The provisions in the Commonhold and Leasehold Reform Act 2002 stipulated that lessees' money was to be held in separate designated bank accounts and that lessees would have the right to automatically receive a full set of annual service charge accounts along with an accountant's report.
Grant Shapps wrote to Brett Williams of the Association of Residential Managing Agents (ARMA) advising that the government is not letting down leaseholders by not completing this section of the 2002 Act.
The reason for the decision was that the government was "keen to avoid imposing further burdens on landlords and managers, which would increase costs for service charge payers"
Flat Living challenges this decision as proceeding with the service charge accounting regulations under the 2002 Act is NOT going to increase costs significantly for service charge payers, however WAS going to protect them against poor management and rogue landlords.
The Commonhold and Leasehold Reform Act 2002 was passed eight years ago and after three years of intensive work to produce these regulations it has been stopped without due consideration.
The regulations were expected in April 2010 and many had already started to towards complying with what had been expected - providing transparency and accountability. However the landlords who were not correctly requesting and holding lessees' monies - haven't and will therefore be able to continue without the last stage of lessee protection..
Flat Living provides a free information service for leaseholders and residents' management companies and every day we are coming up against leaseholders with problems, their biggest asset is not being managed adequately, together with commissions which are often hidden from leaseholders in their service charge requests.
Over fifty per cent of the country's leasehold flats (1.08m approx leaseholders), which equates to around 40,000 blocks of flats have their properties managed by a property managing agent. The balance of the country's leasehold flats (720,000 approx leaseholders) which equates to 40,000+ blocks and conversions in England & Wales, are NOT managed by a property manager - they are self-managed. These figures are based on previous government estimates.
Without legislation to protect this home owner type, of which there are over 1.8m throughout England & Wales, leaseholders may reconsider this way of life with the potential for the investment in their home remaining unsafe.
The government's decision will allow rogue landlords to continue to collect money from leaseholders without redress, collecting and spending lessees' monies, without requirement to either be transparent or accountable to those they collect the money from.
A large proportion of leasehold flats and apartments are the assets of our older generation, however Flat Living sees that in the future leasehold properties could end up becoming predominantly tenanted rather than offering the desirable living accommodation for owners with little time or whom who may be less able to maintain a home, like the elderly.
This is a time when the Government should be helping this large section of our population.
