Leaseholders should have the right not to pay large and unjust service charges, according to Sadiq Khan.
Khan, who is expected to win his third term as the mayor of London when voters in the capital go to the polls this week, has expressed concern that the government is not doing enough to protect leaseholders – as well as tenants.
There are 1.4m leasehold properties in London, a quarter of all such properties in the country. The London mayor said that many of the residents affected were suffering from a “shameful abuse of power” by their landlords.
His comments come after it was revealed by the Observer that some of the UK’s largest housing providers were significantly increasing annual service charges by thousands of pounds, pushing some residents into serious financial distress.
The demand from Khan, who said the right to withhold unfair and unexplained service charges should be attached to the leasehold and freehold reform bill going through parliament, will increase the pressure on levelling up secretary Michael Gove.
Gove has long wanted to abolish what he previously described as the “feudal” leasehold system, but has more recently been accused of diluting the bill.
Khan said that some charges had been “financially crippling” for some people living in flats or in properties where they are shared owners.
“At their worst, they amount to the everyday extortion of leaseholders and a shameful abuse of power by landlords and freeholders,” he told the press.
“While many landlords act responsibly, we need stronger rights for leaseholders to act against those who don’t, with new powers of redress and the ability to withhold service charges that simply aren’t justified,” he continued.
“If leaseholders face large increases in their service charge without it being clearly explained what it’s paying for, they should be able to do something about it, including having stronger rights in law. I’ll keep campaigning for the end of our current system of leasehold ownership, and the introduction of commonhold as the new default tenure for flat owners in London and across the country,” Khan added.
Under Khan’s proposals, leaseholders could withhold service charge payments that had not been justified in writing, for example, in a statement of accounts.
He is also calling for the housing ombudsman to be given more powers over the level and increase in service charges and to make it easier and cheaper for leaseholders to take their landlords to court as a last resort.
Khan made the comments as he heads into a London mayoral election this week in which housing has been a key issue.
This is not a good idea. Let’s assume for a moment that we have a block of say 20 flats that is managed by the residents, rather than a disinterested landlord. Then let’s assume that we have 2 difficult leaseholders:
i) one who will never, ever agree with a consensus opinion because that is always their default position. (We all know at least one person like this, and if you don’t know someone like this then I guarantee that it’s you!!!)
ii) the other who for whatever reason always struggles to pay their bills on time.
This means that 10% of the budget is going to have to be covered (perhaps only temporarily) by the other leaseholders. It opens the door for someone to say “I don’t have to pay because the law says so” even when they know that they should.
The unintended consequence of this kind of ruling will be that the majority of flat owners will be put to immense aggravation by a feckless and irritating minority.
I accept that there are freeholders that overcharge, but that means that everyone in the block is being put to disadvantage and there are already rules in place to deal with this…
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Doesn’t work like that. I’ve been a share of freehold and RTM director, and had no difficulty justifying service charge expenditure. If an individual leaseholder doesn’t pay for no good reason and after other leaseholders had accepted our explanation, we would use the law. Forfeiture was always a final solution to be considered where we were the freeholders, and we would approach the lender where there was a mortgage, and they would pay up. The big difference is share of freehold and RTM are not beholden to an absentee landlord, and are not there to extract profit at every opportunity at the leaseholders expense, regardless of ability to pay.
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I can only imagine you stand to benefit if you’re protecting these service charges or at least it’s obvious you’re not being subjected to one.
Mine went up from £100 a month, to £200 to £400 in 3 years. It’s utterly crippling and we get no explanation for the charges. It’s ruining lives.
It’s extortion and as ever, thank you Sadiq for doing the right thing.
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Khan, as usual, is not doing anything but electioneering. He does not have the power to change it, just “demands” the government do something. He’s still not doing anything about knife crime though.
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Khan was one of the reasons I left the City of my birth. Leasehold reform has been discussed at great length for years, and this is the first time I have seen Khan’s name associated with it.
He already knows it won’t happen, and will [rightly] blame the Tories. But, after promising to end leasehold within their first 100 days, Labour has now said it won’t be doing that. What does Khan say about that?
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What an idiot!
SC’s are on the increase largely due to the Fire Safety Act 2021 and rising costs of utilities. Traders going in and out of London, hiking costs due to ULEZ, Congestion Charge, Fuel, not to mention the cost of materials.
If you have a block that has to increase SC’s for this or any other legitimate reason, two or three lessees could totally derail the accounts and blocks will soon fall in to disrepair.
Block Management is already a totally broken business as it is impossible to provide the service lessees and directors demand.
This is why so many Block Management companies are selling up.
A thankless job getting worse by the day!
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I do understand Mr Khan’s concerns:
The English share of freehold, freehold, and leasehold system is nothing short of a cunning scheme concocted by the lords during the colonial era. This antiquated system, which continues to prevail deserves an immediate abolition.
One victim of this nefarious scheme is a resident in Kensington who had the guts to question the management regarding the abysmal lack of service and the ever-increasing service charges. However, instead of addressing the concerns raised, he was met with an eviction notice and an injunction forbidding him from speaking out against the rogue non-dom management.
What’s even more appalling is the staggering revelation that the management has squandered a jaw-dropping £2.5 million on 4 years of legal costs in a relentless pursuit to recover a measly £11K from him.
This brazen misuse of funds serves only to shield themselves from the law while shamelessly lining their pockets with the hard-earned money of absentee residents, all intended for the well-being of an iconic historical building.
The time has come to expose this scandalous injustice and demand accountability from those responsible. The exploitation of residents must end, and the archaic share of freehold system must be abolished once and for all!”
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