Service charge code could be revised to help housing association tenants

Housing association tenants of long leasehold flats in England will be brought into a revised service charge management code, under proposals being consulted on by surveyors.

Originally developed in 1997, the code sets out best practice for the management of leasehold residential blocks and estates.

The code applies to landlords of leasehold residential properties and managing agents and is used by the courts to settle disputes about service charges, alongside evidence from professionals.

But in the past it has only applied to leaseholders within privately-owned developments, the Royal Institution of Chartered Surveyors (Rics) said.

The proposed enhancements to the code will also ensure greater transparency over service charges and associated spending, it added.

Rics said that with increasing costs associated with managing blocks of flats, particularly where buildings need to be made safe, there is a need for a clear code that helps guide landlords and managing agents on service charge funds, forward planning and keeping leaseholders informed.

The proposals would not stop landlords from potentially increasing charges, but they would require them to set out the rationale behind setting service charges, Rics added.

Jeff Platt, technical author of the new service charge code, said: “Since the first edition of the code was published in 1997, housing associations and local authorities have evolved into large scale providers of leasehold, shared-ownership and rented homes where the costs of services and property management are recovered as variable service charges.

“Leaseholders and tenants paying those charges should expect to receive similar best practice management standards from all landlords, managers and managing agents.”

There are around 4.6 million leasehold properties in England, according to Rics.

Antony Parkinson, senior specialist for property standards at Rics, said: “Proposed enhancements to the code will improve consistency within the industry and transparency for leaseholders in relation to service charges, agents fees, long term planned preventative maintenance plans and reserve funds.

“I encourage all leaseholders, landlords, registered providers, managing agents and anyone else affected by the code to participate in the consultation and share feedback on the proposals.”

The consultation on the proposed new service charge code will end on May 15 2022.

Rics said it will consider feedback and the final service charge code will be published later this year.

A Government spokesperson said: “We welcome the efforts of Royal Institute for Chartered Surveyors (Rics) and others to raise professionalism and standards of managing agents.

“Improving housing standards is a key objective of our levelling up agenda and these proposals will increase transparency for leaseholders and help to guide landlords and managing agents on service charge funds.”