Clause 40 - Estate management charges: general limitations

Part of Leasehold and Freehold Reform Bill – in a Public Bill Committee at 4:30 pm on 25 January 2024.

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Photo of Lee Rowley Lee Rowley Minister of State (Minister for Housing) 4:30, 25 January 2024

Clause 40 sets out general limitations with regard to estate management charges. Subsection (1) states:

“A charge demanded as an estate management charge is payable…only to the extent that the amount of the charge reflects relevant costs”— in other words, purely the costs associated with estate management—and cannot be used to fund wider activities. This means that not every cost incurred by an estate manager is chargeable; an example would be if costs arose from the award of damages against the estate manager or an activity outside the estate by the estate manager that is not regulated. Those costs cannot be passed on.

Subsection (2) goes on to set out more detailed circumstances in which costs that are relevant costs may cease to become relevant costs and hence not payable or only partially payable.