Key Facts

• Edward Leigh is chairing the Public Bill Committee meeting for the Leasehold and Freehold Reform Bill.
• Scheduled meetings include Tuesday 16 January to Thursday 1 February with specific timings allocated.
• Witnesses include Martin Boyd, Chair of the Leasehold Advisory Service; Law Commission representatives; Financial Conduct Authority; various leaseholder associations; and academic experts.
• The RoPA report proposed statutory regulation of managing agents but has not moved forward.
• There are no requirements in the private sector for property managers to have qualifications.
• Two major managing agents hold between £1 billion and £2 billion without proper control or Financial Conduct Authority regulation.
• The 2002 Act included proposals to improve protection for leaseholders' funds which were not implemented.
• There was a provision allowing leaseholders to withhold service charges if landlords did not comply with rules, but it was never brought into effect.
• Mandatory commonhold systems could be introduced quickly if developers are given a bedding-in period and agreed to a sunset clause.
• The Bill imposes a 0.1% cap on ground rent treatment in valuation.
• There is an ongoing consultation with five options regarding existing ground rents.
• Clause 21 of the Bill provides leaseholders with the enfranchisement right to buy out their ground rent under very long residential leases.
• The spread of leasehold houses around the country has been a national scandal, extracting cash from unwitting consumers.
• Liam Spender's case involves £54,000 in legal costs imposed through service charges and potential future costs reaching six figures.
• Leaseholders are owed about £450,000 pending an appeal.
• Edward Leigh acknowledges evidence given by Katie Kendrick, Jo Derbyshire, and Cath Williams.
• The discussion centres around transparency, fairness, enhanced consumer rights, and empowerment for leaseholders in the Bill.
• Concerns are raised about service charge disputes and complexities introduced by leaseback arrangements.
• The Law Commission reports were detailed and well-received.
• The current Bill does not ban leasehold houses as initially proposed.
• There is a two-tier system with new builds having no ground rent but existing homes being affected.
• A peppercorn ground rent would help move towards commonhold.
• Over 27,000 members of the National Leasehold Campaign could be excluded from benefiting from the Bill's provisions due to lease lengths.
• Leaseholders face significant challenges when purchasing their freeholds including high fees, long processes, and poor communication from unscrupulous freeholders.
• The online calculator is crucial in helping leaseholders understand the process better.
• Cath Williams spent £15,000 over 15 months to buy her freehold due to disputes and misinformation.
• Many leaseholders are unaware that their property is leasehold until late in the purchasing process.
• Leaseholders were mis-sold properties without proper disclosure of terms.
• Residents in Warrington's Chapelford estate were unaware they were buying leaseholds until after paying deposits.
• Jo Derbyshire was misled about the ability to buy freehold for £5,000 which later escalated to £50,000.
• Katie Kendrick and others face uncertainty due to regulations yet to be implemented by statutory instruments.
• The Leasehold Reform (Ground Rent) Act 2022 created a two-tier system with new builds without ground rent.
• Clause 21 and schedule 7 of the Bill require a qualifying lease for buying out to a peppercorn rent to have a term of 150 years, potentially excluding many properties.
• An RPI-linked ground rent can double during review periods, making properties unmortgageable.
• Estate management charges are levied on homeowners in new build estates.
• Residents pay double council tax along with estate management fees.
• Properties can be converted from freehold to leasehold if estate management fees are withheld due to rent charge provisions.
• Leaseholders should have a clear, streamlined process for converting ground rent to peppercorn or zero.
• Edward Leigh is the Conservative MP for Gainsborough.
• Amanda Gourlay, a barrister at Lazarev Cleaver LLP and associate member of Tanfield Chambers, provides evidence on clause 27 of the Leasehold and Freehold Reform Bill.
• Clause 27 relates to service charge demands experienced by most leaseholders.
• The Bill aims to achieve transparency in leasehold management through time limits and enforcement provisions.
• Clause 26 integrates fixed service charges into the service charge regime.
• Clause 27 concerns service charge demands, but specific regulations are yet unknown.
• Clause 28 inserts new sections into the Landlord and Tenant Act 1985 for providing written statements of account and reports.
• A template for consistent service charge accounts would be beneficial to avoid discrepancies as leaseholders move between properties.
• Transparency in service charge accounts is crucial for leaseholders.
• The sale of leases often lacks necessary information, such as payment status of service charges and future proposed works.
• There are no current regulations requiring the provision of such information at present.
• Clause 28(2) inserts proposed new section 21D, “Service charge accounts”.
• Subsection (2)(a)(i) discusses variable service charges “arising in the period”.
• There is a concern that withholding service charges could be abused by leaseholders not wanting to pay.
• Legal costs can amount to £2,000 for non-payment of service charges.
• A risk exists where third-party management companies may lack wherewithal to insure buildings properly.
• The 1985 Act's proposed new sections 21D and 21E differ in their detail and narrative scope.
• Proposed new section 21D stands out as necessary because it is not covered by clause 30.
• Clause 49 imposes a maximum fine of £5,000 for failure to provide annual reports.
• Clause 51 imposes a maximum fine of £1,000 for failure to provide charge schedules.
• The committee has three minutes left before adjourning.
• Rachel Maclean and Barry Gardiner will ask questions.
• The debate will conclude by 11:25 as per the programme motion.