Council major works charge cap?

Council leaseholders, those who exercised the right to buy or those who bought from them, have been facing very hefty major works charges, perhaps particularly in London. When repairs have been carried out alongside Decent Homes programmes, or as large scale works of roof and window replacement have gone ahead, major works charges per household of £20,000 or more have not been uncommon, with some reaching £40,000 or £50,000. While there have been successful challenges to these on occasion, those challenges are the exception.

The DCLG is now proposing to cap charges for repairs recoverable by Councils. The proposed cap is £10,000 (or £15,000 in London) over a 5 year period, where there is some Government funding to the COuncil for repairs and maintenance (eg, the remnants of Decent Homes, or any future funding). The consultation is here.

This would be a very significant cap. While it may well give some relief to hard pressed leaseholders, the obvious question is what would Councils  do about required major works or completion of Decent Homes schemes if they are unable to recover a proportion of the costs from leaseholders (not just a delay – many councils have an installment scheme, but at all)? There is no suggestion of any alternative sources of funding opening up.

The suspicion is that there will be a great temptation to simply delay works, or not do them at all. And that may open up a whole fresh round of leaseholder litigation.

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Disrepair, Housing law - All, Leasehold and shared ownership and tagged , , .

14 Comments

  1. As I read it, the caps would apply only to major works which had been part-funded by central Government. Certainly in Westminster, almost no schemes seem to get government funding.

  2. A rather delayed response to the problems identified in Craighead v LBI? And a sign that the 2008 Act amendments didn’t work?

  3. I am not sure if this is yet another sticking plaster policy with 2015 in mind or if it is, if 2015 goes in the favour, the first step in further reforms. Perhaps some of the reasoning, in London and the SouthEast at least, will be that higher rents will be intended to be used/retained as the source of funding. In some ways I would hope that Councils and ALMOs will think again on some of the “unneeded new roof” and the default “install PVCu” stories brought about by the spend it while we have it attitude. Perhaps they can revert to cyclical repairs such as painting which leaseholders might find far more affordable.

    • To be honest, I think this isn’t even a sticking plaster. It is a cynical gesture. It is probably quite simple for Councils to separate major works from Govt funded (Decent Homes) works. If they are separate, then the leaseholders still have to pay up in full.

    • I see it as a sticking plaster to the rising alienation of LA leaseholders “there, there, all better”. Many will rejoice in the notion of a cap on DH work, and as a deferal as non DH work is unlikely to proceed at the same pace, if at all. I think we agree, it is just a choice of description.

  4. As a result of planned DH works, two years ago clients finally exercised TMO ( which in itself is incredibly tortuous as a procedure). They are phasing decoration works which are, in internal decs, 65% of the projected ALMO partner’s cost, and for PVCu windows using the same extruder, but fitted internally, are 53% of the earlier projection. And that includes meeting the fees of their technical department over and above their own surveyors and planning supervisors.

  5. Frankly I would like to see all housing stock removed from LA control leaving them with emergency provision alone and to function as a regulator and commissioner.

    • I would beg to differ in that while they are in some ways just as mired in a particular culture and way of thinking, the various social housing partners I have dealt with have been night and day. Having had primary responsibility (before wandering off to stalk the LVT and more complicated stuff in a shed) where our private sector managers were involved with their residents there were two clear comments- we can trust you as you know what to do and get it done. That was often followed with “why can’t you look after us?”

      The problem is that councils have too many political and financial distractions and priorities, and the biggest difference is when a council or ALMO fails, the council will not take enforcement action. And don’t get me started on exemptions.

      Removing ownership and management from them and requiring them to regulate, would improve standards in RSLs and the Private sector, not too mention private housing.

  6. Surely isn’t Section 27A of the LTA 1985 meant to stop unreasonable charges? I can see the point of capping charges under PFIs because the work is necessarily compacted.

    However, to cap everything LA at £10k for 5 years (or £15k in London) seems to me to be almost pushing LAs to breach their own leases – “do we fund the work now, or do we leave it to fester until it costs even more 5 years down the line?”

    • It isn’t capping everything. It is only proposed to apply where there is Govt funding for maintenance or repairs involved – which currently is only Decent Homes remnant funding. So, the cap would only come into play if chargeable works were being done as part of, or conceivably alongside, DH works to a building or estate.

      It would often not be difficult for Councils to simply separate off those major works and charge in full, I suspect.

    • Yes thats right. They may well bid under DH for internal works which only apply to leaseholders who opt in, and might well look at certain recoverable works which fall under the cap, or do them without DH funding. I can see the Francis decision coming into play if they say X is DH, but Y is not, or X is DH but under the cap, in that some might argue that its all qualifying works and the cap should apply to the total.

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