Property Service Charges

Meg Hillier Excerpts

Thursday 30th October 2025 Commons Chamber

[David Reed (Exmouth and Exeter East) (Con)]

Thank you very much, Madam Deputy Speaker. It is nice to have his name on the record.

I am very grateful for the opportunity to speak in this debate, and I thank my hon. Friend the Member for Reigate (Rebecca Paul) for bringing the topic to the House’s attention. In my constituency, this is rapidly becoming one of the most frequently raised issues. The biggest problem is that people who have worked hard, saved responsibly and bought a home in good faith find themselves trapped in a system that is opaque, unaccountable, and, in the worst cases, exploitative.

Like other Members, since being elected I have been inundated with complaints about one company in particular. We all know its name: FirstPort. It is, by some distance, the most problematic housing management company operating in my constituency. My office is dealing with almost 40 open cases relating to developments that it manages. The stories are depressingly consistent: residents describe unexplained charges, unclear billing and long delays in resolving the simplest issues—we have heard many such examples today. They send long chains of unanswered emails. They attend my surgeries exhausted and frustrated. When my team contacts FirstPort on residents’ behalf, we often wait an unacceptable length of time for a reply, and progress—if it comes at all—is slow.

Earlier this year, I and other Members of this House met FirstPort’s managing director. I hope, Madam Deputy Speaker, that you see me as a chilled-out kind of guy, but I left that meeting with my blood boiling, and other Members had a similar experience. We asked straight- forward questions but received vague answers, rehearsed corporate language and no clear commitment to improving customer service. A group of MPs will meet FirstPort again soon, and I hope that the company has set to work in earnest. On reflection, what angered me most was that many of the people caught up in these issues are elderly. They feel intimidated by the complexity of the system. They are passed from pillar to post, ignored when they raise legitimate concerns, and made to feel like an inconvenience simply for asking what their money is being spent on.

However, when FirstPort wants payment—this is something that it is very good at—its communication becomes clear and very persistent. When residents in several developments tried to move away from FirstPort, essential financial documents, including sinking fund balances and reconciliation statements, were withheld. In some cases, large sums of residents’ money were retained for months, preventing new management companies from planning maintenance or accounting properly. In my constituency, local resident directors Karen Wheeler and David Buller—fierce campaigners—have documented delayed fund transfers, missing paperwork and opaque accounting.

Karen eventually gave up trying to reconcile the final balance because the spreadsheets were, in her words, “unfathomable”. For Karen’s development, the cost was about £500—quite a significant sum for many elderly residents—but, as my hon. Friend the Member for Reigate rightly said, the real issue here is the power imbalance. Residents have no transparency, no clarity and no meaningful route to resolution, despite FirstPort’s own code of conduct, which promises transparency, value for money and excellent customer service. I think we can all agree that that does not stack up.

This is neither an isolated concern nor a partisan one. Former Ministers have highlighted FirstPort and other companies being consistently associated with high charges and poor service. The BBC has reported homeowners being billed for things such as “terrorism insurance”, without any context, while basic grounds maintenance is not completed. More than 30 MPs have written jointly to FirstPort demanding action.

We all know that the problem is structural. Far too many homeowners are locked into contracts they never chose, are forced to pay service charges for poorly maintained communal areas, and have no ability to change providers when the services fail. As we have heard, many homeowners on private estates—the so-called “fleecehold” estates—are effectively paying twice: once through council tax, and once through service charges. Leaseholders trying to sell their homes frequently face long delays and eye-watering administration fees, and what should be a proud milestone—owning or selling a home—becomes a source of stress and financial burden.

We have heard that legal protections exist, but they are not enough. The Leasehold and Freehold Reform Act 2024 will bring mandatory transparency—

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Will the hon. Gentleman give way?

[David Reed]

I have one minute left and I will make my final points. The Act aimed to bring mandatory transparency, through standardised billing, greater rights to challenge charges, and easier routes to taking over management, but those reforms are not yet implemented. Why is that? I hope that the Minister, in his closing remarks, will set out a course for when those measures will be implemented, and will say what new legislation will be brought in to ensure that people are protected. I finish on a point on which I think we all agree: residents who are on these schemes do not need more consultations; they need action, and this Parliament must deliver.

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[Dame Meg Hillier]

Many Members have raised the issue of the adoption of roads. Obviously, physical roads are easier to define, but there are parts of private estates that are only for that estate. Does my hon. Friend agree that there is a challenge, given the current financial situation, because it usually costs councils money to adopt a road, and under the current law, it could be a big hit for those leaseholders to pay the fee up front for the council to adopt the road?

[Sam Carling]

My hon. Friend makes a very useful point. I should have clarified that the figure I gave does not include the private roads that were not supposed to be adopted; it was purely the ones that are having this issue.

As my hon. Friend says, councils are in a difficult financial situation. The precarious state of local government finances after 14 years of cuts and freezes certainly has not helped. We also have a lot of councils blaming developers and developers blaming councils, and there is an increasing divergence between what council planning departments are requiring to grant permission for development and what the highways departments of said councils are willing to adopt. That is particularly vexing when there is a two-tier system, with planning at one level and highways at another. I hope local government reorganisation will help with that, but it is happening in unitary authorities too, and we need to explore ways to deal with that.

Ultimately, these are symptoms of a wider issue in how the system treats freeholders and leaseholders alike. The leasehold and commonhold reform Bill will be a vital step forward. I am pleased the Government are committed to ending leasehold for new developments. From my experience, that change cannot come soon enough. A key advantage of commonhold becoming the default tenure is that managing agents will be appointed by and responsible to leaseholders, rather than absentee corporate freeholders. Of course, the situation with managing agents still needs to be improved, and I am very supportive of mandatory regulation as a core step towards that, which I hope the Minister will comment on.

This debate comes in a week of real progress: the Renters’ Rights Act 2025 has become law, finally giving tenants the fair treatment they deserve. Let’s keep up that progress, because nobody should have to pay through the nose for poor service, broken promises and a system that puts profit before residents.

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[Lewis Cocking]

I agree with my hon. Friend, who makes an excellent point in standing up for his constituents. This is an important point. All MPs across the House have probably attended such meetings, and these companies are unable to answer the most basic questions. They are paid considerable amounts of money, and they cannot answer simple questions from constituents about how much money they will have to pay, where the liability sits, and what work they are going to do.

[Dame Meg Hillier]

I do not know the case the hon. Gentleman is talking about, but I agree that good communication is important. However, it was his Government, under Margaret Thatcher, who introduced the right to buy. That means we have leaseholders mixed with council tenants, so where a council has to improve a property, it needs to go to the leaseholders for their share of the costs. There was always going to be a tension there, and he must acknowledge that that will be a reality where we have pepper-potted estates—notwithstanding that he obviously needs to fight for proper information for his constituents.

[Lewis Cocking]

I fully support the right to buy, which was a good policy—[Interruption.] I am just stating that it was a good policy and I supported that. The hon. Lady makes an interesting point about communication, which must be there. As I have mentioned, Enfield council does not collect a sinking fund, which can go some way towards mitigating some of the issues, as she and I have raised, with leaseholders being asked to stump up for large bills. We need more transparency and better regulation, and we must ensure—here I agree with hon. Members across the Chamber—that councils adopt outside amenity spaces.

We need real improvements in the way that leaseholders are treated. Abolishing ground rent is a good first step and the Government need to get on with delivering that. I also agree that commonhold must be more widespread, but is by no means a silver bullet or right for everyone. I urge the Government to get on with it, improve the lives of hundreds of my constituents, and urgently implement more of the Leasehold and Freehold Reform Act 2024. We must get on with those improvements and help hundreds of our constituents.

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[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I declare an interest as a leaseholder myself.

Like my hon. Friend the Member for North West Cambridgeshire (Sam Carling), I will not name any managing agent or developments, because many of my residents are concerned that if their block is named, it will cause them very big issues. I was delighted to hear from my hon. Friend the Member for St Austell and Newquay (Noah Law) that there are some good management companies, because the picture is certainly mixed in my patch. The company that has been named often in this debate manages some estates in my area, and some are better run than others. A lot seems to depend on the individual property manager and how they run their development, and the size and age of a development definitely has an impact.

In the short time that I have, I will raise a couple of important issues. One is about insurance. We know that costs went up post Grenfell because insurance moved from insuring just the floor that a flat is on to the entire block, but other increases have arisen that are difficult to explain, and there is a danger that we will struggle to get insurance. One block in my patch was able to get one insurer quote for 12 months only, and it was quoted an extortionately high excess rate at the beginning—somewhere in the region of £15,000. That was the excess that the housing association freeholder would have to pay before anything happened. It managed to get that down, but it could only get one 12-month period of insurance.

I think we need to be careful in our discussions about the relationship between insurance companies and managing agents. I know from my role as Chair of the Treasury Committee that there are very strict rules on ringfencing operations, so insurance companies and managing agents should not have a cosy relationship. In law, they are not entitled to do so.

[Sam Carling]

I thank my hon. Friend for her work on this issue on the Treasury Committee. In my speech, I raised an insurance issue that my constituents have gone to the Financial Ombudsman Service about, but they are having problems about whether it is a FOS issue or a property ombudsman issue, and it is just not very clear. Would she join me in calling for more clarity?

[Dame Meg Hillier]

I completely agree with my hon. Friend that we need clarity on this issue. We are talking a lot about service charges, but the insurance industry has a responsibility because it accounts for a large chunk of them. Regulators have a clear role to play, and it is important that that is considered in all the changes we are discussing.

I am pleased that the Government have been consulting on these issues. The consultation on service charges ended in February, so I hope the Minister can give us an update about it. It is important to touch on a couple of other issues. We know that poor maintenance leads to high costs, so standards and expectations should be set on maintenance, which costs leaseholders, but costs them less in the long run if things are maintained. That is a repeated theme across my constituency, as some very modern blocks have not been maintained properly, which means leaseholders end up paying more in the end than they should have done.

There is also an issue with greening blocks. I have constituents working very effectively to try to get electric vehicle charging points and better insulation in a block that is an old warehouse; the famous loft apartments were very popular in my constituency at one point. However, improving such things creates betterment, which increases the ground rent, because the owner of the building can say it is an improvement and can charge more. Such tenants are making their property greener, cleaner and more efficient—costing them less in a lot of ways—but they are ending up with their costs being put up somewhere else, which seems to be a complete imbalance that we have not discussed.

On the right to manage and commonhold—I am a Labour and Co-op MP, and I am very proud to be pushing for commonhold—there can be issues where there is a right to manage. I am working with a development where there is a right-to-manage company, but the directors have hidden themselves away and are not acting responsibly in answering and providing information to their neighbours in the development. I think governance needs an overhaul in this area. It is not going to solve everything if residents take over the management but then do not do a good job, so there needs to be transparency all round.

As we know, this is on top of increased mortgage charges, and let us not forget what the 2022 Budget did to mortgage charges. Shared owners are paying mortgages, rents and service charges, and this is all adding to the cost of living and causing huge upset, on top of the spending on building safety requirements that are hitting so many of my constituents. That is causing real problems, but we need to be clear, so rather than go through the list myself, I will endorse all the asks that my hon. Friend the Member for Doncaster East and the Isle of Axholme (Lee Pitcher) listed about transparency, openness and getting clearer rights for residents to challenge service charges and to make sure they absolutely understand why they are being charged such fees. That is the basic minimum, but we should be making sure it happens.

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[Matthew Pennycook]

I won’t. I am more than happy to meet the right hon. Gentleman about this issue, as I do on a regular basis, and pick up these exchanges, but I want to make a bit of progress.

Lastly, the fragmentation of management on many of these estates compounds the problems we experience. Even on relatively new developments, homeowners often have to deal with multiple management companies, each levying fees in ways that reduce transparency and increase the risk of exploitation. In those situations, home- owners understandably often feel misled and trapped.

[Dame Meg Hillier]

Will the Minister give way?

[Matthew Pennycook]

No, I will not give way any further. There is another debate to follow and I will not test your patience, Madam Deputy Speaker.

It is worth saying that the Competition and Markets Authority published a study of the house building industry last year. It recommended stronger protections for homeowners and called for the mandatory adoption of certain amenities on new estates and, crucially, common adoptable standards for those amenities. The Government’s response to that report accepted many of its recommendations in principle, but acknowledged that further work is required.

I reiterate the Government’s firm commitment to end the injustice of fleecehold entirely. As I set out in my written ministerial statement of November 2024, we will consult this year on legislative and policy options to reduce the prevalence of private estate management arrangements, which are the root cause of the problems experienced by many residential freeholders.

On that point, I say to the hon. Member for Exmouth and Exeter East (David Reed)—I congratulate him on the birth of his child—that I must gently push back on his assertion that we do not need to consult. Through the consultation responses that we are receiving on issues such as service charge protections, we are gathering a huge amount of information that will allow us to implement these changes effectively, to the lasting benefit of leaseholders.

It is also vital that homebuyers understand what will happen to the estate that they are moving into. The Government are currently consulting on guidance to support estate agents with their legal responsibility to provide potential buyers with relevant material information during property transactions, as well as consulting on what should be considered material information for buyers. The Government also want to empower home- owners who are already living on estates under these arrangements. In September this year, the Law Commission published its 14th programme of law reform, which included a project on the management of housing estates. It will consider how residents could be given greater control over the management of their housing estates. My Department is proud to be the sponsoring Department for the project.

In the short term, it is imperative that we protect residential freeholders on privately managed estates from unfair charges. As hon. Members will be aware, the Leasehold and Freehold Reform Act 2024 contains provision for a new regulatory framework, broadly mirroring the rights already enjoyed by leaseholders and designed to give residential freeholders new consumer protections. We intend to consult again this year on how to implement those new protections to ensure that the framework is effective, but I want to assure hon. Members that I am determined to bring them into force as quickly as possible.

Many hon. Members mentioned service charges in a wider sense, and it is right that they champion the cause of leaseholders in their constituencies. As I have made clear on many occasions in this House, this Government recognise the considerable financial strain that rising service charges place on leaseholders and tenants. I reiterate the Government’s firm view that overcharging through service charges is completely unacceptable. In July this year we consulted on the measures in the Leasehold and Freehold Reform Act 2024 that are designed to drive up the transparency of service charges. We also consulted on proposals to introduce a fairer litigation costs regime, helping leaseholders to challenge service charges and protecting them from disproportionate legal expenses. The consultation included proposals on mandating reserve funds and reforming the major works process. As I have said, we have received a huge amount of useful feedback from the consultation, which closed on 26 September. I assure hon. Members that the stories I have heard today will inform my thinking on how the Government respond in due course.

On that point, let me say briefly that I would welcome correspondence from my hon. Friends the Members for Kensington and Bayswater (Joe Powell), for Stoke-on-Trent Central (Gareth Snell) and for Stafford (Leigh Ingham) with some further details about why judgments of the tribunal are not being enforced in the cases that they raised.

Before I conclude my remarks, I must address the legitimate concerns that have been raised in respect of the performance of managing agents, both on freehold estates and in leasehold blocks. We know that there are good managing agents who work hard to ensure that the residents they are responsible for are safe and secure, and that homes are properly looked after, but we also know that far too many leaseholders suffer from poor practice at the hands of unscrupulous managing agents.

I heard so many references to FirstPort during the debate that while I was sitting on the Front Bench I asked my private office to send a request to its managing director asking that he come and meet me so that I can convey some of the concerns that have been raised. Managing agents play a key role in the maintenance of multi-occupancy buildings and freehold estates, and their importance will only increase as we transition toward commonhold, so it is essential that we strengthen their regulation to drive up the standard of their service.

As hon. Members will know, the previous Government committed to regulate the property agent sector in 2018. They asked a working group, chaired by Lord Best, to advise them on how to do it. Yet they failed to respond to the group’s final report, published in July 2019. This Government have engaged seriously and constructively with the findings set out in that report, and we have already taken forward a number of its recommendations. In the recent consultation on strengthening leaseholder protections from charges and services, which I referenced earlier, we consulted on powers to appoint a manager or replace a managing agent, as well as on mandatory professional qualifications for managing agents in England, but that is not the final step in this process, and we will set out our full position on regulation of estate, letting and managing agents in due course.

To conclude, I am grateful to the hon. Member for Reigate for giving the House an opportunity to debate these important matters, I thank all Members who have participated in the debate today for sharing their concerns and insights, and—I say this genuinely—I very much look forward to further engagement with right hon. and hon. Members as the Government continue to implement the reforms to the leasehold system that are already in statute, and to progress the wider set of reforms necessary to end the feudal leasehold system for good in this Parliament, and not least the ambitious draft commonhold and leasehold reform Bill, which we will publish before the end of the year.