PRERA attended a meeting with MP for Streatham and Croydon North Steve Reed this week. The meeting was setup by a resident of Palace Road Estate and Lambeth Homeowners Association.
The purpose of the meeting was for Antony (the Chair of LHA) to raise Steve’s awareness of the extensive issue and particular nuances faced by Leaseholders of Local Authorities (such as Lambeth Housing), and to ask to be included in the consultation on Leasehold Reform between now and June this year.
LHA have also produced the below letter (which has been sent to Steve Reed also) outlining the issues faced, and suggesting measures to be introduced into the new Leasehold and Commonhold Reform Bill.
MP Steve Reed listened to Antony’s presentation and agreed to speak to the Minister of State (Housing, Communities and Local Government) Matthew Pennycook.
Watch this space.
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Dear Member of the APPG for Leasehold Reform,
I am writing to you on behalf of well over 1000 leaseholders of council properties in Lambeth who have signed up to our campaign. There are other groups of leaseholders of commercially owned properties who may also have written to you. Many of our concerns overlap, but the case of council leaseholders is different.
The principal concern for all is the huge increase in charges for day to day repairs and major works, where leaseholders often receive bills well into five figures, for example: https://southwarknews.co.uk/area/peckham/exclusive-peckham-homeowners-fear-financial-ruin-over-wipe-out-50000-major-works-bills/
Examination of the bills often shows that work has been charged for that has not been done, done so badly that it needs to be done again, was not necessary in the first place, has been seriously overcharged, or all of these. It is not only leaseholders that are being overcharged, but also the councils’ Housing Revenue Account that covers tenanted properties, leading to unrecovered loss of public money.
The underlying causes are: inadequate project management, poor cost controls, lack of inspection of work and questionable auditing of contractors’ invoices.
Individual leaseholders with the time, energy and money to engage surveyors and lawyers occasionally succeed in obtaining rebates from excessive charging, but the contractors have already been paid and the councils make no attempt to recover their money. What is needed is reform of the law to oblige landlords to be fully transparent in their accounts so that any mismanagement can be easily identified and dealt with.
To this end, we are suggesting that the following measures be introduced into the new Leasehold and Commonhold Reform Bill:
- Prohibit the use of Non-Disclosure Agreements (NDAs) imposed by landlords on individual leaseholders who have negotiated out of court settlements of their claims of overcharging. The only reasons for NDAs are to prevent other leaseholders on the same estate from making similar claims and to conceal the overspend from the public, who have a right to know how councils have spent their money.
- Extend the remit of the Housing Ombudsman and Social Housing Regulator. At present they can only deal with individual complaints. They lack the power of enforcement of remedy. At best, they are no more than a sticking plaster. Their remits need to be extended to deal with the systemic failures of landlords. They should be given powers and resources to inspect accounts and procedures to ensure that public money is being properly spent and that leaseholders and taxpayers are being charged fairly.
- Remove the unfair exclusions in “Florrie’s Law”. Florrie’s Law requires local authorities to limit the amount they can charge for future major repair, maintenance, or improvement works. Outside London, the maximum level that may be levied in any 5-year period is £10,000 (£15,000 in London). However, it only applies where central government funding is involved, which defeats the usefulness of the policy. All leaseholders, whether under a local authority or private landlord, require this protection. This law, if applied, would force landlords to undertake proper maintenance to prevent the need for expensive repairs.
- Leasehold & Freehold Reform Act 2024. The Regulations under this Act should require service charge and major works bills to be fully transparent. We ask that the Regulations be brought forward for public consultation without further delay. If landlords cannot produce properly audited evidence to justify their bills, there should be no obligation to pay any more than a reasonable and justifiable amount, as would be the case in any normal commercial situation. It should be up to the landlord to prove reasonableness, whereas now the onus is on the leaseholder to prove unreasonableness. This is the reverse of normal business practice and is unacceptable.
I hope that we can count on your support when these measures come before Parliament for discussion. Leaseholders are being faced with unaffordable increases to their service charges and, in the case of public housing, councils are haemorrhaging unaudited sums to their contractors. The law needs to be amended to remedy this. We would be happy to provide detailed information in due course.