Government issues update on leasehold commission ban

The government will launch a consultation on the ban of excessive buildings insurance commissions under the Leasehold and Freehold Reform Act.

The act has been designed to see such commissions for managing agents, landlords and freeholders be replaced with transparent administration fees.

While the act was passed through parliament in May 2024 under the Conservative government, the main provisions of the act will not have effect until secondary legislation has been passed.

The recently formed Labour government said that it aims to implement measures “at pace in the new year”.

Last week (21 November 2024), a statement from Matthew Pennycook, the minister of state for housing and planning, revealed that the government “will go out to consultation very shortly on the detail of the act’s ban on buildings insurance remuneration”.

It said: “We understand that for many leaseholders the cost of living will be their primary immediate worry.

“For too long, leaseholders have borne the brunt of opaque and excessive costs being passed on to them.

“We will go out to consultation very shortly on the detail of the act’s ban on buildings insurance remuneration, such as commissions for landlords, property managing agents and freeholders being charged through the service charge, and their replacement with transparent and fair fees.”

Further plans

The government said that it aims to bring forward more provisions in January.

And it said that in the spring next year, a package of measures is set to be introduced to expand access and reform the cost rules and voting rights where leaseholders claim the ‘right to manage’.

This means more homeowners in mixed-use buildings can take over management from their freeholders and leaseholders making claims will no longer have to pay their freeholder’s costs in most cases.

Pennycook said: “The government is determined to honour the commitments made in our manifesto and I am pleased today to set out the steps we will take to provide relief to those currently subject to unfair and unreasonable practices and to progress the wider set of reforms necessary to end the feudal leasehold system for good.”