If you are a flat owner wondering why your service charges are too high, the service from your managing agent is lacking, or why you are in despair at what you can do about it, now you know. It’s your own fault. Or at least that’s what you may think if you paid attention to the comments from the Government in a recent House of Lord’s debate.
The House of Lords debate concerned service charges and other matters relating to residential blocks of flats. It was the first time for many years that issues affecting over 3 million leasehold flats have been ventilated for any length in Parliament. Baronness Gardner was duly recognised and congratulated by her Peers for securing the important debate, which had been prompted by the efforts of LKP and the FPRA.
In as thorough a way as time allowed, Baroness Gardner raised a shopping list of items which are of serious concern to leaseholders around the country: “...simplification of the law-a consolidation Act; regulation of managing bodies; transparency-complaints processes; closing loopholes-protecting leaseholders' rights; easier change to commonhold; right to manage-tenants' associations; standard of services-value for money; exit or transfer fees; and financing home ownership.”
Fellow Peers banded together in constructively discussing the issues raised. Baronness Maddock, Baronness Greengross, Baronness Miller, Lord Best, and Lord McKenzie all spoke with a considerable degree of professional and private knowledge about the “considerable problems” caused by the leasehold system. The general thrust of their comments was that the current leasehold system does not work as well as it could do and the Government should take the opportunity to do something about it.
Unfortunately, the Government do not share that view. In fact, during the Government’s response, Baroness Hanham made the astonishing remarks:
“I do not think that it is for government to intervene any further. People who buy leasehold properties first need to be very careful with the lease they are buying, to know what they are buying, to know what are the service charge implications and management implications. They need to know whether the managing agent has been appointed by the freeholder and what responsibility they take if that managing agent is not standing up to proper scrutiny. At the end of the day, leaseholds are the responsibility and under the ownership of the people who live in a block of flats and it is very much in their interests to have an organisation or association to use to help manage it. Although I accept that that involves a big responsibility on those who do that, there are some very determined leaseholders who manage to achieve it.”
The Government’s lack of enthusiasm to offer greater protection to the nation’s flat owners was evident in the House of Commons a short time later, when the Housing Minister, Grant Shapps made no mention of leasehold regulation even though he admitted he was chairing “...a taskforce on rogue landlords in order to try to drive them out of the market.”
Overall this was a disappointing outcome, as FPRA Chairman Bob Smytherman explained:
"We believe the only way to get the 'rogues' out of the sector is to have a compulsory independent licensing scheme with a high minimum standard, along with severe penalties for breaches of those required standards.
It is simply a scandal that a large sum of flat owners' cash that is paid to secure a high standard of maintenance to their homes is held by unregulated and unprotected managing agents. We estimate this may well exceed £1 billion and perhaps may be even higher.
We are not aware of any other sector in the UK where such significant funds held by a third party are totally unregulated and can in practice be a person or organisation without any qualification who sets up a property management business, irrespective of experience or even of a criminal background but nevertheless is able to take and hold these funds on behalf of flat owners.
We believe all of this could be achieved at minimal cost to Government with substantial savings to every flat owner in England and Wales.”
You can watch the full debate here:
