Leaseholders are to get stronger rights to scrutinise service charges and challenge unreasonable costs, while landlords will face tighter restrictions on passing their legal bills on to residents who dispute charges.

The changes, being introduced under the Leasehold and Freehold Reform Act 2024, will begin on 1 April 2027, when leaseholders will have the right to request detailed information about their service charges, including records from previous years. Landlords will need a good reason to refuse a request.

Leaseholders will also get stronger protection from having to pay their landlord’s legal costs when they challenge a charge. Landlords will need court or tribunal approval to pass on any legal costs to leaseholders who will also gain the new right to claw back their own legal expenses.

From 1 November 2027, leaseholders will automatically get clearer information about the charges they are asked to pay – whether their building is owned by a private landlord, council or housing association. This includes detailed information about the building insurance, along with stronger protections against excessive or unreasonable fees for arranging and managing insurance. Leaseholders will also receive information about admin fees.

Demand

Meanwhile, landlords will have to use simpler, standardised service charge demand forms and provide financial accounts and annual reports.

“It is simply wrong that millions of leaseholders can be hit with unfair charges, then face another bill just for challenging them,” says Prime Minister Andy Burnham. “Today’s changes are only the beginning. We’re giving leaseholders stronger rights now, while we press ahead with the bigger reforms needed to put power back in homeowners’ hands and end the feudal leasehold system for good.”

Important

Mark Chick, director of Association of Leasehold Enfranchisement Practitioners (pictured), says this will represent an important shift from leaseholders having to ask for information to receiving it as a matter of course. He adds: “Better disclosure of service charges, insurance costs and administration fees should lead to greater scrutiny of costs and higher standards of accountability across the sector.”

Further reforms are also planned through the Commonhold and Leasehold Reform Bill, which is due to be introduced in Parliament before Christmas and will overhaul the way flats are owned and managed, including a revised commonhold model.

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