Leaseholders left out as bill excludes action on embedded managers

The government has confirmed that its draft Commonhold and Leasehold Reform Bill does not currently include measures to tackle so-called “embedded” management companies.

In a written parliamentary question, Labour MP Neil Duncan-Jordan raised concerns about firms that are effectively built into developments by freeholders or developers, often at the point the building is constructed, meaning leaseholders can be automatically tied into their services with limited ability to switch provider or regain control.

The news comes as the government announced that ground rents in England and Wales will be capped at £250 a year for leaseholders.

No provisions relating to embedded management companies

In a written question, Mr Jordan asked: “Will the government  ensure the Commonhold and Leasehold Reform Bill includes retrospective powers for leaseholders to remove ’embedded managers,’ without no-fault litigation where historic structural neglect is proven.”

In response, housing minister Matthew Pennycook said: “It is unacceptable for a managing agent to refuse to vacate a site when it loses a contract to another agent. Landlords may seek legal advice on possible courses of action when such circumstances arise.

“These may include making a formal complaint to the relevant redress scheme or seeking an injunction in the County Court. Leaseholders, including resident directors, can also seek guidance and free initial legal advice from the government-funded Leasehold Advisory Service (LEASE).

“The previous government’s Leasehold and Freehold Reform Act 2024 contains no provisions designed to prevent managing agents using subsidiary, sister, or associated organisations to deliver services.

“The draft Commonhold and Leasehold Reform Bill contains no provisions relating to embedded management companies.

“We await the conclusions of the pre-legislative scrutiny of the draft Bill being undertaken by the Housing, Communities and Local Government Select Committee and will review the feedback received before publishing a substantive Commonhold and Leasehold Reform Bill.”