Part 1
ITEM NO.
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REPORT OF STRATEGIC DIRECTOR FOR SUSTAINABLE
REGENERATION
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TO THE LEAD MEMBER FOR HOUSING ON 7TH MARCH 2011
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TITLE: Major Capital Works Charging Policy for Residential Leaseholders
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RECOMMENDATION:
That Lead Member approves the implementation of the Major Capital Works
Charging Policy for Residential Leaseholders and authorises the Private
Sector Renewal Housing Assistance Policy to be amended to make the
existing forms of loan assistance available to appropriate leaseholders.
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EXECUTIVE SUMMARY:
Salford City Council has a statutory responsibility to keep the structure and
communal areas of residential buildings in it’s ownership in a good state of
repair and condition. Where leasehold properties are located (high rise, low
rise and cottage flats) these major repairs and maintenance works can be
recharged to the leaseholders. This policy puts in place the detail and
process to enable the recharging to be made.
This Major Capital Works Charging Policy for Residential Leaseholders will be
implemented by the appointed managing agent in an appropriate manner and
in compliance with the relevant legislation. The Policy in full is attached in
Annex 1.
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BACKGROUND DOCUMENTS:
Housing Strategy 2008-11 (Available for public inspection)
Private Sector Renewal Housing Assistance Policy
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KEY DECISION:
YES
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DETAIL
1.1
Salford City Council has a statutory responsibility to keep the structure
and communal areas of residential buildings in it’s ownership in a good
state of repair and condition. Where leasehold properties are located
(high rise, low rise and cottage flats) these major repairs and
maintenance works can be recharged to the leaseholders
1.2
Landlord and Tenant Act 1985, allows the landlord of the property to
recharge the leaseholder for their share of any major capital works that
are carried out as part of this duty. Although the legislation allows for
this, what can be charged for is determined by the detailed contents of
the lease. Leaseholders pay an annual service charge to cover the
costs of day to day repairs.
1.3
In order to provide a consistent approach across all Salford City
Council’s residential leaseholder stock the policy has been developed.
In brief it sets out:
 what is being charged for;
 the different payment options open to leaseholders;
 the assistance packages available for those who are unable to
access resources to meet the costs on their own;
 the consultation processes dependent upon the procurement route
taken; and
 the appeals process.
1.4
The Policy will be implemented by appointed managing agent(s),
currently the only one is Salix Homes, in an appropriate manner and in
compliance with the relevant legislation. Existing monitoring
arrangements will ensure implementation.
1.5
This Policy has been developed in consultation with a number of key
stakeholders including:
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1.6
Leaseholders through the Leaseholder Forum;
Salix Homes – main managing agent;
Strategy and Enabling Team;
PFI Team;
Housing Investment Team;
Debtors Team (Customer and Support Services); and
Salford Money Line (SML).
Without this Policy, the Council would not be able to recharge for major
capital works, meaning that this would otherwise be subsidised from
the public purse. However, to avoid hardship and provide support the
Council has proposed a suite of financial support packages, which will
be administered by Salford Money Line (SML), that are compliant with
the appropriate housing and financial legislation.
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1.7
This area is complex, governed by a multitude of housing and financial
support and assistance legislation and guidance that is subject to
frequent change. As such guidelines have been developed for
managing agents and partners to support the implementation of the
Policy. These and the Policy will be reviewed and updated on a
regular basis.
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KEY COUNCIL POLICIES:
Housing Strategy 2008-11
Private Sector Renewal Assistance Policy
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EQUALITY IMPACT ASSESSMENT AND IMPLICATIONS:
A Community Impact Assessment screening process has been completed on
this policy. It was concluded that there would not be any disproportionate nor
adverse impact upon the equality strands.
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ASSESSMENT OF RISK: Low
Without this Policy rechargeable costs would not be recovered. In the case of
these major capital works for Salix Homes managed stock this equates to
approximately £2m.
This Policy will apply to all council owned stock, irrespective of managing
agent and major capital works procurement route.
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SOURCE OF FUNDING:
Funding for Major Capital Works programmes are in place. On completion of
the works the managing agents will then seek to recover these costs.
Leaseholders, unless qualifying for assistance and support are responsible for
paying for major capital works and will need to seek appropriate private
financing. Financial support for those who require this, including management
of repayments etc; will be administered through the existing arrangements for
managing loans provided under the Council's Housing Assistance Policy.
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LEGAL IMPLICATIONS:
Supplied by: David Egerton (Ext: 3130)
The Council has both statutory and contractual responsibilities to its
residential leaseholders with regard to the condition of blocks of flats and their
surroundings. It is therefore important to have a policy in place setting out
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how contributions to the costs will be assessed and recovered from
leaseholders. The report summarises the legal framework and no
contravention of legal requirements has been identified in the proposals. The
proposals represent a reasonable approach for the Council in dealing with this
difficult matter.
FINANCIAL IMPLICATIONS
Supplied by: Steve Bayley (Ext: 3643)
Major works will be incorporated in Sustainable Regeneration’s Public Sector
Housing Capital budget in line with the Council’s statutory responsibility to
maintain the housing stock.
The policy will set out how leaseholders’ contributions will be recovered,
which will create a capital receipt. Provision for any assistance that is given to
qualifying leaseholders has already been made through the relevant business
plans.
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OTHER DIRECTORATES CONSULTED:
Debtor Team, (Customer and Support Services)
__________________________________________________________________
CONTACT OFFICER:
TEL. NO.
Mark Hart
0161 793 2039
__________________________________________________________________
WARD(S) TO WHICH REPORT RELATE(S):
All wards
leaseholders.recharg
ing.CIA.feb 2011.doc
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Annex 1:
Major Capital Works
Charging Policy for
Residential
Leaseholders
February 2011
Salford City Council
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Introduction:
Salford City Council has a statutory responsibility to keep the structure and
communal areas of residential buildings in it’s ownership in a good and
substantial repair and condition.
The Landlord and Tenant Act 1985, allows the landlord of the property to
recharge the leaseholder for their share of any major capital works that are
carried out as part of this duty. Although the legislation allows for this, what
can be charged for is determined by the detailed contents of the lease.
Leaseholders pay an annual service charge to cover the costs of day to day
repairs. This policy sets out the circumstances where a charge will apply and
the basis for payment.
This policy sets out:
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what is being charged for;
recharging approach and different payment options open to
leaseholders;
assistance for those who are unable to access resources to meet the
costs on their own;
consultation processes; and
identifies appeals and challenge routes for leaseholders.
This will be implemented by the appointed managing agent in an appropriate
manner and in compliance with the relevant legislation and Private Sector
Renewal Assistance Policy. Supplementary documents to support this are
attached in the annex of the policy.
Principles:
In developing and delivering this policy Salford City Council (landlord) and its
managing agent(s) will act to ensure that:
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We deliver our duties in a cost effective, efficient and economic
manner;
Apply a fair process for calculating and charging leaseholders for costs
in accordance with the lease arising from major maintenance and
repairs works;
Apply a fair process for recovering charges so those who are able to
pay do so, whilst those who require support and assistance gain
access to this; and
Consult with and provide information to leaseholders in a transparent
manner that complies with legislation to ensure that they are fully
aware of major maintenance and repair works and how to engage with
the process.
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What can be Recharged for:
This policy covers major capital works which are substantial and significant
works that will ensure that the Development is in a good and substantial repair
and condition. It does not cover day to day maintenance and costs.
The Landlord and Tenant Act 1985 provides the basis for what can be
charged for, but what each leaseholder has agreed to be charged for will be
determined by the detailed content of their lease. The rechargeable major
capital works will primarily not relate to the interior of the leaseholder’s
property. Rechargeable work will relate to the structure that accommodates
the leaseholder property and the grounds – this is known as the Development.
Items which serve the Development such as utilities and telecommunications
are also included as rechargeable.
In discharging its duty through major capital works the Council will consider
modern preventative and environmentally friendly, health (removal of
previously accepted building material such as Asbestos) and design
standards. Although the original Developments were built to the standards of
the day, the major capital works need to be compliant with the modern day
equivalent standards.
The list below shows an example of the likely rechargeable works, but more
detail will be provided by each lease:
Communally used areas of the Development including:
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forecourts and courtyards;
fences; and
halls and staircases, lifts (if any), landings, steps, passages.
The main structure of the Development including:
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foundations, (including replacement damp proof courses);
exterior walls, (including cladding);
dividing walls and structures between properties, common halls,
staircases, landings, steps and passages and all electrical and other
fittings and windows in the Development;
all doors in the Development (apart from doors that give access to
individual properties); and
all roofs, their support and chimneys and every part of the
Development above the level of the top-floor ceilings.
Utilities:
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anything that supports the supply of water, heating, power, waste water
and drainage e.g. cisterns tanks sewers drains gutters pipes wires
cables ducts and conduits in the Development (apart from those that
are in the leaseholder property).
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Telecommunication:
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any wireless and television masts and aerials cables and wires erected
on the Development or in or over the roof or roofs and available for use
with the properties.
Charging for Major Capital Works:
The managing agent will calculate the costs which an individual leaseholder is
required to pay for major works by totalling the actual costs of the work to the
building and dividing this by the number of properties in the building. These
costs include materials, labour, fees and administration of the major capital
works programme. If leaseholders wish to secure and pay for additional
works inside their home (which is the leaseholders responsibility to repair and
maintain) they are entitled to discuss this with their managing agent. Please
see “Decent Homes and Other Internal Improvement Work” section below.
Leaseholders will not be charged more than 10% above the final estimate for
the works given to them in advance of the work starting. If, once completed,
the cost of the works is less than the estimate, then leaseholders will only be
charged their share of the actual costs.
Consultation and Engagement:
Leaseholders will be advised and consulted prior to commencement of the
planned major capital works for their Development. The exact detail of the
consultation and engagement process will vary depending upon the major
works procurement process. These procurement processes are governed by
separate government legislation and policy. However, Salford City Council is
committed to ensure that all the legal requirements are fulfilled and that
leaseholders have sufficient information to engage with the process and make
informed decisions and choices.
Leaseholders cannot refuse permission for the works to go ahead, because
Salford City Council has responsibility to repair and maintain the building
under the terms of the lease agreement. Leaseholders do have the right to
challenge the charges and the reasonableness of the work via the Leasehold
Valuation Tribunal (LVT).
Paying for Major Capital Works:
Leaseholders will have up to 21 days after completion and billing of the works
to pay. There are a number of options open to leaseholders including: using
their existing savings, seeking private loans arrangements or any other
subsequent arrangements that might be established (like a contributory
sinking fund). There are also public financial support options including
statutory and discretionary loans, discretionary cap for eligible leaseholders
and other support under the Private Sector Renewal Assistance Policy. To
support leaseholders to identify the most appropriate option they are advised
to seek advice from an Independent Financial Advisor (IFA). Alternatively at
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the time of writing Salford City Council has an agreement with Salford Money
Line (SML), to provide financial advice on City Council approved financial
products.
Decent Homes and Other Internal Improvement Work:
Leaseholders have the opportunity to opt into improvement works, such as
the Decent Homes Programme. This work targeted at affordable housing
relates to internal improvement works such as replacing kitchens or
bathrooms. Please note that this is additional non mandatory maintenance /
repairs work. The costs of this work must be repaid over a period agreed with
the managing agent. If the leaseholder wishes to explore this improvement
option, then the main route is to finance this privately.
Challenges, Appeals and Complaints:
Early and continuous engagement between the leaseholder and managing
agent throughout the whole major capital works process should ensure a
quality service and delivery of the major capital works. As indicated earlier,
engagement will be determined by the procurement process, but it is
expected to include, but not exclusively:
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appropriate and time considerate consultation with the leaseholders
individually prior to the works carried out;
wider consultation carried out with all residents in the block or estate
before the works start; and
contact details provided to allow leaseholders to channel any issues
arising whilst the works are being carried out.
However, in the unlikely event that a leaseholder feels that the situation has
not been raised and resolved in an appropriate manner there are existing
challenges, appeals and complaints processes.
For appeals, complaints and challenges about the major capital works a
leaseholder can:
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make a formal complaint to the managing agent who will investigate in
line with their policy on customer feedback; and / or
apply to the appropriate leaseholder body Leasehold Valuation
Tribunal for a determination on issues relating to the reasonableness of
the works and / or costs.
If the leaseholder chooses to apply to the Leasehold Valuation Tribunal, in
most cases they will have to pay an administration fee, but this is assessed on
a case by case basis. The decision of the Leasehold Valuation Tribunal must
be followed by the managing agent and the leaseholder but if either of them
are unhappy with the decision then they can appeal to the Lands Tribunal.
Challenges, appeals and complaints about the managing agent should be
directed to:
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Sustainable Regeneration Complaints Officer
Business Management Team
Phase II
Civic Centre
Chorley Road
Swinton
M27 5BY
Tel: 0161 922 8763
Fax:0161 793 2477
E-mail: complaints.housing@salford.gov.uk
The council does not accept challenges about policies that it has developed
and that have been approved through the appropriate process.
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