A Mandate Without a Bailiff

Two governments are at this moment deciding how a building’s future should be paid for, and neither appears to be reading the other’s paperwork.

In London, the Ministry of Housing, Communities and Local Government has confirmed a large package of service charge reforms and set aside, for a separate answer at an unnamed date, the four proposals that matter most: mandatory reserve funds, professionally certified asset management plans, reform of the section 20 major works regime, and minimum qualifications for managing agents. In The Hague, a draft bill extending the statutory maintenance plan from ten years to thirty was open for public comment until 20 September 2026. The English question is whether to build the institution. The Dutch question is how to repair it.

What England is proposing

The Leasehold and Freehold Reform Act 2024 is already law and is being commenced in stages. A consultation on implementing its service charge provisions ran from 4 July to 26 September 2025 and drew 1,356 responses, sixty-one per cent of them from individual private leaseholders and three per cent from private managing agents. The government answered on 15 July 2026, for England alone.

What it confirmed is substantial and largely procedural. A prescribed annual report on the health and condition of the building. A standardised service charge demand accompanied by a budget with prior-year comparison. A statutory right to request a defined list of documents going back six years. Extended insurance disclosure reaching beyond the Financial Conduct Authority’s existing rules to capture commercial relationships between landlords, agents, brokers and insurers. Standardised service charge accounts including a balance sheet, an income and expenditure account and a sinking fund statement where one exists, reported under ISRS 4400 by default. At least five statutory instruments, twelve months’ notice for private landlords, effects visible to leaseholders during 2027.

What it did not answer is the substance. The proposal to mandate a reserve fund in new and existing leases, underpinned by a professionally certified asset management plan and periodically reviewed, was deferred along with the section 20 threshold, which has stood at £250 per leaseholder since 2002 and is proposed to rise to a £600 baseline, and along with the introduction of a Level 4 qualification for managing agents enforced through a designated professional body. Separately, the draft Commonhold and Leasehold Reform Bill published on 27 January 2026 would require a reserve fund in every commonhold association, and would give the First-tier Tribunal power to appoint directors where owner participation proves insufficient.

Taken together, this is the architecture of the Dutch Vereniging van Eigenaars, arriving in England eight years after it arrived in the Netherlands and roughly sixty years after it arrived in France. The English debate is being conducted almost entirely in domestic terms.

What the Netherlands actually did, and what happened

The Dutch appartementsrecht makes membership of an owners’ association automatic and inseparable from ownership. The association is a legal person by operation of law. It can hold assets, contract, borrow and sue. On 1 January 2018 the Wet verbetering functioneren VvE’s added the missing financial obligation: every association must contribute annually to a reserve fund, either on the basis of a multi-year maintenance plan of at least ten years, or, failing that, at a flat rate of 0.5 per cent of the building’s rebuilding value.

The population subject to that rule is precisely known. On 1 January 2025, according to Statistics Netherlands, there were 149,625 associations containing at least one residential address, covering 1,571,030 dwellings and a further 130,525 non-residential units, together nineteen per cent of the Dutch housing stock.

Compliance with the savings obligation is not measured by the state. The only available series comes from the property data firm Matrixian, which found that in 2017, 2018 and 2019 roughly two-thirds of associations met the standard, and that by 2023 the figure had fallen to 48.6 per cent. Over the same period the average owner contribution rose from €1.58 to €1.99 per square metre per month, an increase of almost a quarter.

Owners did not save less. The standard moved away from them. An obligation indexed to rebuilding value rises at the rate of construction cost inflation, and between 2017 and 2023 construction costs rose faster than any household budget adjusted. A quarter more money bought a smaller fraction of a larger target.

This is worth stating carefully, because it is not an argument for abandoning the object as the unit of measurement. A fund sized against the annual service charge budget, which is the Spanish approach under article 9.1.f of the Ley de Propiedad Horizontal, is self-referential and turns procyclical at exactly the wrong moment: when owners are under financial pressure, the budget shrinks and so does the obligation to save. Italy avoids advance accumulation altogether, requiring under article 1135 of the civil code a special fund equal to the cost of the works at the moment the works are resolved upon, which reproduces the lottery of timing that the English reforms are intended to end. The Dutch answer, indexing to the object, is in principle the right one. It failed on execution, not on logic.

Three reasons it failed on execution

The index was never named or reviewed

A statutory percentage of a moving figure is a statutory obligation to track an index. Nowhere in the Dutch framework is it stated which measure of rebuilding value governs, how often it should be restated, or what happens when it moves faster than incomes. Associations discovered their non-compliance retrospectively, through a valuation they had not commissioned and did not control. Any English reserve fund pegged to a professionally certified asset management plan will face the same problem in a different guise, because the plan’s cost assumptions are themselves an index, and an uncontrolled one.

Nothing happens if you do not comply

The 2018 Act contains no sanction. There is no inspectorate. No public body verifies that a reserve fund exists, still less that it is adequate. Municipal powers under article 5:127a of the Civil Code are narrow, requiring a threat to the building’s condition under the Housing Act before they engage, and even then a municipality cannot compel an individual owner to pay. Enforcement therefore runs through one of two channels: a member sues his own neighbours in the sub-district court, or a bank notices at the point of a mortgage application. The legal obligation is real; the compliance regime is, in practice, voluntary.

England is currently designing the same structure. A mandate is proposed. The enforcement route is not named. For the parallel qualifications requirement the government’s stated preference is implementation through a designated professional body, which is to say through the sector’s own trade institutions, supported by local authority enforcement that is already thinly resourced. A duty attached to nothing is a duty that will be met by the diligent and ignored by everyone else, and the diligent were never the problem.

The obligation was designed for a building and lands on a staircase

The Dutch size distribution is the fact that most commentary misses. Of those 149,625 associations, 75,425, slightly over half, contain three addresses or fewer. Three-quarters have five or fewer dwelling-owners, and 40,405 have a single owner, which is to say they are associations in law and nothing at all in practice.

Dutch owners’ associations by size, 1 January 2025

	Associations	Share
1 to 3 residential addresses	75,425	50.4%
4 to 6 addresses	28,750	19.2%
7 to 20 addresses	23,915	16.0%
21 to 100 addresses	19,700	13.2%
More than 100 addresses	1,840	1.2%
Total with at least one dwelling	149,625	100%

A statutory maintenance plan, a certified cost basis and an annual reserve contribution are proportionate instruments for an association of eighty flats with a professional manager and a board. Applied to two people who share a front door, they are a paper exercise that will not be performed, and non-performance carries no consequence, so it is not performed. England’s stock is differently shaped, with roughly 350,000 residential blocks in England and Wales against 4.90 million leasehold dwellings in England, an average of some fourteen dwellings per block. But the tail exists there too, and roughly one London block in four is self-managed, without an agent to prepare anything.

The unit problem underneath

The section 20 threshold has stood at £250 per leaseholder since 2002 and is proposed to move to a £600 baseline. This is presented as a correction. It is a re-indexing of a number, and it leaves the measure exactly as it was.

A consultation trigger denominated in pounds per leaseholder per project measures one thing: the disturbance to a single household’s budget in a single year. It says nothing about the asset, its remaining life, or the cost of deferral. It is a proxy chosen because it is easy to observe, standing in for a quantity nobody is measuring. Raising it to £600 makes the proxy less obstructive without making it more informative, and in ten years it will be wrong again for the same reason it is wrong now.

The reserve fund debate is the same error viewed from the other end. A building’s components have lives measured in decades: a flat roof in twenty to thirty years, a lift in twenty-five, a facade in forty, a foundation in the life of the structure. The decision cycle that governs them is annual, because the service charge is annual and the board turns over. Every instrument in this field is an attempt to bridge that mismatch, and the choice of unit is the whole of the design. Europe has now tried all three available answers, and each has produced a distinct and documented failure: the object unit produces procyclical obligations and mass technical non-compliance, the budget unit produces self-reference and collapse under pressure, and no unit at all produces the timing lottery. England is choosing among the three without acknowledging that the choice has been made three times already.

Five design implications

1. Name the index and schedule its review. If a reserve obligation is pegged to a certified plan, the cost basis of that plan is a statutory index in all but name. It should be identified, published, and reviewed on a stated cycle, so that associations learn of a change before they are found in breach of it.

2. Attach the enforcement route at the point of legislation. A named body, a defined trigger and a consequence, written into the same instrument as the duty. Everything the Dutch experience demonstrates points to the same conclusion: an obligation whose enforcement is deferred to a later review is an obligation that will not bind.

3. Set a de minimis and design a second regime beneath it. The Property Institute asked for this in its own consultation response, proposing a threshold for conversions of three or four self-managed flats. It is the right instinct and the Dutch data show why. A short, cheap, standard-form obligation for small blocks will produce more actual saving than a certified plan that nobody commissions.

4. Measure compliance from the first year. The Netherlands has no official statistic on reserve fund adequacy. The only figure in circulation comes from a commercial data firm, and the policy debate has been conducted on it for three years. England is already building the reporting apparatus, since standardised accounts must show sinking funds and the annual report must describe the building’s condition. Extracting a national compliance series from that apparatus is nearly free, and without it nobody will know whether the reform worked.

5. Match the plan’s horizon to the components, not to the tenure of the people writing it. The Netherlands set ten years in 2018 and is now proposing thirty, having discovered that a ten-year plan systematically excludes the expensive items. England should start where the Netherlands is arriving.

Conclusion

The reserve fund is one of the few instruments in housing policy that has been tried in enough jurisdictions, for long enough, to be assessed rather than argued about. The Dutch result is not that mandatory reserves fail. It is that a mandate without an index, without an enforcement route and without a proportionate regime for small buildings produces a statute that is widely admired abroad and quietly unmet at home. Roughly half of Dutch associations are in breach of a law that no one enforces, and the ones in breach are disproportionately the small ones, which are also the ones whose buildings will fail first.

England has the opportunity to import the instrument and leave the failure behind, and a window of perhaps eighteen months in which to do it. Whether the separate response, when it comes, names a bailiff will tell you most of what you need to know about whether any of this will hold.

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The author co-runs a Dutch owners’ association management practice in the Randstad and writes on governance and the built environment. The practice has no commercial interest in the English market and holds no client relationships in the United Kingdom.

Notes

1. Ministry of Housing, Communities and Local Government, Government response to the Strengthening leaseholder protections over charges and services consultation, 15 July 2026 (updated 30 July 2026). Ministerial foreword for the deferral of reserve funds, asset management plans, the major works regime and managing agent qualifications; executive summary for the statutory instrument timetable; questions 70 to 75 for the accounts and reporting standard.
2. MHCLG, Strengthening leaseholder protections over fees, charges and services: consultation, 4 July to 26 September 2025, section 3.1 (mandatory reserve funds and asset management plans) and chapter 4 (qualifications of managing agents, three implementation options, preference for designated professional bodies).
3. The Property Institute, summary response to the same consultation, 12 September 2025, for the proposed de minimis for small self-managed conversions.
4. MHCLG, draft Commonhold and Leasehold Reform Bill and consultation Moving to commonhold: banning leasehold for new flats, published 27 January 2026, consultation closed 24 April 2026; King’s Speech commitment of 13 May 2026.
5. Centraal Bureau voor de Statistiek, Aantallen en kenmerken van Verenigingen van Eigenaren 2025, published 13 August 2026 at the request of the Ministry of the Interior and Kingdom Relations, project PR004644. Table 1: 149,625 associations with at least one residential address; 1,701,555 addresses of which 1,571,030 residential and 130,525 non-residential; size distribution by address count and by number of dwelling-owners; nineteen per cent of the Dutch housing stock.
6. Matrixian Group, More than half of homeowners’ associations do not meet statutory savings standards, 28 November 2023: approximately two-thirds compliant in 2017, 2018 and 2019, falling to 48.6 per cent in 2023; average contribution rising from €1.58 to €1.99 per square metre, an increase of almost twenty-five per cent, lagging construction cost growth; apartments in financially unhealthy associations selling for up to ten per cent less.
7. Wet verbetering functioneren verenigingen van eigenaars, in force 1 January 2018; Burgerlijk Wetboek Boek 5, Titel 9, in particular articles 5:126 and 5:127a.
8. Internetconsultatie, Wetsvoorstel versnelling verduurzaming en onderhoud verenigingen van eigenaars, consultation closed 20 September 2026: decisions on maintenance, sustainability and their financing by an absolute majority of votes cast, quorum retained, multi-year maintenance plan extended from ten to thirty years with a mandatory sustainability paragraph, and a simplified route to a right of superficies.
9. Ley 49/1960 de Propiedad Horizontal, article 9.1.f (Spain), reserve fund obligation since 1999, minimum raised to ten per cent of the ordinary budget by Real Decreto-ley 7/2019. Codice civile, article 1135 (Italy), special fund equal to the amount of the works.
10. Ministry of Housing, Communities and Local Government, Leasehold dwellings, 2024 to 2025, published 21 May 2026: 4.90 million leasehold dwellings in England, of which 3.38 million flats and 1.52 million houses. Block counts for England and Wales, and the estimate that approximately one London block in four is self-managed, are drawn from Wilson Hawkins block management research (2025 and June 2026) and are industry estimates rather than official statistics.