Social Rented Housing: Repairs and Maintenance

Department for Communities and Local Government written question – answered on 29th January 2015.

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Photo of Rushanara Ali Rushanara Ali Labour, Bethnal Green and Bow

To ask the Secretary of State for Communities and Local Government, what guidance his Department issues to local authorities on collecting payments for repairs to leasehold properties covered by the Decent Homes programme.

Photo of Brandon Lewis Brandon Lewis Minister of State (Communities and Local Government)

The Department has provided the following guidance to Local Authorities on collecting payments for repairs to leasehold properties covered by the Decent Homes Standard:-

  • On 12 August 2014 this Department introduced “The Social landlords Mandatory Reduction of Service Charges (England) Directions 2014”. The new mandatory directions limit charges that social landlords can make to leaseholders in respect of major works funded by the Government. The cap is £10,000 for works outside London and £15,000 for inside London, over any 5 year period.
  • The Department wrote to all local authorities (letter attached) about the wide range of payment options available to help leaseholders meet major works bills associated with Decent Homes Funding. This letter reminded local authorities of the importance of the following points:-
  • Reminding landlords of the importance of meaningful engagement with leaseholders at an early stage on issues relating to major works bills.
  • Existing statutory consultation requirements upon landlords where proposed works will cost an individual more than £250, or where it is proposed to enter into a long term agreement involving costs to the service charge payer of more than £100 in any accounting year and their rights to nominate contractors from whom estimates should be sought.
  • There is a statutory duty for landlords to provide loans on specified terms to help leaseholders pay service charges where requested in specified circumstances.
  • Landlords may offer interest-bearing loans on terms which they determine.
  • Landlords can also offer equity loans – i.e. interest-free loans on which there is a monthly repayment and which pay a percentage of the market value when the property in question is sold. These loans are on terms agreed with the individual leaseholder
  • Landlords can cancel the service charge bill by taking an equity share in the property, where there is no monthly repayment and the landlord redeems their share when the property is sold. These arrangements are on terms agreed with the individual leaseholder.
  • Landlords can extend or delay the repayment period for the service charge for a period which they determine.
  • Landlords may defer payment until the property is sold, charging interest in the meantime (known as putting a charge on a property)
  • They can also buy the property back from the leaseholder on terms which they agree. Buybacks are part-funded by Government.
  • Service charges sought towards the costs incurred by landlords are only recoverable to the extent that they are reasonably incurred, in accordance with the Landlord and Tenant Act 1985.
  • The Landlord and Tenant Act 1985 provides leaseholders with a number of statutory rights where service charges are concerned, including the right to be consulted by their landlord about proposed works, and the right to challenge the reasonableness of service charge demands at the First-tier Tribunal (Property Chamber).
  • Guidance and advice in respect of service charge issues where this is needed, is available from the Leasehold Advisory Service, which is an independent body supported by Government to provide advice on residential leasehold issues.
  • Right to Buy purchasers are protected by a statutory requirement that the landlord, before selling, must estimate service charges likely to arise during the 5 years following the sale, and may not charge more than this estimate except a prescribed allowance for inflation.
Letter on LA Major Works Bill (Word Document, 94 KB)

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