Any single item of expenditure accounting for 10 per cent of the total spend, such as lift maintenance, utility bills, cleaning and refuse collection costs, will need to be shown separately. Landlords will also need to show balances of service charge accounts at the beginning and end of each year.

Junior Housing Minister Iain Wright MP said: “Leaseholders are expected to contribute towards the upkeep and maintenance of their property through service charges, so it’s only reasonable for them to expect that money is properly accounted for. People should be able to see what they are paying for and a yearly statement of account will create transparency and ensure that tenants receive information about service charges. Tenants will be better able to check that they are receiving value for money and see whether sums paid towards the upkeep of their property are being used for the right purpose.”

History of abuse

Now the bad news. When last I spoke to them, the Department of Communities and Local Government was not proposing to include, in the list of required information, details of the commission paid to landlords and managing agents for buildings insurance.

It came as no surprise to me to learn that the Royal Institution of Chartered Surveyors (RICS), of which many managing agents are members, is letting the public down by failing to crack down on these commissions, for which, of course, the leaseholders have to pay.

They were openly accused of this by Roger Southam, a chartered surveyor, who raised the issue over a year ago. Following press reports in June 2006, the RICS’s then president Graham Chase said Mr Southam would be appointed to investigate the issue. Since then, however, Mr Southam has met with nothing but obfuscation and obstruction from the RICS.

“I keep asking when this will happen”, he said. “I have spoken with people in the RICS executive office, only to be told they will get back to me and they weren’t ready to start the working party yet. So I decided to blow the whistle”.

No legal obligation

Mr Southam says that the majority of landlords are using the fact that there is no legal obligation to disclose insurance commissions – and that the FSA is refusing to impose such an obligation – to enrich themselves with commissions.

A company secretary for a residents association at a building in London told News on the Block that during the first five years he lived there the buildings insurance had always been arranged by the landlord with a large insurance company and then collected by the landlord, as he is legally allowed to do.

“There is no provision in the lease for my flat for me to arrange my own buildings insurance, nor for the residents to club together to do so”, he said. “So it was only when we changed our managing agent to Chainbow in August 2006 that I learned from Roger Southam, that many insurance policies contain a ‘kickback’ or commission for the landlord from the insurer.

“We knew the landlord already makes money from leaseholders through ground rent and negotiating lease extensions. It had never occurred to me that he could be making a profit from the act of protecting his investment.

“Many landlords are professional investors. Give an investor the legal right to create a profit margin when arranging insurance and of course they are going to take it. The law should be changed – first to force landlords to disclose how much commission they are getting on the insurance, and then to force them accept the best quote that a managing agent or residents association can find.

“As someone who is currently trying to negotiate a lease extension, I am fast discovering the large profit margin that can be made as a landlord.

Mr Southam told me: “The RICS has not found itself able to organise a review within the past 12 months. How many more people have to be ripped off before action is taken?”

This is a good question. When I asked the government what they were doing, a spokeswoman said they were not thinking of including a requirement to declare insurance commissions. “This is on the basis that it will not be a direct cost that is payable as part of the relevant service charge,” she said. Go try to figure that one out!

When I took the issue up with Graham Chase, he insisted that he had been told by RICS officials that progress was being made. He then suggested that Mr Southam was at fault for not telling him that this was not the case.

The RICS’s policy of obfuscation extends to me too. In fact, I can no longer ask them anything because they have made me a non-person and broken off all communications. This is because I had the temerity to criticise the Institution’s long term resistance to have its estate agent members join an ombudsman scheme to ensure that their customers can get redress when necessary.

So if you want to know why the RICS is allowing this practice to go on you’ll have to ask them yourselves.