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Housing: Leaseholder Deposit Protection

Volume 739: debated on Monday 23 July 2012


Asked By

To ask Her Majesty’s Government whether they will introduce a transparent scheme, similar to the Deposit Protection Scheme for tenants, to protect monies paid by leaseholders and held by managing agents.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I state that my interest is on the register.

My Lords, the law already provides protection for service charges. They are deemed to be held in trust. The law also provides leaseholders with a number of rights to aid transparency over service charges. These include rights to be consulted, to ask for a summary of service charges, and to see supporting documentation. The Government therefore have no plans for additional regulation of leasehold service charges.

My Lords, is the Minister aware of the case reported last month of the managing agent who pleaded guilty to stealing £122,000 from leaseholder funds? Does she not think that the nearly 3 million leaseholders are entitled to the protection called for by the voluntary accreditation bodies, Leasehold Knowledge Partnership and the Association of Residential Managing Agents, and supported by the British Property Federation? Can she tell me what parliamentary procedures would be required to introduce regulation?

My Lords, I thank my noble friend for drawing to my attention the article about the offence to which she referred. As it is a matter of court action, I do not think there is anything I can say. The article is not sufficiently detailed to know exactly where the money came from so I do not think I can comment any further on that.

My noble friend will know that if you are going to undertake legislation then before doing so, you must undertake consultation, draw up plans and take the process through, not only the regulators but also the leaseholders and those who are carrying out the voluntary regulation at the moment. You must then find legislative time to deal with it. We do not believe that it is necessary at this stage to undertake any of that.

My Lords, my noble friend will remember the Commonhold and Leasehold Reform Act 2002. We spent many hours on it. My noble friend will also know that Section 156 of the Act, which would have protected leaseholders from losing their funds, has not yet been brought in. Can my noble friend tell me what the Government’s plans are regarding this part of that important Act?

My Lords, the Government have no plans to implement these provisions at present, but we are keeping a watching brief on the concerns of people within the leasehold reform area. A technical guide was published last year by the Institute of Chartered Accountants in England and Wales on accounting and reporting on residential service charges. We would encourage its adoption across the sector.

My Lords, I draw attention to my interest in the register. The noble Baroness, Lady Gardner of Parkes, has rightly raised the issue of regulating managing agents from the perspective of leaseholders. However, with the private rented sector now at 3.6 million households, and with nearly one-third of all private rented sector households being families with children, is now not the time for effective and comprehensive regulation of the whole sector?

My Lords, as the noble Lord will know, there are two parts to this. This Question is not about the private rented sector. It is about leaseholders. We have no policies at present to bring the private rented sector under the law.

My Lords, why have the Government chosen not to make plans to implement legislation that was passed in 2002?

The noble and learned Baroness will be aware that this was not our legislation: it was the legislation of the previous Government and it was the previous Government's responsibility to implement it.

Is my noble friend aware that, very often, sinking funds that go missing amount to millions of pounds affecting only about 100 leaseholders? It is not acceptable for this to be allowed to continue under the Act.

My Lords, there are voluntary regulators and voluntary regulations and organisations that are keeping an eye on this. I am sure my noble friend will agree that it is not always for the law or for Parliament to dictate or regulate and that an industry can be self regulating. That is the situation at present.

Will the Minister please explain, because it was not clear to me from her Answer, what she actually said? If a clause is in statute, is it not obligatory for a Government to take action on it and not say that they are thinking about it?

As I said before, this was not this Government's legislation. We helped with it and we went through it. In fact, I have been reminded that one of my amendments was agreed by this House in 2001, which is unusual. If the previous Government had wished to implement the Act and those clauses, they could have done so. We have not chosen or do not think that it is appropriate to do so.

An important new principle has just been announced. There are many reasons for not bringing things into force, which Parliament has passed, but surely one is not that the other side passed the legislation. Parliament passed the legislation and the Minister is saying that she does not like it.

My Lords, I am saying that this was not this Government’s legislation. The noble and learned Lord is wise enough to know that after a change of Government the new Government will not necessarily take up all the issues or points that have been raised in what has been passed by Parliament.