Open consultation

Strengthening leaseholder protections over charges and services: executive summary

Published 4 July 2025

Applies to England and Wales

1.0 Introduction

For far too many leaseholders in England and Wales, the reality of homeownership has fallen woefully short of the dream – their lives marked by an intermittent, if not constant, struggle with punitive and escalating ground rents; unjustified permission and administration fees; unreasonable or extortionate charges; and onerous conditions imposed with little or no consultation. This is not what home ownership should entail.

The UK government is committed to bringing the feudal leasehold system to an end and we are progressing the wider set of reforms necessary to do so. On 3 March we published the Commonhold White Paper as a crucial first step in ensuring commonhold becomes the default tenure.

Later this year, the UK government will publish an ambitious draft Leasehold and Commonhold Reform Bill. A central focus of the Bill will be reinvigorating commonhold through the introduction of a comprehensive new legal framework but it will also include a range of other vital reforms to the leasehold system.

We are, however, acutely aware that leaseholders currently subject to unfair and unreasonable practices need urgent relief. Chief among the concerns for many leaseholders are opaque and unaffordable service charges which represent the single biggest subject of enquiry among those seeking advice and support from the Leasehold Advisory Service.^{[footnote 1]}

The Leasehold and Freehold Reform Act 2024 contains a number of provisions designed to standardise and increase the transparency of service charges so that leaseholders are able to better scrutinise and challenge costs if they consider them to be unreasonable. The Act also includes provision to scrap the presumption for leaseholders to pay their landlords’ legal costs, thereby removing a significant barrier to challenging poor practice.

Implementing the 2024 Act requires an extensive programme of detailed secondary legislation. While we want to act as quickly as possible to provide homeowners with greater rights, powers and protections over their homes, we have been clear that we must balance speed with care if we are to ensure that measures brought into force are to the lasting benefit of leaseholders.

Service charges are no exception when it comes to the importance of taking the necessary time to ensure that reforms are watertight. Given the wide variation of leases across five million dwellings, it is essential that we engage comprehensively to get the technical detail right. While we want the input of all those involved in managing leasehold buildings, we also want to hear from leaseholders themselves as to how best they believe that the service charge and legal costs measures in the 2024 Act should be implemented.

Through this consultation we are also proposing new reforms to the Section 20 process that leaseholders must go through when a landlord wants to carry out ‘major works’ funded by a service charge. One-off, unexpected and often very large bills for major works can place a huge financial strain on leaseholders. Far too many leaseholders receive little or no notice about these works and so have little time to obtain sufficient funds.

It is not in dispute that buildings must be properly maintained, but major works, such as repairing a roof or replacing a lift, should be properly planned for in so far as possible with leaseholders kept fully informed. We know that the current system does not work for anyone, leaseholders, managing agents or landlords, and are seeking views on how we can improve it to make it fit for purpose. 

We are also taking steps through this consultation to strengthen the regulation of managing agents. Managing agents play a key role in the maintenance of multi-occupancy buildings and freehold estates and their importance will only increase as commonhold becomes the default tenure and existing leaseholders are empowered to exercise the Right to Manage, collectively enfranchise or convert to commonhold.

While we know that there is good practice in the sector, far too many leaseholders suffer abuse and poor service at the hands of unscrupulous managing agents. While further reform will be necessary to drive up the standard of service provided by managing agents and ensure that they are made more accountable to leaseholders, the introduction of mandatory qualifications in England is an important first step to ensuring all agents have the knowledge and skills they need to do their jobs effectively.

Finally, we also want to use this opportunity to review longstanding aspects of the system to ensure they remain fit-for-purpose. This includes protections for leaseholders who pay a fixed service charge, especially where costs are estimated each year. They presently have fewer rights than those who pay a variable service charge, and we are keen to explore what more can be done to help them. 

Taken together, this is an ambitious package of measures designed to empower and protect leaseholders currently suffering as a result of unfair and unreasonable practices. Parts of the consultation are necessarily technical, but it is designed so that respondents can engage with the issues that are most relevant to them and to use this summary as a guide. The annex of the consultation also provides examples of forms which leaseholders might receive for illustrative purposes. We look forward to hearing your views on these important reforms.

Find the full consultation here.

The consultation will run from 4 July 2025 for 12 weeks and closes on 26 September 2025.

2.0 Driving up transparency of fees and charges

Greater transparency will help leaseholders better understand the charges and fees that they are asked to pay by landlords and managing agents working for landlords. It should also help make them more accountable to leaseholders over the provision of services, maintenance and works, and level of insurance that they procure on leaseholders’ behalf. This will also help leaseholders to determine whether costs are reasonable, and if not, to more easily challenge them.

We propose a new annual report to set out the detail of what leaseholders are paying for and provide key information for the year ahead, including advanced notice of planned major works. Standardised service charge demands will give clarity about the bills leaseholders are required to pay, as will the new notice of future demands and enhanced rights to request further information if needed. Better information on buildings insurance and up front information about administration charges will make these charges clear. And better prepared accounts will ensure that at the end of the accounting year, details of income and expenditure over the previous 12 months are appropriately set out, accurate and provided in a timely manner. All of this information will better enable leaseholders to challenge costs both informally, and where necessary in the tribunal or court. Measures in the 2024 Act will also ensure there is a fairer litigation costs regime. An indicative overview of when leaseholders may expect bills and information once the new arrangements are in place is set out at Figure 1 below.

Figure 1: Impact of new measures on provision of information to leaseholders over the course of a year

2.1 New annual report

To give leaseholders key information about their building and the cost of maintaining it, we will implement measures in the 2024 Act requiring landlords to provide an annual report.

The 2024 Act gives Ministers powers to specify what and how information must be provided, and we are seeking views through the consultation to get the details right, see consultation section 2.1. The annual report is proposed to give leaseholders an insight into the health and condition of their building, plans for forthcoming major works and other information about the year ahead.

We propose that contact details should be provided for the main people associated with the building, including the landlord, and where relevant, the managing agent and those associated with fire and building safety functions. The annual report should also include a reminder of key dates, such as when service charge demands will be made, basic information about the health and condition of the building, or when surveys are planned. It should also include details of any major works planned and signpost leaseholders where to go if they have a complaint as well as outline their wider rights. We also propose that the annual report contains details of any statutory proceedings, such as an ongoing enfranchisement claim, or enforcement action taken against the landlord. 

The leasehold tenure covers a huge range of different types of buildings, leaseholders and landlords. The 2024 Act provides for exemptions from producing annual reports. We are seeking views on where exemptions may be required. In particular, with regards to leaseholders paying fixed service charges in the retirement sector where needs may differ, as well as landlords of intermediate leases who may require different arrangements to provide information to their leaseholders. Views are also sought on how to deal with situations where landlords do not hold information directly and may be required to source it from a third party.

2.2 New standardised service charge demand form

The service charge demand is what all leaseholders receive, invoicing them the amount of service charges they are required to pay. Currently, demands are only required by law to include the name and address of the landlord and a summary of rights and obligations. Otherwise, the information provided is determined by the lease, or by the landlord, or managing agent working on their behalf, who is issuing the demand.

To help leaseholders better understand the demands they receive, the 2024 Act allows Ministers to require the use of a standardised service charge demand form and to prescribe what information is given and how it should be provided. We are seeking views on the minimum information that all service charge demands should contain and we propose to allow landlords to provide additional information should they wish to. We also propose that the annual budget be provided to leaseholders as part of the initial service charge demand form, setting out planned expenditure for the year ahead. This would break down what service charge money is intended to be spent on into standardised cost headings to identify items of expenditure and more easily allow for comparison with previous years, or even between buildings. We are seeking views about the right level of detail that should be provided. It will be important to strike the right balance between the information that leaseholders should have and will find useful, and the costs to the landlord or managing agent of providing that information to them.

The service charge demand could work alongside the new annual report (described above) to avoid repeating information, but we propose that it should include a set of core information. This could include: the overall amount payable for the relevant period in relation to the annual budget, details of how to pay and by when and consequences of non-payment, plus where to go for help if the leaseholder wishes to query the bill or may have trouble in paying it. Further details are set out at consultation section 2.2, including seeking views on any potential exemptions.

We are also seeking views on what an appropriate transitional period should be to allow all landlords and managing agents sufficient time to implement these changes.

2.3 Clarity over future service charge demands

The current law requires that leaseholders must be issued with a demand for payment within 18 months of the relevant costs having been incurred by the landlord. This is so that bills, which will form part of the service charge demand, are issued in a timely manner and to avoid confusion and disputes which might arise over costs incurred a long time ago, which may also span different residents of the building.

Leaseholders not issued with a demand for costs within this time period are not liable to pay them unless they are notified in writing. There is, however, some confusion over this current process and the meaning of when costs are incurred; when the clock starts; and which leaseholders must be informed of the expenditure. For example, whether the start time is the point at which a contractor invoices the landlord, or when the landlord makes payment to the contractor.

To clarify this process, the 2024 Act introduces measures which will require landlords to issue a ‘future demand notice’. The notice will require landlords to provide detailed information to leaseholders about the total cost of the bill, their contribution towards that cost, and when they might expect to receive the demand.

Through consultation section 2.3, we are seeking views on the form and manner of the new future demand notice. Views are also sought on appropriate grounds for extending the due demand date. For example, where there have been unanticipated delays to works or disputes over costs between the landlord and contractor.

2.4 Extended rights to obtain information on request

In most cases the information provided in an annual report and service charge demand will be sufficient for leaseholders to understand what they are being asked to pay for and to assess whether it is reasonable or not. There may be occasions where a leaseholder wishes to see additional information, such as receipts or invoices of particular works or services, or copies of a fire risk assessment for the building.

While leaseholders currently have the right to ask for a summary of costs, and then to inspect any documents related to this summary, these provisions are limited and can prevent leaseholders from inspecting documents which they should be entitled to.

Powers in the 2024 Act allow for a new prescribed list of the types of information that landlords must make available on request for leaseholders to further inspect. We are seeking views at consultation section 2.4 on what types of information should be included, with regards to the management and finances of the building. We are also seeking views on how this information should be provided and how quickly, as well as the case for exemptions. For example, where information may be commercially sensitive or to avoid vexatious requests.

2.5 Scope of the new proposals for renters

Tenants who rent their homes in social housing may also pay a service charge. Measures in the 2024 Act regarding the new annual report (section 2.1 of the consultation document), service charge demand (section 2.2) and right to obtain information on request (section 2.4) may also extend to tenants of Private Registered Providers of social housing in England and Registered Social Landlords in Wales. We are seeking views at consultation section 2.5 about the application of these measures to such tenants.  

2.6 New duty to publish an administration charge schedule

Administration charges are a one-off charge that are levied to individual leaseholders, generally relating to a specific service provided to them by the landlord or managing agent. What may be charged for will be specified in the lease and may include matters such as, seeking the landlord’s permission to make an alteration to the property, to sub-let or keep a pet.

The landlord has a duty to consider the best interest of all leaseholders as well as protecting the building. They may incur costs in making decisions on behalf of requests from individual leaseholders which they would wish to pass on to those leaseholders directly rather than to all leaseholders in the building via the service charge.

Some costs may be straightforward and predictable, but other costs will depend upon the circumstances (e.g. employing a surveyor to advise on a leaseholder’s request to reconfigure the layout of their flat or to remove an internal wall).

While many landlords seek to be transparent about administration charges, still too many leaseholders complain that it is not clear as to whether these charges will be charged in the first place, and if so, how much the charges will be, and inconsistency between charges levied to different leaseholders for similar matters. 

To improve transparency for all leaseholders, the 2024 Act requires landlords to publish an administration charge schedule, showing what charges leaseholders may be liable to pay, what those charges will be, or if it is not possible to determine the amount in advance, how the charge will be calculated. Through the consultation at consultation section 2.6, views are sought about what form and content the schedule should comprise, and how it should be provided as well as be updated where necessary over time.

2.7 Better information about insurance

It is vitally important that buildings have appropriate buildings insurance to protect the interests of leaseholders and landlords alike. The cost of buildings insurance may make up a significant portion of service charge costs for leaseholders.

Landlords typically take on the task of sourcing insurance for the building, often employing a managing agent to arrange the insurance, who in turn may employ an insurance broker. These arrangements can incentivise the choice of insurance product which does not necessarily represent best value for money for the leaseholder but yields the highest commission to the landlord or managing agent. The Financial Conduct Authority (FCA) has introduced new rules to ensure insurers and insurance brokers (intermediaries) act in the best interest of leaseholders, but given the way insurance is often procured on behalf of leaseholders and the significant costs involved, it is vital that there is also greater transparency. This is to ensure that leaseholders have the information necessary to be confident that their buildings insurance is appropriate and fair value, or to help them challenge the reasonableness of insurance costs.

Existing arrangements allow leaseholders to request a summary of the insurance policy from the landlord, but landlords have no duty to proactively share information if it has not been requested. Measures in the 2024 Act require that landlords should proactively provide information on their insurance policy to leaseholders. The 2024 Act also includes a range of other measures to complement those on greater transparency, such as addressing the current commission structures for freeholders, property managing agents and landlords. This has been consulted on separately.

The FCA has also introduced new rules which mean that FCA regulated brokers and insurers are required to provide more detailed information to their contractual consumers, often the landlord or managing agent. This includes more detail on the key features of the policy as well as information on commissions and conflicts of interest. However, as the customer may not be FCA-regulated, the FCA cannot require that the information is passed on to leaseholders. Therefore, as a minimum we think that the information stipulated by the FCA should always be passed on to leaseholders. We also think there is a case to go further and that landlords and managing agents should have to declare to leaseholders any conflicts of interest that they might have with insurers or insurance brokers. We are seeking views through consultation section 2.7 about what additional information leaseholders should receive, the form and manner in which it should be provided, and transitional arrangements to smooth the introduction of these new requirements.

2.8 New standardised service charge accounts

At the end of the financial year, financial statements of accounts (or ‘service charge accounts’) are typically prepared and provided to leaseholders, setting out the detail of income and expenditure relating to the management and maintenance of the building over the past 12 months.

The form and content of these accounts can be determined by the lease. If it is not so determined, landlords are able to refer to the ICAEW’s guidance on best practice.

There is no standard approach for accounts to be provided by landlords. Existing legislation also does not specify how quickly service charge account information should be provided to leaseholders after the year end. This means that the provision of information is inconsistent between leaseholders and in the worst cases, leaseholders may receive information years later or not at all.

Existing rules allow for leaseholders to request a summary of costs from landlords, and that the summary must be certified by a qualified accountant for blocks of four or more dwellings. But current arrangements are not considered satisfactory as there are few consequences for landlords failing to provide accounts in a timely manner or who provide inadequate or inaccurate accounts.

The 2024 Act includes measures which will require landlords of four or more dwellings to provide a written statement of accounts within six months of the end of the accounting year. The Act provides flexibility over what information must be provided, the standards which must be met to ensure accuracy of accounts, verification by accountants and specification of who may be classified as an accountant for this purpose.

Through consultation section 2.8 we are seeking views on the form and contents of a new statutory written statement of accounts, financial reporting standards and assurance that the reports have been prepared correctly and by an appropriate professional. We are also seeking views on appropriate transitional arrangements for implementation as well as costs.

2.9 Rebalancing the litigation costs regime

Where disputes such as a breach of the lease or challenging the reasonableness of a service charge cannot be resolved informally, leaseholders and landlords can access the relevant tribunal or courts for help.

Landlords often have an advantage in that many leases will allow them to recover their litigation costs incurred during legal proceedings from leaseholders regardless of the outcome of the dispute. This can deter leaseholders from taking forward disputes in the first place, for fear of incurring their landlords’ legal fees.

Leaseholders can seek to limit their liability for such costs by making an application to the courts, but the onus is on them, and only leaseholders named in the application benefit from any order made. Leaseholders also have very limited opportunity to recover their own costs from landlords.

Measures in the 2024 Act seek to rebalance the litigation costs regime.

First, they require that the landlord, if they wish to recover their litigation costs from the leaseholder through the service charge or as an administration charge, must first make an application to the relevant tribunal or court for approval. This will put the onus on the party wishing to recover their costs to make the application and will allow the court or tribunal to decide whether it is just and equitable for costs to be passed on.

Second, a further measure gives leaseholders a similar right to landlords, by introducing a new right for them to be able to apply to the relevant tribunal or court to recover their litigation costs from the landlord in certain legal proceedings.

It is important that we get the details right when these measures are switched on. Leaseholders need an effective mechanism to challenge costs or resolve other disputes. It is also crucial that landlords can enforce the terms of their lease, so they can recover the money they need to properly maintain or run the building or to clamp down on anti-social behaviour, which can both negatively affect other leaseholders in the building.

The nature or circumstances of disputes may vary significantly, and the Act has some helpful flexibilities to make exemptions should they be needed, both from the outset, or if required in future. Through this consultation we wish to seek views on a number of refinements to the measures so that they work well for leaseholders, landlords and the tribunals and courts alike. The full details of issues under consideration can be found in consultation section 2.9.

In this section we seek views on how to ensure the most efficient use of tribunal and court time as well as safeguarding leaseholder and landlord protections. For example, many disputes that are brought to the courts by landlords are admitted or undefended by leaseholders and are processed swiftly. To avoid unnecessary delay and use of court time, in such cases we are proposing that landlords should be exempted from the requirement to apply to recover their litigation costs. 

We are also seeking views on the best approach for where cases are only partially admitted by the leaseholder and for cases that are ‘automatically’ struck out because of something the leaseholder has done or failed to do.

The Act also includes powers to suspend the requirement for landlords to apply to recover their costs until a specified time or event has occurred. This provides flexibility, in particular, to consider how the measures should be tailored to support resident-led buildings such as Resident Management Companies or Right-to-Manage Companies. Such landlords may have limited funds available to bring forward necessary legal action and only have access to funds via service charge contributions. Litigation costs may accrue in first bringing the case as well as contesting it. We make proposals to suspend the requirement for resident-led buildings to apply to the court or tribunal to recover the litigation costs via the service charge until a later point, so that they are able to draw upon such funds to bring a case in the first place.

For the new leaseholder right to apply to recover their litigation costs from their landlord (upon successful application to the court or tribunal), we are seeking views on which types of cases the right should apply to (e.g. service charge reasonableness cases). Our initial view is that the leaseholder right should broadly align with the right landlords currently have to recover their litigation costs.

These new measures will not apply retrospectively to existing cases (where legal proceedings have already been issued). To enable landlords and leaseholders prepare for the new arrangements, we are also asking for views on whether there should be any transitional period provided from when the regulations bringing these measures in to effect commence.

3.0 New additional service charge reforms

The measures in the 2024 Act will help improve transparency over the fees and charges that leaseholders pay and help them better challenge these costs as well as the standard of services or works provided. The UK government has always been clear that while helpful, these reforms do not go far enough.

The UK government’s November 2024 written statement on leasehold and commonhold reform committed to further reform of the major works regime and to consider what more could be done to help leaseholders. This consultation is seeking views on a number of additional proposed reforms concerning the charges that leaseholders face. 

A common concern among leaseholders is being landed unexpectedly with a large bill for major works. We want to explore what more can be done to mitigate this risk, through greater forward planning for major works, including greater use of reserve funds and asset management plans. Views are also sought on how the “Section 20” consultation process for major works can be improved and updated so that it provides meaningful consultation but is also proportionate and does not unnecessarily delay smaller works or prevent leaseholders from getting the best deal for services such as energy tariffs. We are also seeking views on whether existing protections for leaseholders’ money held by landlords or managing agents are sufficient and whether more needs to be done to protect leaseholders paying ‘fixed’ service charges.

Through this consultation, we are also seeking views on possible improvements to the “Section 24” regime whereby failing management of a building can be rectified by seeking a tribunal-appointed managing agent, as well as on supporting leaseholders to have a greater say over the appointment or replacement of a managing agents. We also want to explore how the largely current paper-based service charge regime could benefit both leaseholders and landlords through greater use of IT and electronic communications. 

3.1 Mandating reserve funds and planning for major works

Large one-off bills for major works, such as to repair a roof, or replace a lift or communal boiler, can be a source of great distress, especially for vulnerable households or those on fixed incomes. There are frequent high profile cases of leaseholders facing unexpected bills of tens of thousands of pounds for major works, and many more facing large bills outside of the headlines.

There are also concerns about the fairness of these costs where there is poor forward planning by landlords or managing agents acting on their behalf. This can feel like a lottery of timing for leaseholders as bills for major works fall on whoever lives in the property at the time.

It is considered good practice to make advance provision for future expenditure through the use of a reserve fund and to have a costed long-term maintenance plan to manage works and projected income streams.

In consultation section 3.1 we are seeking views on making use of a reserve fund mandatory in both new and existing leases. Where a reserve fund is used, we are also seeking views to ensure that it is effectively funded, such as being underpinned by a professionally certified asset management plan, and provisions are made for periodic review.

It is also proposed that details of reserve funds and asset management plans should be incorporated into the new transparency measures for leasehold charges which will be created by implementing the 2024 Act. For example, that such information is provided as part of the annual report, or more detailed information is available on request.

We think it should be incumbent on owners of buildings to have a plan for the maintenance or replacement of the building’s infrastructure and key assets, and to plan for the financing of such major works. Many buildings are already run this way, but it can be difficult to introduce such measures for existing buildings that are not, and we want to explore how we make this easier.

Asking leaseholders who do not already do so to pay more to contribute to a reserve fund, must not be taken lightly. Like saving towards a personal pension, the benefits are clear, but also need careful handling and communications. For those already struggling to pay bills, setting aside additional sums of money now may be challenging, but money set aside in a reserve fund can help mitigate the risks of much greater financial distress in the future.   

Views are sought on how to introduce asset management plans and encourage much greater use of reserve funds, including consideration of the circumstances where for particular types of building, they may not be required. We are particularly interested in views about the challenges, and how to overcome them, in relation to applying these proposals to existing buildings and what transitional arrangements may be required.

3.2 Reforming major works consultations

Existing rules under “Section 20” of the Landlord and Tenant Act 1985 currently require landlords to consult leaseholders on “Qualifying Works” (major works), and “Qualifying Long-Term Agreements” (contracts for a term of more than twelve months), where those works or agreements exceed a specified financial threshold.

The purpose of the consultation process is transparency for leaseholders regarding these major works and contracts; and an opportunity for leaseholders to influence decisions on the choice of contractor, the works to be carried out, or the proposed contract.

There has long been a tension between leaseholders who feel that the Section 20 process does not allow them to be meaningfully consulted or sighted on future costs, and landlords or managing agents, who can feel dissatisfied with the administrative and financial burdens related to consultation, especially when often, few leaseholders currently engage with them.

We are seeking views on improvements to the Section 20 process at consultation section 3.2. This includes reviewing the scope of what should be included within a consultation. For example, the financial threshold that determines when a consultation must take place has not been updated for over 20 years. Given the passage of time, it may now capture relatively minor works, adding potentially unnecessary costs and delays to getting works done. We also want views on the types of works or contracts to which the consultation process should apply. For example, in more dynamic markets where prices can change quickly (such as around energy tariffs), the time taken to consult may risk acting against the interests of leaseholders by preventing them from securing the best deal available.

Sometimes leaseholders fail to engage with Section 20 consultations as they don’t really understand what they are looking at, or the implications of the works are not clear to them until it is too late (e.g. how much they might cost them, or whether costs may be fully or partially covered by a reserve fund, or not at all). Through this consultation we also explore what can be done to improve leaseholders’ understanding, including the use of standardised forms and notices with specified information included. We also are seeking views on how the consultation process could be safely sped up, balancing the needs of leaseholders in terms of being notified and being consulted, with that of landlords and managing agents in terms of getting work done, as well as leaseholders themselves who will benefit from the timely provision of works.

3.3 Protecting leaseholders’ money

Large amounts of leaseholders’ money may be held by landlords or managing agents acting on their behalf in general service charge accounts and in reserve funds. Existing legislation requires leaseholders’ money to be held on trust, at an authorised financial institution, and that it may only be used for the purposes for which it was collected.

We are seeking views through consultation section 3.3, on whether these existing protections remain sufficient, or whether there is evidence that reform or new protections are required. We are also mindful of advances in banking technology and are keen to explore whether greater use of IT and electronic communication may offer advantages in terms of keeping money safe and giving leaseholders better information about what money is being held on their behalf.

3.4 Protections for leaseholders paying fixed service charges

Most leaseholders pay ‘variable’ service charges which vary depending upon the actual costs incurred in providing the management, maintenance and insurance of the building. Some leaseholders however, pay ‘fixed’ service charges.

These are typically found in settings such as retirement leasehold housing, where there can be benefits to leaseholders, particularly those on fixed incomes, of knowing in advance what their service charge costs will be and that they remain largely constant over time (e.g. excepting uplifts in inflation, or until specified review points).

With fixed service charges there is some necessary and in-built flexibility. Should actual costs be lower than anticipated, any excess will not normally be returned to the leaseholder. Should actual costs be higher than anticipated, any excess should be absorbed by the landlord and not passed onto the leaseholder. Therefore, the rights and protections for leaseholders paying variable and fixed service charges can differ.

Measures in the 2024 Act regarding the new annual report (section 2.1 of the consultation document), service charge demand (section 2.2) and right to obtain information on request (section 2.4) may also extend to those who pay fixed service charges. We think it is right that those paying fixed service charges should as a minimum enjoy greater transparency over the charges they pay and benefit from implementation of the transparency reforms.

In consultation section 3.4, we are also seeking views about whether those paying fixed service charges should have further protections. For example, giving them the same right to challenge the reasonableness of their service charge enjoyed by those who pay variable service charges. This might take place if, for example their charges remained static but there was deterioration in the quality or number of services provided to them.

3.5 Powers to appoint a manager or replace a managing agent

There are existing protections for leaseholders in cases of serious management failure by a landlord or managing agent. Leaseholders are able to apply to the relevant tribunal to request that it appoints a managing agent to take over all or some of the management functions of the landlord or current managing agent. This is often referred to as a “Section 24” power, in reference to its provisions in the Landlord and Tenant Act 1987.

This is a longstanding right and there have been calls to review the effectiveness of it as well as the process which leaseholders must go through to evidence and bring forwards an application. We are seeking views at consultation section 3.5 about how the Section 24 power could be improved.  

We also want to explore what more could be done beyond section 24, which deals with only very serious management failures, to give leaseholders more say over the appointment of a managing agent more generally. For example, whether leaseholders could have new rights to veto the appointment of a particular managing agent or make representations to replace an existing managing agent that they were dissatisfied with. This follows up on recommendations made by Lord Best’s Regulation of Property Agents Working Group report to consider a review of the effectiveness of the existing Section 24 process, as well as consulting on options to support the vetoing or switching (during an existing contract) of a managing agent. This would seek to empower residents and simplify the process for removal of an underperforming agent, subject to an agreed set of criteria for any veto or switch.

3.6 Providing information and services digitally

A large part of the existing legal framework around leaseholder fees and charges was set out in the 1980s and assumes a largely paper-based approach. 

Digitalisation of services and provision of information through electronic communication, such as email, and greater use of other platforms, such as apps and webpages, may offer benefits to leaseholders in terms of giving them greater choice in accessing information and could also provide efficiencies that benefit landlords and reduce costs of administration for leaseholders.

It is however, important that all leaseholders can access the information, and where necessary there is a clear audit trail that information has been provided. We are seeking views in consultation section 3.6 about the opportunities for greater digitalisation of information provision and other related services, as well as providing safeguards so all leaseholders can access the information they need.

4.0 Regulation of managing agents

Managing agents play a vital role in the housing market. They are appointed by the landlord in leasehold properties, or estate management companies in the case of freehold estates, to manage and maintain multi-occupancy buildings (or estates) on their behalf. They will also have an important role in supporting the management of buildings owned on a commonhold basis. Managing agents deliver a number of functions on behalf of their client, including significant financial responsibilities, resident liaison, managing disputes, arranging and managing contracts and ensuring compliance with statutory obligations. The proposals in this part of the consultation specifically relate to managing agents of leasehold, commonhold, and share of freehold properties and estate managers of freehold estates, and do not relate to estate agents or letting agents.

Under existing law, anyone can become a managing agent. There is no legal requirement for agents to demonstrate they possess the required knowledge and skills to carry out the required functions. This is important given the increasing complexity in managing buildings (particularly buildings over 18 metres tall), the financial responsibilities, the vital role managing agents will play when measures are brought forward to make commonhold the default tenure for new flats, as well as known challenges in managing common areas on freehold estates.

Many managing agents provide a good and fair service to leaseholders. However, too often, leaseholders are left to endure unacceptable living conditions, are not treated with courtesy or respect and have valid concerns ignored by their managing agent. The UK government is committed to protecting leaseholders in England from abuse and poor service at the hands of unscrupulous managing agents. In 2018 the previous UK government committed to regulate the whole property agent sector (covering estate, letting and managing agents) and commissioned a working group chaired by Lord Best to advise how to do it, though the proposals were not taken forward. The UK Government is considering the proposals in Lord Best’s report and we are clear that this consultation is not the final step in the regulation of managing agents. However, we believe that there is an overwhelming case to take forward one of Lord Best’s key recommendations now and to introduce mandatory professional qualifications for managing agents in England.

4.1 Mandatory qualifications for managing agents

Mandatory minimum qualifications will ensure that managing agents and estate managers on freehold estates have the skills they need to deliver their role to a high standard, will professionalise the important work of the sector, and support the industry to attract and retain talent. We recognise that many agents already hold qualifications, but given the importance and complexity of the role, we think that a voluntary approach is not enough. Given this, consultation sections 4.1 to 4.8 propose a route to introducing mandatory minimum qualifications for managing agents in England.

We think that individual managing agents should be responsible for achieving qualifications, following the principle of individual accountability seen in other professions. We also think that firms employing managing agents should have responsibilities for ensuring that their employees achieve qualifications. We also propose that, in principle, estate managers on freehold estates should face the same requirements as those managing leasehold or commonhold blocks.

Given the complexity of their roles and responsibilities, we propose, in line with Lord Best’s report, that most managing agents should achieve a minimum of a Level 4 qualification (1st year of a bachelor’s degree equivalent). We recognise that there may be managing agents with lower or higher levels of responsibilities in the functions that they undertake and therefore are seeking views for where there is a case for agents to hold a qualification that is lower or higher than Level 4. We also think it important that agents undertake continuing professional development and are seeking views on how this should be best achieved. There are already building management qualifications offered by the market and propose that the UK Government works with the sector to develop a core list of key topics that qualifications should cover.

We consider that there are three possible routes to implementing mandatory minimum qualifications. Our preferred approach is to create new statutory requirements that all individual managing agents and managing agent firms must join a designated professional body, and that all agents must achieve or be working towards a minimum qualification to join the body. The designated professional body or bodies would be responsible for ensuring that agents had achieved qualifications and could act where they had not. In this model, we also think that local authorities could play a key role in being responsible for enforcement against agents and firms who operate without complying with the requirement to join a designated professional body.

We also seek views on two alternative options. Firstly, on giving the UK Government-approved redress schemes a statutory role in the implementation of qualifications, working with local authorities. Secondly, we seek views on making local authorities solely responsible for enforcement.

We also make proposals for a transition period to allow agents time to achieve qualifications, as well as the grandparenting of existing qualifications to avoid  unnecessary duplication where agents are already fully or in-part qualified.

Although specific commitments have been made by the UK Government in relation to this issue for England, Welsh Ministers also have an interest in ensuring the quality of property management practices in Wales. Therefore, the consultation also includes questions to determine whether a similar approach should be taken in Wales.

Beyond this consultation, the UK Government is looking again at Lord Best’s Report of July 2019, which made a range of recommendations across the property agent sector, and we will respond in due course. We are clear that this consultation is not the final step in the regulation of managing agents.

Responding to the consultation

To see more details on the reform proposals please see the full document: Strengthening leaseholder protections over charges and services: consultation

The consultation will run from 4 July 2025 for 12 weeks and closes on 26 September 2025.

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1. The Leasehold Advisory Service, independent initial advice for residential leaseholders and park home residents, funded by the UK and Wales governments, see: Home - The Leasehold Advisory Service ↩