The government does not intend to put a cap on service charge as part of its reform and abolishment of the leasehold tenure, housing minister Matthew Pennycook said.
In a debate about leasehold costs at the House of Commons, when asked by Rachael Maskell MP if there were arrangements to cap management fees and ground rents for new developments to help the transition to commonhold, Pennycook said there were no plans to do so.
He responded: “The government have no plans to cap service charges for tenants and leaseholders, given that would prevent necessary funds from being raised for legitimate purposes, but we do plan to tackle unregulated unaffordable ground rent provisions through legislation.”
Pennycook said the government’s plans to ban new leasehold flats and make commonhold the default tenure would be made “as easy as possible”, and proposals for how this would happen would be published later in the year.
Lee Dillon MP said leaseholders across the country were still “crippled by both high service charges and failing delivery” and asked what the government would do to hold individual management companies accountable for the services they delivered.
Pennycook said the Leasehold and Freehold Reform Act 2024 was designed to improve transparency around service charges so leaseholders could challenge them more easily if they were considered unreasonable.
Introducing Lloyds Living
Sponsored by Halifax Intermediaries
“I would say to any managing agent… that they should improve their performance in the light of the changes coming forward in the near future,” Pennycook added.
When asked by Florence Eshalomi MP what this would mean for existing leaseholders, Pennycook said the government wanted to make it so leaseholders in existing blocks could make the change “as simply as possible”, while ensuring that those who did not wish to convert still had rights and protections.
