Just £2 per flat owner will make leasehold fit for purpose says think tank

Report Co-Authors, Chris Paterson and Thomas Brooks explained: "In a housing strategy that will entail the building of hundreds of thousands of new leasehold properties, creating a system of leasehold tenure that is fit for purpose must be a key priority. Groups from all sides of the sector are united in their call for regulation of leasehold managing agents. The government must address this urgently”.

Other recommendations in the CentreForum report are:

1) A regulator should make membership of an ombudsman compulsory for all managing agents. This is similar to current regulations for estate agents, and would give leaseholders a far lower barrier to redress.

2) The leasehold valuation tribunal (LVT) process should be reformed to reduce power and information imbalances. It should ensure that all relevant information is disclosed prior to a case to avoid freeholder brinkmanship and presume use of the legislative provision to prevent freeholders from recouping legal costs through service charges.

3) The threat of forfeiture, which means leaseholders can lose the full value of their property for minor debts, should be removed

4) The power of freeholders and estate management schemes to charge tenants to modify their properties should be amended so that they cannot demand a fee for permission unless they show that planned work would reduce a property's value.

5) In the longer term commonhold should be promoted as an alternative to leasehold.

6) The right to manage, where leaseholders can take control of management in certain circumstances, should be promoted by putting information notes on all service charges.

There has already been cross-party support for CentreForum’s leasehold report. Conservative MP for Worthing West Sir Peter Bottomley said: "Leaseholders need far greater protection. At present there is legal torture of vulnerable groups including elderly, frail people on limited incomes and often limited life expectancy. Regulation and reform are urgently required. Everyone committed to fair dealing will welcome CentreForum's proposals. Government and parliament must act."

Sir Bottomley recently helped a number of leaseholders in his own constituency and raised issues of leasehold inequity in Parliament.  Barry Gardiner, Labour MP for Brent North, echoed Sir Bottomley’s sentiments: "There is a real sense of growing momentum and cross party consensus on this issue. It is now time to revisit leasehold reform. These proposals would cost the government nothing and would at a stroke transform the lives of millions of leaseholders."

Mark Field, Conservative MP for Westminster and the City, also explained: "I have seen relationships between leaseholders and the owners of their freehold that work well. But all too often I am shown instances where the balance of power in those relationships is dangerously out of kilter, delivering hopelessly poor value to leaseholders. I welcome CentreForum's report, which seeks to address this imbalance in the leasehold system."

The CentreForum report also identifies that problems with management in the property industry are growing - the number of service charge cases taken to tribunal over the past decade has risen by 400 per cent.  Despite the fact that leaseholders spend up to £2.5 billion on service charges annually, there is currently no independent regulation on how managing agents operate.

Although all stakeholders in the industry expressing support for regulation and apparent Parliamentary enthusiasm, Housing Minister Grant Shapps has to date refused to countenance further leasehold reform and stated: "any reform should be driven by a more proactive approach from the sector - not by greater regulation".   A formal Ministerial Statement is expected in September 2012.