Leasehold Reform (Disclosure and Insurance Commissions) Bill [HL]

Official Summary

A Bill to amend the Landlord and Tenant Act 1985 to prevent landlords recovering service charges where they have failed to comply with their disclosure obligations under that Act; to commence section 21A of the Landlord and Tenant Act 1985 insofar as is it not already in force; to require landlords to disclose commissions earned on insurance policies; and for connected purposes

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Overview

This bill amends the Landlord and Tenant Act 1985 to improve transparency and fairness for leaseholders in England and Wales. It primarily focuses on preventing landlords from charging unreasonable service charges if they haven't met their disclosure obligations, and requiring disclosure of any commission earned on insurance policies. It also brings a previously unimplemented section of the 1985 Act into force.

Description

The bill makes several key changes:

Unreasonable Service Charges: Landlords who fail to comply with their disclosure duties under the 1985 Act (sections 21, 22, and 30A and Schedule 1) will no longer be able to recover service charges deemed unreasonable. The court will decide the reasonableness of charges considering the extent and timing of the landlord's compliance.
Insurance Commission Disclosure: Landlords must disclose all commission received from insurance policies covering their leasehold properties for the past six years. This includes commission received directly or indirectly, in cash or kind.
Definition of "Associate": The definition of "associate" (as used in relation to commission) is clarified to align with the Companies Act 2006.
Section 21A Implementation: Section 21A of the Landlord and Tenant Act 1985 (not yet fully in force) will be implemented on July 1st, 2023.

Government Spending

The bill doesn't directly specify government spending figures. However, there might be some indirect costs associated with the implementation and enforcement of the new regulations and any court cases arising from disputes.

Groups Affected

Leaseholders: Will benefit from greater transparency and protection against unfair service charges.
Landlords: Will face stricter regulations regarding service charge recovery and insurance commission disclosure; increased compliance costs are possible.
Insurers: Will be subject to increased transparency requirements related to commission payments.
Courts and Tribunals: May see an increase in cases related to disputes over service charges.

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