Leasehold Flats: Measures to Strengthen Owners' Rights (Hansard, 22 January 1996)

The Minister of State, Department of the Environment (Earl Ferrers)

We have received a large number of representations from right honourable and honourable Members and leaseholders, particularly in London, about allegations that some landlords have been behaving unreasonably. The allegations are that a number of landlords have been buying up freeholds of blocks of flats and then presenting the leaseholders with very large maintenance and service charge bills. The amounts demanded appear to be excessive in relation to the work required, and the landlords can make a substantial profit by employing associated surveyors, contractors and managing agents, and earning commission. Any leaseholders who challenge the service charges are met with aggression and intimidation from the landlord and threatened with forfeiture of the lease.

There is already a considerable body of legislation offering safeguards to leaseholders. After careful consideration of these recent developments we have decided, however, that further action should now be taken to strengthen leaseholders' rights.

We therefore propose the following legislative amendments. First, we propose a number of changes to the Right of First Refusal contained in Part I of the Landlord and Tenant Act 1987 to help ensure that tenants are given the opportunity to exercise this right if their landlord wishes to dispose of his interest. Second, we propose to amend the Leasehold Reform, Housing and Urban Development Act 1993 so that qualifying leaseholders will have a right to enfranchise where their block of flats has more than one freehold interest. Third, we propose to give a recognised residents' association a 60WA right to challenge major works proposed by their landlord before the work has commenced. Fourth, we propose to amend the law of forfeiture so that forfeiture proceedings are separated from disputes over service charges. Fifth, we propose to strengthen the grounds available to leaseholders seeking to require the court to appoint a manager of their block of flats where the landlord is failing to carry out his obligations in a reasonable manner.

Finally, we are concerned about the costs which leaseholders can face in pursuing their rights through the courts and we are considering the possibility of transferring these disputes over service charges to Leasehold Valuation Tribunals.

We will bring forward amendments to the Housing Bill, which is being introduced today, to give effect to these proposals.

We have today placed a note in the Library of the House which outlines these proposals in more detail.