Question to the Department for Levelling Up, Housing & Communities:

To ask the Secretary of State for Housing, Communities and Local Government, what assessment he has made of the potential merits of bringing forward legislative proposals to (a) cap increases to (i) service charges and (ii) management agent fees payable by owners of leasehold properties and (b) to prevent freeholders of shared ownership properties from using funds from leasehold service charges to pay legal fees for defending action taken by leaseholders; and if he will make a statement.

The Government believes very strongly that any fees and charges should be justifiable, transparent and communicated effectively, and that there should be a clear route to challenge or redress if things go wrong.??

The law is clear that service charges, administration and permission fees must be reasonable and, where costs relate to work or services, the work or services must be of a reasonable standard. Leaseholders may make an application to the First-tier Tribunal to make a determination on the reasonableness of their service charges or fees. A summary of leaseholders’ rights and responsibilities must also be provided with the demand for charges.

We are also considering under what circumstances administration and permission fees are justified and if they should be capped or banned. We established a working group, chaired by Lord Best, who looked at this alongside the regulation of property agents and reported back to Government last summer. We are currently considering their recommendations.

Leaseholders may be liable to pay the legal costs of their landlord regardless of the outcome of a legal challenge - even if they win the case. This depends on the terms set out in their lease. This can lead to leaseholders facing bills that are higher than the charges they were seeking to challenge in the first place. It can also deter leaseholders from taking their concerns to a tribunal.

The Government believes leaseholders should not be subject to unjustified legal costs and will close the legal loopholes that allow this to happen. We will bring forward legislation to do this when parliamentary time allows.