Government to crack down on 'unfair' landlord charges

A government proposal aimed at cracking down on "overpriced" service charges and "unfair" costs thrust onto renters and leaseholders in England was unveiled by Communities Secretary Sajid Javid on Wednesday.

Javid said ministers had been looking into the possibility of making changes to the law in order to create a fairer property management system that would make it easier to outlaw "rogue" letting and management agents.

The crackdown was just the most recently announced set of measures relating to tenants and leaseholders after the government proposed a complete ban on the sale of newly-built houses being used as leaseholds in England back in July.

According to the Department for Communities and Local Government (DCLG), there were around 4.3m leasehold properties in England.

Given service charges on those properties were exceeding £2.5bn per year, the government turned its focus away from its previous attempts to ban letting fees for tenants and towards cutting the "overcharged costs for repairs and services" that many tenants in the retail sector were being hit with.

The DCLG said that poor management had been evidenced by a group of leaseholders who had been charged more than ten times the market rate to have a new fire escape fitted with the £30,000 contract handed having been awarded to the freeholder's brother, it also cited a case where one landlord had been charged £500 by the letting agent of his property to repair a shower door, and lastly an instance of a London-based property agent that attempted to charge a leaseholder just shy of £5,000 to transfer the ownership of a parking space to a different leaseholder.

Consumer organisation Which? claimed that leaseholders were "losing out to the tune of £700m a year because of excessive fees and hidden costs contained within their service charges," adding that other groups, like the all-party parliamentary group on leasehold, believed the total to be as high as £1.4bn.

The government said it would investigate how to best increase levels of transparency in the system, "so that tenants and leaseholders know what they are being charged for and why."

"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 statement read.