Key Facts

• The amendment is consequential on Government new clause 6.
• New clause 6 introduces a requirement for landlords to provide future demand notices under section 20B of the Landlord and Tenant Act 1985 if costs cannot be issued within 18 months.
• Clause 26 amends section 18 of the Landlord and Tenant Act 1985 to create separate definitions for 'service charge' and 'variable service charge'.
• New clause 6 requires landlords to specify the amount of incurred costs, leaseholder's expected contribution, and date by which demand will be served.
• Subsections (3) and (4) define and regulate future demand notices.
• Amendment 47 inserts 'the LTA 1987' after '1987'.
• Amendments 54 and 124 are consequential to amendment 47.
• The amendments aim to align references to the Landlord and Tenant Act 1987 with other references in the Bill.
• Clause 27(4) provides clarity on overlapping information requirements.
• Proposed new section 21C of the LTA 1985 takes precedence over sections 47 and 48 of the 1987 Act when there is overlap.
• Landlords will be able to provide additional information beyond what is required by the standardised demand form.
• The amendment would require landlords to provide transaction details related to sinking or reserve funds held by leaseholders.
• Clause 28(2) of the Bill allows the appropriate authority to prescribe other matters included in a written statement of account.
• Barry Gardiner references past experiences where millions of pounds have been involved and stresses the importance of transparency and accountability.
• Amendment 131 enables leaseholders to withhold service charges when landlords fail to provide annual accounts on time.
• Amendments 13 and 14 require courts and tribunals to treat non-compliance by landlords as a condition precedent for tenants' obligation to pay service charges.
• The amendments aim to address power imbalances in the leasehold system.
• Lee Rowley thanks hon. Members for their amendments.
• Amendment 131 aims to enable leaseholders to withhold payment of service charges when accounts are not provided within six months.
• If a landlord fails to issue a demand for costs within 18 months, the leaseholder would not be liable for those costs.
• Landlords must provide leaseholders with written statements of accounts within six months of the end of a 12-month accounting period.
• The threshold applies to landlords managing blocks of four or more dwellings who charge variable service charges.
• A qualified accountant must certify the accounts.
• New section 21E obligates landlords to provide an annual report within one month of starting a 12-month accounting period.
• Clause 29 introduces a new right for leaseholders to request information from their landlord, with specifics to be detailed in regulations.
• The Government prefers that the detail is prescribed through secondary legislation and will consult interested parties.
• Amendment 16 aims to give the Secretary of State power to set prescribed amounts for reasonable costs.
• New sections 21F and 21G allow landlords to charge leaseholders for information provision costs.
• The Committee voted against amendment 16 with Ayes 5, Noes 7.
• Clause 29 introduces new provisions under section 21F for leaseholders to request information.
• Section 21G allows leaseholders to inspect and copy documents at no cost except reasonable charges for copies.
• The Government proposes replacing 'damages' with 'penalties' in clause 30 to ensure proof of financial loss is not required.
• Clause 30 aims to replace ineffective enforcement measures for landlords' failure to provide necessary service charge information.
• The tribunal is the appropriate body to determine whether damages should be paid based on a balance of probabilities, not beyond reasonable doubt.
• Amendment 134 seeks to allow tribunals to order remedies and damages for all affected leaseholders even if only one brings the case.
• Amendment 17 would raise the cap on penalties from £5,000 to £30,000.
• Amendment 142 would increase the penalty cap to £50,000.
• Labour proposes a minimum penalty floor of £1,000 as per Amendment 18.
• The Government proposes doubling the penalty from £2,500 to £5,000.
• The penalty applies per challenge regardless of the number of people involved in each challenge.
• There are concerns about potential unintended consequences such as freeholders opposing challenges more strongly.
• Amendment 48 is consequential on amendment 123.
• Clause 30 introduces new enforcement measures to replace existing ineffective ones under section 25 of the Landlord and Tenant Act 1985.
• The tribunal can order landlords to serve correct payment demands or provide reports within 14 days and may also order damages up to £5,000.
• Amendment 135 requires landlords to provide recognized tenants’ associations with three insurance quotes before placing the insurance.
• Amendment 152 is consequential on Amendment 151 regarding subsection (3) of proposed new section 20G of the Landlord and Tenant Act 1985.
• Amendment 136 ensures that costs for permitted insurance payments are reasonable.
• Amendment 155 mandates insurers or brokers to provide tenants with a written copy of the contract of insurance within six weeks.
• Amendments 151 to 153 aim to tighten definitions of recoverable costs.
• Amendment 135 requires landlords to provide tenants' associations with three insurance quotations before placing the insurance, allowing RTAs to submit alternative quotes.
• At least £80 million in insurance kickbacks have been paid to landlords and their managing agents by leaseholders.
• New clause 41 would preclude landlords from operating as appointed representatives under brokers' licences if they lack proper qualifications.
• The Financial Conduct Authority’s report found evidence of high commission rates and poor practice in buildings insurance.
• Commission rates for managing agents and freeholders more than doubled between 2016 and 2021.
• Clause 32 introduces a new duty to provide specified insurance information to leaseholders.
• Lee Rowley has held the building safety portfolio for 16 months.
• Clause 31 inserts proposed new section 20G into the Landlord and Tenant Act 1985.
• The value chain in the insurance sector is complicated, involving reinsurance markets and brokers.
• Section 20G defines permitted insurance payments through regulations via the affirmative procedure.
• Leaseholders will have access to policy details and total remuneration for legal challenges.
• Clause 31 bans commissions passed on to leaseholders as costs and introduces a transparent handling fee.
• Clause 32 places a duty on landlords to proactively provide information on building insurance to leaseholders.
• New paragraph 1A allows leaseholders to request further information from landlords, including contractual documentation and technical information shaping premium prices.
• A new clause imposes a duty on third parties to provide specified information requested by landlords within the specified period.
• Clause 33 amends the Commonhold and Leasehold Reform Act 2002.
• It requires landlords to publish an administration charge schedule.
• A landlord may face damages of up to £1,000 if they fail to comply with the provision.
• Landlords currently can charge tenants' litigation costs if allowed by the lease.
• Clause 34 requires landlords to apply for court permission before recovering litigation costs.
• Clause 35 allows leaseholders to claim their own litigation costs from landlords under certain conditions.
• The Secretary of State may set exceptions via regulations.
• Clause 34 amends the Landlord and Tenant Act 1985 and the Commonhold and Leasehold Reform Act 2002.
• The clause allows landlords to apply for an order to pass their legal costs on to leaseholders in undefined circumstances.
• New clause 3 would provide a general prohibition on claiming legal costs from tenants with limited exceptions.
• Clause 36 introduces general provisions for regulation-making powers under the LTA 1985.
• Schedule 8 sets out consequential amendments arising from part 3 of the Bill, including changes to the Secretary of State's and Welsh Ministers' authority to make regulations in England and Wales respectively.
• New clause 8 amends section 24 of the Landlord and Tenant Act 1987 to allow tribunals to vary or discharge orders without a request from an interested party.
• Amendment 52 clarifies the definition of 'estate management charge' for commonhold associations.
• Part 4 of the Bill creates a new regulatory framework for privately managed residential estates.
• Subsections (8) and (9) define what is included in an estate management charge and what is excluded.
• Clause 39(10) defines relevant costs as those incurred by an estate manager in carrying out management for dwellings' benefit.
• Clause 40 provides clarity that not all incurred costs may be passed on and sets circumstances when even chargeable costs are not payable.