Managing agents to face new leasehold insurance rules
The Government is consulting on a new 'permitted insurance fee' that will prevent agents, landlords and freeholders from sharing commission with brokers.
New proposed rules on how agents, landlords and freeholders charge insurance are being proposed by the Government.
The new ‘permitted insurance fee’ will prevent property owners and agents from sharing commission with brokers.
And it will also give leaseholders more transparency about the insurance costs they face, the Ministry of Housing, Communities and Local Government says.
Scrutinise costs
Under the Leasehold and Freehold Reform Act 2024, which was passed by the previous Conservative Government just before the General Election, leaseholders will also be able to scrutinise insurance costs.
But secondary legislation will be needed to bring in these new measures, and the Government is consulting on this.
“It [the Act] established powers to rebalance the legal costs regime and remove barriers that may deter leaseholders from challenging their landlord.
Transparency
“It also introduced powers to enhance the transparency of service charges, allowing leaseholders to better scrutinise and challenge unfair costs,” MHCLG says.
“This could include disproportionate remuneration for services in the arranging and managing of insurance, or even commissions – and other financial benefits – being given to landlords, freeholders or property managing agents that are unconnected to the services provided.”
Robert Poole, Director at Glide (part of Leaders Romans Group), says: “We will be responding to the consultation, and largely supporting its aims as this is an appropriate direction of travel for the sector, and one which offers transparency for leaseholders.
“However, increased costs to arrange insurance may exceed any proposed permitted insurance fee, and we could see management fees increasing to cover this.”
Feudal system
Housing minister Matthew Pennycook confirmed last month that Labour intends to ‘end leasehold’, and make commonhold the ‘default’ tenure during the current parliament.
He said the Government will do what is necessary to “finally bring the feudal leasehold system to an end”.
