Priorities for Leasehold Reform

[eagle2]

In no particular order
All service charge monies must be held in a separate client bank account, someone eg the regulator should carry out random checks that it is being held correctly
All reserve fund monies must be held in a separate client bank deposit account, monies paid in immediately that it is received, interest received added to the fund, monies withdrawn only for the specific purpose that it is required. The leaseholders should be informed of the specific purpose of the fund and the calculation of the sum required each year.
All leaseholders should be given the right to inspect the accounting records of the service charge accounts. Any requirement for an accountant to carry out an audit or prepare an accountants report should be removed.
All commissions and benefits received by freeholders and agents should be declared to leaseholders and paid into the service charge fund to reduce the service charge expenditure
Freeholders and agents should not be allowed to use connected companies, businesses etc to inflate charges
Freeholders and agents should be allowed to charge a reasonable management fee if applicable. Leaseholders should have the right to choose/remove the managing agent
Freeholders and agents should be fined if they fail to follow the consultation procedure unless the First Tier Tribunal has found that there was a valid reason
All service charges and administration charges must be reasonable. The First Tier Tribunal should be given the power to fine freeholders and agents and order them to repay monies which have been found to be overcharged. Fines should be on a sliding scale depending on the amounts involved and whether or not it is a first offence. Persistent offenders should be banned from owning/managing properties
There should be a complaints procedure whereby minor complaints can be resolved simply, speedily and cost effectively without having to resort to the First Tier Tribunal or to court.

[michelle230]

Hi Eagle - can we add that freeholders ability to claim legal fees back from leaseholder/ through service charges, when they * lose *the case should be totally and utterly dead in the water!
(Can you imagine them adding any fines imposed on them added to boot 🙄)

[leaseholder64]

Hi Eagle - can we add that freeholders ability to claim legal fees back from leaseholder/ through service charges, when they * lose *the case should be totally and utterly dead in the water!
(Can you imagine them adding any fines imposed on them added to boot 🙄)

That would mean that self managing blocks would never be able to chase late payers, as the late payer could cost them money chasing the debt, but pay it before the court hearing.

[eagle2]

Hi Eagle - can we add that freeholders ability to claim legal fees back from leaseholder/ through service charges, when they * lose *the case should be totally and utterly dead in the water!
(Can you imagine them adding any fines imposed on them added to boot 🙄)

I agree with you, they were included under the general heading service charges and administration charges must be reasonable but I have no objection to separating them if you wish, If so, we should add that legal fees must be reasonable even if the freeholder wins, in order to cover the case highlighted on this forum of a leaseholder being charged £5,000 to recover some ground rent arrears.

[eagle2]

All managers should think twice before taking legal action and ensure that charges are reasonable and legally payable . At the moment, there is a pot of money available for them to use at no risk to them. I am sure that they would reconsider if they were using their own monies.

[andydd]

The number one should be the removal of the right of forfeiture...its bizarre and draconian that its possible for a leaseholder to lose his home for £350 (in theory).

Some of the other points are already covered by existing law, right to examine accounts, and right to disallow legal costs either via admin charges or service charges already exists..although it is upto a courts discretion.

[andydd]

I agree with you, they were included under the general heading service charges and administration charges must be reasonable but I have no objection to separating them if you wish, If so, we should add that legal fees must be reasonable even if the freeholder wins, in order to cover the case highlighted on this forum of a leaseholder being charged £5,000 to recover some ground rent arrears.

The fact that costs must be reasonable already exists in general litigation law (unrelated to leasehold matters)...unfortunately with solicitors charging £200 + an hour even reasonable costs can be a small fortune.

[eagle2]

I agree that the removal of the right of forfeiture could be added. I considered it and left if out in case there were extreme cases.

There is no right to examine accounting records unless it is contained within the Articles. There is a very limited right to inspect certain documents by following the s21 and s22 route but I am saying that it should be extended to include all accounting records whilst removing any "right" to have an audit or accountants report which is next to useless.

There is an existing right to apply to the FTT to determine whether or not charges are unreasonable. If it disallows expenditure, it does not order the freeholder or agent to refund the unreasonable amount which leaves a deficit for the leaseholders or members to resolve. It does not stop the freeholder or agent continuing to overcharge.

[eagle2]

The fact that costs must be reasonable already exists in general litigation law (unrelated to leasehold matters)...unfortunately with solicitors charging £200 + an hour even reasonable costs can be a small fortune.

Many freeholders have their own legal practices, other solicitors accept instructions on a no win no fee basis, the balance needs to be addressed.

[leaseholder64]

No win no fee solicitors will generally only take cases cases that they are certain they will win.

[desamax]

Insurance: all leaseholders should be named as an interested party on the building insurance, Man co and freeholders should not be allowed to request the payout and then deduct an admin fee.

[eagle2]

I think that you will find that "no win no fee" solicitors are more concerned about being paid I have known them take on cases simply because there is an available pot of monies and without even looking at the merits of a case,

[eagle2]

Insurance: all leaseholders should be named as an interested party on the building insurance, Man co and freeholders should not be allowed to request the payout and then deduct an admin fee.

I agree that the leaseholders interests should be recorded on a policy. I would go further that freeholders and agents should not be allowed to make insurance claims which are used entirely to pay themselves or connected businesses.

[michelle230]

That would mean that self managing blocks would never be able to chase late payers, as the late payer could cost them money chasing the debt, but pay it before the court hearing.

If it's a black/white case of unreasonableness, then errant leaseholder should be held financially responsible.

[eagle2]

These are the sort of measures which should be introduced if people are serious about stopping the current abuse. Instead we get wishy washy proposals which take us no further forward.