New Clause 35 - Duty to notify purchasers of liability for estate management charges

Leasehold and Freehold Reform Bill – in a Public Bill Committee at 3:45 pm on 30 January 2024.

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“(1) The Secretary of State must by regulations make provision to ensure that any purchaser of a property which is subject to estate management charges—

(a) is notified about their liability for estate management charges at the point at which an offer is accepted by the seller on the property; and

(b) is provided with the most recent set of accounts of the property management company.

(2) Regulations under this section—

(a) must be laid within 24 months of the date of Royal Assent to this Act,

(b) shall be made by statutory instrument, and

(c) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”—

This new clause would require the Secretary of State to make regulations to ensure that purchasers of properties subject to estate management charges are notified of those charges.

Brought up, and read the First time.

Photo of Richard Fuller Richard Fuller Conservative, North East Bedfordshire 4:00, 30 January 2024

I beg to move, That the clause be read a Second time.

New clause 35 seeks further to improve the rights of those who will be liable for estate management charges. We know from written and oral evidence that people do not know what they are getting into right at the start of the purchase of a property. My clause asks the Government to make it clear by regulations that purchasers of properties who will get management charges are notified about them. It would ensure that people have access to the latest set of accounts, enabling them not only to understand what charges may be due, but to see what liabilities there were in the past.

Photo of Lee Rowley Lee Rowley Minister of State (Minister for Housing)

I am grateful to my hon. Friend the Member for North East Bedfordshire for moving new clause 35. I share his concern that purchasers should know about estate management charges; we talked a little about that issue in our sitting this morning.

There is nothing worse than facing a bill that we know nothing about at a time when we can do nothing about it. That is why the Government have been working with the national trading standards estate and letting agency team to develop guidance for property agents on what constitutes material information. The information must be included in property listings to meet the obligations under the Consumer Protection from Unfair Trading Regulations 2008. Estate management charges are considered material if they will have an impact on a decision to purchase. That should mean that purchasers get information on the expected level of estate management charges when they see the property particulars before they even view the property, let alone make an offer.

In addition to the measures that we discussed this morning, we are seeking to include in the Bill a requirement that freehold estate management information be provided to potential sellers, meaning that conveyancers acting on behalf of those sellers can quickly get the detailed information that they need to provide to potential purchasers. That could include accounts, if the estate manager is a resident-owned company, as well as any previous or future charges. With that reassurance in mind, I hope that my hon. Friend will consider withdrawing his new clause.

Photo of Richard Fuller Richard Fuller Conservative, North East Bedfordshire

I think that that reassurance has been provided. The particular issue is that when people buy these homes, the solicitors are usually appointed by the people selling them. It is important that the Minister thinks carefully about that, and it sounds very much as if he is doing so. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.