Go further on regulating leasehold managing agents, Rayner urges

Former Housing Secretary Angela Rayner has urged the government to go further on regulating managing agents as part of its reforms of the leasehold system in England and Wales.

Speaking to MPs on the Commons Housing Committee she praised the government's draft legislation as striking "the right balance" between standing up to "vested interests" and pushing through changes quickly.

But the ex-deputy prime minister also called on ministers to take forward proposals to introduce an independent regulator and enact measures to improve the transparency of service charges.

The government's draft leasehold bill is currently being scrutinised by the committee before making its way through Parliament.

The legislation would also ban the sale of new leasehold flats and give homeowners greater control over how buildings are managed.

However, it does not cover specific measures to regulate managing agents or tackle spiralling service charges.

Many leaseholders complain of unjustified service charges, which they have no control over and must pay for the management and maintenance of their building.

The government has said it is committed to regulating managing agents and is considering proposals to introduce mandatory professional qualifications.

It has also consulted on measures to prevent managing agents from imposing opaque and excessive charges related to building insurance, often in the form of commissions.

There are around five million leasehold homes in England and Wales, where people own the right to occupy a property via a lease for a limited number of years from a freeholder.

She told the committee the lack of regulation of managing agents was "a real problem" and said the government needed "to go further and harder" on proposals by Lord Best in 2019 to introduce an independent regulator.

The former deputy PM also said ministers needed to "move at pace" to enact measures in the 2024 Leasehold and Freehold Reform Act, passed under the previous Conservative government, including making service charges and building insurance policies more transparent.

Rayner added that she knew this was something the housing minister wanted to tackle "with expedience".

Overall, she praised the bill as a "gamechanger for people who have waited far too long for action to be taken".

Speaking alongside Rayner at the committee, former Conservative Housing Secretary Lord Gove, who oversaw the 2024 leasehold act, said there were "many good things to welcome" in the government's draft bill.

However, he said the housing secretary had been "fighting against a rearguard action mounted by the freeholders and other financial interests and supported by the Treasury".

"I witnessed that myself when I was in government, and I think that the institutional resistance of the Treasury remains," he added.

Under the government's draft legislation, ground rents would ultimately be reduced to a peppercorn rate, effectively zero, after 40 years.

However, Lord Gove said he would have preferred "an accelerated timetable" of 20 years, describing ground rents as "essentially extortion".

Speaking to the committee earlier, Charmaine McQueen-Prince, who chairs the Residential Freeholder Association, said she was "deeply concerned" about the "unintended consequences" of the draft bill.

She warned that capping ground rents risked leaving freeholders insolvent and unable to carry out their obligations to ensure fire safety and remove dangerous cladding.

McQueen-Prince said the move would also affect pension funds which invest in freeholds and damage investor confidence in the UK because of the retrospective nature of the changes.

However, Lord Gove dismissed these arguments as "bogus", pointing out less than 1% of pension fund investments were in residential property in the UK, while he said investors would look at a variety of factors when judging the attractiveness of the UK.

Ahead of the draft legislation being published, Rayner had urged the government to stick to its election pledge to cap ground rents, amid fears the promise could be dropped following lobbying from freeholders.

She told the committee the government was trying to "strike the right balance to get this over the line" by moving towards capping ground rents at a peppercorn rate over 40 years, rather than immediately, as some campaigners had called for.

However, she warned that being too slow to act would look like "the vested interests win over the will of the people".