From time to time it will be necessary for the Council to carry out major repair works or improvements to the block and grounds in which your property is situated. Such works can be expensive and a proportion of the cost can be passed to you as part of the service charge. The service charge is further explained in Section 6. However there are some protections for you as a leaseholder.
If you have bought your flat under the Right to Buy scheme the Council must advise you of any planned major repairs/improvements to the block in which your flat is situated where the works will be carried out within the first five years of your lease starting from the date of your purchase. This information is given in the Right to Buy Section 125 Notice which the Council will send to you once your RTB application has been accepted.
If work is carried out within the five year period, the Council cannot recharge any more than the price quoted in the Notice, plus inflation. If the property is subsequently resold or transferred within five years, the next leaseholder is entitled to what is left of the five year protection period.
Please note: There is not a renewed five year period each time the lease is sold on.
Consultation
Where a need is identified by the Council to carry out major works, or improvements to properties, e.g. roof replacement, and a leaseholder is to be charged a proportion of the cost of this work, under the Commonhold and Leasehold Reform Act 2002, you have the right to be consulted prior to work being carried out to your block. This applies where the recharge is expected to be more than £250 for each leaseholder.
Where recharge costs are to exceed £250 the Council will (except in cases of emergency):
- give you a full description of the work required
- invite you to nominate a contractor unless the contract has been advertised in the European Journal
- advise you of the estimates received from the contractors
- advise you of the amount payable by yourself
- invite you to make comments and advise you where your comments should be sent
- specify the time in which you have to pass comment
In the case of urgent works, such as leaking roof, the Council may proceed with the repairs without giving you notice and still charge you for the works. In these cases the Council will try to follow the consultation process as far as possible.
Further details on the consultation process is contained in the Commonhold & Leasehold Reform Act 2002. You can buy a copy from HMSO, or you can read a it at any library or on the Department for Communities and Local Government website,www.communities.gov.uk.
Reporting a structural disrepair
Where a leaseholder considers a repair to the structure of their flat and/or to communal areas is required you can report this by calling our contact centre on 0800 9151 600.
What can I do if I receive a large bill for repairs or improvements?
Where you receive a large Service Charge account for repairs and/or improvements you are entitled to pay the account over a one year period by 4 equal quarterly instalments.
You may also qualify for the Right to a Loan under the Housing (Service Charge Loans) Regulations 1992.
Noted below are ways in which the Council may act as a ‘Lender in last resort’ where you are unable to raise finance from an external source e.g. bank or building society.
Discretionary loan
If you do not qualify under the ‘Right to a Loan’ the Council may be able to offer you a discretionary loan. This will be subject to your meeting the Council’s means test criteria. The loan will involve a Council mortgage on your home and interest will be charged at a variable rate. Before taking out a Council loan you should compare the rate of interest offered by other lending institutions. As with any other mortgage, your home may be at risk if you do not maintain the payments required. Further details will be given at the time an account is issued.
Interest Only loan
For people who are on state pension or a low income, the Council at its discretion, may consider providing an Interest Only loan. This is where a leaseholder would be required to pay the interest element only, of the loan. The monthly repayments would be based upon the Council’s variable interest rate at the time of application. The loan would be secured by means of a mortgage on the property. The capital would be repayable in the event of the property being sold or upon the death of the leaseholder. Full details of such loans will be supplied upon request.
Equity loan
In exceptional circumstances of financial hardship and where specific criteria are met the Council may be able to offer an Equity loan. This means the debt would be left outstanding and a charge will be taken on your property. The debt would be repayable on any assignment of the lease, the granting of a long lease, or on the death of the leaseholder. In such an event the leaseholder, or their Estate, would be required to repay the full amount of the principle loan plus either compound interest, or an amount proportional to any increase in the value of the property. Full details of such loans will be supplied upon request.
A Charge on the Property
In exceptional cases and where leaseholders are on a state pension or on low income the Council may, at its sole discretion, consider taking a charge on the property for the outstanding sum. This means that the leaseholder will not make any payments towards the debt. However, the debt will be secured by a charge on the property and interest will be added on a compound basis. The principle debt plus accrued compound interest would become payable on assignment or on the granting of a long lease, or on the death of the leaseholder. The major disadvantage is that the debt will accumulate each year and the future sale of the property may result in all or a large proportion of the sale proceeds being paid to the Council. Full details of such loans will be supplied upon request.
In all cases, where the Council acts as ‘Lender in the last resort’, you will be required to pay all the Council’s legal and administrative costs in respect of any such loan.