The government is also planning to repeal legislation which could allow homes to be repossessed or have a lease placed on it for rentcharge arrears.
Pincher, the new housing minister, revealed the plans when responding to a written question from shadow housing minister John Healey, asking what plans government had to protect freeholders against service charges and other fees.
The issue of estate management fees, also known as rentcharges, has grown in prominence following the controversy around leasehold fees.
Mortgage Solutions revealed that some high street banks have already taken action to not offer mortgages on new-build homes if the developer has included uncapped management charges in the freehold contract.
And trade body the Intermediary Mortgage Lenders Association (IMLA) has also issued a warning to developers that more lenders could follow suit and that they must be transparent on the charges.
Protected from abuse of power
It appears the Ministry of Housing, Communities and Local Government (MHCLG) is now planning to take action with these concerns.
In his reply, Pincher said: “The government is committed to promoting fairness and transparency for homeowners and ensuring that consumers are protected from abuse and poor service.
“The government is aware that homeowners could be subject to a possession order or the granting of a lease of their home by the rentcharge owner over rentcharge arrears.
“As part of our leasehold reform work, we are moving forward with legislation to repeal Section 121 of the Law of Property Act 1925 to ensure homeowners are not subjected to unfair possession orders.”
Pincher added: “Furthermore, where people pay estate rentcharges, it is not right that these homeowners have limited rights to challenge these costs.
“That is why the government intends to legislate to give freeholders on private and mixed-tenure estates equivalent rights to leaseholders to challenge the reasonableness of estate rent charges.”
The government also asked the Regulation of Property Agents working group, chaired by Lord Best, to look at how service charges for leaseholders and estate rent charges for resident freehold homeowners could be made more transparent.
The working group published its final report in July 2019 and Pincher noted that government was “considering the report’s recommendations and will announce next steps in due course”.
