Leaseholders will gain greater powers to scrutinise service charges and challenge unreasonable costs under the latest phase of the government’s leasehold reforms

Taking effect next year, changes include an annual report, which landlords will need to provide to leaseholders, giving a clear insight into the health and condition of their building and plans for major works.

A new service charge demand form will set out detailed information about service charge payments and what they will cover. New rules will protect leaseholders from footing their landlord’s legal bills without challenge where disputes arise, such as over service charges, and allow them to apply to recover their own costs.

Landlords will need to provide certain building information on request, such as fire safety information and invoices for maintenance works, going back up to six years and with clear timeframes for responses.

It comes as Propertymark reports that a whopping 93% of leaseholders wouldn’t buy a leasehold property again, with widespread frustration at service charges and problems selling.

Further

The agents’ body wants the government to go further and faster with reforms in the Leasehold and Freehold Reform Act. Its new poll of 200 agents and 1,200 leaseholders found that 86% of leaseholders had seen an increase in service charge in the past 24 months, while 89% of leaseholders found it difficult to challenge unfair charges.

There are 1.9 million private rented leasehold properties in England (337,000 houses and 1,574,000 flats). Propertymark says since its first report on the sector eight years ago, it has become even more difficult for leaseholders to sell their property. During the last two years, 78% of estate agents have taken at least one leasehold property off the market due to it being unsellable.

Desperate

“The system is in desperate need of reform. While moving to commonhold will help, this will take time to implement,” explains the report. “All the while, leaseholders will continue to be trapped in their homes while facing rising costs.”

Propertymark wants to the government to urgently review the proposed timeline of 40 years to set ground rents to a peppercorn, introduce a standardised format for leases and lease terms and to consider financial support for leaseholders looking to purchase their freehold.

In April, the government announced it wouldn't be able to abolish the leasehold system until after this Parliament. However, ministers have now launched long-awaited consultations aimed at making lease extensions cheaper and simpler. These explore plans to set specific valuation rates in regulations, reducing disputes over costs and giving leaseholders greater certainty about the price they will pay to enfranchise, as well as protect leaseholders from covering their landlord’s solicitor, valuer or administrative fees when going through the process.

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