Levelling the playing field on private estates
7 June 2019
Freehold Properties (Management Charges) Bill 2019 (HC Bill 396)
This private members' bill had its first reading on 5 June 2019. It is a bill "to require landlords to provide accounts of management charges payable under section 19 of the Leasehold Reform Act 1967 to freehold property owners, and for connected purposes".
Historically, developers of housing estates transferred common areas (such as roadways, pavements and recreational land) to the appropriate local authority upon completion of the development, with the responsibility for maintenance of these areas falling to the public purse.
More recently however, developers of new estates frequently retain the common parts after completion of the development, with the cost of maintenance being recovered through an estate management scheme to which house buyers (including freeholders) are liable to contribute (under a covenant).
Whilst leaseholders have long enjoyed clear statutory powers entitling them to obtain information relating to sums paid under the lease (including service charge and other expenses), the situation is very different for owners of freehold properties subject to estate management scheme covenants (who in reality have very similar obligations). These estate freeholders currently have no such statutory right for information and more often than not find themselves having to foot considerable management scheme charges without knowing where their contributions are being spent.
The bill aims to level the playing field by giving these freehold owners equivalent rights to leaseholders to know how these funds are being spent, and no doubt will be welcomed by homeowners in new developments.
The bill was introduced under the 10 minute rule by Preet Kaur Gill, MP for Birmingham/Edgbaston and at the time of writing, the text of the bill is not available. We will comment more when further information comes to light.