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Help with service charges

By J

Leaseholders who purchased their properties from local housing authorities under the Right to Buy (and those persons who subsequently bought on from those original purchasers) are currently facing huge service charge bills (up to £40,000 in some London Boroughs) for their alleged share of the remedial works to their buildings which is being carried out as part of the Decent Homes Initiative.

Whilst the Government has resisted calls to cap those service charges, they have, from 6 April 2009, introduced two reforms which may be of some benefit to leaseholders in England.

The Housing (Service Charge Loans) (Amendment) (England) Regulations 2009 SI 2009/602 amends the Housing (Service Charge Loans) Regulations 1992 so as to permit housing authorities to make loans to their leaseholders on non-commercial terms. Specifically, on terms that do not require the payment of interest or only require interest to be paid on part of the loan.

Secondly, the Housing (Purchase of Equitable Interests) (England) Regulations 2009 SI 2009/601 give effect to s.450D Housing Act 1985, as inserted by the Housing and Regeneration Act 2008. In outline these regulations provide for the housing authority to purchase an equitable interest in the property in exchange for reducing or cancelling the outstanding service charge bills.

It remains to be seen how keen, if at all, housing authorities are to make use of these new provisions, especially the latter Regulations. I have my doubts.

J is a barrister. He considers housing law to be the single greatest kind of law known to humankind and finds it very odd that so few people share this view.


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