Flat's £23,000 Service Charge Bill 'Beggars Belief', Says Owner

A resident at a 24-flat development in central London says he had the shock of his life when he opened his latest service charge bill and found he was being asked to pay £23,309 for the year – 12 times the average for the capital. “Many of the charges listed beggar belief,” says Waiel Yahia, who bought his three-bedroom flat in early 2017 when his bill that year was £9,420. Another resident with a smaller flat, Chandini Lachmandas, is being charged £16,943 this year, up from £6,965 three years ago. Residents are now paying more than the millionaires living in one of Mayfair’s most exclusive developments, which boasts luxury perks such as a swimming pool, cinema and wine room. Read more on the Guardian website.

https://www.theguardian.com/money/2020/nov/21/flat-service-charge-bill-owner-london-fees 

Later Life Housing ‘Largely Ignored And Not Understood By Government’

A new survey from Winckworth Sherwood has found a series of aspects of older people’s housing are ignored by government. The government are also failing to provide the choice of tenures and care options and is confusing for buyers, says a new report from law firm Winckworth Sherwood and Housing LIN, a specialist housing network of housing, health and social care providers. The report – The other end of the housing market: Housing for older people – also notes a marked rise in the number of private developers moving into this market and fear over high service charges holding back decisions to move. Download the report from the Housing LIN website.

First Million Pound 'Affordable' Housing Property Goes On Sale

Britain's first £1million 'affordable' housing property has gone on the market but its prospective buyer will need to earn £82,000-a-year to cover the cost. The three-bedroom flat in Hackney, east London, has come under fire from housing charities after being valued at £1,025,000 with would-be homeowners offered a 25 per cent stake in the property. It means that if prospective buyers only have the minimum deposit of £12,813, they would need to be earning £82,000-a-year to get a mortgage on the remaining £243,437. With this agreed, mortgage repayments on the 25 per cent stake would work out at around £1,352-a-month. Housing association rent on the remaining three quarters of £1,121, and an additional monthly service charge of £250, would then push up the total monthly outgoings to £2,723. Read more on the Daily Mail website.

Court of Appeal Overturns Leaseholder Consultation Ruling

Landlords will not need to consult leaseholders if separately accumulated service charges exceed £250 during the year, the Court of Appeal has ruled. The case, Phillips v Francis, overruled a decision in the High Court that required landlords to conduct formal consultations if the cost of works exceeded £250 during the year – a ruling that experts called ‘almost unworkable’ as landlords could not be expected to predict service charges in advance. Landlords were faced with a situation where, if unexpected repairs were required, they would either be in breach of repairing covenants if they did not carry out repairs, or liable for the costs themselves as they had not consulted before making the repairs. Read more on Inside Housing.

New Cap on Charges to Leaseholders for Major Works

In October 2013, the government consulted on capping the charges to leaseholders for major works. There were already directions in place that capped leaseholder for future major repair, maintenance, or improvement works at £10,000 when they were wholly or partly funded by specific named government funding programmes.  These directions, last revised in 1999, have been updated to include all future central government assistance for works of repair, maintenance or improvement provided by the Secretary of State or the HCA.  From 12 August there will be two caps:

·         £15,000 for homes in London

·         £10,000 for homes outside of London.

This acknowledges the higher prices in the capital, and that the nature of the stock, with many homes in tower blocks, makes it more expensive to repair and maintain. Read more on the Housemark website.

Service Charges and Universal Credit

The National Housing Federation has published a new briefing note, focusing on service charges and changes which have come into play with the introduction of Universal Credit. The briefing covers the following key issues:

• Service charges are governed by legislations and regulation
• Eligibility for benefit will change under Universal Credit (UC)
• There is a need to inform tenants claiming UC of eligible and ineligible charges

Download a copy of the briefing from the NHF website.

Housing Benefit – Parliamentary Written Answer

Mr Frank Field: To ask the Secretary of State for Communities and Local Government pursuant to the answer of 12 February 2014, Official Report, column 652W, on housing benefit, whether local authorities will continue to decide on applications for reimbursement of service charging on adaptation following the full introduction of universal credit. 

Kris Hopkins: Decisions on charging for maintenance costs following housing adaptations funded by the disabled facilities grant are for local authorities. Those decisions will continue to be made by local authorities following the introduction of universal credit.

Right to Buy Scheme – Parliamentary Written Answer

Mr Nicholas Brown: To ask the Secretary of State for Communities and Local Government what guidance he has issued under the Right to Buy scheme to tenants who are considering purchasing leasehold properties on determining the extent of service charges and other leaseholder responsibilities for which they would assume responsibility.  

Kris Hopkins: The Government has been clear that Right to Buy applicants must be provided with information on both the benefits and responsibilities that homeownership brings. Our Right to Buy booklets: Want to make your home your own? and Thinking of buying a council flat? provide tenants with advice and tools to help them work out the costs of homeownership. The booklets are available for free from social landlords or they can be downloaded here:

http://righttobuy.communities.gov.uk/howtoapply/ 

https://www.gov.uk/government/publications/thinking-of-buying-your-council-flat--2 

The Housing Act 1985 also contains a number of duties on social housing landlords in respect to supporting potential Right to Buy leaseholders. Social housing landlords must provide all tenants with a document containing information to assist the tenant in making their decision, including on leaseholder responsibilities. As part of the offer notice to a Right to Buy applicant, landlords must also provide an estimate of service charges for the first five-years of ownership. The right hon. Member may also be interested to note that the Department is currently considering the responses to our recent consultation on proposals to cap leaseholder charges at £10,000 outside London, and £15,000 in London, where the works to tenanted homes receive future Government funding. I would expect social landlords to ensure that leaseholder charges are always proportionate and rational, and deliver good value for money.

Confusion over Repairs Caps

A proposed cap on what councils can charge private leaseholders for repair work has been met with confusion and scepticism by legal experts. Eric Pickles said recently he wanted local authorities which receive government funding to help maintain tenants’ homes to charge leaseholders a maximum of £10,000 over five years for repairs, or £15,000 in London. Lawyers were divided on whether the proposals would be costly for council landlords.  Giles Peaker, a partner at Anthony Gold Solicitors, said councils could still use money not provided by the government to pay for communal repair works, which would mean they could charge over the cap. ‘[The proposal] is fairly meaningless,’ he said ‘It only applies where there is government funding related to the works… I think this would be really easy to get around.’ Read more on Inside Housing.

New Curbs against Councils’ Rip off Repair Charges

Eric Pickles has announced plans to crack down on councils that sting private leaseholders with huge bills for their share of the ‘repairs’ to the building and communal areas.  Mr Pickles said he was outraged that some councils had targeted hard-working leaseholders, often those who have bought through Right to Buy, with extortionate bills of nearly £50,000 for the upkeep of their building. The proposals, which will be subject to consultation, would ensure that councils that get government funding to help maintain their tenants’ homes could in future only charge leaseholders a maximum of £10,000 over a 5 year period for repairs, or £15,000 for those in London.  Read more on the Govuk website.

UC Assessments Are a Recipe for Confusion for Leaseholders

As the roll out of universal credit nears, the DWP has begun distributing a range of guidance notes on how various assessments will be made, such as on how the universal credit will be calculated for payments on service charges where home owners are on a long lease.  Universal credit will not be paid for all service charges, only those that are deemed eligible.  The guidance notes suggest that the managing agents running the service element will be the best people to make these calculations. Among the examples given for ineligible service charges are the installation and maintenance of disability equipment and adaptations, individual emergency alarm systems, and communal recreation areas.  Having gleaned the information from the individual managing agent about these service charges, the DWP assessment officer then has to go on to consider other factors in order to decide how much the recipient of the benefit will get for this. Read more on the Guardian website.

Universal Credit Service Charges – Guidance for Landlords

Ahead of the introduction of Universal Credit in 2013, DWP is publishing the landlord guidance for Universal Credit service charges. This guidance is intended for social sector landlords of Universal Credit claimants, but is not intended to cover Supported Exempt Accommodation, which will be administered outside of Universal Credit.  This guidance reflects the policy intent of paragraphs 7 and 8 of Schedule 1 to the Universal Credit Regulations 2013, which were laid before parliament on 10th December 2012 and which remain subject to parliamentary approval.   The guidance now sets out those charges that are to be eligible under Universal Credit. We would welcome substantive comments that could improve the clarity of the guidance so that it can more easily be followed by landlords and related parties.  Find out how you can comment on the DWP website, or on the Consultations page of this blog.

Time to Make a Noise about Housing Attacks

In simpler times, the rent was just the rent. The breakdown of council rents in recent years, to include many itemised service charges, was never for our benefit as tenants. Today, housing experts say that it is "uncertain" whether the universal credit, being phased in from October 2013, will cover tenant service charges, as current housing benefit does. Draft regulations published in June 2012 look set to exclude 13 different types of service charge from benefit coverage. The impact on tenants would be severe, and for some, devastating.  We estimate that the changes would cut the disposable income of single unemployed tenants by one-third, from £64.87 to £42.97 per week. That's on top of the Tories' other benefit changes - the council tax shortfall, the "bedroom tax" and so on. Many councils and housing associations have been considering the withdrawal of some services, because tenants would be unable or unwilling to pay high service charges from their benefit income.  Read more on the Morning Star website.

Social Rented Housing – Parliamentary Written Answer

Rushanara Ali: To ask the Secretary of State for Communities and Local Government what assistance his Department is providing to those unable to meet their financial commitments as a result of rising rent and service charges; and what steps he is taking to prevent housing associations raising such costs.

Grant Shapps: Any tenants facing difficulties in meeting the cost of their rent or service charges should discuss this with their landlord. The regulatory framework requires registered providers to develop and provide services that will support tenants to maintain their tenancy and prevent unnecessary evictions.  Tenants on low incomes are also supported by the housing benefit system, depending on individual circumstance. As well as talking to their landlords, tenants should also discuss what support is available with their local authority.

Fewer Service Charges to Be Covered By Benefits

Proposed new rules could lead to fewer service charges being covered by housing benefit, sector experts have warned.  Draft regulations for the universal credit redefine which service charges are eligible to be covered by housing benefit.  As a result of the change, lawyers and housing consultants warn that a host of service charges could no longer be covered by benefit. This would mean extra cost to tenants or landlords, or a reduction in services for tenants. 13 different types of charges would become ineligible under the new rules. These include charges for the maintenance of communal gardens, fire safety equipment, communal heating and lighting, lifts, door entry systems, children’s play areas, white goods, furniture and rubbish collection.  Read more on Inside Housing.

Supported Housing Investigation Launched

The government has launched an investigation into the level of service charges levied by supported housing providers, after becoming concerned that some were inflating costs. The news emerged in a consultation document that also set out radical proposals for the future funding of housing benefit for people in supported housing. The document, published by the Department for Work and Pensions, revealed it had launched an investigation into service charges. It will run the probe with the Communities and Local Government department. The move follows research into the costs of supported housing published last year by the DWP, which revealed median service charges had increased in 2009/10 compared with the previous year. The new investigation has prompted fears among supported housing providers that the DWP may insist on service charge reductions that could end the viability of some schemes. Read more on Inside Housing.

Service Charge to Be Included In 80% Rents

Service charges will be included in the new affordable rent regime. Confusion has surrounded service charges following the government’s announcement in October that it will allow landlords to charge rents at up to 80 per cent of market rent. Landlords have feared that if the charges were not included in the definition of affordable rent, the real cost to residents would be closer to market levels. The Homes and Communities Agency has refused to confirm whether the charges will be included, but a source confirmed they would be. Service charges cover services including cleaning, management costs, lifts, maintenance of entry phones and the provision of wardens and caretakers. Most of these charges are covered by housing benefit. Social rents do not include service charges, which are added on afterwards but they are included in definition of private and intermediate rents. Read more on Inside Housing.