Property Service Charges

Debate between Meg Hillier and Sam Carling

Thursday 30th October 2025 Commons Chamber

[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.

--- Later in debate ---

[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.