Competition and Markets Authority (CMA) finds little wrong with Service Charge Management in England and Wales

On the 2nd December 2014 the CMA published its long awaited market study of the residential property service in England and Wales. This 168 page report looked at issues around the way leasehold properties in England and Wales are managed and in particular the impact this has on the Service Charges paid by over 3 million leaseholders.

As the Press Release from the CMA states, the report concludes that overall the “market works well for many leaseholders” with a modest range of reforms to the existing system required to improve the situation for leaseholders who experience problems. The suggested changes include:

  • Better information to be made available to purchasers of Leasehold property
  • Better information to be provided by property managers about current and future Service Charge expenditure
  • Disclosure by property managers of all charges and fees
  • Disclosure by freeholders and property managers of any relationship they have with service providers
  • Improvements to be made in the way property managers communicate with leaseholders
  • Independent advice to be made available to Leaseholders with Service Charge disputes
  • Leaseholders to be given the right to demand that a service contract be re-tendered
  • Review and amendments to the section 20 consultation process
  • Local Authorities to share ‘best practice’
  • Providers of social housing to make a clear separation of the costs which solely to tenants and those which relate to leaseholders.

Conclusions aside, the CMA provides some interesting statistical information based on the surveys and other research it funded. The most striking three findings are:

1. The annual amount paid as Service Charges in England and Wales each year is between £2.5 and £3.5 billion.

2. Overall Leaseholder satisfaction levels are highest in retirement properties (82%), next highest in other privately managed leasehold property (63%) and lowest in local authority (53%) and housing association (53%) managed properties.

3. Residents of properties run by Right to Management Companies (RTMCo) and Resident Management Companies (RMC) have higher satisfaction levels (83%) than leaseholders of properties not run by RTMCos and RMCs (58%).

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