Association of Residential Managing Agents

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Brokenshire announces industry pledge to crack down on toxic leasehold deals

A new industry pledge to stop leaseholders being trapped in unfair and costly deals has been unveiled by the Communities Secretary, Rt Hon James Brokenshire MP, today (28 March).

More than forty leading property developers and freeholders - including big names such as Taylor Wimpey and Barratt Homes - have already signed the government-backed pledge, which commits them to doing away with onerous ‘doubling clauses’ that can result in ground rents soaring exponentially over a short period of time.

The freeholders who have signed have committed to changing the terms of leases for those who are affected. Other industry bodies such as managing agents and trade body ARMA (the Association of Residential Managing Agents) have also put their names down, vowing to act fairly and transparently in their dealings with leaseholders.

Ministers have also today announced plans to close the legal loopholes that force leaseholders to pay unjustified when they take their freeholders to court over pernicious service charges. This includes consultation with industry on whether these changes should apply to existing leases too.

Under current rules, leaseholders who wish to take their landlords to court to challenge exorbitant fees or unfair hikes in annual charges also run the risk of being forced to pay their landlord’s legal fees. This applies even if the court rules in their favour – hitting some tenants with bills of tens of thousands of pounds. 

Scrapping this loophole will reset the relationship between freeholders and leaseholders – stopping tenants being unfairly burdened with legal fees and ensuring they can access justice. 

The Communities Secretary, Rt Hon James Brokenshire MP, said:

“Since becoming Communities Secretary, I have repeatedly made clear my ambition to end those exploitative and unfair leasehold arrangements that have no place in a modern housing market.

“The new industry pledge - signed by leading freeholders and property developers - will further support existing and future leaseholders by protecting them from onerous fees. It’s great news that leading names such as Taylor Wimpey and Barratt Developments have already signed up to the pledge, and I want to see others who have not yet signed up do the right thing.”

Dr Nigel Glen, CEO of ARMA, said:

“The Public Pledge for Leaseholders gives leaseholders reassurance that their landlord will act fairly and responsibly towards them. Addressing the problem of doubling ground rents is a welcome central theme to the pledge. ARMA is delighted that a part of this responsible approach is to ensure that managing agents acting for participating freeholders or developers should be regulated by a formal industry body, such as ARMA. This will ensure that leaseholders are given the highest standards of service.

“We hope to see as many developers and freeholders as possible sign up to the pledge.”