After much anticipation, the government has finally launched its consultation on leaseholder charges and services (‘service charges’) and the provisions of LAFRA that relate to these.
Through the consultation, which is open until 26 September 2025, the government hopes to engage of all those involved in managing leasehold buildings as well as leaseholders on how best they believe that the service charge and legal costs measures in the 2024 Act should be implemented.
The government is also proposing new reforms to the Section 20 process that leaseholders must go through when a landlord wants to carry out ‘major works’ funded by a service charge. The intention here is to ensure that major works will be planned and scheduled long in advance to ensure that leaseholders have the opportunity to plan and save in advance of the charges.
The regulation of managing agents is also included, with the government aiming to ‘take steps through this consultation to strengthen the regulation of managing agents.’ Looking ahead, the government expects the role of managing agents in the maintenance of multi-occupancy buildings to only increase as commonhold becomes the default tenure and existing leaseholders are empowered to exercise their right to manage. The consultation specifically references the ‘overwhelming case’ to take forward one of Lord Best’s key recommendations and introduce mandatory professional qualifications for managing agents in England.
As a practitioner working this this field, I welcome further steps towards the regulation of managing agents as in my view, the regulation of those who handle millions of pounds of leaseholders’ money is long overdue. As I have said previously, many of the perceived ills of the current system stem from issues within management.
However, within that lies another challenge. Whilst a lot of the provisions of LAFRA may be welcome in terms of the standardisation service charge accounting and reporting regimes, what has to be borne in mind is the compliance burden that will come with this. Ultimately this, and the economies of scale that are required to comply with it, may well play into the hands of bigger businesses. The one thing that I would urge is caution to ensure that quality services can be provided by independent operators to ensure a good range of consumer choice when it comes to property management.
Reconfirming the government’s stance on the issue, the launch announcement was accompanied by a post on X from Matthew Pennycook, Minister of State for Housing and Planning, stating: “Leaseholders across the country are at the mercy of opaque and unaffordable service charges and unscrupulous managing agents. Today, Labour is acting to protect leaseholders from service charge abuse and ensure landlords and managing agents are robustly held to account.”
Everyone working in the sector has been waiting for this consultation, so it is exciting for it to now have launched. It does beg the question of what has happened to the consultation on the capitalisation rate and the deferment rate, which have also been promised.
The consultation is very detailed and covers a lot of different topics:
- Driving up transparency of fees and charges
- New annual report
- New standardised service charge demand form
- Clarity over future service charge demands
- Extended rights to obtain information on request
- Scope of the new proposals for renters
- New duty to publish an administration charge schedule
- Better information about insurance
- New standardised service charge accounts
- Rebalancing the litigation costs regime
- New additional service charge reforms
- Mandating reserve funds and planning for major works
- Reforming major works consultations
- Protecting leaseholders’ money
- Protections for leaseholders paying fixed service charges
- Powers to appoint a manager or replace a managing agent
- Providing information and services digitally
- Regulation of managing agents
- Mandatory qualifications for managing agents
Anyone can respond to the consultation, and full details can be found here:
If you have a query concerning leasehold property, then please contact the experts at Bishop & Sewell’s Landlord & Tenant team by emailing leasehold@bishopandsewell.co.uk or call on 020 7631 4141.
The above is accurate as at 7 July 2025. The information above may be subject to change. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis
