© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
It is more than five years since the Government passed the Commonhold and Leasehold Reform Act 2002 to give leaseholders important new rights. But perhaps the most useful rights are still not implemented. John Mills reports.
At long last we have some progress from the government as new rights mean leaseholders have the right to a regular annual statement of account for service charges and a right to require the landlord to keep a separate bank account in trust for each scheme. On July 26th a consultation paper was published setting out in some detail how these rights can be implemented – it is called A Consultation Paper on Regular Statements of Account and Designated Client Account and is available to download from www.communities.gov.uk.
The good news is that it is proposed that leaseholders of private landlords will get annual income and expenditure account plus a balancing statement. Private landlords will also have to have annual accounts checked by an independent accountant who will have to produce a report but not an audit.
The second proposal will require private landlords to protect leaseholders’ monies in separate bank accounts per estate or scheme, something that some managing agents already do as good practice.
The bad news is that the consultation paper is proposing a different lesser standard of statement of accounts for local authority and housing associations leaseholders. Why? Because local authorities find it difficult to separate costs per building or scheme and it would be expensive to set up systems to do so. So local authority leaseholders can expect a statement of expenditure and no balancing statement.
For housing association leaseholders the paper is not clear what it wants. It says housing associations can adopt the same lesser standard used by local authorities “if appropriate”, but it does not define what is appropriate. This is not good enough. If a housing association or local authority is managing a block of flats with a majority of leaseholders owning in it, why should they not produce a full set of accounts, as for private leaseholders?
The government has accepted the argument of local authorities that it will be too complex and expensive to change the way they account for service charges paid by leaseholders, and there are undoubted problems. But the government is insisting private managing agents and landlords will have to incur large costs to set up systems to provide the new format of accounts and open up and operate thousands more separate bank accounts.
Double standards again?
The consultation paper also fails to address another key point. What if the leases on a building managed by a local authority state requirements for an annual income and expenditure account for service monies to be held in trust and for an accountant to certify the accounts? Surely the lease still applies as well as the statutory requirements.
Overall the proposals for private leaseholders are sensible and long overdue. The ones for housing associations and local authorities are a poor second best.