, Cabinet Secretary for
Housing and Local Government: As part of my commitment to keeping
Senedd members updated about progress to reform leasehold, I am
pleased to announce the publication of the latest consultation in
the programme of work to implement the Leasehold and Freehold
Reform Act 2024, which can be accessed
here.
Welsh Government is committed to overhauling the operation of
leasehold in Wales to make it fairer, clearer and more
transparent for leaseholders who have been struggling for too
long with an archaic and opaque system. We have achieved
important reforms for Wales via the 2024 Act, and I am now
delivering a programme of work to implement the Act. At the same
time, I am exploring further significant reform for Wales and
continuing to engage with the UK Government on their upcoming
commonhold and leasehold reform bill.
I am undertaking this consultation jointly with the UK
Government. I have been clear that I believe reform of leasehold
in Wales will be most effective if we take opportunities to work
together with the UK Government where the problems we experience
are the same, and we share common aims in addressing them. An
important element of the consultation for me is to understand
whether there is a case for divergence between England and Wales
in this area, or whether commonality in the reformed regime would
be more beneficial to Welsh homeowners.
We have all heard time and again from constituents about their
burdensome and incomprehensible service charges, and how
difficult or even impossible it is for them to get enough
information to decide whether to contest these charges.
Leaseholders are also often wary of using the limited rights they
currently have to take their landlord to the tribunal to
challenge service charges. This is exacerbated due to the
financial peril of having to cover not only their own legal
costs, but those of the landlord too, even if they win.
Part 4 of the Leasehold and Freehold Reform Act 2024 makes
important changes to address some of the unfairness associated
with service charges, requiring landlords and their managing
agents to be more transparent about service charges, and
scrapping the presumption that leaseholders will always need to
pay their landlord's legal costs. The operational details of the
new service charge regime will be set out in subordinate
legislation made by Welsh Ministers. This consultation sets out
our proposals about how the regime could work and provides an
important opportunity to ensure that the regulations we make
effectively address the needs of leaseholders and ensures good
practice in future service charge management.
The first half of the consultation deals with implementing Part 4
of the Act, and considers the information that should be required
in an annual report and service charge demands, what further
information and documents should be readily available to
leaseholders on request, how administration charges should be
published, and how service charge accounts should be compiled and
signed off. It also explores how legal costs changes should be
implemented in a way that provides the necessary protection and
clarity for resident management structures to effectively
function.
The second half of the consultation explores potential further
reforms to improve the operation of service charge management,
above and beyond the changes already made via the 2024 Act. For
instance, whether changes should be made to improve how major
works are planned and paid for, how the existing ‘section 20'
consultation process could be improved, and whether there should
be controls on how managing agents operate. The problems
leaseholders currently experience in these areas will be familiar
to many of us.
I would encourage leaseholders and interested stakeholders to
consider and respond to the consultation, in order that I have
the best evidence on which to base decisions about next
steps.
I am also pleased to confirm we will shortly publish the
government response to the first joint consultation on
implementation of the 2024 Act. This consultation set out
proposals to address longstanding concerns that leaseholders are
charged excessive commissions by brokers for the arranging and
managing of buildings insurance, which are then given to
landlords, freeholders or property managing agents. The response
will set out evidence gathered from consultation responses, and
outline next steps towards the replacement of commissions with a
fairer and more transparent fee-based system.
My ambition is to deliver reforms to leasehold at pace, so that
Welsh homeowners feel the benefit of the substantial changes they
represent as quickly as possible. The programme of work will
require further consultation and development of detailed
subordinate legislation both by Welsh and UK Ministers over the
coming months. I will continue to update Members on this, and I
would be grateful for your support in encouraging engagement with
the programme as it progresses.
