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Leaseholders in social housing: paying for major works (England)

Published Friday, July 5, 2019

An explanation of the assistance available to assist long leaseholders of social landlords in paying for major works. In August 2014 the Coalition Government introduced a cap on the amount that can be recovered from these long leaseholders where the work has been carried out with funding from central Government. The cap has been referred to as "Florrie's law." The Housing, Communities and Local Government Committee has recommended the introduction of a Code of Practice for social landlords.

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Despite several legislative attempts by Governments over the years to increase the statutory protection available to long leaseholders in blocks of flats, complaints about a lack of redress in relation to service charge demands, and demands for carrying out major works are still rife. The position of long leaseholders in blocks of flats owned by social landlords has attracted particular attention.

All social landlords were required to bring their stock up to the decent home standard by 2010. Although funding for this programme has largely ended, social landlords are still required to carry out works to maintain their stock.

Where major works are carried out by social landlords to blocks of flats, this can result in long leaseholders receiving substantial bills in respect of their contribution towards the cost of this work. In response, in August 2014 the Coalition Government brought in a cap on service charges for social sector leaseholders which applies where the work is carried out with central Government funding. This cap has been referred to as “Florrie’s law” followoing the case of an elderly long leaseholder who challenged a bill for major works amounting to £49,000.

The issue of high one-off bills has attracted additional media attention in the wake of the Grenfell Tower fire and the remedial work required to remove and replace ACM cladding. There is a separate Library paper on this issue: Leasehold high-rise flats: who pays for fire safety work?

The Housing White Paper, Fixing our broken housing market (February 2017), included a commitment to “improve consumer choice and fairness in leasehold”. The Government, along with the Law Commission, has embarked upon a wide-ranging programme work concerning leaseholders’ rights and redress mechanisms. Full details of this work can be found in the Library paper: Leasehold and commonhold reform.

The Housing, Communities and Local Government (HCLG) Select Committee launched an inquiry into leasehold reform on 24 July 2018 with a focus on the position of existing leaseholders. The Committee’s report was published on 19 March 2019 – the inquiry considered the imposition of one-off bills, describing them as “a source of great distress for leaseholders.” The Committee recommended the introduction of a Code of Practice for local authorities and housing associations which would provide best practice guidance on the conduct of major works.

The Government’s response was published on 3 July 2019 and is covered in section 5 of this paper. The Housing Green Paper, a New deal for social housing (August 2018), also asked what more could be done to support social housing leaseholders. Responses are being analysed – the outcome and action plan is expected to be published in September 2019.

This note outlines the assistance available to these leaseholders and goes on to discuss efforts to strengthen their rights and Government responses.

The legal provisions described in this note apply in Wales and in England but the maximum cap from August 2014 applies only in England.

 

Commons Briefing papers SN04553

Author: Wendy Wilson

Topics: Housing, Owner occupation, Social rented housing

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