Housing: Flats

Lord Faulkner of Worcester Excerpts

Monday 23rd April 2012 Grand Committee

[Baroness Hanham]

May I get back to the noble Baroness in due course? I will have to find out whether that has been undertaken.

Managing agents, as I say, are put forward by the freeholder. The leaseholders have some rights if they consider that they property is not being properly managed, and can go to the leasehold valuation tribunal about that or begin to think about taking over the right to manage the property for themselves, which would mean that they were then fully in charge.

Service charges are an issue. All sorts of issues have been raised today about the protection of money and service charges, how much they are and what is involved with them. Again, I am afraid that that is a matter for the leaseholders to watch carefully. It is important that what the managing agents do and the costs that they put forward are transparent, and that the leaseholders have a number of rights. They can and must ask for a summary of service charges, and those charges should be consulted upon. They must be able to see the supporting documentation. They have a right to see insurance documents and the right to have a management audit carried out, albeit at their own expense. So they have some control over the service charges, although I think my noble friend Lady Miller mentioned capital charges and the fact that some people had not understood that they were going to come in.

There are two codes of practice, one from the Association of Retirement Housing Managers, mentioned by the noble Baroness, Lady Greengross, and one from the Royal Institute of Chartered Surveyors, which I think the noble Lord, Lord McKenzie, mentioned. These pay particular attention to the disclosure of commissions. Although the issue has not been entirely raised today, there have been concerns about the commissions taken on insurance. There are good codes of practice that ought to be adhered to. The Association of Retirement Housing Managers code is in the process of being reviewed—we expect that to come off quite soon—and we hope that RICS will also look at that issue and revise what it says.

The noble Baroness, Lady Gardner, and other noble Lords raised two or three other points. I shall comment briefly on commonhold, something that I remember debating with the noble Baroness, Lady Maddock, in 2002 when we were, it is fair to say, vigorously opposed and saw all sorts of pitfalls coming up. Those pitfalls are still there but we could make it easier for a leasehold property to be changed to commonhold. This would now be a matter for the Lord Chancellor, which slips it away from me, and the Secretary of State for Justice. They will be required to have a look at it, and I am sure that we will refer them to this debate so that they will know what has been said about it.

The noble Lord, Lord Best, and the noble Baroness, Lady Greengross, raised the question of exit fees. We could not possibly comment on the practice of any particular company, but we are well aware that these are causing practical issues and great distress. The Office of Fair Trading, as the noble Lord, Lord Best, said, has been considering whether the exit fees might breach the unfair terms in consumer contracts, and if they do indeed constitute a breach, the OFT can take action and can take such companies to court.

I have been advised by the Whip at my right hand that I have truly run out of time. The only point that I have not covered is that on the ombudsman, which the noble Lord, Lord Best, raised. May I write to him about that, since I do not now have time? I have a note of it. I shall also write regarding the red-tape challenge.

There has been too much in this debate for me to go into as much detail in my response as I would have liked. We will scour Hansard and, if we have missed anything, I will write to noble Lords who have taken part. I thank everyone for their contribution on this extremely important subject, and I assure noble Lords that I will draw the Housing Minister’s attention to this debate and the concerns that have been raised.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester)]

The Grand Committee will adjourn during pleasure until 6.30 pm.