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Government considering new regulatory body for leasehold rentals

Plans for new measures regarding leasehold tenancies to help create “a fairer property management system that works for everyone” have been unveiled by the government.

Communities Secretary Sajid Javid has announced that the government is considering whether a “new independent regulatory body” is required to handle leasehold and private rented management, and letting agents.

A statement from the Department of Communities and Local Government this morning says: “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.”

Javid has told the ARMA conference this morning: “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.”

Now the government is going to contact lettings organisations to seek 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;

- a possible new independent regulatory body for leasehold and private rented management;

- 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.

Javid says that 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 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 4.5m 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” he adds.

Anecdotal evidence of poor management cited by Javid included:

  • 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 consultation period will last for six weeks from today.

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