Government plans to protect consumers from “unfair practises” in property management system

Houses in Norwich.

Houses in Norwich. Picture: ANTONY KELLY - Credit: Archant

Plans to clamp down on unfair practises and inflated costs in the property management system in England have been outlined by communities secretary Sajid Javid.

Under law changes being considered by the government, all letting and management agents – across the private rented and leasehold sectors – would have to be qualified and regulated in order to practise.

With more than 4.2 million leasehold homes across the country and service charges reaching £2.5bn-£3.5bn a year, the government says it wants to drive down costs and protect consumers from a small minority of rogue agents.

It has launched a six-week 'call for evidence' and wants to hear from people about whether a regulatory overhaul of the sector is needed, how to protect consumers from unfair costs and over-priced service charges and ways to place more power in the hands of consumers by giving leaseholders more say over their agent.

It will ask if a new independent regulatory body is needed – and if separate bodies should be established, for both leasehold and private rented management, and letting agents.

Measures to be considered include whether leaseholder tenants should have a greater say over the appointment of managing agents and how transparency can be increased in the system so that tenants and leaseholders know what they are being charged for and why.

The government said the problem is not just for leaseholders but also some of the 4.5 million tenants in the rental sector too, with overcharged costs for repairs and services often being passed down to tenants.

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It said while the sector is partly self regulated through professional bodies which have a code of conduct, other property agents operate outside of any system and can provide a poor deal for consumers.

Research by consumer group Which? previously found unfair practices can lead to as much as £700m of unnecessary service charges being paid each year, and others such as the all party parliamentary group on leaseholds believe the total could be double that – as much as £1.4bn.

Mr Javid said: 'This is supposed to be the age of the empowered consumer – yet in property management, we're still living in the past.

'Today we are showing our determination to give power back to consumers so they have the service they expect and deserve, as part of my drive to deliver transparency and fairness for the growing number of renters and leaseholders.

'Our proposed changes to regulate the industry will give landlords, renters and leaseholders the confidence they need to know that their agents must comply with the rules.'