Property Service Charges
Debate between Matthew Pennycook and Meg Hillier(5 days, 3 hours ago)
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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.
Oral Answers to Questions
Debate between Matthew Pennycook and Meg Hillier(3 weeks, 1 day ago)
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Matthew Pennycook
I will refer the hon. Lady’s comments about the warm homes plan to the Secretary of State for Energy Security and Net Zero. If she wishes to write to me with details of any particular cowboy builders, I would be more than happy to read what she has to say.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is great that we are transforming leasehold properties, but many leaseholders are now stuck in a gap with their freeholders when it comes to betterment. If they want to green their homes through new roofs, new insulation and electric vehicle charging, they have to pay a huge extra cost. Will the Minister and, if necessary, Ministers from the Department for Energy Security and Net Zero meet me and my constituents to discuss this issue? There is a real gap when it comes to achieving green improvements.
Oral Answers to Questions
Debate between Matthew Pennycook and Meg Hillier(1 year ago)
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Matthew Pennycook
I thank the hon. Gentleman for that question, and I am sorry to hear about Paul’s experience with that particular property management company—an experience that will, I know, be reflected in the experiences of many others across the country. There are two existing routes to redress in such circumstances, the property redress scheme and the property ombudsman scheme, to which people can submit complaints. I will happily write to the hon. Gentleman to set out in full the various sources of advice and support and the avenues for redress that his constituent might pursue before we bring in more fundamental changes to the regulation of the sector.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I should draw the House’s attention to the fact I am a leaseholder subject to service charges, as are hundreds of my constituents. There is very often a real lack of transparency and accountability from service providers. Bills are not very clear, and it takes quite a lot of effort to understand them. The Government could regulate, but will the Minister use his convening powers to encourage service providers to do better, prior to discussing legislation that could take a very long time?
Matthew Pennycook
I thank my hon. Friend for that question. I am more than happy to look into what more can be done by convening to get the various interested parties around the table. The Government are committed to implementing the provisions of the Leasehold and Freehold Reform Act 2024, which includes measures to increase the transparency and standardisation of service charges and empower leaseholders in that way.