Bills

Owners of ex-local authority homes face horror of bills running into thousands | Money

When Cat Whitehouse and her partner James Wooldridge bought their ex-local authority flat on the Roupell Park estate in Lambeth four years ago, they were told there were no major works planned on the block. Then lumps of concrete started to fall off it, prompting health and safety fears.

Lambeth council initially told leaseholders that repairs to the estate would cost £7m, and that the Whitehouse’s share would be £6,000. This soon more than doubled to £13,000 – a fee they scraped together by adding to their mortgage and plundering their savings. Now they have been billed another £5,000 – on top of the £170 service charge they pay every month.

“The council say the total bill will be £12m and we have to pay another £5,000. Some of the other flats paid £15,000 last year and now have demands for another £15,000,” says Whitehouse. “Almost doubling the budget for the work seems ludicrous mismanagement.”

The couple are part of a group of homeowners who either bought former council homes on the open market or through the right-to-buy scheme. There are more than 500 properties on the estate, with about a third privately owned. It is these owners who foot their share of the bill with charges varying depending on the block their flat is in and its size, but it is the freeholder – the council, in this case – that decides what work is done and by whom.

Many leaseholders are finding that they are being billed not just for repairs, but for upgrade and regeneration projects of entire estates.

Fire safety in council-owned tower blocks has been put under the spotlight following the Grenfell Tower blaze last month. First secretary of state Damian Green said local authorities would be expected to pay for fire safety works, with central government stepping in where a council can’t afford it. That statement will have left thousands of leaseholders worried, not only about whether their homes are safe but whether the cost of works will ultimately be passed on to them.

When The Guardian first reported on this problem in May last year, the cost of refurbishing Roupell Park was estimated at £7m with the council admitting there had been “historic underinvestment in the council’s housing stock”. When lumps of the building started to fall off, Lambeth council declared the situation an emergency, erected scaffolding and started work.

The Landlord & Tenant Act 1985 requires freeholders to consult leaseholders if major works will result in a bill of £250 or more per property. Under usual circumstances, the affected leasehold owners are entitled to nominate an alternative contractor to carry out the works and the freeholder is obliged to obtain an estimate. But the rules don’t apply if your freeholder is a local authority. Leasehold owners can make “observations” but the local authority has no obligation to act on them.

Council tenants taking up right to buy should receive an estimate for service charges for the initial five years, but once that period is up there are no limits.

Campaign website the Leasehold Knowledge Partnership (LKP) has unearthed instances where individual leaseholders in Edmonton were given a bill of £25,000; in Haringey £44,000; and from Brent council £15,000.

Oxford city council’s planned revamp of five tower blocks went from £4.7m to more than £20m, resulting in a cost of £50,000 to each leasehold property. The case went to an initial tribunal where a judge ruled residents may not have to pay for all the planned work. Another hearing, scheduled for September, will determine what other works the leaseholders have to pay for and the final cost.

Legislation only allows freeholders to recover the cost of repairs and maintenance from leaseholders, not improvements. But many leaseholders claim they are paying for the upgrade and regeneration projects of entire estates. “We are aware the council can claim the cost of maintenance and repairs, but not improvements,” says Whitehouse. “Yet some of the work seems to be improvements – for example, replacing normal windows for double glazing. If we had known we’d get these bills we never would have bought an ex-council flat.”

Lambeth council has offered leaseholders repayment plans, but these could be unaffordable for someone on a modest salary. Leaseholders billed £13,000 were offered the chance to spread the cost over two years, paying £560 each month plus a £600 penalty fee for not paying the entire cost up front.

The council says the structural repair works to Roupell Park were considered essential due to the risks of falling concrete and insecure and potentially dangerous balcony fixings. “The project costs have increased for a number of reasons, as additional and unforeseen works were confirmed once on site – for example, fabricated steel balustrades along public and private balconies, and increased amounts of brick repairs, which had not been visible during initial surveys,” it says in a statement. “We understand the concerns over the increase in estimated costs and how this may affect leaseholders. We are currently reviewing the repayment options that could be offered to leaseholders who are facing higher bills and we will liaise with leaseholders as soon as we can to do so.”

Sebastian O’Kelly, founder of the LKP, says he is regularly contacted by leaseholders of flats in council properties facing ruinous major works bills. “Part of the problem is the council flats do not have contingency funds, so the private owners face massive bills all at once.

“Councils can be too harsh in demanding this money, with even repayment schemes meaning leaseholders have to find an extra £1,000 a month,” he says.

FLORRIE’S LAW

In theory, local authority leaseholders are protected from massive bills by “Florrie’s Law”. Florence Bourne, 93, “died of shame”, according to her family, after being unable to pay a £50,000 bill for the refurbishment of her block in Newham, east London, in 2013.

Bourne called her son in panic after the huge bill landed on her doorstep. She died of a heart attack after being startled by the sound of falling tiles as builders replaced the roof. A leasehold valuation tribunal later found that Newham council had not done a proper survey and the existing roof would have lasted another 40 years.

The case led to Eric Pickles, then secretary of state for communities and local government, introducing Florrie’s Law, which caps the amount local authority leaseholders have to pay for repairs to £10,000 (or £15,000 in London) over a five-year period.

But there’s a caveat: it only applies if repairs are partly funded by a central government grant. If not, the council can pass the entire cost to leaseholders.

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