Leasehold: Property Management Companies

Lord Kennedy of Southwark Excerpts

Monday 19th February 2024 Lords Chamber

Asked by

[Lord Kennedy of Southwark]

To ask His Majesty’s Government what plans they have to ensure leaseholders get the best value for money from services provided by management companies appointed by freeholders without their involvement or consent.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I refer the House to the register of interests and the fact that I am a leaseholder.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Penn) (Con)]

My Lords, I declare my interest as a leaseholder. The Leasehold and Freehold Reform Bill will make long-term changes to improve home ownership for millions of leaseholders in England and Wales. Measures to empower leaseholders and improve their consumer rights, such as better transparency of fees and charges and improved access to the right to manage, will make management companies more accountable to leaseholders who pay for their services.

[Lord Kennedy of Southwark (Lab Co-op)]

Leaseholders are at a complete disadvantage with regard to service charges, and the Bill before the other place does not change that fact, nor do the overoptimistic comments of the right honourable Member for Surrey Heath, which go way beyond what the legislation proposes. When will we get regulation of property agents, following the review by the noble Lord, Lord Best, published in 2019? When will we get proper control over the system whereby leaseholders pay out all the money but have no say in the services provided?

[Baroness Penn (Con)]

I am afraid I have to disagree with the noble Lord’s assessment of the Bill. I can set out a number of ways in which the Bill will improve the position of leaseholders regarding service charges. It will require greater transparency of service charges, so that leaseholders receive key information regularly; we will rebalance the legal costs regime, giving leaseholders greater confidence to challenge their service charges; it will replace the buildings insurance commissions system for managing agents, so that transparent admission fees are in place; and it will increase the non-residential limit from 25% to 50% for buying the freehold or exercising the right to manage, giving leaseholders greater rights in respect of taking over the freehold of their property or managing it themselves.

--- Later in debate ---

[Baroness Penn (Con)]

I welcome the work of the noble Lord on this issue, and I know that your Lordships will be looking at it further in Committee. It is already a legal requirement for property agents to belong to one of two government-approved redress schemes. We also welcome ongoing work undertaken by the industry itself to raise professionalism and standards across the sector, which will make property managing agents more accountable to leaseholders. We will keep that and the question of further regulation for the sector under review.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lord, if leaseholders want to change their managing agent, they need 50% plus one of the residents to vote for change. But in many modern blocks of, say, 100 flats, perhaps 40% to 50% are being sublet, and you have no right to know who the people are who need to vote. How can leaseholders who want to change their managing agent exercise their right to change? It is impossible, because they do not have a right to that data.

[Baroness Penn (Con)]

Leaseholders wishing to take forward the right to manage claim will need to obtain the title documents of their building from His Majesty’s Land Registry. Those will contain the names and addresses of leaseholders in the other flats in the building, so it should be possible to contact them. On the voting threshold of 50% plus one, we agree with the Law Commission’s recommendation that these existing requirements should not be changed, because they make sure that a minority of leaseholders cannot impose changes on the majority.