Under the proposed changes, landlords will be required to provide tenants paying service charges with an annual statement detailing how these charges were spent.
At least one million tenants living in leasehold flats in England will gain the right to withhold service charges from landlords who fail to comply.
The proposed annual statement will itemise how much service charge money their landlord spent in the previous year on repairs, maintenance, improvements, professional fees and staff costs. Any item accounting for 10 per cent of the total spend will need to be shown separately.
Junior Housing Minister, Iain Wright MP, said: “Leaseholders are expected to contribute towards the maintenance of their property through service charges, so it’s only reasonable for them to expect that money is properly accounted for.
Martin Wade, director at Mortgage Options, said: “Anything that prevents the freeholder making profit out of service charges is good. The original idea for service charges was to cover costs of running the block, but it has become a profit centre. It is more red tape, but landlords should be accountable if charging for a service.”
The closing date to comment on the paper is 4 October.
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