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New rules to reform leasehold

As the Government introduces a raft of new measures, designed to reform the leasehold system, Nick Faulkner, Managing Director, SDL Property Partners believes these regulations can’t come soon enough.

Nick Faulkner

Leasehold cash image

New rules that aim to clamp down on “unfair and abusive practices within the leasehold system” have won broad support from property management companies, leaseholders and the industry, including the SDL Group.

Following an extensive consultation, which included responses from leaseholders, freeholders, private landlords and individuals with a portfolio of ground rents, the Government has pledged to overhaul existing leasehold practices, as part of its wider plan to “fix [Britain’s] broken housing market”.

Responding to feedback from those who took part, the Government has set out plans to make sure residents “only pay for the services they receive” – which is certainly good news for everyone, other than the cowboys profiting from poor service charge management and excessive ground rental reviews. As such, proposals are in place to reduce ground rental reviews.


There’s no doubt this is a positive outcome for consumers, who enjoy a new level of protection and transparency insofar as they should be able to see precisely where their money is being spent and challenge it if necessary. It’s also a boost for credible property management companies who, for too long, have been engaged in a race to the bottom with unsustainably low fees for the services provided.

Nick Faulkner image

Nick Faulkner

Given that some management agents might be charging as little as £1 a unit per week, it’s easy to see why some leaseholders receive such a poor service. Under the current system, a responsible managing agent simply cannot match those prices if they are complying with the hundreds of pieces of legislation governing health and safety, repairs and maintenance and energy efficiency.

Of course, greater transparency around how service charges are spent is always welcome, yet we should remember that it comes at a cost. Uploading documents, like gas safety certificates and rent invoices, to a tenant portal requires employee time and money, as does building and managing the website in the first place.

There is no longer a place for those who just collect the cash without giving an adequate service.

As the managing agents who charge virtually nothing and deliver very little, disappear from the market, consumers will inevitably see a rise in the fees they pay – but in return they should be able to expect a far more professional standard of service. To put it into context, plenty of people are happy to spend £15 a week on takeaway coffee, so chances are they are also prepared to pay a little more keeping their home safe and well-maintained.


The Government’s reforms come at a crucial time when the property management industry needs to take stock of what it offers and value itself a little more. I believe we need to take the same approach to our work as solicitors and accountants, who set fees based on their vast knowledge and hours spent on client work. Managing property portfolios, whether large or small, requires legal and financial expertise, not to mention an army of accredited trade contractors and suppliers – 1,000 in our case – who can assist where needed.

Since the new leasehold legislation champions the rights of residents, it seems only right that they should also have greater say on how their properties are maintained. Tenants’ groups are well-placed to report on what needs to be done in their complex, but they can only maintain the highest level of safety if they have guidance and support from a professional property management company.


Simply put, it would be extremely difficult for a layperson to grasp, and stay up-to-date, with the regulations around fire, legionella and asbestos control – and there is a real danger that something would get missed. While this professional service comes with a price tag, I suspect most tenants would see it as vital for protecting their interests, safety and wellbeing.

Ultimately, the Government’s action on current leasehold practices can only be a good thing for tenants, as well as responsible landlords and property management firms. With ground rents set to be controlled, and greater support for leaseholders looking to challenge unfair fees, it’s clear there is no longer a place for those who think they can just collect the cash without providing an adequate service. As these agents drop out of the market, they’ll be replaced with reputable property management firms, which can, in time, drive up standards and professionalism.

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