Under the enormously popular ‘Right to Buy‘ legislation introduced by the Conservative Government in 1980, tenants up and down the country took the opportunity to purchase their homes at a considerable discount to what they could expect to pay on the open market. Among these were the tenants of the Lillington Gardens Estate in Pimlico, in the London Borough of Westminster. On the surface it was a great deal but years later, has turning from tenant to leaseholder been such a great idea? Leaseholders on this award-winning and conservation area estate may have mixed feelings as they prepare to challenge service charges running into thousands of pounds being demanded by their freeholder, Westminister City Council. But why are these demands so high?
Lillington Gardens
Whilst building in the 60′s and 70′s favoured quantity over quality, many leaseholders found themselves decades later being expected to pay massive bills for repairs to property that didn’t actually have a life expectancy above 30 years. However, this doesn’t apply to Lillington Gardens Estate which, whilst built in the 60′s, was not only a high quality build but received a number of design awards. So why are leaseholders prepared to take on the might of Westminster City Council when one of their spokesmen has said “the leases clearly state what leaseholders should expect to pay towards the regular management and maintenance of the estate as well as the proportion of the cost of major works as well”.
It’s also not as if leaseholder’s can’t get help in paying these bills,help that includes loans and monthly re-payments. But we’re talking leasehold here and digging a little deeper reveals that all is not as straightforward as it first appears.
The first concern is that the final amount the leaseholders of Lillington Gardens are likely to be charged has been uncapped so they have no way of knowing what the final bill will be until it lands on the doormat.
When they compare the cost of similar work done in the past with what they are expected to pay now, the increase is much larger than most anticipate or make allowance for. Whilst many councils across the country often cite the rush to comply with the Decent Homes Standard, many leaseholders believe they are facing higher costs because their landlords have failed to maintain their blocks properly in the past although I don’t know if this line of thought applies here.
It does however lead me nicely into the fact that leaseholders are actually asking whether the council has been able to obtain ‘best value’. This is a policy built on ‘Challenge, Comparison, Consult and Competition’. If I have understood this correctly then the contractual arrangements between commissioning authorities and contractors (that protect the interests of not only both parties but those who pay the bills), are being increasingly replaced. Not, it would seem by something better but by London boroughs aligning themselves together to set up framework agreements in order to procure contractors and consultants specifically to carry out major works. Local authority landlords are able to apply to the LVT for dispensation from the duty to consult with them under Section 20 but to my mind this automatically negates the 4 ’C's that the ‘best value’ policy is comprised of.
Again, whilst I don’t know if this applies here I do know that another big problem social sector leaseholders face is that many early local authority leases don’t provide for the operation of sinking funds. These are separate funds established and contributed to over time to pay for the larger works that buildings inevitably need as they age. Legislation for social sector leaseholders doesn’t actually prevent one from being established but the reasons for not doing so include technical issues relating to the Housing Revenue Account rules, the difficulty in setting contributions at realist and affordable levels and the fact that some earlier sinking funds actually lapsed because leaseholders were reluctant to make any more contributions after works were not carried out on schedule.
Whatever the issues, the leaseholders of Lillington Gardens Estate are due to commence battle this week. Will they be as successful as leaseholders from other Boroughs in effecting change?
Watch this space!
Guest Blogger Sharon Crossland writes here regularly on the issues facing Pimlico Leaseholders and their Tenants. Her website is the recognised authority on Managing Leases, and Leasehold Management.
