Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Government Plans Clearer Service Charge Rules for Leaseholders in 2027

Leaseholders are set to receive clearer information about service charges and stronger protections against unfair costs, according to government plans to improve the leasehold system. The changes could come into effect as soon as next year.

Under measures from the previous government’s Leasehold and Freehold Reform Act, leaseholders will be able to see what they are being charged for, how service charges are being spent, and challenge unfair costs. Landlords will be required to provide leaseholders with an annual report on the condition of their building and plans for major works.

A new service charge demand form will be introduced, detailing payments and what they cover. In cases of dispute, leaseholders will be protected from covering their landlords’ legal bills without challenge and will be able to apply to recover their own costs.

Landlords will also be required to provide certain building information on request, such as fire safety information and invoices for maintenance works. These changes are designed to increase transparency and accountability in the management of leasehold properties.

The government stated that these measures would complement the upcoming Commonhold and Leasehold Reform Bill, which includes proposals such as a ban on new leasehold flats and a £250 cap on ground rents. The Housing Committee has urged the government to publish the final draft of the Commonhold and Leasehold Reform Bill by autumn.

These developments are particularly relevant for UK letting agents and inventory clerks, who may need to adapt their processes to comply with new reporting and information-sharing requirements.