Context
Lord Kennedy of Southwark has introduced a Private Members Bill into the House of Lords, titled The Leasehold Reform (Disclosure and Insurance Commissions) Bill. The page on which the details are published will allow other related documents to be sourced, and where the Bill’s passage can be tracked. There is an accompanying Notes document, and a page where the (brief) details of the First Reading can be viewed. Lord Southwark has declared an interest, in that he is a Leaseholder.
Key points to note
The first reading of the Bill took place on 14th July 2022, and the second reading is yet to be scheduled. The Bill is short and seeks to introduce three amendments to the Landlord and Tenant Act 1985:
- amend section 19 of the Landlord and Tenant Act 1985 to prevent landlords and managing agents who do not comply with their duties from recovering service charges, unless they have a good excuse for non-compliance;
- commence section 21A of the Landlord and Tenant Act 1985, insofar as it is not already in force, to permit leaseholders to withhold their service charges if a landlord does not provide a summary of accounts by 6 months after the financial year end; and
- amend Schedule 1 to the Landlord and Tenant Act 1985 to require landlords to disclose all insurance commissions (however described), including commissions paid on policies in the 6 years before the Bill becomes law.
Residential leaseholders currently have only limited rights to receive information about service charges and insurance commissions. These rights are to receive an annual account of service charges under section 21 of the Landlord and Tenant Act 1985; to inspect the documents supporting the annual statement of account under section 21 (section 22 of the Landlord and Tenant Act 1985); and to receive details of insurance arranged by the landlord or paid for through the service charge (section 30A of and Schedule 1 to the Landlord and Tenant Act 1985).
Leaseholders’ information rights are often ignored by landlords and managing agents, or their exercise made subject to onerous conditions. Common examples of such conditions include demanding leaseholders pay for staff overtime, or pay an hourly rate for the cost of having staff supervise the inspection. Such charges are already banned by sections 22(5) and 22(6) of the Landlord and Tenant Act 1985 but landlords and managing agents continue to attempt to impose such charges. It is not uncommon to see rates of £180 per hour or more quoted to leaseholders.
Next actions
None – for information and awareness, but there are potential implications for insurance brokers which we will explore if this Private Members Bill progresses to the House of Commons; in the current climate of scrutiny of insurance commissions and property managing agents, it is possible that this Bill might progress.