The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. Much of the attention went to lease extensions and enfranchisement. For managing agents, freeholders and residents’ management companies, the provisions on service charges are just as important.
More transparency on service charges
The Act provides for service charge demands and annual reports in standard forms, and gives leaseholders greater rights to information about what they are paying for. Much of this needed regulations before it could take effect, but the direction was clear. Leaseholders would expect to see the evidence behind major works and long term budgets.
What that means for major works
The consultation requirements under section 20 of the Landlord and Tenant Act 1985 still apply. The difference is in expectations. A major works programme should be traceable from start to finish: the survey that identified the work, the specification, the tenders, the consultation, and the final account.
What that means for budgeting
A costed planned maintenance plan is the clearest way to show leaseholders why a reserve fund contribution or a service charge budget is what it is. The RICS standard Planned preventative maintenance of commercial and residential property sets out how such a plan should be prepared.
What managing agents and freeholders needed to do
- Make sure every block has a current, costed maintenance plan.
- Keep the paper trail for major works complete and easy to share.
- Explain the figures to leaseholders in plain English.
See our Planned Preventative Maintenance and Major Works services.