Khan calls for end to ‘everyday extortion’ of unfair charges for leaseholders

London Mayor Sadiq Khan is urging ministers to end the “everyday extortion” of unfair service charges for leaseholders.

He is demanding legal powers for leaseholders to withhold service charge payments where the justification has not been set out in writing.

The City Hall incumbent’s intervention comes less than a week before the May 2 mayoral election in the capital, where he is seeking a historic third term in office.

He said: “If leaseholders face large increases in their service charge without it being clearly explained what it’s paying for, they should be able to do something about it – including having stronger rights in law.”

Mr Khan also wants the Government to use the Leasehold and Freehold Reform Bill currently going through Parliament to make it easier for leaseholders to take their landlords to court to challenge unreasonable costs.

Leaseholders should also get quicker redress by expanding the remit of the housing ombudsman to investigate service charge hikes, the mayor argues.

Leaseholds are a form of home ownership that gives the householders the right to live in a property for a fixed number of years but can also mean having to pay service charges to the freeholder, who owns the land.

London has 1.4 million leasehold properties, a quarter of all such properties in the country.

The Leasehold and Freehold Reform Bill has faced criticism for failing to outlaw this housing system branded “feudal” by Housing Secretary Michael Gove.

While the legislation bans the sale of new leasehold houses, except in exceptional circumstances, it does not ban the sale of new leasehold flats, which make up 70% of properties affected.

Action the Labour London mayor has taken to support leaseholders includes introducing a requirement for 990-year leases as standard for shared ownership homes funded by City Hall.

But he does not have the power regulate existing homes or change current legislation, and so is urging ministers to act, upping the pressure on Mr Gove who has already been accused of heavily diluting the Bill.

Mr Khan said: “Sky-high service charges can be financially crippling for people living in flats or who are shared owners. At their worst, they amount to the everyday extortion of leaseholders and a shameful abuse of power by landlords and freeholders.

“While many landlords act responsibly, we need stronger rights for leaseholders to act against those who don’t, with new powers of redress and the ability to withhold service charges that simply aren’t justified.”

He added: “I’ll keep campaigning for the end of our current system of leasehold ownership, and the introduction of commonhold as the new default tenure for flat owners in London and across the country.”

He also described Conservative rival Susan Hall as a “hard-right Tory candidate who will never stand up to vested interests in the property market”.

A spokesperson for the Department for Levelling Up, Housing and Communities said: “Unjustified increases in service charges are completely unacceptable, which is why we are committed to strengthening protection for leaseholders, and are bringing forward reforms through the Leasehold and Freehold Reform Bill. This will empower them and make it easier to challenge unfair costs.”