress fast and affordable? We need to resource the first-tier tribunal, and publish simple guidance, so that residents can challenge unreasonable costs without needing deep pockets. I am sure that a small number of timely rulings will reset behaviour across entire developments.
My constituents in Doncaster East and the Isle of Axholme are not asking for special treatment. They are just asking for fairness—bills that are clear, charges that are reasonable, and services delivered as promised. I have set up a number of street surgeries in the areas from which I get the most comments on this matter. That way, I can hear constituents’ voices and directly feed back what they have said to the Minister and the Department as we move forward with the legislation. With prompt secondary legislation, tight definitions on insurance, professional standards for agents and an accessible tribunal system, we can turn a confusing and stressful system into one that treats residents with respect and provides peace of mind.
Richard Foord
The hon. Member talks about secondary legislation when suggesting what should happen next. The Leasehold and Freehold Reform Act provides protections for leaseholders on private managed estates; it enables them to go to a tribunal to challenge management charges. Does he think that that ought to exist for freeholders as well?
Lee Pitcher
The hon. Gentleman makes a valid point, and it is certainly one that the Minister should listen to and take into account. I was concluding when he intervened, so I will finish with this: our home should be a place where we get to dream, not where we have nightmares.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
As a member of the Housing, Communities and Local Government Committee, I want to bring the House’s attention to the work we did in the summer looking into property management companies. The Chair of the Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi), would have been here if she was not already committed to a Westminster Hall debate at the same time, so I send her apologies.
I thank my hon. Friend the Member for Reigate (Rebecca Paul) for securing this important debate. Like many in this House, my constituents have been affected by property charges and the lack of transparency from certain companies. We have already heard about FirstPort, and I wish to expand on what has been said about it. In Penn Place in Rickmansworth in my constituency, FirstPort looks after about 140 apartments on an estate. Many of my constituents who live there have contacted me regarding the ever-increasing service charges that they face. Their monthly payments have more than doubled, on occasion. They receive no communication as to why an increase is needed, and that places extortionate pressure, both financial and emotional, on those living there.
We all are aware of the cost of living in our communities at the moment, given the cost of council tax, energy prices, and licence fees for renting properties in certain London boroughs. Many of my constituents have been unable to sell or move, as people do not want to purchase properties that come with ever-increasing service charges, and we have already heard about that.
This is not just an issue in my constituency. I have worked with many of my fellow Conservative MPs on this, and indeed, I know it to be a proper cross-party issue. I have a huge amount of respect for the Minister, who I know will continue to ensure that this issue is addressed, build on the legacy of my Government, and continue to push the matter forward, hopefully at speed. I look forward to him giving that commitment when he responds to this debate.
Despite its expensive charges, FirstPort does not even provide an adequate property management service. One of my constituents made me aware that carpets were not being replaced and walls were not being repainted. There is also a high turnover of property managers, which is ineffective for maintaining the estate and symptomatic of a poorly run company. When we were in government, we brought in the Leasehold and Freehold Reform Act 2024, which required transparency about leasehold service charges. It would have allowed leaseholders, such as those in Penn Place in my constituency, to scrutinise and challenge increases if they are unreasonable. The Act has received Royal Assent, but it is yet to be brought fully into force. I understand some of the reasons behind that, but I urge the Minister to get moving on this. I am sure he will give us that reassurance a bit later. In closing, what assurances will the Minister provide to my constituents and many across the country, who constantly face service charge increases but no increase in service, and how we can better protect those residents?
Sam Carling (North West Cambridgeshire) (Lab)
I am so pleased that we are taking the time today to debate property service charges in depth. Across my constituency, residents are drowning in soaring bills, deferred maintenance, opaque accounts and a carousel of management companies passing the buck. These charges do not exist in a vacuum; they sit alongside dodgy contracts, conflicts of interest and unadopted roads—a structural failure that leaves residents feeling trapped and powerless.
Since being elected, I have had so many constituents come to me with leasehold horror stories. Of course, it is the service charge hikes are that are brought up most. In one case, a £4,600 charge in 2017 was due to increase to over £9,000 this year, in a property where many residents are retired and on a fixed income. That is not to mention the lack of transparency over what the charges were for. In this instance, residents pointed out that a £6,000 charge for staffing was levied during a time when there were no permanent on-site managers. I want to give credit where it is due. When I met the team at that management company for an explanation, they held their hands up and acknowledged that things needed to improve, and they have since followed up with residents.
Other companies, however, are not quite as reflective. Having thought about this, I will not name the companies in my speech, because I do not want to blight the developments in question, but I must warn these companies that that is an option in the future if we do not see improvements. The managing agent of one development in my constituency did not respond positively to my letter setting out residents’ concerns. Indeed, it is displaying what I have come to call the four horsemen of the managing agent: hikes in service charges, inadequate maintenance, poor communication with residents and a lack of financial transparency.
In a previous contribution in the House, I said that residents had informed me of a 150% increase in the service charge in two years. In its very blunt reply, the managing agent said that that was wrong and that the real increase was only a doubling in four years, which it considers reasonable. I do not, and nor do my affected constituents, who have pointed out that if we factor in various additional costs that used to be in the service charge but were then separated out, it is closer to the increase they cited.
Maintenance work does not get done. When residents took me around their development this year, I saw for myself the shoddily constructed steps that create hazards, plus defective drainage, malfunctioning lighting and so much more. The responsibility for some of these issues is not clear, as the developer should be taking on some issues that arose shortly after development. The lack of clarity means that residents are dealing with onerous back-and-forths, whereby responsibility is forever passed on and it seems like maintenance issues will never be solved. Just today, a resident described to me how there was a rat infestation at one point, and a contractor was apparently paid £30,000 of residents’ money to resolve it. It did not. The residents’ association was later able to sort it out, but not before that huge sum of their money was frittered away.
That brings me on to the poor communication. When highlighting the above problems, as well as concerns from residents about service charge breakdowns, I asked the managing agent what it would do to improve communication. I expected an answer that pushed back but at least agreed to look into the concerns I raised. I did not even get that. The response said it all:
“We do not consider that communication requires improvement.”
Then we come to the fourth horseman: a lack of financial transparency. I have been told by residents that they are contractually bound to an insurance policy with a £5,000 excess, making it completely unusable. A resident has shown me figures for one block that show a total insurance premium charged of over £60,000, of which just under £20,000—around 30%—was commission, in a confusing brokerage set-up, with much of that going to a company linked to the managing agent in quite clear ways, which smacks of a conflict of interest or worse. There are so many other examples of this. At another development in my constituency, accounts were provided late to residents for three of the last five years, and in the most recent two years, accounts have not been provided at all, despite much pushing from residents and leaseholders.
It is not just leaseholders in flats who are affected by service charges. I have not yet discussed the fleecehold scandal sweeping up so many of my residents in the newly built developments of Hampton. Unadopted roads are rife in new developments, meaning that residents are paying twice for their local areas to be maintained: once in their council tax, and once in a separate service charge. I counted the number of roads that need to be adopted but are without a section 38 agreement—meaning there is a long way to go before they are adopted—in the Peterborough part of my constituency. There are 289 of them, and they are mostly housing roads. That is an unjust extra charge for thousands of residents in Hampton, Stanground, Orton and elsewhere because roads are not being adopted. Some proposals have been made on how we could tackle this problem. The Home Builders Federation, for example, has made useful suggestions about common adoptable standards and mandatory adoption by public authorities.
Dame Meg Hillier
Many Members have raised the issue of the adoption of roads. Obviously, physical roads are easier to define, but there are parts of private estates that are only for that estate. Does my hon. Friend agree that there is a challenge, given the current financial situation, because it usually costs councils money to adopt a road, and under the current law, it could be a big hit for those leaseholders to pay the fee up front for the council to adopt the road?
Sam Carling
My hon. Friend makes a very useful point. I should have clarified that the figure I gave does not include the private roads that were not supposed to be adopted; it was purely the ones that are having this issue.
As my hon. Friend says, councils are in a difficult financial situation. The precarious state of local government finances after 14 years of cuts and freezes certainly has not helped. We also have a lot of councils blaming developers and developers blaming councils, and there is an increasing divergence between what council planning departments are requiring to grant permission for development and what the highways departments of said councils are willing to adopt. That is particularly vexing when there is a two-tier system, with planning at one level and highways at another. I hope local government reorganisation will help with that, but it is happening in unitary authorities too, and we need to explore ways to deal with that.
Ultimately, these are symptoms of a wider issue in how the system treats freeholders and leaseholders alike. The leasehold and commonhold reform Bill will be a vital step forward. I am pleased the Government are committed to ending leasehold for new developments. From my experience, that change cannot come soon enough. A key advantage of commonhold becoming the default tenure is that managing agents will be appointed by and responsible to leaseholders, rather than absentee corporate freeholders. Of course, the situation with managing agents still needs to be improved, and I am very supportive of mandatory regulation as a core step towards that, which I hope the Minister will comment on.
This debate comes in a week of real progress: the Renters’ Rights Act 2025 has become law, finally giving tenants the fair treatment they deserve. Let’s keep up that progress, because nobody should have to pay through the nose for poor service, broken promises and a system that puts profit before residents.
Dr Al Pinkerton (Surrey Heath) (LD)
I am grateful to the hon. Member for Reigate (Rebecca Paul) for securing this important debate. Across the country, and certainly across my constituency, leaseholders are trapped in a system that too often leaves them feeling powerless. They face spiralling service charges, opaque management practices and little or no accountability from the agents or freeholders who control their lived environments.
In my experience, these problems are particularly acute for elderly and more vulnerable residents, many of whom live in retirement developments and depend on the professionalism of those entrusted with managing their estates. Far too often, what they experience is mismanagement, confusion and financial anxiety. To illustrate the scale of the issue, I want to draw on two cases from my Surrey Heath constituency that encapsulate the national failings: first, Mytchett Heath, a retirement complex managed by Cognatum Estates, a not-for-profit developer and operator based in the south and south-east of England; and secondly, the Courtyard in Camberley, a residential building currently undergoing cladding remediation—in effect, two scandals rolled into one.
At the Courtyard, one of my constituents, Sharon, has seen her annual service charges rise by £1,394 between 2017 and 2025, and has paid a total of £22,727 over that period on top of council tax. In 2021 alone, her bill rose by 38% with no clear explanation. When she sought answers from Pinnacle Property Management, the managing agent, the responses were slow, incomplete and unhelpful. She has been left anxious, powerless and deeply mistrustful of those managing her building.
At Mytchett Heath, residents face an equally troubling pattern, and I am grateful to the hon. Member for North Dorset (Simon Hoare) and my hon. Friend the Member for Honiton and Sidmouth (Richard Foord) for supporting me in my investigations of the organisation. Maintenance costs appear without warning or justification. Worse still, the managing fee at Mytchett Heath—the basic charge that residents pay for estate management—has increased by 75% since 2019, at an average rate of 10.7% per year. As all of us know, that far exceeds inflation, wage growth and pension increases, yet residents have been given no clear explanation of how those rises are justified, nor any transparent breakdown of where their money is going.
There is no effective oversight mechanism for managing agents or freeholders. Although residents can, in theory, appeal to the industry ombudsman, many are deterred from that process because it is too long, too complex and often too costly. What is particularly concerning for my residents at Mytchett Heath is that the managing director of Cognatum Estates, Mr John Lavin, also sits on the board of the Association of Retirement Housing Managers—the very trade body that purports to regulate and uphold standards across the sector. That is a textbook case of marking one’s own homework.
Elderly residents, meanwhile, are left financially trapped, emotionally exhausted and with nowhere to turn. The human cost of all this is immense: stress, anxiety, depleted savings and a complete loss of peace of mind. These are retirees spending their later years poring over spreadsheets and unanswered emails, when they should be enjoying the comfort and security they have worked for.
Back in April, I met the board of Cognatum Estates to hear its side of the story. I was told that some residents were “encouraging others to protest”. In a recent letter from Cognatum’s chief executive officer, I heard that complaints were, in fact, part of a
“co-ordinated campaign to…denigrate the organisation.”
These are not political agitators—I should know, because I have met enough of them—but elderly homeowners who are asking basic questions about the bills they receive. They deserve answers, not accusations.
In conclusion, I ask the Minister three simple questions. When can leaseholders—particularly elderly residents—expect to be able to receive clear, itemised explanations of how their service charges are calculated? Secondly, when managing agents fail to communicate or justify large increases, such as the 70% rise in Mytchett Heath’s managing fee since 2019, what meaningful sanctions might they face? Finally, will the Government review the governance of trade associations such as the Association of Retirement Housing Managers to ensure genuine independence and oversight, rather than industry insiders marking their own homework?
Chris Hinchliff (North East Hertfordshire) (Ind)
The scandal of property service charges is one of the most unjust, indefensible and generally enraging issues facing my constituents. In many cases, the charges amount to little more than a form of parasitic exploitation of ordinary people by absentee landlords and businesses. It has been allowed to fester for far too long.
Across the country, 5 million people are trapped in a broken system that leaves them beholden to obscure, often overseas companies with a licence to cream off their hard-earned earnings with almost complete impunity. They have got away with it for years because leaseholders simply cannot effectively challenge this unfairness. As so often in Britain today, wealth is translated directly into power and ordinary people are left without any sense of agency over something as basic as their month to month finances.
The issue of unfair and arbitrary property service charges is impacting every corner of North East Hertfordshire, from Royston to Tewin and from Baldock to Buntingford. There are fleecehold estates where constituents have purchased a new build property under freehold conditions but found they are
“hostages to the whims and desires of service companies who can charge any amount of service fee they wish and without redress”,
making a mockery of the notion of freehold. There are housing association tenants paying eye-watering fees, yet left with neglected and inadequate services; residents in retirement accommodation facing extortionate maintenance costs that leave families struggling to pay care fees and trapped with properties that have little resale value; and leaseholders facing huge hikes in service charges by freeholders, yet seeing little evidence of the maintenance they are supposedly paying for. One constituent put the experience plainly:
“They are committing service charge abuse”
and
“they are making people’s lives miserable.”
I have previously criticised privatised water companies and housing developers for raking in vast profits despite substandard delivery, but in many ways they pale in comparison with the sheer audacity of the leasehold scandal.
These are issues rooted in feudal concepts of property ownership, and those trapped paying these fees, with next to no ability to challenge or escape them, are in effect still suffering from a form of economic serfdom where those with the right title deeds can levy private taxes on ordinary people that bear practically no relation to services rendered. Nearly 1,000 years after William’s conquest, I think the English have suffered under this Norman yoke quite enough.
The Government’s own Competition and Markets Authority found
“no persuasive evidence that consumers receive anything in return”
for the ground rents they pay. In communities like Letchworth, that rings painfully true. We should all welcome the Government’s recent victory in the High Court over wealthy private interests who threw millions at trying to block vital reforms. I also welcome Ministers’ commitment to finishing the job of reforming leasehold. I look forward to supporting further steps to end this scandal once and for all.
The solution is clear: municipal estate ownership and the ability to move to commonhold as quickly as is reasonably possible. Home ownership should mean owning the bricks and mortar and should come with a sense of freedom, not exposure to exploitation. No one should be left behind as we put this injustice to bed.
I would also like to take this opportunity to highlight the broader campaign for a charter of community empowerment. Many of its principles are relevant to the debate. If the Government are to achieve that historic Labour mission of redistributing not just wealth but power into the hands of the majority, in today’s context that must mean trusting that ordinary people are more capable of upkeeping their own estates and managing their homes fairly than offshore firms or the landowning aristocracy.
For once, I will not rain down a series of detailed demands on the Minister, as I know he faces a complex legal situation left by the previous Administration. Today I want only to urge him to cut this Gordian knot in this Parliament and give my constituents a straight- forward way out of being forever tied to service fees by unaccountable companies. The economic benefits to our high streets, which are desperately needed in villages and market towns such as those I represent, would be enormous, as thousands of families across the country found their disposable income no longer slashed every month by charges that cannot be justified.
The resistance that the Government have faced from the freehold lobby, clinging desperately to their ill-gotten gains and the sacred right to turn hard-working people into cash cows, should only renew our sense of urgency. I am sure that we will see more appeals and outcry from vested interests—the Government should know the Labour party and millions outside this place are united behind them.
After the High Court’s ruling, the Residential Freehold Association warned that the decision
“opens the door for Government to intervene in markets far beyond the leasehold sector”—
in other words, the terrible spectre that democracy may be empowered to secure the public good before private profit. As my constituents lose out in an economy rigged against ordinary people—one that rewards wealthy property owners and unearned income rather than those who go out and work for a living—I say, quite simply: I hope it is right.
Lewis Cocking (Broxbourne) (Con)
I commend my hon. Friend the Member for Reigate (Rebecca Paul) for securing this important debate. I understand more than most the issues with property service charges, because I am a leaseholder where I live in Hoddesdon. A quarter of my constituents live in flats or maisonettes, and 25% of property transactions in Broxbourne last year involved leasehold properties, but shockingly, as we have heard, it is hard to find any leaseholder who has a good word to say about their landlord or their service charge.
Landlords and solicitors do not provide enough information to new residents, and far too often prospective residents are not properly informed before they move in about how much service charges have increased in previous years. They are then hit with huge rises down the line. It is also unclear where the money is going.
A resident in Waltham Cross told me:
“The service charge has skyrocketed from around £800 to £6,000 for each leaseholder, yet living conditions remain extremely dire. Residents here face ongoing issues including trespassers, mould, broken security doors, mice infestations and squatters. Our building also has several defects, including weak floors, fire safety issues, and ongoing leakages. At one point my flat became uninhabitable after a severe leak that took months to resolve”.
I hear these stories again and again from constituents who come to me as the contact of last resort after months and sometimes years of neglect to their property. In that case I met the management company involved, RMG, earlier this year, but nothing has changed. Whether it is RMG, FirstPort, Bamptons, EN8 Homes or Warwick Estates, leaseholders deserve better from their landlords and management companies, who focus purely on collecting ever higher charges for worse services.
However, by far the worst treatment of leaseholders in my constituency has been at the hands of—I hope the Minister is listening to this point—Labour-run Enfield council. I was first contacted by residents on the Whitefield estate in May last year, and what I heard left me outraged. Completely out of the blue, Enfield council was demanding up to £50,000 from each leaseholder for “urgent” repairs. Roofs that had never had a leak were earmarked to be replaced, and windows would be fixed, even though they had been used for years without issue. Understandably, my residents immediately asked, “What about my service charge?” Well, as the Leasehold Advisory Service says, many landlords collect money out of the service charge for a sinking fund, to help cover the cost of exactly these kinds of major works. But not Enfield council. No, it expects my constituents to stump up all the cash, even after raising the service charge that year and, as far as the residents are concerned, having not spent a single penny on the estate in decades.
The Whitefield estate tenants association, and in particular leaseholder Nicky McCabe, have worked incredibly hard to bring the community together in response to this issue. They simply demanded straightforward answers to straightforward questions, but they were met with confusing statements from Enfield council representatives, who found it far too easy to say, “That’s not my job.” I attended the meeting. There were a number of directors from Enfield council there, all of whom earn significant sums of money, and they could not answer basic questions from my constituents about how much they would have to pay, and what was going to change on the estate. The communication was shocking. My constituents’ fight is still ongoing, and they have my full support.
Mr Andrew Snowden (Fylde) (Con)
I am sure that many Members have attended meetings with groups of residents who, in trying to resolve issues that are causing them so much anxiety, are at their wits’ end. We have an example in Fylde that is actually pre the management company. An estate has been developed, but it flooded during the construction and twice since, and now the estate company is desperate to get it into a management company, and to transfer all the flood risk liability to that company. Does my hon. Friend agree that kind of thing will just cause further problems down the line?
Lewis Cocking
I agree with my hon. Friend, who makes an excellent point in standing up for his constituents. This is an important point. All MPs across the House have probably attended such meetings, and these companies are unable to answer the most basic questions. They are paid considerable amounts of money, and they cannot answer simple questions from constituents about how much money they will have to pay, where the liability sits, and what work they are going to do.
Dame Meg Hillier
I do not know the case the hon. Gentleman is talking about, but I agree that good communication is important. However, it was his Government, under Margaret Thatcher, who introduced the right to buy. That means we have leaseholders mixed with council tenants, so where a council has to improve a property, it needs to go to the leaseholders for their share of the costs. There was always going to be a tension there, and he must acknowledge that that will be a reality where we have pepper-potted estates—notwithstanding that he obviously needs to fight for proper information for his constituents.
Lewis Cocking
I fully support the right to buy, which was a good policy—[Interruption.] I am just stating that it was a good policy and I supported that. The hon. Lady makes an interesting point about communication, which must be there. As I have mentioned, Enfield council does not collect a sinking fund, which can go some way towards mitigating some of the issues, as she and I have raised, with leaseholders being asked to stump up for large bills. We need more transparency and better regulation, and we must ensure—here I agree with hon. Members across the Chamber—that councils adopt outside amenity spaces.
We need real improvements in the way that leaseholders are treated. Abolishing ground rent is a good first step and the Government need to get on with delivering that. I also agree that commonhold must be more widespread, but is by no means a silver bullet or right for everyone. I urge the Government to get on with it, improve the lives of hundreds of my constituents, and urgently implement more of the Leasehold and Freehold Reform Act 2024. We must get on with those improvements and help hundreds of our constituents.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Order. With an immediate five-minute time limit, I call Ms Julie Minns.
Ms Julie Minns (Carlisle) (Lab)
I thank the hon. Member for Reigate (Rebecca Paul) for securing the debate and enabling Members across the House to give voice to our constituents, like mine in Carlisle, who are, quite frankly, fed up. They are fed up with being charged hundreds of pounds a year in estate management fees for services that are either not delivered or delivered poorly; they are fed up with asking for transparency and getting vague spreadsheets, instead of receipts for the services that they are told have been delivered; and they are fed up with being told that they have no choice, no voice and no way to challenge that.
One of my first pieces of casework, after my election last year, concerned FirstPort, and one of the more recent cases concerned another estate management company, Gateway. They are different companies, but there was the same problem with charges for things like grass cutting, street cleaning and lighting maintenance. One might say that those charges are to be expected, but too often they are levied while the grass becomes overgrown, the rubbish is not picked up and the roads remain unlit. Quite rightly, residents then ask for proof of where their money has been going and, quite consistently, they are given a list of costs, not invoices—no evidence and no accountability. In some cases, the same service appears more than once under different names. It is confusing, opaque and unfair.
I acknowledge the work done by the last Government and continued by our Government. I was pleased to see swift action in the early months of this Government to implement key provisions of the Leasehold and Freehold Reform Act 2024. I welcome the Government’s wider programme of reform, removing the threat of forfeiture, tackling abuse by managing agents and implementing the Law Commission’s recommendations on right to manage, but we must go further, especially as we build new homes.
The Government’s house building agenda is ambitious, and rightly so. We need more homes and we need them quickly, but we also need to ensure that when people move into those homes, they are not being ripped off by management companies they did not choose. It is not enough just to get the bricks and mortar down; we need to ensure that the regulation around property charges is constructed properly too.
We need enforceable standards for transparency. If a company charges for a service, they must be required to show that it was delivered and provide proof of what it cost. If the grass becomes overgrown, the litter piles up and the roads remain unlit, residents should not be expected to pay. We also need a clear route to redress. At the moment, too many people feel trapped by being tied to a management company that they did not choose, with no meaningful way to hold it to account.
Asking for reform is not about undermining the sector; it is about fairness, restoring trust and ensuring that when people buy a home, they are not buying into a system that takes advantage of them. We have made a start, but if we are serious about protecting homeowners, we need to finish the job and to bring cowboy estate management companies to heel.
Daniel Francis (Bexleyheath and Crayford) (Lab)
I pay tribute to the hon. Member for Reigate (Rebecca Paul) for securing today’s debate and setting out the deep concerns about property service charges that many of us hear about from our constituents.
Since being elected, I have received countless emails from constituents across Bexleyheath, Crayford and Slade Green who are struggling with rising service charges, lack of transparency and poor communication from managing agents. In the words of a constituent who lives in a development where the service charge has increased from £1,800 a year to £3,200 a year:
“We honestly don’t have a clue what we are paying for.”
Others describe themselves as “cash cows” and speak of
“financial hardship to those trapped in their clutches”.
One constituent, a pensioner, had to borrow money from her adult children, and she is now considering selling her car if another unexpected bill arrives. Another, who asked to spread an additional bill over monthly payments, was told that she would be charged £60 for the trouble.
I have been holding public meetings with residents across my constituency this year to discuss these issues. The meetings have seen large turnouts and residents understandably at the end of their tether. I accept that some increases in service charges can be explained by rising insurance costs, building safety costs and other economic factors, but other items on service charge bills beggar belief: £1,000 a year for CCTV, when there is no CCTV; service charges for a gym that had not been built; service charges for a 24/7 concierge service that operates from 7 am to 7 pm; and £5,000 a year to empty one dog bin that members of the public, living outside of the estate, are using on a communal open space. Despite those costs, maintenance oftens remains poor.
I will focus on one example: the Eastside Quarter development in Bexleyheath, on the site of our former council or civic offices built a few years ago. The development was originally managed by DJC, which was then bought by FirstPort, which has been relieved of its duties and replaced by a new managing agent. The directors of the management company took action to remove FirstPort in 2024 due to concerns about performance levels and a lack of financial transparency, which was raised by residents.
FirstPort was responsible for producing audited accounts for the years 2022, 2023 and 2024, but in the most recent correspondence I have received it failed to do so. As a result, the developer is legally pursuing those accounts at their cost. FirstPort was unable to provide any funds on account to the new managing agent. In correspondence to me, the new managing agent stated that the service charge bank account was empty and that many suppliers were owed substantial sums, with many of them having withdrawn services as a result. Continuing management on the estate was possible only because the developer provided substantial funding to the new managing agent to enable it to pay suppliers.
I have seen similar issues on Talehangers Close in Bexleyheath. At Vickers Green in Crayford, where FirstPort has attended a public meeting and where I believe we are making some progress, I have seen that some of the fault lies—in my view—with the local authority, which agreed a planning development back in 2009 in which residents took on responsibility for the roads, the lighting and the public space, which is then costed back to the residents.
I welcome the Government’s consultation on plans to strengthen protections over charges and services and hope that they will bring forward measures to support my constituents. I was proud to sponsor the Managing Agents (Regulation) Bill of my hon. Friend the Member for Uxbridge and South Ruislip (Danny Beales), and I support calls from across the Chamber for the need for clear managing agent standards and regulation. I welcome the Minister’s comments on these matters and the measures to be brought forward in secondary legislation. I support the Government’s work in this area, but I will continue to press for further action to empower residents and deal with service charges to protect residents across the Bexleyheath and Crayford constituency.
Joe Powell (Kensington and Bayswater) (Lab)
I join others in congratulating the hon. Member for Reigate (Rebecca Paul) on securing this debate. I know that leaseholders across the country will be watching this debate very closely, because the cost of being a leaseholder has contributed to the cost of living challenges that so many of our constituents have faced for such a long time.
My leaseholder action group in Kensington and Bayswater, which the Minister kindly met with recently, regularly shares stories of escalating, unaccountable and untransparent service charges levied by managing agents that they have no control over. At worst, the current system can represent a cartel, with a broken market in which competition between managing agents is undermined by monopoly-type relationships with some freeholders and a broken connection between those who pay the bills and those who deliver the services.
The impact can be devastating. One of my constituents, Adriana, has taken her housing provider to tribunal three separate times simply to get clarity on how her service charge was calculated. Each time she has won, but the housing provider is still not providing the information; indeed, it is now offering to withdraw all the charges, rather than provide that information. That is not transparency: it relies on the assumption that the other residents, many of whom are elderly or financially strained, will not have the resources to challenge. Rather than giving up, Adriana now supports other residents in helping them to understand their rights and how to contest these unfair practices. Her determination is admirable, but it should not fall to residents themselves to protect one another from a system that is supposed to protect them.
Another group of residents who speak to me regularly about these issues, who live in a building called Shaftesbury Place, have been hit with crippling increases to their charges after a 2,489% increase in their building insurance premium. That annual cost, which is up from £15,000 to £375,000 a year, has been passed directly to the leaseholders through their service charges. The housing provider says that the freeholder procured the insurance—the residents have seen evidence suggesting otherwise—but the confusion over who procured the insurance and how the premium was calculated has left leaseholders caught in the middle. The justification appears to rest on a fire risk assessment that many residents believe is flawed, but the result is that ordinary homeowners, including shared ownership homeowners trying to climb the ladder, have been left with unaffordable bills and no clear line of accountability for how those costs have been allowed to spiral.
Anna Dixon (Shipley) (Lab)
I commend my hon. Friend for explaining the problems so clearly, problems that are shared by my elderly residents in Aire Valley Court and Sutton Court in Bingley. They too have seen above-inflation rises in service charges and a lack of transparency about accounts, with no evidence to justify them. Does my hon. Friend agree that it is now time that we bring in licensing and stronger regulation of managing agents such as FirstPort?
Joe Powell
I agree entirely with my hon. Friend. There is now an overwhelming case for introducing mandatory professional standards—which I know the Government are bringing forward—and for considering what regulation might look like, whether that is a new regulator or expanding on the current system. It is clear that some of the suggestions that the Government have consulted on in their “Strengthening leaseholder protections over charges and services” consultation have the potential to deliver for residents such as mine and my hon. Friend’s. That includes a right to veto their property agent, and I hope the threshold for that will be set at a level that will work in places such as my constituency. With a large number of overseas and absent owners, reaching high thresholds can be challenging, so I hope the threshold will be accessible. My constituents would appreciate hearing from the Minister—or from a different Minister at a later stage—about our progress on tackling the issue of building insurance. It is a big issue, particularly for metropolitan Members of Parliament. Of course, that must go hand in hand with continuing on the path to full reform of the system. I was delighted by the High Court’s decision to comprehensively dismiss challenges to the Leasehold and Freehold Reform Act 2024. That is a vital step that will enable progress towards implementing reforms that will make it easier and cheaper for leaseholders to extend their lease or buy their freehold. I hope it will smooth the way for a new Bill that will deliver on our manifesto commitment to leaseholders—to
“bring the feudal leasehold system to an end”
in this Parliament. I am incredibly proud of that commitment, and I know that millions of leaseholders watching this debate also want to see it delivered. It is something that previous Governments promised, but failed to deliver.
This Government have already taken decisive action to dramatically improve the rights of 4.6 million private rented households in England by abolishing no-fault evictions, increasing security in tenancies, and ensuring safe and healthy homes for all. We have taken action to dramatically improve the rights of 5 million social rented households in England by bringing Awaab’s law into force, guaranteeing emergency repairs within a statutory timeframe. Now, we have the opportunity to deliver on our promise to the 5 million leasehold households, too.
Dave Robertson (Lichfield) (Lab)
I place on record my thanks to the hon. Member for Reigate (Rebecca Paul) for bringing this debate before the House, and to the Backbench Business Committee for scheduling time for it. From the number of Members present in the Chamber today, we can all see that property service charges are a problem across the entire country, but they certainly are for people in Lichfield, Burntwood and the villages.
In the time I have, I will focus on just one of the estates where these charges are an issue: the Roman Heights estate in the village of Streethay, on the edge of Lichfield. The people who live on that estate know just how difficult managing agents can be. I have had dozens of households get in touch to tell me about the appalling service they have received from their managing agent— I will not name it, but I am sure it is the first name we would think of. Over the summer, I held a town hall with residents, at which I heard the same thing over and over again. Bills for management were coming through completely irregularly, sometimes with three bills for three years being received in the space of three months, which is interesting. There was absolutely no transparency about the level of charge, with demands to come up with huge sums of money at a moment’s notice. All the while, basic maintenance such as cutting the grass just was not being done, leaving residents wondering what exactly they were paying for.
Leigh Ingham (Stafford) (Lab)
I thank my hon. Friend, who is also from Staffordshire, for giving way. A constituent has got in touch with me to say, “It genuinely feels like they are stealing money from us.” Another said, “I just feel like we are a cash cow for these companies.” Does my hon. Friend agree that if managing agents and companies want to continue operating these services, they must increase transparency and make things more regular for their customers?
Dave Robertson
My hon. Friend is right. She is a very good friend, and often she has seen speeches before I give them, but she has not seen this one, and she gives me the perfect segue into my next point.
Transparency is so important. When I surveyed residents in the affected estate, 85% told me that billing was either poor or very poor. Some 79% have told me that the management of the estate was poor or very poor. I have written to that management company, and I am looking forward to meeting it, because its written response is simply not good enough.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Much like my hon. Friend in Staffordshire, I have constituents who are under the same management company. Even when trying to use mechanisms to see things, such as by a section 21 request under the Landlord and Tenancy Act 1985, they have been ignored and dismissed, or often are given incorrect information. Does my hon. Friend hope, like I do, that when the Minister sums up, he will talk a little bit about the technical measures for holding these organisations to account and why they are not working so well? Enforcement of the existing rules should be enough. Whether or not those should be changed, there are mechanisms available that my constituents are trying to access that are simply not working.
Dave Robertson
My hon. Friend is well apprised over the specific issue. Part of the issue we may be facing is that he refers to an Act of Parliament that is older than either of us. There may be significant space for an update in this area.
It is clear from my hon. Friends’ comments and from everything we have heard this afternoon that this situation is all too common. Up and down the country, managing agents are just letting people down. The long-term solution has to be councils taking on the management of these estates themselves. It is an absolute travesty that we have a bizarre situation where some people are being charged twice for the same service.
Last week, other Labour MPs and I met the House Builders Federation to discuss this issue, and I place on record my thanks to my hon. Friend the Member for Hitchin (Alistair Strathern) for organising that. The message that came out of that was clear that adoption is holding up those companies, too. They want to see adoptions happening faster. There are massive issues with how they are approached for things. We heard one story of a particular local authority that demands semi-permeable paving as part of its planning process, but its highways department will apparently never adopt anything with semi-permeable paving. That is a totally bizarre situation. It is a case not of two councils but of one organisation where the different parts are not talking to each other.
Councils need to work harder on this issue. They need to ensure that they are working with residents and companies to get it right, but they also need to have the money and expertise to be able to do so. Fourteen years of cuts, freezes and austerity on councils have left planning departments hollowed out, and we need to ensure we are rebuilding that capacity so that things can be done correctly. It is important that we take this issue seriously, so that residents in my constituency and across the country get the service they so deeply need, for which they apparently are paying through the nose.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
I am imposing an immediate four-minute time limit.
Pam Cox (Colchester) (Lab)
I will see what I can do, Madam Deputy Speaker. Property service charges and the behaviour of the companies that levy them are causing real distress across the country. I thank the hon. Member for Reigate (Rebecca Paul) for her speech setting out those challenges.
In Colchester, I have heard from residents in Orchard Gardens, Colne View and Kingswood Heath who are being charged astonishing amounts—often thousands of pounds a year—for services that are either poorly delivered or not delivered at all. Many of those homes are managed by one company, and the House could guess that that company is FirstPort. When I walked into the Chamber, FirstPort had been named 39 times in the Chamber this year, but I imagine that has doubled in the course of this afternoon. It claims to be an “award- winning property management service” that
“makes sure customers feel safe and happy in their homes.”
I think we all have a little bit of news for FirstPort.
Retired residents in Orchard Gardens showed me demands for payments for services that they never received or for which they had already paid. Residents at the Colne View development have faced a 15-year battle over neglect, overcharging and obfuscation. They have faced extortionate service charges—sometimes doubling in a year—yet their buildings are left mouldy, unsafe and unclean. They feel bullied, belittled and beyond hope that they will ever resolve what has become a living nightmare. I am pleased to say that one of those residents, Chia, was able to come into Parliament last week to give some evidence to a panel of MPs organised by my hon. Friends the Members for Hendon (David Pinto-Duschinsky) and for Cities of London and Westminster (Rachel Blake), who have been working on this issue for some time. I hope the Minister will consider the evidence that was gathered.
Pam Cox
I am advised not to, so that we can keep to time. Lord Best, chair of the Regulation of Property Agents Working Group, said in his recent evidence to the Housing, Communities and Local Government Committee that this “is an unregulated sector”, and his group has called for proper regulation. If property agents cannot behave responsibly, they must be held to account. This is about fairness, restoring trust, and ensuring that nobody in Colchester, or anywhere else, has to pay over the odds for basic services, or fight tooth and nail just to get a straight answer from companies like FirstPort. I urge the Minister to move at pace to implement this new framework.
Jim Dickson (Dartford) (Lab)
I welcome this debate warmly. I pay tribute to the hon. Member for Reigate (Rebecca Paul) for securing it, and for her excellent speech introducing it, and to other Members for their great contributions.
Property service charges, whether for freeholders who have purchased homes on unadopted new build estates or for leaseholders living in flats, are a huge concern to residents across Dartford. It is no exaggeration to say that the charges are causing misery to my constituents. Home to Ebbsfleet Garden City, Ingress Park in Greenhithe and the Bridge estate near Dartford, the constituency that I am proud to represent has among the highest number of leaseholders and freeholders paying property service charges of any in the country.
As others have, I have surveyed my residents on managing agents and costs, and it is fair to say in summary that residents are bemused by what seems to be the lack of a framework for assessing what reasonable service charges should cover. Long-term trends in rising building insurance costs and energy prices and opaque charging practices by managing agents have created a toxic mix for residents. As if that was not enough, long after buying their new properties, residents have been shocked to receive demands for three to five years-worth of backdated service charges. In some cases, they even predate their ownership of the property, or apply soon after they bought the property, and the bills often contain immediate demands for repayment, despite coming years after people started occupying their home.
Another incredibly frustrating issue for residents, which the Minister might be able to pick up directly with developers, is lack of transparency for buyers regarding the service charges they should expect to pay. One constituent ended up £4,000 in debt, as he was being charged for the maintenance of the estate around his house—on which construction had not even been completed.
Much of the area around new build estates in my constituency remains unadopted by the local authority, an issue that we discussed earlier this year in a Westminster Hall debate secured by my hon. Friend the Member for Hitchin (Alistair Strathern). There is a huge sense of unease and unfairness among residents living on those unadopted estates. They are paying full council tax in addition to hefty service charges. They are paying for the local authority to maintain roads and parks in other parts of the area, but not those on the estate on which they live. I warmly welcomed the Minister’s response in that debate, in which he confirmed that it remained a commitment to end the injustice of so-called fleecehold estates, and I hope we can have an update on that at the end of this debate.
I am grateful to have been among more than 100 Government Members who have, since November 2024, banded together to hold to account managing agents, including FirstPort and RMG. We will not let managing agents off the hook for the extremely poor service that they deliver to our residents. We need a road map from the Government on how unadopted roads and estates will be taken on by the local authority.
Finally, perhaps the Minister might could remind house builders that their choices of managing agents for new developments will cause them long-term reputational damage if they continue to select companies that simply are not up to the job. Let us get this right on behalf of freeholders and leaseholders across the country.
Noah Law (St Austell and Newquay) (Lab)
While we have heard countless examples of grievances about property service charges today, for many residents, this ultimately boils down to one fundamental issue: disparity. Far be it from me to play devil’s advocate for a broken sector—a market failure—but some residents do face affordable service charges, and benefit from management companies that are responsive and effective in resolving their problems; yet others, often living in similar developments, are saddled with soaring fees and management companies that are slow, unaccountable and uncommunicative, leaving basic issues unresolved for months on end. When people are forced to pay ever-higher prices for worsening service, it is no wonder that frustration and resentment towards the sector as a whole is growing.
One of my constituents recently wrote to me to say that they were alarmed by their service charge, which had risen from £161 a month to £266 the following year—a staggering 65% increase, which might be a record today. The justification provided was that the management company, which I will not name—the House can hazard a guess—had simply overspent on work that it had carried out. Such an arbitrary rise is unaffordable for so many households, and illustrates the dramatic and damaging impact that unchecked service charges inflation can have.
Beyond the question of cost lies an equally important issue: transparency. Too often, residents have no idea what they are paying for and why, as we have heard. Service charge statements are opaque, and when people ask for explanations, they are often met with obfuscation and silence.
There is also a chronic lack of oversight and accountability, and I look forward to hearing from the Minister about the potential to address that. As we have heard, when residents wish to challenge high or unjustified costs, their options for any form of recourse, except through the courts, are limited. The balance of power lies entirely with the managing agents, not the homeowners footing the bill.
Worst of all, many people discover only after moving in that the management company responsible for the estate is unfit for purpose and provides a poor and inconsistent service in exchange for their hard-earned money. Residents still have to pay council tax in addition to their service charges, leading to a feeling of being double charged. It is therefore no surprise that my constituents are crying out for a stronger ability to take on the right to manage. Areas that are managed locally are often extraordinarily effective, with better services, better value for money and better local oversight all compounding to support communities to thrive.
One of my constituents shared her frustration that her estate’s management company consistently fails to maintain communal grounds. She wrote:
“My issue is that we, the residents, have no real power or control over the management of the communal grounds, but we are expected to pay all the costs. I want that control. We should have the right to make our own choice of property manager.”
That sentiment is shared by thousands across the country. It speaks to an urgent need for regulation of a sector that has had a licence to print money. Its high yield gives private equity companies a perverse incentive dynamic, which the hon. Member for Reigate (Rebecca Paul) described so eloquently at the start of this debate. As we have heard, problems also arise from the failure of local authorities to adopt highways, which is due to the poor incentive structure.
I hope to see all these issues—particularly transparency, value for money, accountability and professional standards —addressed in the leasehold and commonhold reform Bill. After all the progress we have made on renters’ rights in the past week, the Bill represents a huge opportunity for leaseholders across the country, thanks to this Labour Government. Until we rebalance those relationships, residents will continue to feel powerless, exploited and unheard, and that is completely unacceptable.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I declare an interest as a leaseholder myself.
Like my hon. Friend the Member for North West Cambridgeshire (Sam Carling), I will not name any managing agent or developments, because many of my residents are concerned that if their block is named, it will cause them very big issues. I was delighted to hear from my hon. Friend the Member for St Austell and Newquay (Noah Law) that there are some good management companies, because the picture is certainly mixed in my patch. The company that has been named often in this debate manages some estates in my area, and some are better run than others. A lot seems to depend on the individual property manager and how they run their development, and the size and age of a development definitely has an impact.
In the short time that I have, I will raise a couple of important issues. One is about insurance. We know that costs went up post Grenfell because insurance moved from insuring just the floor that a flat is on to the entire block, but other increases have arisen that are difficult to explain, and there is a danger that we will struggle to get insurance. One block in my patch was able to get one insurer quote for 12 months only, and it was quoted an extortionately high excess rate at the beginning—somewhere in the region of £15,000. That was the excess that the housing association freeholder would have to pay before anything happened. It managed to get that down, but it could only get one 12-month period of insurance.
I think we need to be careful in our discussions about the relationship between insurance companies and managing agents. I know from my role as Chair of the Treasury Committee that there are very strict rules on ringfencing operations, so insurance companies and managing agents should not have a cosy relationship. In law, they are not entitled to do so.
Sam Carling
I thank my hon. Friend for her work on this issue on the Treasury Committee. In my speech, I raised an insurance issue that my constituents have gone to the Financial Ombudsman Service about, but they are having problems about whether it is a FOS issue or a property ombudsman issue, and it is just not very clear. Would she join me in calling for more clarity?
Dame Meg Hillier
I completely agree with my hon. Friend that we need clarity on this issue. We are talking a lot about service charges, but the insurance industry has a responsibility because it accounts for a large chunk of them. Regulators have a clear role to play, and it is important that that is considered in all the changes we are discussing.
I am pleased that the Government have been consulting on these issues. The consultation on service charges ended in February, so I hope the Minister can give us an update about it. It is important to touch on a couple of other issues. We know that poor maintenance leads to high costs, so standards and expectations should be set on maintenance, which costs leaseholders, but costs them less in the long run if things are maintained. That is a repeated theme across my constituency, as some very modern blocks have not been maintained properly, which means leaseholders end up paying more in the end than they should have done.
There is also an issue with greening blocks. I have constituents working very effectively to try to get electric vehicle charging points and better insulation in a block that is an old warehouse; the famous loft apartments were very popular in my constituency at one point. However, improving such things creates betterment, which increases the ground rent, because the owner of the building can say it is an improvement and can charge more. Such tenants are making their property greener, cleaner and more efficient—costing them less in a lot of ways—but they are ending up with their costs being put up somewhere else, which seems to be a complete imbalance that we have not discussed.
On the right to manage and commonhold—I am a Labour and Co-op MP, and I am very proud to be pushing for commonhold—there can be issues where there is a right to manage. I am working with a development where there is a right-to-manage company, but the directors have hidden themselves away and are not acting responsibly in answering and providing information to their neighbours in the development. I think governance needs an overhaul in this area. It is not going to solve everything if residents take over the management but then do not do a good job, so there needs to be transparency all round.
As we know, this is on top of increased mortgage charges, and let us not forget what the 2022 Budget did to mortgage charges. Shared owners are paying mortgages, rents and service charges, and this is all adding to the cost of living and causing huge upset, on top of the spending on building safety requirements that are hitting so many of my constituents. That is causing real problems, but we need to be clear, so rather than go through the list myself, I will endorse all the asks that my hon. Friend the Member for Doncaster East and the Isle of Axholme (Lee Pitcher) listed about transparency, openness and getting clearer rights for residents to challenge service charges and to make sure they absolutely understand why they are being charged such fees. That is the basic minimum, but we should be making sure it happens.
Madam Deputy Speaker (Judith Cummins)
I call the Liberal Democrat spokesperson.
Gideon Amos (Taunton and Wellington) (LD)
I warmly congratulate the hon. Member for Reigate (Rebecca Paul) on securing what, given the number of Members taking part, has clearly been an important debate.
Liberal Members of this place have been campaigning to end residential leasehold and the charges it entails since Lloyd George, who, at the time his People’s Budget in 1909, said that the practice
“is not business, it is blackmail... Ground rent is a part of it—fines, fees; you are to make no alteration without…consent.”
His words ring true today. Over a century later, we still have the same feudal system, and charges that trap homeowners in a cycle of uncapped ground rents, exploitative charges and similarly unreasonable estate management fees.
The scale of the problem is staggering—there are 4.8 million leasehold properties in England, which is more than a fifth of the housing stock—but England, Wales and Australia are the only countries still operating such residential leasehold approaches. Most other countries are perfectly able to ensure building maintenance and safety without relying on such outdated practices. One of the things I hear most often from my constituents is how long it takes to get change in this place, and property service charges are a perfect example. They have been around for decades, but very little seems to have happened.
In 2019, the Government commissioned the independent Lord Best to write a report, and he laid out sensible solutions and a clear path ahead: a new property regulator to establish a code of practice, the licensing of property managers and agents, and minimum qualifications for those working in the sector.
While I acknowledge the last Government’s work in this area, it took them five years to bring forward legislation, and when they did in the form of the Leasehold and Freehold Reform Act 2024, they completely neglected to regulate property management or spiralling service charges. That is a measure of how leaseholders have been let down despite the overwhelming evidence of the need for action. The Labour Government promised that they would implement the rest of the Act, but well over a year later little progress has been made—progress that would give redress to those saddled with charges they cannot contest and marriage values that are wholly unreasonable. These delays are failing the people who are trapped in these properties.
Recently, I heard from one constituent about their experience of leasehold service charges. When they purchased their property in 2022, the service charges were £1,700. In 2023 they rose to £2,600, which is a 52% increase. The next year they went up to £3,700, which is a further 43% increase. The following year—2025—they reached £5,010, which is another 34% increase. Overall, the service charges tripled in just three years, and for what? After a huge effort by residents asking to see quotes and invoices, it turns out that the answer was that it was for nothing—or rather for incompetence and, as Lloyd George might have put it, for greed. There were invoices relating to other buildings entirely and gaping differences between maintenance quotes and actual costs.
Eventually, through the right to manage, the residents appointed a new managing agent and got their charges back down to around £2,000. That means that over those four years, residents paid approximately £13,000 in service charges. If the charges had remained at the proper level, it would have been £2,000 a year, so they have overpaid by £5,000 each and they will never get that money back. The money went straight into the pockets of unregulated managers. That is the cost of delay —it is a real cost being borne by constituents of mine and other Members.
The constituent said to me that the process was akin to having a full-time job, which is an entirely unreasonable way for the property industry to be working—and what about residents who are less able than my constituent? Some residents may be older or in poor health, or simply ill-equipped for the massive task of navigating that bureaucracy. They may be so busy with work or children that they do not know they have been ripped off until it is too late. Folk should not have to devote that level of time and energy to get redress.
The issue of fleecehold, which has been referred to by hon. Members, including my hon. Friends the Members for Surrey Heath (Dr Pinkerton) and for Honiton and Sidmouth (Richard Foord), must not be forgotten. Companies such as FirstPort have been mentioned, and I assure Members that they are as much of a problem in Taunton and Wellington as they are elsewhere. Freeholders often have even fewer rights to challenge estate management charges than those who have leases. The arrangements operate almost like leaseholds. Such residents pay double—both their council tax and estate management charges—and often receive a far worse service than those who live on estates fully adopted by a local authority, where the only charge is council tax. They have all the financial burdens of leasehold without the legal protections. Another constituent—a freeholder in Taunton—has been awaiting the regulations for years now so that he can take his case to tribunal.
Even the rights that exist on paper are worthless without effective enforcement. Currently neither leaseholders nor those paying estate management charges have any easy way to ensure that their rights are upheld. That is why we need both the provisions of the 2024 Act to be commenced, and an independent regulator with teeth and the ability to cap unreasonable charges levied on both leaseholders and freeholders. Even the British Property Federation said back in 2023 that
“the lack of any provision to introduce competency standards or regulation to our sector is a missed opportunity.”
The Property Institute has welcomed proposals for oversight. When even those who would be regulated are asking for it, surely it is time to act.
The Government rightly have an ambition to build 300,000 new homes a year, but we Lib Dems would prefer that to include a stretching target of 150,000 social homes. We agree that homes are needed. However, in building them we must not create a next generation of fleecehold properties. The practice of developers building estates with shared roadways and public spaces, then retaining ownership through management companies and charging residents for their upkeep while those same residents are paying council tax, has to end. For the vast majority of standard developments, there needs to be a presumption that shared areas must be adopted by the local authority. Crucially, councils need to be given the proper resources to allow that; the ability to recoup the costs of managing those spaces from developers or landowners; and powers to sanction those who fail to complete roads and similar infrastructure to the right standard. We cannot allow developers to profit from management companies, while residents pay twice for the same services.
It has been 116 years since Lloyd George called out these practices. We have had six years since Lord Best’s report laid out a clear path forward. We have had over a year with the new Government in office. The evidence is overwhelming and the solutions are clear. Liberal Democrats are therefore calling for: a new property regulator, as recommended in the Best report, establishing a code of practice, minimum qualifications and the licensing of property managers; leaseholders to be enabled to get alternative quotes for maintenance; a power for residents to act in common to take ownership of management companies and common areas; the strengthening of councils’ powers to adopt, with resources from developers or landowners; the urgent abolition of ground rents for existing residential leases; and, crucially, the capping of unreasonable service and estate management charges.
Millions of leaseholders and freeholders are waiting. They have waited long enough. It is time for the Government to act and end what has become the great British property rip-off.
Madam Deputy Speaker (Judith Cummins)
I call the shadow Secretary of State.
Sir James Cleverly (Braintree) (Con)
I start by putting on record my gratitude, which I suspect echoes the views of many right hon. and hon. Members, to my hon. Friend the Member for Reigate (Rebecca Paul) for securing the debate and setting out so clearly in her opening remarks the significance of this issue and the corrosive impact it has on so many people.
The number of speeches, the tone of those speeches and, sadly, the regular themes we have heard through those speeches tell a really tragic and frustrating story. The experience of constituents across many different parts of the country is unfortunately consistent. They are in a situation where they feel trapped, powerless and voiceless, and where the balance of power is completely unfair. And that is all wrapped up in something that should be a positive experience: owning a home and being able to enjoy your home and its surroundings. The hon. Member for Doncaster East and the Isle of Axholme (Lee Pitcher) summed it up very well as something that is meant to be a dream turning into a nightmare. That a consistent theme we have heard.
I pay tribute to the hon. Member for Ellesmere Port and Bromborough (Justin Madders). He clearly has not just passion on this issue, but real experience of it. I also pay tribute to my hon. and gallant Friend the Member for Exmouth and Exeter East (David Reed). I was struck by his confession that his normal mild mannered demeanour was sacrificed after a meeting. I know his background—I am not sure if all right hon. and hon. Members know it—and I can assure the House and the management companies that he is not someone they should inspire to lose his temper.
Today’s debate has been held in a very positive spirit. This is an issue, as has been evident today, that generates genuine cross-party agreement. I am proud of the fact that my party in government started the process of reform in this area. I will concede that we did not complete the process—we absolutely recognise that. A number of things that we put in place have made a difference, but we recognise that there is more to do.
I have no intention of trying to play party politics on this matter. This debate has shown that whether a leaseholder is living in a—currently—Labour-held constituency, a Lib Dem constituency or a Conservative constituency, their pain and suffering is real, and I think we are all collectively duty bound to do something about it. That is why I encourage the Government to continue with the process of implementing the Leasehold and Freehold Reform Act 2024 and ensure that the appropriate secondary legislation is fully in place, and to do so quickly. Like others, I have received numerous pieces of correspondence from people whose properties are managed by FirstPort and others, and our constituents want us to get a grip of this situation.
There are political and legitimate philosophical differences across this House. The hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) made a great point about a by-product of what my side of the House regard as an incredibly positive move by the Thatcher Government in the ’80s—I know that not everyone will agree that it was positive, for completely legitimate reasons. One of the practical implications of that move is a mixture of ownership types within a block of properties, and that has to be resolved. That resolution is not a political issue, but a practical one. Finding opportunities to work across the House to deliver those practical responses is absolutely key.
My hon. Friend the Member for South West Hertfordshire (Mr Mohindra) recognised in his speech that there is cross-party unity and focus on this matter, and my hon. Friend the Member for Weald of Kent (Katie Lam) made it clear that implementation is key. People do not want grandstanding on this issue; they want actual shoulder-to-the-wheel delivery. I have no doubt that I speak for all Members of my party when I say that in the boring, behind-the-scenes, get-stuff-done bit of this House’s business, the Government will enjoy our support in using the legislation that we started off to bring about a better living environment for the people whom we serve.
I will not detain the House much longer, because the message we need to send to the people we serve is that we recognise this challenge and we recognise that the market forces that provide consumer choice are not working properly in this situation. People are not able to choose between alternative providers; the professionalism that is forced on commercial organisations through the pressure of competition is not working here, which is why we are seeing costs that are hidden, obscured and, in some instances, completely created out of thin air. That is not how a market is meant to work. There has to be Government intervention in this. As a free-marketeer Conservative, that is not my default setting, but in this instance it is clearly what we have to do.
I will conclude by saying that when the Government take action to deliver on this matter, they can rest assured that the Opposition will give them practical support and will be chivvying them along at every opportunity.
The Minister for Housing and Planning (Matthew Pennycook)
It is a genuine pleasure to follow that constructive speech by the shadow Secretary of State, the right hon. Member for Braintree (Sir James Cleverly). I congratulate the hon. Member for Reigate (Rebecca Paul) on securing a debate on what is without question a critically important and pressing issue for residential freeholders and leaseholders alike across the country, and one that, as the shadow Secretary of State rightly said, enjoys significant cross-party consensus. In opening the debate, the hon. Lady spoke forcefully and eloquently on behalf of her constituents in Redhill and, in sharing their plight with the House, brought alive the financial and emotional toll that leasehold terms can take on homeowners across the country.
The many excellent contributions that followed from hon. and right hon. Members powerfully reinforced the arguments that the hon. Lady made. The case studies littered across those contributions were shocking but will not have surprised anyone in this House. We all know from the work we do supporting leaseholders and residential freeholders in our constituencies that, for far too many of them, the reality of home ownership has fallen woefully short of the dream. It is precisely because this Government are no longer prepared to accept that situation that we are determined to honour the commitments made in our manifesto and do what is necessary to finally bring the feudal leasehold system to an end in this Parliament.
I do not intend to detain the House for a huge amount of time—I know there is another debate to follow—but in the time I have available I would like to address the main issues that have been raised in the debate, starting with the various problems affecting homeowners on private and mixed-tenure housing estates. But, as ever, I am more than happy to meet any hon. or right hon. Member who has raised an issue that I am unable to cover.
As several hon. Members argued in their contributions, we have seen over recent years a significant shift away from a situation where local authorities and utility companies would generally adopt the respective amenities and public spaces within new residential developments to one where private management arrangements take hold—a so-called fleecehold arrangement. Shared amenities and open spaces are now routinely not adopted and maintained at the public expense, and the maintenance costs fall to residents through an estate rent charge, a fee paid in addition to council tax.
The estate charge also normally covers the management costs of the estate management company, although, as has been evidenced in the debate, residential freeholders frequently complain that these companies deliver little, if anything, beyond what a local authority would usually provide in an area where amenities would have been adopted.
My Department estimates that up to 1.75 million homes in England are located on such private and mixed-tenure estates, although not all are subject to charges. Properties on these estates often have restrictive covenants registered at the Land Registry. They may require homeowners to seek permission, often for a fee, from the management company for actions such as selling or letting their home or altering its appearance. In the worst cases, residents face excessive or unjustified charges levied for minimal services. Those may include fees for services normally provided by local authorities, arbitrary and costly administration fees, unexplained increase in charges and fees imposed during the sale of their home.
Helen Maguire (Epsom and Ewell) (LD)
I just want to add one more case study to the plethora that have already been provided today. I have a resident who has a one-bed flat who saw their charges rise by thousands of pounds in just a few years. That financial burden also makes it even harder to sell their property. Simply too many rogue developers and estate management companies, as alluded to, are exploiting residents and demanding excessive fees for maintaining shared and public spaces in developments. Will the Minister, as many Members have called for, today commit finally to cracking down on these money-grabbing companies, capping unreasonable service and management charges, and urgently abolish ground rents on existing leases?
Matthew Pennycook
If the hon. Lady had been present for the debate, she would have heard extensive exchanges on this subject, but I will set out what the Government intend to do to provide leaseholders and residential freeholders with redress in these areas.
Matthew Pennycook
I won’t. I am more than happy to meet the right hon. Gentleman about this issue, as I do on a regular basis, and pick up these exchanges, but I want to make a bit of progress.
Lastly, the fragmentation of management on many of these estates compounds the problems we experience. Even on relatively new developments, homeowners often have to deal with multiple management companies, each levying fees in ways that reduce transparency and increase the risk of exploitation. In those situations, home- owners understandably often feel misled and trapped.
Matthew Pennycook
No, I will not give way any further. There is another debate to follow and I will not test your patience, Madam Deputy Speaker.
It is worth saying that the Competition and Markets Authority published a study of the house building industry last year. It recommended stronger protections for homeowners and called for the mandatory adoption of certain amenities on new estates and, crucially, common adoptable standards for those amenities. The Government’s response to that report accepted many of its recommendations in principle, but acknowledged that further work is required.
I reiterate the Government’s firm commitment to end the injustice of fleecehold entirely. As I set out in my written ministerial statement of November 2024, we will consult this year on legislative and policy options to reduce the prevalence of private estate management arrangements, which are the root cause of the problems experienced by many residential freeholders.
On that point, I say to the hon. Member for Exmouth and Exeter East (David Reed)—I congratulate him on the birth of his child—that I must gently push back on his assertion that we do not need to consult. Through the consultation responses that we are receiving on issues such as service charge protections, we are gathering a huge amount of information that will allow us to implement these changes effectively, to the lasting benefit of leaseholders.
It is also vital that homebuyers understand what will happen to the estate that they are moving into. The Government are currently consulting on guidance to support estate agents with their legal responsibility to provide potential buyers with relevant material information during property transactions, as well as consulting on what should be considered material information for buyers. The Government also want to empower home- owners who are already living on estates under these arrangements. In September this year, the Law Commission published its 14th programme of law reform, which included a project on the management of housing estates. It will consider how residents could be given greater control over the management of their housing estates. My Department is proud to be the sponsoring Department for the project.
In the short term, it is imperative that we protect residential freeholders on privately managed estates from unfair charges. As hon. Members will be aware, the Leasehold and Freehold Reform Act 2024 contains provision for a new regulatory framework, broadly mirroring the rights already enjoyed by leaseholders and designed to give residential freeholders new consumer protections. We intend to consult again this year on how to implement those new protections to ensure that the framework is effective, but I want to assure hon. Members that I am determined to bring them into force as quickly as possible.
Many hon. Members mentioned service charges in a wider sense, and it is right that they champion the cause of leaseholders in their constituencies. As I have made clear on many occasions in this House, this Government recognise the considerable financial strain that rising service charges place on leaseholders and tenants. I reiterate the Government’s firm view that overcharging through service charges is completely unacceptable. In July this year we consulted on the measures in the Leasehold and Freehold Reform Act 2024 that are designed to drive up the transparency of service charges. We also consulted on proposals to introduce a fairer litigation costs regime, helping leaseholders to challenge service charges and protecting them from disproportionate legal expenses. The consultation included proposals on mandating reserve funds and reforming the major works process. As I have said, we have received a huge amount of useful feedback from the consultation, which closed on 26 September. I assure hon. Members that the stories I have heard today will inform my thinking on how the Government respond in due course.
On that point, let me say briefly that I would welcome correspondence from my hon. Friends the Members for Kensington and Bayswater (Joe Powell), for Stoke-on-Trent Central (Gareth Snell) and for Stafford (Leigh Ingham) with some further details about why judgments of the tribunal are not being enforced in the cases that they raised.
Before I conclude my remarks, I must address the legitimate concerns that have been raised in respect of the performance of managing agents, both on freehold estates and in leasehold blocks. We know that there are good managing agents who work hard to ensure that the residents they are responsible for are safe and secure, and that homes are properly looked after, but we also know that far too many leaseholders suffer from poor practice at the hands of unscrupulous managing agents.
I heard so many references to FirstPort during the debate that while I was sitting on the Front Bench I asked my private office to send a request to its managing director asking that he come and meet me so that I can convey some of the concerns that have been raised. Managing agents play a key role in the maintenance of multi-occupancy buildings and freehold estates, and their importance will only increase as we transition toward commonhold, so it is essential that we strengthen their regulation to drive up the standard of their service.
As hon. Members will know, the previous Government committed to regulate the property agent sector in 2018. They asked a working group, chaired by Lord Best, to advise them on how to do it. Yet they failed to respond to the group’s final report, published in July 2019. This Government have engaged seriously and constructively with the findings set out in that report, and we have already taken forward a number of its recommendations. In the recent consultation on strengthening leaseholder protections from charges and services, which I referenced earlier, we consulted on powers to appoint a manager or replace a managing agent, as well as on mandatory professional qualifications for managing agents in England, but that is not the final step in this process, and we will set out our full position on regulation of estate, letting and managing agents in due course.
To conclude, I am grateful to the hon. Member for Reigate for giving the House an opportunity to debate these important matters, I thank all Members who have participated in the debate today for sharing their concerns and insights, and—I say this genuinely—I very much look forward to further engagement with right hon. and hon. Members as the Government continue to implement the reforms to the leasehold system that are already in statute, and to progress the wider set of reforms necessary to end the feudal leasehold system for good in this Parliament, and not least the ambitious draft commonhold and leasehold reform Bill, which we will publish before the end of the year.
Rebecca Paul
I thank all right hon. and hon. Members for participating today. I also thank all Members for leaving politics at the door, on the whole. Everyone recognises that there is a challenge, we all agree that that challenge is impacting our constituents’ lives in a detrimental way, and I think everyone came here today to try to solve that, and I thank them for that.
I also thank the Minister, who has clearly listened closely to everything that was said today. I am grateful to him for taking this with the seriousness that it deserves. He has already contacted FirstPort—that is incredible and I thank him for it.
I thank the shadow Secretary of State, my right hon. Friend the Member for Braintree (Sir James Cleverly), for his contributions and the Liberal Democrat spokes- person, the hon. Member for Taunton and Wellington (Gideon Amos). I also thank the Backbench Business Committee for allowing time for this debate. I think we can all agree that it was time well spent, and I am sure that the Committee will be happy with the number of hon. Members who were here to speak today.
In summary, we have heard some truly astounding things today. I am sure that we are all horrified by what some leaseholders have to endure. It is clear that some property service companies are exploiting leaseholders for their own benefit and profit. Some do not provide a value-for-money service, do not adequately maintain communal areas and are most certainly not transparent in their dealings. Their actions trap residents in homes they cannot afford and cannot sell, but the law of the land currently allows those companies to do that. It is a travesty and an absolute scandal. I look forward to the Minister and the Government acting quickly to prevent further abuse, and I will support them and cheer them on in that.
Question put and agreed to.
Resolved,
That this House has considered property service charges.