Right-to-buy owners are also being ripped off by the leasehold system, The Guardian reports

By Harry Scoffin

Local authorities can be hard-nosed freeholders, too, journalist Emma Lunn showed over the weekend with a punchy piece for The Guardian detailing the horrors of council-led major works initiatives for flat owners in the social sector who have to pay and live with the consequences of having minimal control over their homes.

Focused on the story of Southwark leaseholder Michelle Baharier, who forced the council last year to deploy top landlord and tenant barrister Philip Rainey QC against her in a successful attempt to overturn her victory over a controversial heating and hot water replacement scheme, the piece has provoked a flurry of debate, including over 800 individual reader comments below the line.

“I am a chartered structural engineer. I have always advised all my clients since the inception of Right to Buy to steer clear. I ask them one question… ‘Why would you want the Council as your freeholder when you haven’t been happy with the way they treated you as a tenant,” said one reader.

Another wrote: “Cash-strapped councils do make the worst freeholders. Leaseholders are an easy source of cash because the lease pretty much says they have to cough up whatever the freeholder demands.”

Leaseholders facing ‘staggering’ bills for ex-council flats

The risk of buying ex-local authority property has been laid bare by a leaseholder who claims she has had to pay more than £24,000 for a new heating system and £2,000 to have her door painted.

Artist Ms Baharier, who in 2008 used right-to-buy procedures to acquire the leasehold interest to her two-bed on the Gilesmead estate in Camberwell, south London, says that since her defeat at the upper tribunal she has had to pay out £32,000 for the major works bill, and the legal fees and interest that she accrued in simply trying to challenge the reasonableness of the project.

She alleges that despite the great expense of the solution pushed by Southwark, which totalled nearly a million pounds and saw individual leaseholders saddled with bills of up to £25,000, the communal heating system “regularly breaks down with leaseholders footing the bill.”

Southwark denies the charge.

Southwark litigant-in-person leaseholder faces wipe-out after £24,000 tribunal victory. Council now deploys ‘shock and awe’ QC …

“We’ve paid for more than 50 repairs in the past year. The council doesn’t seem to know anyone who can fix the heating. The pipes and tanks have cracked and are leaking. I don’t have any control over the temperature of my flat and my hot water tank isn’t sufficiently insulated,” she says.

Ms Baharier insists that she and her fellow leaseholders should have paid for an individual metering solution, which would have not only saved each owner £20,000 but also been less prone to breakdown.

Her leasehold woes include other subsequent one-off bills such as an £8,000 charge per flat for internal decoration, which was then brought down to £2,000.

“The council originally tried to charge us £8,000 each for internal decoration which involved painting corridors and the front door to each flat. We are being ripped off. It took the workman two hours to paint my door,” she says.

First-time buyers looking to get on the first rung of the ladder and council tenants wanting to unlock the benefits of home ownership should not be seduced by discounted ex-council property since they may get stung by giant major works bills as vulnerable flat lessees, LKP CEO Sebastian O’Kelly told the paper.

“The problem is that councils do not have reserve funds, so huge bills come out of the blue. These can be devastating for right-to-buy purchasers or young first-timers, who have bought a council property because it is relatively cheap,” he says, “The bills are staggeringly high, the works are often pretty shoddy and there seems to be minimal cost control.”

He also urged leaseholders feeling financially under water by council major works demands to pay first, challenge later.

“This means you can argue over the quality of the works or the cost without danger of being hit with legal costs if you fail,” he says.

Section 20: leaseholders’ rights

Ms Lunn, who has written extensively on leasehold issues for the national press, took to Twitter to say her report has generated a substantial amount of interest, with her inbox inundated with emails of similar stories and complaints.

The debate continued on Twitter.

In reply to a user who questioned her comment that leasehold is a “massive scam”, the personal finance journalist tweeted:

“Freeholders don’t care about cost control, leading to leaseholders getting massive bills for work that can be done for much less. My flat is share of freehold – leaseholders make the decisions – costs are low, work a good standard, everyone happy.”

“When leaseholders make decisions, costs are kept low. External freeholders’ contract expensive work to their own companies/their friends at inflated prices, crippling leaseholders,” she continued.

David Madden, an associate professor of sociology at the London School of Economics, gave his view:

“Leaseholders in the tower on our estate in Hackney are being charged £25,000 this year for repairs that they argue should have been the council’s responsibility all along—no facade maintenance for decades, a near-deadly accident and now they’re charging leaseholders a huge amount.”

Another reader tweeted:

“Camden have done the same for many estates. The quality of work; the business case for the work; the oversight; the cost; the lack of accountability – all appalling. The conflicts and corruption are self-evident, but you’re powerless.”

One even suggested that cash-strapped councils very deliberately use leaseholders to fatten their budgets:

“A large part of the problem is that the councils are incentivised to drive up bills. ‘Major works’ and repairs are done unnecessarily and inefficiently because they need their ~30% fee of the total for their department budgets. There is zero incentive to give value for money.”