The housing minister has promised to crack down on unfair service charges and what he called the “wild west” of property managing agents as he launched the next stage of the government’s reforms of the leasehold system.
Matthew Pennycook told the Guardian he wanted to stop a number of unfair practices undertaken by some companies, including overcharging and imposing large, unexpected repair fees.
He was speaking as the government launched a consultation into measures such as making property managers provide more transparent information on their fees and forcing them to qualify as professional practitioners for the first time.
Matthew Pennycook said the consultation was being carried out because ‘leaseholders are suffering and they need urgent relief’. Photograph: Richard Townshend
The consultation is the latest step towards what the government promises will be an eventual end to the “feudal” leasehold system, which applies to 5m homes in England.
Pennycook said: “Managing agents play a key role in multiple-occupancy buildings, and will play an even bigger role in the future, but it is a bit of a wild west at the minute.”
Speaking about the new qualification system, he said: “It is very easy to set yourself up as a managing agent. A group of us could do it just by renting an office on top of a newsagent in the high street … we know there are really bad practices out there.”
Talking about the changes to service charges, he added: “We are setting out plans to protect millions of leaseholders across the country from opaque and unfair service charges and other fees which they incur.
“Leaseholders are suffering and they need urgent relief – that’s why we are doing what we are.”
Pennycook has been pushing through a series of changes to the leasehold system in the last year, including implementing parts of the 2024 Leasehold and Freehold Reform Act which was passed by the Conservatives shortly before the general election.
Some campaigners have been frustrated with the pace of change, accusing the government of dragging its feet on many of the promised reforms.
The government’s consultation, which will last 12 weeks, will ask for views on how to impose two major changes: more transparent fees and an end to what many see as unfair legal costs.
Under the current system in England and Wales, freeholders and managers do not have to explain why they have charged the fees they have, and many resist doing so even when asked directly by residents.
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MPs say they have received complaints from their constituents of surprise one-off fees, above-inflation rises in service charges and even bills for repairs which are never carried out.
One MP said they had been told of one case where a leaseholder had been charged for repairs to a lift in a building that did not have one.
When residents do challenge their property freeholders or service companies in court, they sometimes find themselves saddled with having to pay their opponents’ legal costs, even if they have won.
The government’s consultation will also seek a way to end that practice – though Pennycook admitted there could be a small number of cases where tenants still have to pay back unpaid fees.
Ministers will also consult on a new regime for carrying out major repairs, which can currently happen at little notice and at great expense.
Pennycook promised a draft leasehold bill, which will include provisions to end the system on new-build flats and to make it easier to convert old properties into other forms of ownership, would be published by the end of the year.
“It will be an ambitious piece of legislation, but there are many moving parts,” he said.
