Leaseholders Handbook

The right to consultation regarding qualifying long term agreements and major works programmes

We believe in the value of consulting you about our services. In addition there is legislation which affects the way your building is managed and the rights you have as a leaseholder for items of expenditure over certain limits.

The Commonhold and Leasehold Reform Act 2002 received Royal Assent on 1 May 2002, but its provisions have continued to be introduced in stages.

Section 20 Landlord and Tenant Act 1985, as substituted by Section 151 Commonhold and Leasehold Reform Act 2002, contains revised consultation requirements.

The purpose of the Act was to enhance leaseholders’ rights and afford greater protection of their service charge money. Amongst other things it amended the old Section 20 consultation requirements, in respect of major works and qualifying long term agreements:

• it eased the rules on enfranchisement
• it introduced the concept of Commonhold.

Consultation

The Council is required to consult you (and any recognised Residents Association) before we carry out any maintenance or improvement work likely to cost more than £250 per flat, and before we enter into any long term agreement likely to cost more than £100 per year per flat.

Qualifying works are repairs, maintenance or improvements works on a building or other premises identified in your lease. These are usually specialist works that will not be undertaken by our day-to-day contractors.

You have two 30 day periods to comment on our proposals. The first stage is to advise you of our intentions and the second stage is to provide you with the estimated costs. We will also write to any residents associations in the borough. You may have the right to nominate a contractor yourself and you may comment and inspect the tenders if you wish. If you raise an issue we will respond to you within 21 days. If we do not choose either the lowest priced contractor or one nominated by a residents association, then we will write to you again within 21 days if entering into a contract to explain to you why we have selected this contractor.

Qualifying long term agreements relate to services that we provide and could include:

• cleaning and gardening
• insurance cover
• maintenance of lifts
• partnering contracts for day to day repairs and capital projects.

We will consult with you if we are entering into an agreement for more that 12 months and it will cost you more than £100.

Where we are carrying out works under a qualifying agreement (which we have already consulted you on) you will not be able to nominate a contractor. We will inform you of our intention to carry out the work, the reason it is necessary and an estimate of cost from the contractor we are in a long term agreement with. We will still give you a 30 day period to inspect the tenders and make comments. If you raise an issue we will respond to you within 21 days.

Please submit consultation comments in writing to:

Home Ownership
Royal Borough ofKingston Upon Thames
Guildhall 2
Kingston
KT1 1EU
Email: leasehold.consult@kingston.gov.uk

First Tier Tribunal previously known as the Leasehold Valuation Tribunal

The First Tier Tribunal has power to authorise a landlord to dispense with the consultation requirements if it is satisfied it is reasonable to do so.

Examples are:

• very urgent works (safety grounds)
• advance applications, where the landlord gives a full description of the relevant reasons
• difficult to obtain more than one estimate with regard to specialist works.

Paying for major works (service charges)

Kingston Council recognises that some lessees may find the cost of some works difficult to pay for, although we must maintain the building in accordance with the lease and for the benefit of all residents.

Repayment options are as follows:

Resident leaseholders

If you are a resident leaseholder you can pay for major works which cost more than £1500 in several ways:

• Lump sum payment: You can pay for the full amount in one go and receive a discount of 5% if you pay on demand (one lump sum payment), or
• Instalment facilities: If you are resident in the flat you can opt to pay for them over a period of up to seven years (10 years for works carried out under the Council’s Better Homes Programme). The first three years are nterest free.

These are deferred payment options and are not secured to the flat by a mortgage:

• if you are on a low income, or on Income Support, the Benefits Agency on 020 8481 3000 may be able to help you or access www.direct.gov.uk
• you may be able to add the amount to your mortgage
• you may be able to get a loan from a bank orbuilding society.

Service charge (major works) loan

If you bought your flat under the Right to Buy Scheme, you may be eligible for a loan under the Housing (Service Charge Loans) Regulations 1992, in respect of the cost of repairs. This is often simply referred to as a Right to Buy Loan.

You may borrow the amount by which the service charge exceeds £1,500 subject to a minimum amount in excess of £500 and a maximum of £20,000. The repayment period depends on the amount borrowed. You would be required to pay interest for the loan at the Local Authority mortgage interest rate. Such a loan would also be secured by a mortgage on the flat.

Your request for a loan must be made within six weeks of the date you are invoiced for the works in question.

If you have any queries regarding payment options please contact the Income Recovery Team on 020 8547 5468.

Non-resident leaseholders

Non-resident leaseholders are required to pay for major repairs in accordance with the terms of the lease which is payment in full on invoice. There is no discount available to leaseholders for prompt payment.

However from 1 April 2015 the Council have introduced a scheme enabling non-resident leaseholders to repay major works or Better Homes invoices over £1,500 over three years subject to interest being payable on the debt. Interest will be charged at five per cent above the Bank of England Base rate on the amount owed.

The Council are also considering whether it will be able to offer payments in instalments from receipt of the estimate. If this option can be offered, further details will be provided when we consult with leaseholders on the estimated charge for major works.

Non-resident leaseholders who rent their homes to Council nominated tenants through our Private Sector Leasing scheme or Tenant Finder service can continue to benefit from a five per cent discount on prompt payment in full or interest free payments over three years.