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incorporating the London Forum for Council Leaseholders' Associations and the London Leaseholders' Network . DIARY . MANIFESTO . SLN CONSTITUTION . DOWNLOADS . CASES . ISSUES . ASSOCIATIONS . LINKS . QUOTES . BIBLIOGRAPHY . UK-Leaseholder . GOOGLE GROUP . ABOUT US . CONTACT Updated 2007 March 29th. |
"There is great deal of mistrust of the landlords, and people want independent advice because they are not necessarily convinced that the landlords will act in their interest; indeed, the landlords are not acting in their interests, because they have a fiduciary duty to act in their own interests."
Karen Buck MP for Regents Park and Kensington North speaking in the House of Commons Government 'Best Value' policy is built upon the 4 'c's, Challenge, Comparison Consult Competition. London boroughs have been forming an alliance for the purpose of procuring contractors and consultants to carry out major works. It is immediately apparent that once a significant number of boroughs start to operate together that the opportunity for cost comparisons become increasingly limited and best value has to take a back seat. In borough after borough we are witnessing attempts to set up 'framework agreements' and this is naturally causing great concern. Before a framework agreement can be put into place the landlord applies to the Leasehold Valuation Tribunal for dispensation from the duty to consult with leaseholders under Section 20. Once a framework agreement or long term contract is in place all competition is suspended. It has been alleged that these will make savings of cost but no proof to this effect has been produced. These 'partnership agreements' are alternative to the contractual arrangements between commissioning authority and contractor that protect the interest of both parties and in turn those who ultimately pay the bill, leaseholders and ordinary tenants. All we are left with is our duty to challenge these agreements when landlords apply for dispensation. During the house building boom of the 1960's and 70's, at the encouragement of Central Government, the emphasis was placed upon quantity of house building. The guard of commissioning authorities was dropped and not only did the quality of building work suffer but there were instances of severe corruption. Some leaseholders are being asked now to pay major works bills to up-rate that same housing that was built under the 60's regime for an expected life of only thirty years. See the correspondence that appeared in the Paddington, Marylebone & Pimlico Mercury The suppliers got too close to the boroughs that commissioned it and the result was the corruption of T Dan Smith and John Poulson. Aren't we now at risk of repeating the same mistakes? This cutting is from The Times of 2007 March 22nd. 
See also the 2006 Chartered Institute of Building study entitled "Corruption in the UK Construction Industry" that you can download from here. (search on "corruption".) Pauline Walton from Norwich Leaseholders' Association and John Paterson from the London Leaseholders' Network gave evidence on March 5th 2007, to the Communities and Local Government Committee when they considered "Leasehold and Major Works Bills" You can now read what was said by downloading from here the "uncorrected notes" Those making use of these notes should note that they are uncorrected and take to heart the note to this affect on the first page. Communities and Local Government Committee is a Select Committee of the House of Commons and it met in the Grimond Room of Portcullis House at 16.10 hrs (ten past four) and in the public seats there were members from the Social Leaseholders' Network. Inevitably much attention was centred upon leaseholders in London where the problems that are experienced around the country seem to be exagerated by the higher building costs, the greater concentration of leaseholders and the preponderance of high rise and dense development. Mr Bill Olner MP (Lab Nuneaton) thought it incredulous that leaseholders did not have surveys carried out before they bought and would not know what they are in for when they buy but Anthony Essien from the Leasehold Advisory Service explained that surveys of individual flat would not show up problems with the structure, roof or foundations of the buildings nor expenditure that the landlord would decide to make on estate roads and playgrounds. A leaseholder with a house in a semi-rural situation will be getting bills for major works that may only amount to a few thousand pounds and which may result in an equivalent increase in the value of their equity in their landlord's property. We were reminded once again that London has unique problems...........so too do other cities, towns and villages. There is a need, in short, for a 'bottom up approach' that recognises, and celebrates, the diverse nature of our homes rather than the 'top down', 'one size fits all' approach that we are getting. Emily Thornberry conducted a robust questioning of civil servants whose statistics currently only show some 5,000 of London's 108,000 leaseholders have received bills of more that £10,000. Civil servants were unable to confirm whether these were estimates or final bills. The Decent Homes Programme has several years yet to run, and some boroughs have yet to get going with the work. We have to be prepared to see this first trickle, in time, become a flood. To be told the percentage of bills that are above £10,000 might have been more useful. One way or the other it emerged that Communities & Local Government despite having been the both initiator of the Decent Homes Programme and the chief proponent of 'home ownership', has failed to gather statistics to monitor the affect that the Decent Homes programme has upon exisitng 'home owners'. (of course we realise that leasehold is not actually 'home ownership') Mr. Clive Betts MP (Lab Sheffield, Altercliffe) asked whether ordinary tenants find themselves pushing to get decent homes works expedited against a resistance from leaseholders because of the costs that they are going to be faced with. Hopefully the mainstream of tenants, leaseholders.....residents and their organisations have moved on from this approach. Leaseholders bills reveal problems with expenditure that affect all residents in time and alert ordinary tenants to problems with the way that contractors are procured, contracts are drawn up, surveys fail to be carried out and work is selected. When leaseholders receive their final bills they look again at what they got for their money and it is they who can question the quality of the work with the threat of going to the Leasehold Valuation Tribunal. Try doing that if you are an ordinary tenant. So it is that Ordinary Tenants are learning to work together to obtain the Value for Money that is in everybody's interest. The Introductory Summary to The Commonhold and Leasehold Reform Act 2002 (CLARA) clearly states that the Act was intended to:- "simplify and strengthen the existing consultation requirements relating to service charges" However what we find across the country is that council landlords are applying to Leasehold Valuation Tribunals and getting dispensation from providing consultation under Section 20 of the Landord & Tenant Act 1985 as ammended by Section 151 of CLARA. One Civil Servant gave evidence to the effect that procurement practice has moved on from the use of traditional tendering and took refuge in the thought that if leaseholders were not satisfied they could object at the Leasehold Valuation Tribunal which would then arrive at a judgement as to what was right. The way ahead should be for these rights of consultation to now be extended to ordinary tenants but instead we are being taken back into the dark ages. You can help to take these matters froward. If leaseholders on your estate are getting bills in double (or treble figures as on at least two London Estates) then let us know ASAP and we will feed this back to the Select Committee. For a year now the Social Sector Working Party has been meeting to discuss possible changes to the legislation affecting leaseholders with regard to service charges for major works and at last it has reported its findings to Baroness Andrews. The Working party comprised members from:- Communities and Local Government (formerly the ODPM and then DCLG), Local Government Association (LGA)(representing Local authorities interests), London Councils (formerly the ALG)(representing London Local Authorities' interests), The Housing Corporation (now combining with English Partnerships)(this body regulates and registers the Housing Associations, Chartered Institute of Housing (CIH)(represents the interests of housing managers, The Leasehold Advisory Service (LEASE)(Government funded to advise residential leaseholders), The National Federation of ALMOs (NFA)(Representing the Arms Length Management Organisations that sit between Residents and their local authority landlords, The National Housing Federation (NHF)(That represent the Registered Social Landlord's interests). Then representing the Leaseholders have been:- Harlow Leaseholders' sub-group, Manchester Leaseholders' Association, Norwich Leaseholders' Association and London Leaseholders' Network (LLN)(laterly 2 members) The full report (30 pages) can now be downloaded as a pdf file from the LEASE web site here.
" Mike Gaskell, partner at Trowers & Hamlins, said it was ‘almost inevitable’ that associations would consider selling stock to the public because government funding would never be enough to meet demand. But it could prove controversial with tenants, he warned. ‘The big answer on stock transfer hitherto has been “this is not privatisation folks because no one ever makes a profit out of the organisation”. " We should never be guilty of under-estimating the gulf that lies between property consultants and we ordinary residents, how ignorant they can be nor how gullible they think that we are. When trying to put across the positive aspects of having a housing association for a landlord the argument is not that there are no profits and no tenant/leaseholder would believe that. The argument is that the profits cannot be distributed to shareholders but must be used within the organisation. Tenants and leaseholders always note that senior executives of the larger Housing Associations tend to have pay scales well in advance of those for local authority landlords. Indeed this has been the justification for the hike in pay that has accompanied the setting up of ALMOs. See "No justice’ in salary hikes" However this is of little significance ......... The real concern that those facing transfer have is that the land and building assets that their housing represents are absorbed within a larger pool and any surpluses (or should we now call them profits) are to be pulled off their estate to be used elsewhere in the Housing Association's property portfolio in its struggle to grow and absorb or be absorbed. So what would be the significance of Housing Associations floating on the stock exchange? Simple! It is a fundamental of Company law that a company must put the interest of the company and its members (shareholders) first. Quite simply a public company would be required in law to accumulate profits for distribution to its shareholders. Looking after the tenants/leaseholders, sorry following the softening up process of marketisation we have to call tenants 'customers', would only be a means to an end - higher profits. The ultimate nightmare scenario is that tenants, including leaseholders, find themselves with an RSL as a landlord which is pulling surpluses from their estate to divert into investments abroad. Once a company goes public anybody can buy the shares and there are hardly any holds barred. If you need to think about this then you might like to visit the Thames Water web site where you can download the history of that company and note that it boasts of "providing water and wastewater services to some 70 million customers in 46 countries". And what of Places for People? Do they make profits? The Housing Corporation assessment (page 4) from 2006 December states that their group returned a surplus of £14.9m in the year March 2005. As a public company their duty would be to distribute a dividend from these profits and to retain only that which can better be reinvested to guarantee future profits. As a Real Estate Investment Trust the tax regime heralded in last year's Budget requires that 95% of these surpluses be distributed to the shareholders - in order that they can be taxed. Other stories of Places for People appeared in Inside Housing as "Places for People’s soaring private sales lead the way" 2006 November 10th. "Profitable rent hikes in the pipeline as inflation peaks" features a quote from Places for People but is more significant for the statement that "Housing associations made a surplus of just under half a billion pounds last year (Inside Housing, 11 August)." Last but not least: REIT consortium prepares for international bank bids This article tells us that Places for People were not looking to join the consortium but:- "Places for People has also revealed it is considering launching a REIT for its commercial development arm. Finance director Steve Binks told Inside Housing the group was exploring ways to use a REIT, likely to be used to offer financial support to PfP's commercial development arm Blueroom Properties. 'We are looking at expanding our development activity and it may be that we can use a REIT to fund that,' he said. But he said that REITs were only likely to appeal to non-charitable housing associations. 'If you have charitable status then the tax benefits may not be that great. But if you have commercial interests then they may be more attractive.' Paul Herrington, head of UK property investment at asset management group F&C, said launching a REIT would be a sensible move for housing associations. It was a good opportunity for the social housing sector to bring in more funding, he said. And this is where it is at. This weeks' article makes it clear that the advantage that flotation would give lies in the massive amounts of finance that could be raised by the sale of shares but with the surpluses that are already sloshing around un-utilised this is clearly not motivated out of philanthropy or practical need. If we don't want to put it down to the personal greed of Housing Association executive officers and board members then it must be the mind-set engendered by Central Government that has encouraged each RSL to grow and absorb other RSLs or risk being absorbed themselves. Kill or be killed! THE NEXT ROUTINE MEETING OF THE SOCIAL LEASEHOLDERS' NETWORK will be held on Tuesday 10th April 2007 commencing at 18.30 hrs (half past six pm) In the Council Chamber of Camden Town Hall. Dates through to April can be seen if you click on the diary so that you can forward plan and we hope that we will be able to stick with Tuesdays in the middle of each month after April. Currently all meetings are at Camden Town Hall which is one of London's most accessible public venues. "I could save more money by successfully opposing my major works bill than I can earn by spending the same time working." Quote from young leaseholder at Islington Leaseholders Forum on 9th August The argument for reform of leasehold doubtless goes back to the time of its creation but it is interesting to see old documents setting out the changes that were sought. Click on our download section and you can get a copy of The Case for Leasehold Reform from the year of the Coronation. I wonder if anybody can remember Mr G.W. Hitchings who was then the Hon. Organising Secretary of the Deptford Leaseholders Association. It is no wonder that so many leaseholders run into trouble paying their major works bills when you consider that 80% of them bought when they were in excess of 45 years of age. Many such statistics are available from the Survey of English Housing (SEH) that can be seen on the website of the Department of Communities and Local Government (DCLG) Leaseholders thanks should go to Tower Hamlets Leaseholders' Association and all the other Leaseholders' Associations that contributed to making The Social Sector Leaseholders' Rally 2006 the fabulous success that it was on April 26th at York Hall Bethnal Green. The rally was chaired by Mick Lowe Our Manifesto was presented by 6 leaseholders from 5 London Boroughs followed by speeches by:- Simon Hughes MP (Lib Dem for Southwark North & Bermondsey and Shadow Cabinet Spokeman for Consititional Affairs & Shadow Attorney General Jacui Lait MP (Conservative for Beckenham and Shadow Minister for London) George Galloway MP (Respect for Bethnal Green & Bow) Jenny Jones (Leader of the Green Party Group on the London Assembly) David Edgar (New Labour Cabinet member as Councillor on the London Borough of Tower Hamlets Council) finally questions from the floor were answered by the politicians. THE COMMONHOLD AND LEASEHOLD REFORM ACT 2002or CLRA, as it now normally referred, represented the biggest re-writing of leasehold law since the Property Act of 1925. The broad consensus among residential leaseholders is that it has done nothing to address the concerns of leaseholders. The establishment of Commonhold itself has proven to present so many hurdles that it has had little relevance to existing leaseholders whilst developers have shunned the idea of building for commonhold in favour of building for shared ownership.Will Shared ownership turn out to be a new nightmare?
Shared ownership has been billed as a route for first time buyers who otherwise would not be able to afford to step onto the property ladder, who will then be able to buy additional shares in their property as they increase their income.
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