Skip to main content

Leasehold: Service Charges

Question for Ministry of Housing, Communities and Local Government

UIN 174200, tabled on 23 March 2021

To ask the Secretary of State for Housing, Communities and Local Government, what requirements are placed on freeholders to ensure transparency in the calculation of ground rent, service charges and other ancillary fees for leaseholders.

Answered on

31 March 2021

The Government has set out a package of measures to tackle unfair practices in the leasehold market and promote transparency and fairness for both leaseholders and freeholders.

We believe very strongly that service charges and fees should be transparent and communicated effectively, and that there should be a clear route to challenge or redress if things go wrong. We established an independent working group, chaired by Lord Best, to raise professionalism and standards across the property agent sector, which also considered how fees such as service charges should be presented to consumers. The working group published its final report to Government (available at: https://www.gov.uk/government/publications/regulation-of-property-agents-working-group-report) and we are considering the report’s recommendations.

The Government asked the CMA to conduct an investigation into potential mis-selling of homes and unfair terms in the leasehold sector. On 19 March, the CMA announced that it is requiring the removal of ground rent terms which it thinks are unfair from all existing Countryside and Taylor Wimpey contracts to make sure they are no longer in breach of the law. The companies must also agree not to use the terms again in any future leasehold contracts. The Government strongly welcomes the CMA’s efforts to bring justice to homeowners affected by unfair practices. Further information is available at: https://www.gov.uk/cma-cases/leasehold).

The Government has committed to restricting ground rents for newly created leases for both houses and flats to a peppercorn (zero financial value). This will ensure that homeowners in new leasehold properties are not charged a financial sum for which they receive no tangible benefit.

We will bring forward legislation in the upcoming session to set ground rents on newly created leases to zero. This will be the first part of seminal two-part legislation to implement reforms in this Parliament.