Corporate report

Residential property management services

Published 25 November 2016

CMA recommendations to industry

Pre-purchase remedies

(1) When specific enquiries are made about a property, the estate agent provides a short information sheet providing basic key information on major facts about leasehold ownership.

(2) The leasehold property particulars prepared by estate agents should state the current level of service charges and that a requirement to provide this information should be incorporated into the approved code of practice followed by estate agents and the associated guidance that supports it.

(3) A standard set of questions is used as part of the conveyancing process to ensure that the prospective leaseholder has sufficient information to make an informed decision on the purchase. We said that this may be achieved by wider adoption of the Leasehold Property Enquiries form 1 (LPE1) which was created through a working group of representative bodies from the leasehold and legal sector. In addition, we recommended that conveyancers also distribute the short information sheet on major facts about leasehold ownership.

Remedies to improve transparency and communication, to be addressed via self-regulatory industry codes of practice

(4) We recommended that industry codes of practice are updated to include a number of measures to improve transparency and communication.

Redress remedies

(5) We recommended the provision either of independent advice to the parties about the merits or otherwise of their case, or some form of alternative dispute resolution (either early neutral evaluation, mediation or other), separate from the current First Tier (Property) Tribunal (FTT) process, for certain categories of complaint.

CMA recommendations to government

Remedies requiring legislative change

(6) New powers that would require the landlord to re-tender for a new property management company in circumstances where more than 50% of all leaseholders support re-tendering (we noted that some exemption may be needed for providers of integrated development/management and care schemes).

(7) Department for Communities and Local Government (DCLG) to review/revise section 20 of the Landlord and Tenant Act 1985 because of concerns that it was not working as well as it should and may be imposing unnecessary costs and delaying necessary works.

(8) Local authorities should develop mechanisms to share best practice in working with leaseholders. DCLG will work with the Chartered Institute of Housing, National Housing Federation and Local Government Association to use a range of approaches, including peer support, to share best practice on improving communication with leaseholders in blocks owned by local authorities and housing associations.

Recommendations to local authorities

(9) Both local authorities and housing associations should separate out the costs, as far as practicable, of providing services to leaseholders and social rental tenants, to make clear the costs that are being incurred by leaseholders for common services and to explain the allocation of costs in an accessible way. DCLG will work with the Homes and Communities Agency and Local Government Association to scope proposals for a consultation later this year. DCLG has highlighted that expenditure pressures may impact on how this recommendation will be implemented.

Response

All accepted with the exception of recommendations 6, 7 and 8. See the implementation of the CMA’s recommendations document for details.

Recommendation 6 is currently being consulted on by the Law Commission.

Recommendations 7 and 8 are currently being considered by DCLG.