To ask the Secretary of State for Housing, Communities and Local Government, what recent assessment his Department has made of the potential merits of increasing regulation of service charges applied by landlords.
10 November 2020
The Government believes very strongly that service charges should be transparent and communicated effectively, and that there should be a clear route to challenge or redress if things go wrong.??The law is clear that service charges must be reasonable and, where costs relate to work or services, the work or services must be of a reasonable standard.
Disputes may be resolved informally between leaseholders and the freeholder, or leaseholders may make an application to the First-tier Tribunal to make a determination on the reasonableness of their service charges. There are two service charge codes of practice approved by the Secretary of State for the residential leasehold sector and private retirement housing published by the Royal Institution of Chartered Surveyors and the Association of Retirement Housing Managers, which can be taken into account at court or tribunal proceedings where relevant.
The Department does not hold information about the average number of and category types for service charge components, nor the average service charge amount in London. We also do not hold information on trends in incidences where leaseholders challenge their service charge because work was not undertaken, or because they do not have access to the service provided. Free initial advice regarding service charges as well as other leasehold matters may be obtained via the Leasehold Advisory Service, the specialist advisory body funded by the Ministry of Housing, Communities and Local Government to provide assistance to leaseholders.
The law requires that leaseholders paying variable service charges must be consulted before a landlord carries out qualifying works or enters into a long-term agreement for the provision of services (Section 20 of the of the Landlord and Tenant Act 1985).
The Government established an independent working group chaired by Lord Best to raise standards across the property sector, which also considered improvements to the transparency of service charges and major works consultations. The working group published its final report to Government (see: https://www.gov.uk/government/publications/regulation-of-property-agents-working-group-report ). We are considering?the report’s?recommendations and will announce next?steps in due course.