Understanding your rights Service Charges Ealing Council Leaseholders Association 29 February 2012...

Understanding your rights Service Charges

Ealing Council Leaseholders Association

29 February 2012

Dona Awano

LEASE and what it does• LEASE is an NDPB providing free initial advice on

residential leasehold law for England and Wales• We run training, outreach events and on location advice

surgeries • We provide input to government through working parties

and consultations

www.lease-advice.org 2

How we deal with enquiries

www.lease-advice.org 3

Who we help

www.lease-advice.org 4

Areas of advice• The leasehold system

− The duties and obligations of the landlord and leaseholder• Service charge

− Statutory consultation on charges arising from works or contracts− Right to challenge service charge− How to apply to the Leasehold Valuation Tribunal (LVT)

• Rights and information − Summaries of service charge and accounts− Right to inspect documents − Information on landlord

www.lease-advice.org 5

Areas of advice • Right to manage

− Statutory right for leaseholder to take over the management of the building

• Extending the lease− Statutory rights and procedures

• Buying the freehold− Statutory rights for leaseholder of houses − Collective enfranchisement for leaseholder of flats − The Right of First Refusal

www.lease-advice.org 6

Areas of advice• Management issues

− What a managing agent does and how to appoint one− Forfeiture − Administration charges− Appointment of a manager by the LVT

www.lease-advice.org 7

Additional roles• Chairing

− Leasehold Reform Working Party − Social Sector Working Party

• Participating in government advice groups − Department for Work and Pensions − Law Commission

• Responding to consultation paper on residential leasehold • Cooperating with other organisations in producing

materials e.g. ARMA, ARHM and AIMS• Staging annual conference and seminars

www.lease-advice.org 8

What is a lease• A document setting out the terms for the occupation of the

premises by the tenant • A contractual agreement between the parties • Capable of assignment

www.lease-advice.org 9

Problems with leasehold • Lack of understanding of the nature of the tenancy • Different perspectives of the parties • Diminishing asset

www.lease-advice.org 10

Rights and obligations• The contractual relationship

− Specific terms on the lease − Implied terms

• Common law• Statutory requirements

www.lease-advice.org 11

Statutory Authority • Landlord and Tenant Act 1985 • Landlord and Tenant Act 1987 • Commonhold and Leasehold Reform Act 2002 • Housing and Regeneration Act 2008

www.lease-advice.org 12

Crucial questions• Are costs payable • Are costs reasonable • LVT vs. County Court • Section 27A LTA 1985

www.lease-advice.org 13

The service charge demand • Section 47 and 48 LTA 1987

− Must be accompanied by the summary of the rights and obligations, since October 2007

− Administration charges must also be accompanied by similar summary

www.lease-advice.org 14

Construction of lease• Entitled to recover • Improvement vs. repairs • Management costs • Legal costs

− Section 20C LTA 1985• Sinking fund • Sweeper clause

www.lease-advice.org 15

Machinery in the lease• Advance payments

− When due • Certification

− By whom • Audited accounts required • Inspection of documents • Sections 21 and 22 of LTA1985

www.lease-advice.org 16

Historic service charge• Section 20B LTA 1985

− City of Westminster vs. Hammond− Limitation Act 1980

• Rent − 6 years

• Service charges − 12 years

www.lease-advice.org 17

Statutory consultation • Section 20 LTA 1985

− As amended by Section 151 of the CLRA 2002− 3 stage process− Applicable to QLTA− LVT can determine

www.lease-advice.org 18

Right to buy• Section 125 notice

− Payment options − Various public sector landlords will have payment options

www.lease-advice.org 19

Continental vs. White • Historic neglect• Set - off

www.lease-advice.org 20

Quantum • Reasonably incurred • Reasonable standard• Advance payments reasonable

www.lease-advice.org 21

Decent homes• National strategy for renewal of local authority housing

designed to deal with disrepair issues• Certain requirements to be met by 2010: “all property the

Decent Homes Standard. To meet the standard, property must have reasonably modern facilities, be warm and weatherproof.” (DirectGov website)

www.lease-advice.org 22

Decent homes • Huge service charge demands for local authority lessees• Huge number of enquiries for LEASE • LVT applications • Limited if within reference period for RTB leases • Has to be recoverable under the lease

www.lease-advice.org 23

Assistance for decent homes • Landlord may provide a loan • Mandatory and discretionary directions • Buy – back • Exchange sale scheme

www.lease-advice.org 24

Questions?

The Leasehold Advisory Service020 7383 9800

info@lease-advice.orgwww.lease-advice.org

Maple House, 149 Tottenham Court RoadLondon W1T 7BN

www.lease-advice.org 25