DCLG Secretary Eric Pickles has stepped in to protect leasehold owners from staggering repair costs where local authorities are the freeholder.
If central government money is being spent on improving local authority housing stock then leaseholders should not have to pay more than £10,000 … or, £15,000 in London.
But it is an open question how many leaseholders the scheme will help as central government funding for local housing refurbishment dwindles. (See comments below)
Many of these leasehold owners are former council tenants who have exercised their right to buy – only to be hit by eye-watering bills for the building’s refurbishment.
Pickles’ proposals come in the form of a consultation and he is seeking the opinions of leasehold owners.
The Leasehold Knowledge Partnership, which has been contacted many times over this issue, is offering to organise a delegation of local authority leasehold owners to the DCLG.
It is vitally important when dealing with government that a clear, reasoned argument is put forward – especially over issues concerning leasehold, for which the DCLG has a poor track record.
It is also possible to send in views by email to email@example.com
But please copy in to LKP.
Pickles’s interest in this issue was sparked by the case of Florence Bourne, 93, who her family claim died tormented by the thought of owing £50,000 for the refurbishment of her block in Newham, north London. This was reported in the Daily Express.
Pickles referred to the case at last week’s Tory party conference. Newham had “guesstimate” repair costs of £50,000 for a new roof, but a subsequent LVT accepted a surveyor’s report that the roof might have lasted another 40 years.
In announcing the proposal, Pickles said: “Ministers are well aware of the profound effect high charges for major works can have on leaseholders.
“Recent press reports have highlighted isolated cases of wholly unjustified demands on leaseholders.
“I want to be sure that all such future Government funded programmes come with protections for local authority leaseholders.
“Of course, leaseholders must pay their fair share of costs to maintain their homes, and they should pay as required under the terms of their lease but I, and the Minister for Housing, do want to limit any excessive claims on these owner occupiers.”
It is ironic that this announcement by Pickles comes in the same month that Southwark council is seeking the forfeiture of the home of Fareida Chandoo, 60, an NHS secretary for failing to pay £40,000 for capital improvements.
Farieda owns a three-bedroom flat in Camberwell in a council owned block of 29 flats.
Southwark spent £1.2 million refurbishing the block, including a new roof, and Farieda ended up with a £40,000 bill.
“I am an honest person and I am willing to pay my share, but not £40,000,” she says.
During the works she claims leasehold owner contributions were supposedly capped at £10,000, which she has offered to pay.
“I received very little benefit from these works and some harm. All the tenants flats were refurbished.
“I wanted this to go to arbitration, but Southwark refused and insisted on court action. Other leasehold owners have had the money paid by their mortgage company, but I refuse to pay this sum for benefits I have not received.”
It appears Mr Pickles has a first case to consider during his consultation, which ends on November 18.
The devil is in the detail – it isn’t a true “cap”; rather, it is a cap only if councils are using Decent Homes funding (which won’t apply in many cases now as the Decent Homes works are almost all over) or other government funds (which there aren’t any). Any other works will not be affected by this proposal.
Would you expand this point: it seems an entirely valueless initiative, in your assessment.
You have fallen for the press release and not read the actual Directions on the last few pages. They make clear that the caps will only apply where the funding is from one of the sources set out in the Schedule. That means Decent Homes funds (which are almost over) or other central gov funds.
This won’t apply to works involving any other funding source. It will ‘cap’ nothing of any importance.
It is not an area where we have great expertise. I have tweaked the article to introduce the question of whether it would help many local authority leaseholders. (I think there have been caps for leaseholders in local authority blocks in the past.)
Please can people informed on this issue make comments.
Anon is correct it only applies to works funded under DH. In many cases projects will be unviable and further delayed so it is of little help to owners, or tenants in miserable communal conditions. . In some cases the work will be refocused on internal upgrades and related services eg re wiring rather than external communal works to structure.
p9 of the consultation. You can see the amusing idea that most estates are now decent! Mmm well Mr Pickles join me on the boat to Canary Wharf and lets wander around Tower Hamlets esp east to Canning Town.
How do the RTB leases differ from other leasehold when the maximum is £250.00 per flat/house.
With 29 flats times £250.00 is £7,250.00 per year, if the contract was over two financial years this could be £14,500.00, Am I wrong?
Why has Mr Pickles raised his head above the parapet when we have a new Housing Minister?
This is a seperate thing, Assuming the cost is for qualifying works and consultation has been completed on say £25,000 for you, the cap of £10/15k will apply to DH funded works which are not yet bid for. Current works will not be affected and in the long term its clear they think that DH is coming to an end.
Note that this is a consultation and nothing has changed as yet.
In practice this will take 1 year or 2 to apply and then government look like ending DH funding with few exceptions.
I helped my brothers ESG on stock transfer in Tower Hamlets in 2005, but the stock survey in 2004 showed many flats with original 1957 kitchen and bathrooms. That hasn’t changed. Its not even programmed to be considered until 2015 and as this information is on their website is daft that the DCLG make this assessment to pass to Mr Pickles.
This is just another example of the sucking mud pit that is the civil service. It should be full of chartered surveyors who understand property. Its not changed since I walked out of the planning dept at University who worked with several local councils, and joined Estate Manangement, scarely a clue between them.