Leasehold Reform: Raising Standards Without Overlooking the Real Costs

What Service Charges Actually Pay For

A service charge and a managing agent's fee are not interchangeable, yet they are frequently discussed as though they are. The management fee is usually one component of the service charge and pays for the professional administration of a building or estate. The rest of the budget generally covers expenditure incurred under the lease: insurance, cleaning, communal electricity, lift maintenance, repairs, grounds maintenance, inspections and, where applicable, contributions towards future major works.

Managing agents help prepare budgets, obtain quotations, oversee contractors and advise clients on expenditure. We should be expected to challenge costs and explain why money is being spent. But we do not set the price of electricity, materials, specialist inspections or insurance. Nor can we prevent the effect of wage increases on the contractors who deliver essential services. Good procurement and forward planning can achieve considerable savings, but there are limits to what those measures can offset.

This is why a rising service charge is not, in itself, evidence of poor management or excessive profit. Equally, an increase should never be accepted without explanation. Leaseholders are entitled to understand what has changed, what alternatives have been considered and whether the expenditure is reasonable. Better information makes that scrutiny possible and allows agents to demonstrate value rather than simply asking residents to trust them.

The Cost of Safer, Better-Maintained Buildings

Building safety has rightly become a central priority for our sector. The responsibilities surrounding fire precautions, risk assessments, inspections, remedial works and the management of building information demand specialist knowledge, careful coordination and proper financial provision. For higher-risk buildings in England, the Building Safety Act 2022 has introduced additional duties that make the need for competent, consistent management even more apparent.

None of this is optional simply because a budget is under pressure. An inspection identifies what needs attention; it does not pay for the remedial work. A building may require emergency lighting improvements, fire door repairs, specialist advice or a significant programme of works. These are sometimes difficult messages to deliver to residents already concerned about affordability, but avoiding the conversation does not make the underlying obligation disappear.

We must also acknowledge the legacy of historic underinvestment. I have encountered buildings where essential maintenance was deferred, budgets were unrealistic or records were inadequate. When those problems are finally addressed, costs can rise sharply even though the standard of management is improving. In such circumstances, the question should not simply be why the bill has increased, but what the building needs, why it needs it now and whether the proposed approach is proportionate. Transparency is especially important when residents are being asked to fund work they cannot immediately see.

Recognising the People and Systems Behind the Service

Property management is often portrayed as an administrative function. In practice, it demands a remarkably broad range of skills. A Property Manager may move between a building defect, a contractor dispute, a complicated lease provision, an insurance issue, a resident complaint and an urgent safety concern in the course of a single day. They are expected to understand financial controls, legal responsibilities, construction matters and customer service, while remaining responsive and professional under considerable pressure.

I support mandatory qualifications and stronger professional standards. Leaseholders should be confident that the people responsible for their homes are properly trained and accountable. But higher expectations must be accompanied by a realistic discussion about the investment required to meet them. Qualifications involve training, time and continuing development. Good professionals need manageable workloads, appropriate supervision and remuneration that reflects their responsibilities. If the sector wants to attract and retain skilled people, it cannot treat their expertise as an expense that ought continually to be reduced.

The same principle applies to technology. Reliable accounting systems, compliance records, document management, secure communications and accessible information are now fundamental to effective property management. They can improve efficiency and help residents understand what is happening in their buildings, but they require ongoing investment and maintenance. Technology should be used to improve service, not as a substitute for professional judgement or meaningful human contact. The most effective approach combines capable people with systems that support them.

Avoiding a Race to the Bottom

There is a genuine risk that an understandable focus on affordability becomes a competition to offer the lowest possible management fee. Competitive pricing is healthy when it rewards efficiency, innovation and good service. It becomes less helpful when fees are set at a level that cannot sustain the work involved. The consequences may not be immediately apparent: excessive portfolios, reduced training, weaker communication, postponed preventative action or additional fees that were insufficiently clear when the contract was agreed.

None of these outcomes serves leaseholders well. A low initial fee is not necessarily good value if problems take longer to resolve or important responsibilities are poorly managed. Conversely, a higher fee must be justified by the quality, scope and accountability of the service delivered. The answer is not to shield managing agents from scrutiny, but to give clients the information needed to compare services on a genuinely like-for-like basis.

I am also concerned about the cumulative impact of regulation on smaller independent agents. Larger businesses can often spread compliance, training and technology costs across more developments. Smaller firms may have less capacity to absorb them, even when they provide excellent service. We should not design a system in which achieving professional standards inadvertently reduces choice or makes scale the principal measure of viability. The sector needs a healthy mix of businesses, with effective oversight applying fairly to all of them.

Reform Needs to Work in Practice

None of these concerns should detract from the experiences of leaseholders who have received poor service, faced opaque charges or struggled to hold an agent to account. Such failures are real and they damage confidence in the entire profession. Independent regulation, enforceable standards and appropriate redress can help address them. There is also a legitimate case for restricting unreasonable administrative and permission fees. Those measures deserve serious support, provided their detail is workable and proportionate.

What I would like to see alongside them is a stronger commitment to education and practical engagement. Leaseholders should have clear explanations of how their buildings are funded, what their leases require and which costs are within an agent's control. Policymakers should hear from the professionals carrying out the work, including independent agents, as well as residents, directors, legal specialists and industry bodies. And managing agents must accept their own responsibility to communicate openly, challenge unnecessary expenditure and demonstrate the value they provide.

The debate should also recognise that changes in ownership structures, including a greater role for commonhold, will not remove the everyday responsibilities of maintaining shared buildings. Decisions about repairs, long-term funding, safety and professional support will still need to be made. Better governance can improve outcomes, but a different tenure does not make a lift cheaper to maintain or a roof less expensive to replace.

Ultimately, I want the same things that leaseholders should expect: safer buildings, competent professionals, transparent finances and effective accountability. Reform is an opportunity to achieve them, but only if we are candid about the resources they require. We should judge success not simply by whether individual fees fall, but by whether people receive a fair, reliable and sustainable service. Raising standards and recognising the real cost of delivering them are not competing ambitions. They are essential parts of the same conversation.

Dan Winrow, Director of Operations & Technology – Levels Property Management