Study puts spotlight on leaseholds

Leaseholders typically pay a service charge to cover costs for the maintenance and management of the building they share and may also contribute to a fund to cover other significant expenses, such as roof maintenance.

Announcing the study on 4 March, the OFT said that property management companies were often used to provide maintenance, cleaning or building work, either themselves or through contractors.

Rachel Merelie, senior responsible officer for the study, said: “Service charges for the maintenance of a building can be substantial and we want to make sure that leaseholders are getting a fair deal.

“We are concerned that management agents and freeholders may not be incentivised to keep maintenance costs down and that leaseholders may not receive value for money.

“We will look at whether there is sufficient competition in the market generally as well as taking a close look at specific areas which have been brought to our attention, including services provided to retirement properties.”

Estimates vary but some suggest there could be up to five million leaseholders in England and Wales. The OFT study will look at issues including:

• whether leaseholders have sufficient influence on decisions taken by freeholders or others on the appointment of managing agents and the supply of residential property management services
• whether managing agents' and freeholders' choice of contractors and services may be influenced by links with associated companies and the availability of financial commissions
• whether it works well in practice when leaseholders exercise their right to manage their own properties.

Our experts in the property team can advise leaseholders on issues including disputes over service charges or getting repairs done, as well as leasehold extensions and enfranchisements.

For more information, please visit or contact Gareth Williams or Robert Lloyd-Davies.