Asked by
To ask His Majesty’s Government what plans they have to regulate
managing agents who manage leasehold properties on behalf of
freeholders while being paid by leaseholders.
(Lab Co-op)
My Lords, in begging leave to ask the Question standing in my
name on the Order Paper, I refer the House to the register of
interests and the fact that I am a leaseholder.
The Parliamentary Under-Secretary of State, Department for
Levelling Up, Housing & Communities () (Con)
My Lords, we are committed to raising standards and
professionalism within the property management sector. Managing
agents in England and Wales must belong to one of the two
government-approved redress schemes. Leaseholders can also apply
to the First-tier Tribunal to appoint a manager where there is
significant management failure. We will continue to work with the
industry on improving best practice, including in relation to the
codes of practice. Announcements will be set out in the usual
way.
(Lab Co-op)
I thank the Minister for that response. There is a desperate need
for a regulator with real teeth to ensure that managing agents
treat leaseholders fairly and are open about their charges; that
there is a proper redress scheme in place, with real powers to
take remedial action against those who rip people off; and that,
in the worst cases, they can be removed from the industry. Does
the Minister agree with me that that is the way forward?
(Con)
I agree with the noble Lord. That is exactly what we are doing.
The commitment includes raising professionalism and standards
among property agents. As I am sure the noble Lord knows, the
noble Baroness, Lady Hayter, and RICS, which she is working with,
will meet the Housing Minister to discuss a code of practice for
property agents. I thank the noble Baroness for all the work she
is doing on this, and I welcome her excellent stewardship of the
independent steering group as we strive to promote best practice
among property agents in future.
(Con)
My Lords, the Building Safety Act has given leaseholders very
welcome protection against the costs of making their buildings
safe, following the Grenfell tragedy. But the legislation has an
important defect, in that if any leaseholder subsequently extends
his or her lease, they lose all their protection. I think my
noble friend is aware of this oversight in the legislation, but
when will she put it right and will it be retrospective?
(Con)
My Lords, we are well aware of the significant issue concerning
leaseholder protections where leases are extended or varied. A
change to primary legislation is necessary to ensure the
continuation of protection. We are looking to bring forward the
necessary legislation as soon as parliamentary time allows.
Obviously, compensation will be part of that discussion, I am
sure.
(Lab)
Is the Minister not aware that freeholders are frequently
motivated to consolidate the ownership of their properties by
driving the leaseholders into unsustainable debt, by dint of
exorbitant service charges?
(Con)
I thought the noble Viscount was going to go on further with that
question; it was nice and quick. He is absolutely right; I get
more letters about service charges, particularly at this time,
than ever before. We believe very strongly that service charges
need to be more transparent and communicated more effectively by
freeholders, because there should be a clear route to challenging
them, or to redress if things go wrong. We are working to make
sure that we get further changes to leaseholder legislation to
ensure that transparency.
(CB)
My Lords, the noble Lord, , raised the
regulation of managing agents of leaseholder properties. Does the
Minister recall that the working group the Government set up
looked at estate agents and letting agents as well, grouping them
all together as property agents and requiring a regulator that
covered all three sectors together? This makes a lot of sense
because some people do all three jobs.
(Con)
The noble Lord is right, and I thank him for the work he has done
on this. I assure him that we are still looking at his review. We
are also working with National Trading Standards to improve
particularly the disclosure of material information in property
listings, and with estate agents to ensure that they are offering
an appropriate service to consumers all the time. We will
continue to work with the sector to make sure that it is behaving
appropriately and ensuring that people who go to agents are
treated with the respect that they deserve.
(LD)
My Lords, over the years that this has been a major issue we have
had seven Secretaries of State and nine Housing Ministers. In the
meantime, the building safety crisis and surging inflation are
causing even more financial hardship to tens of thousands of
leaseholders. Can the Minister assure us that managing agent
reform—I use that word deliberately—and regulation specifically
will be a plank of any new legislation? Will it be given the
necessary time to ensure that it receives Royal Assent before the
end of the next Parliament?
(Con)
My Lords, I have said many times at the Dispatch Box that I
cannot say that. I cannot tell noble Lords when the leaseholder
protection Bill will come through and what it will contain
because that would pre-empt the King’s Speech. However, I can
assure noble Lords, as I have said before, that it was in our
manifesto and that we intend to deliver before the end of the
Parliament.
(Lab Co-op)
My Lords, would it not be better if leaseholders were enabled
more easily to take over the management of their flats
themselves? At present, this is particularly difficult and can be
easily frustrated. What will the Government do to make it
easier?
(Con)
My Lords, the Government agree with the noble Lord. We should
wait until we have further leasehold reform.
(Non-Afl)
My Lords, the estate agents Hamptons estimates that England’s
leaseholders will collectively pay a crippling £7.6 billion in
service charges this year. The Minister will have heard from the
individuals. Although it is tempting to say that the case is
therefore for statutory regulation of managing agents, could she
comment on the real solution, which is that leaseholders should
have the right easily to hire and fire managing agents
themselves, as suggested by Commonhold Now, and that they should
have some control over their own properties?
(Con)
The noble Baroness is right. That is exactly why we are looking
at a code of conduct, which will have teeth, and the role more
widely of leaseholders when we look to the leasehold Bill that
will come through.
(Con)
My Lords, my noble friend refers to leasehold, but is it not
correct that all the other professionals involved in residential
property transactions—I declare an interest as a solicitor—are
very tightly controlled indeed in respect of fees and their
conduct, bearing in mind the extra responsibilities, such as
sales and purchases, now placed on professionals? Why are we not
more determined to ensure that estate agents are equally
controlled?
(Con)
My Lords, estate agents are regulated through the Estate Agents
Act 1979. As I said, that is currently enforced through the
National Trading Standards estate and letting agency team, which
makes it very clear that estate agents are expected to exercise
due diligence and check whether the information on anything they
are selling is correct. The Government expect all property agents
to ensure that customers are aware of anything to do with the
property that they are negotiating on and to work within those
trading standards rules and regulations.
Baroness Taylor of Stevenage (Lab)
My Lords, we keep getting vague promises about action being taken
on leaseholder reform. For all leaseholders, the prospect of
hikes in their service charges hangs over them like a sword of
Damocles. It is about time that this was sorted out. The present
provisions are too opaque and leave leaseholders at the mercy of
unscrupulous managing agents. If we are to have transparency of
service charges, when will this reform come forward? Please can
we have a bit more clarity about when the Government will tackle
it?
(Con)
The noble Baroness is absolutely right: leaseholders need that
transparency to better understand what they are paying for and
for it to be harder for landlords to hide any unreasonable
charges. As I said, we are looking at it. We will bring forward
legislation later in this Parliament.
(Lab)
My Lords, on that very important point, does the Minister
envisage that the outcome of this will be models to insist that
agents set out information in a way that is very simple and easy
to understand? Unless we have that, it will be so easy for agents
to hide behind the jargon used in the industry about what exactly
service charges cover.
(Con)
I cannot say what will be in the proposed Bill, but what the
noble Lord has said is absolutely right. Leaseholders should be
absolutely clear about what to expect from their landlord.
