Plans for new measures to help create a fairer property
management system that works for everyone have today (18 October
2017) been announced by the Communities Secretary .
With over 4.2 million leasehold homes in the country and service
charges reaching between £2.5 billion and £3.5 billion a year,
the Communities Secretary will say the government is determined
to fix the problems in the property management industry, drive
down costs and protect consumers from the small minority of rogue
agents.
The problem isn’t just for leaseholders, but for some of the 4.5
million tenants in the rental sector too – with overcharged costs
for repairs and services often passed down to tenants.
Since 2010, government has taken action to require all letting
and management agents to belong to a redress scheme, and we have
introduced a range of tougher measures to target rogue landlords
and agents in the private rented sector.
As part of this new call for evidence,
government is seeking views on:
- whether regulatory overhaul of the sector is needed
- measures to protect consumers from unfair costs and
overpriced service charges
- ways to place more power in the hands of consumers by giving
leaseholders more say over their agent
It will ask if a new independent regulatory body is needed - and
if separate bodies should be established, for both leasehold and
private rented management, and letting agents.
While the sector is partly self regulated - through professional
bodies such as the Association of Residential Managing Agents
(ARMA) and ARLA Propertymark (formally Association of Residential
Letting Agents) which have a code of conduct, other property
agents operate outside of any system and can provide a poor deal
for consumers.
Communities Secretary said:
This is supposed to be the age of the empowered consumer – yet
in property management, we’re still living in the past.
Today we are showing our determination to give power back to
consumers so they have the service they expect and deserve, as
part of my drive to deliver transparency and fairness for the
growing number of renters and leaseholders.
Our proposed changes to regulate the industry will give
landlords, renters and leaseholders the confidence they need to
know that their agents must comply with the rules.
Research by consumer group Which? shows that unfair practices can
lead to as much as £700 million of unnecessary service charges
being paid each year, and others such as the All Party
Parliamentary Group on leaseholds believe the total could be as
much as £1.4 billion.
The government will consider changing the law so that all letting
and management agents, across both the private rented and
leasehold sectors, must be qualified and regulated in order to
practice.
Measures to be considered as part of the call for evidence
include:
- how consumers can be empowered in the market, including
whether leaseholder tenants should have a greater say over the
appointment of managing agents
- how transparency can be increased in the system so that
tenants and leaseholders know what they are being charged for and
why
- ensuring fairness and openness around relations between
freeholders and agents
- looking at what qualifications are needed by agents to
practice and how regulation can be improved
This piece of work is part of wider government action to bring
power back to the tenant and leaseholder.
In summer 2017, government launched a consultation setting out
radical proposals to cut out unfair abuses of leasehold to
deliver a fairer, more transparent system for homebuyers. Plans
include banning new build homes being sold as leasehold as well
as restricting ground rents to as low as zero.
Earlier this month the Secretary of State also announced measures
to help make sure tenants are more secure in their homes;
requiring all letting agents to be regulated; and consulting with
the judiciary on the case for a new Housing Court – a specialist
court with the aim to save time and money resolving housing
disputes.
Government has also confirmed it will legislate to ban letting
fees so that tenants aren’t hit by unfair charges.
Anecdotal evidence of poor management includes:
- a group of leaseholders charged ten times the market rate to
have a new fire escape fitted – with the £30,000 contract handed
to the freeholder’s brother
- one landlord charged £500 by his agent for repairing a shower
door
- a London-based property agent who tried to charge a
leaseholder almost £5,000 to transfer ownership of a parking
space to other leaseholders
The call for
evidence will last for 6 weeks from Wednesday 18 October
2017.
The proposals relate to England only.
Managing agents are a person or company appointed by the owner
(or someone operating on their behalf) to manage that property
and their role may include for instance repairs and maintenance.
Managing agents operate in both the private rented sector and the
leasehold sector.
