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Local authority leasehold on BBC’s You and Yours

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BBCyouandyourBBC Radio 4 featured issues concerning leasehold flats in local authority owned blocks.

LKP has long been concerned about the issue of major works where huge bills are presented to leaseholders (tenants pay nothing, obviously).

So many private leaseholders are wiped out by these huge bills that Southwark has a policy of buying up right-to-buy flats.

The issue is addressed at 32.00 on iPlayer below: http://www.bbc.co.uk/programmes/b06myhn3

LKP highlighted areas where leaseholders can challenge these costs:

1/ As always leaseholders need to mobilise and co-operate fast: in order to share costs for a lawyer and/ or a surveyor.

2/ Has the council / housing association followed the correct procedure of consultation?  Make sure the council is aware that you are mobilised, informed and professional ASAP. As always in leasehold, freeholders exploit the ignorance and lack of cohesion among flat owners.

3/ It is not a bad idea to fire a lawyer’s letter at a council as early as possible.

4/ If there is an error in the procedure, the costs can be challenged.

5/ If the works are unnecessary or over extensive and the council is just getting leaseholders to pay up for improvements to a block, they can be challenged. You may need an alternative opinion from a surveyor, which can be expensive. So, share costs if possible.

6/ Councils may chance their arm and try to enhance the physical state of a block and get leaseholders to pay for this, rather than carry out repairs / maintenance. In this case a woman had a £55,000 bill for new windows by Hounslow thrown out by the Upper Tribunal of the property chamber. Sebastian O’Kelly refers to this case in the radio broadcast.

 

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  1. admin

    This is from Kate Newton, a Southwark leaseholder who featured on the programme.

    Dear Sebastian,

    Apologies for not contacting you via the online form but you have already heard a brief description of our case which you commented on as a guest on BBC Radio 4’s “You and Yours” programme on Friday 6th November.

    We appreciated your comments and advice but we would like to feed back on one of the points you made, provide more detail about our case and ask your opinion of the best way to progress.

    Advice on getting a thorough survey done before purchase:

    You commented that by getting a thorough survey done upon purchase you can avoid the situation of receiving a large major works bill only months/weeks after completing. However for us this would not have helped for the following reasons.

    1. We did get a comprehensive survey done ahead of purchase but our surveyor was refused access to the main roof of the building which is kept locked. Our survey reported that the building was in good condition which is true and agrees with the survey commissioned by the Southwark ahead of the works.

    2. A few months after purchase when the bill for the works arrived we (along with other leaseholders) paid for an independent roof survey. This survey reported that the roof had already been recovered (17 years ago) and was in good condition. It concluded that while repairs should be undertaken to maximise the roof’s lifetime that to replace the roof completely was “wholly excessive and unnecessary”. This also agrees with the original estimates of the council’s own surveyor’s which do not include roof works to our block. When we challenged the council they argued that although the roof is currently in “fair condition” a new one would be guaranteed for 30years which they had decided was the most economical way for long term maintenance.

    3. In general the council’s own survey (by long term surveyor partner Blakeney Leigh) to support this major works project is quite open and concludes that while there are some signs weathering and damage that there is no urgent work (apart from some minor fire safety upgrades) which can’t be tackled through cyclical maintenance. It seems to give the council the freedom to both justify not doing works if finance is unavailable or support a £4m works project such as ours when financing is available.

    An additional piece of advice for prospective leaseholders could be to buy legal protection insurance as part of their Home Insurance as this would then give them cover for legal assistance to fight any issues arising to do with their property.

    Explanation of the difference in cases of the two leaseholders – the bill for one has been waived:

    Both couples bought only a few months before a large (£22k) major works bill was issued.

    Both had a pre-assignment pack produced by Southwark and paid for by their sellers suggesting limited or no future planned major works.

    The solicitors of both couples requested and were provided with an update on planned Major Works from Southwark ahead of exchange. These updates advised there was no new information.

    The only difference was in one case Southwark said there were no future major works and in the other that electrical works were planned “subject to surveys and available finance”. The final work scope did not in fact include electrical works but roof works, concrete repairs, balcony re-surfacing and re-decoration. However the council feels that where it had mentioned that any works were planned subject to surveys it would be prepared to defend that in court although the detailed feasibility surveys for the work were completed at the time of exchange and showed the real extent of the work.

    There are 3 other leaseholders who are in the same situation on the estate. In one case a women exchanged on her flat a mere 11 days before receiving a NOI telling her she was liable for an £18k major works bill! We have got together as a group and complained to our councillor and the council directly.

    In dealing with our complaint Southwark do not deny that it had much better information at the time since this is was provided explicitly in Right to Buy packs produced over a year before we bought and is evident from budgets and surveys. However it maintains that:

    It has no duty of care or direct relationship to a prospective leaseholder even though the seller does and the seller pays a fee to the council to prepare the Pre-Assignment pack.
    Due to dispensation for works under QLTA the council is only required to notify leaseholders one month in advance of starting works.

    To provide estimates of majors works which are not fully finalised and signed off may lead to sellers taking a lower price than that which would reflect the true cost of the liability which the buyer is taking on.

    In my opinion the third point is the only sensible one. However this does not prevent the council from giving better information on the scope of planned works or the average costs of similar works which should be freely available to leaseholders anyway. Moreover the council policy of only giving leaseholders the absolute minimum notice of a few months before payment of such enormous bills leaves prospective leaseholders open to the situation we have suffered where we have spent all our savings on stamp duty, a deposit and solicitors’ fees only to move in and get a bill for £22k a few months later. This kind of financial stress is way beyond what a mortgage provider would stress test for and could lead to individuals losing their home less than a year of moving in even if they have paid for a thorough survey upon purchase.

    We are happy to provide any reports/surveys referred to in this email or any additional information.

    Any further advice on what you think we can do next would be much appreciated.

    Kind Regards,

    Kate Newton

    PS You briefly mentioned Florrie’s Law in the radio programme. Are there any statistics available on this new regulation actually saving leaseholders any money? It seems councils can easily avoid the cap by changing their accounting/planning processes and/or the categorisation of work projects.