Overview

This bill amends the Landlord and Tenant Act 1985 to improve transparency and fairness in leasehold properties. It prevents landlords from recovering unreasonable service charges if they haven't met their disclosure obligations, requires disclosure of commissions earned on insurance policies, and brings a section of the 1985 Act into force.

Description

The bill makes several key changes:

• Preventing Unreasonable Service Charge Recovery: If a landlord fails to comply with their disclosure duties under the Landlord and Tenant Act 1985 (sections 21, 22, or 30A and Schedule 1), they will not be able to recover service charges deemed unreasonable. The court will determine reasonableness, considering the landlord's eventual compliance, the extent of compliance, and the time taken to comply. A "reasonable excuse" defense is allowed, defined by the Secretary of State.
• Insurance Commission Disclosure: Landlords must disclose all commissions received from insurers or their associates on any relevant insurance policy covering the leasehold property. This disclosure applies to policies from the six years preceding the bill's passage.
• Commencement of Section 21A: Section 21A of the 1985 Act (not yet fully in force) will come into force on July 1st, 2023. This section likely deals with further aspects of leasehold disclosure.

Government Spending

The bill is not expected to significantly increase or decrease government spending. The primary impact is regulatory, aiming to improve the fairness and transparency of leasehold arrangements, potentially reducing disputes and litigation costs in the long run.

Groups Affected

The bill primarily affects:

• Leaseholders: They will benefit from greater transparency regarding service charges and insurance commissions, potentially leading to lower costs and fairer treatment.
• Landlords: They will face stricter regulations regarding disclosure and service charge recovery, potentially impacting their profitability if they fail to comply.
• Insurers: They will need to cooperate with landlords in providing the necessary commission disclosure information.

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