Leaseholder recharges position statement from Poplar HARCA 23rd February 2004

Background

The Government will not apply a mandatory cap for leaseholder recharges for major repairs and improvements carried out throughout the Housing Choice programme. This is despite joint representation by the Council and RSL's that a cap of £10,000 should be applied to resident leaseholders as it was in previous LBTH stock transfers.

The Government has advised the Tower Hamlets that it will be for them to decide whether or not they apply a discretionary cap for leaseholder recharges, however, they will need to fund that cap, the Govemment will not provide any funding. Any cap applied must comply with the with the Governments rules on discretionary caps. The Council does apply a cap on hheir own leaholder recharges but have been considering a review of the circumstances in which this will apply over the last year or so.

Council Policy

The Council has now agreed a policy that a cap for lst generation (original RTB) leaseholders will apply where hardship can be proven. Second generation (RTB sell-on's) and absentee leaseholders will not receive the benefit of a cap.

Where a cap is applied, in the above circumstances, the balance will need to be repaid if the beneficiary of the cap sells or assigns the property within 7 years unless this is to a spouse following death.

The policy also introduces measures to ensure that leaseholders do not face unexpected costs and states that "exceptional and extensive work to meet wider regeneration objectives be excluded from leaseholder recharges. An example of this work would be the redesign of an estate to combat anti-social behaviour". The exemption of such works should help to reduce the recharge to leaseholders considerably on comprehensive regeneration schemes. PH are looking at specific examples to see to what extent this will have an effect on reducing recharges and to get a legal view of our interpretation of the items to be considered for exemption. This will need to be undertaken on each individual estate and block eventually to get a reasonably accurate assessment.

It is intended that the Council policy be applicable to all RSL's working with the borough on Housing Choice.

Poplar HARCA position

Poplar HARCA Board remains committed to capping leaseholder costs but is unable to do this legally in the absence of a mandatory direction.

However, Poplar HARCA recognises the difficulty that not capping recharges will create for a number of leaseholders and therefore we are looking all possible options available to us to help those who genuinely need it. In the absence of a mandatory cap, what Poplar HARCA will also do is keep leaseholder costs to a minimum by applying the above exemptions.
The aim is to keep leaseholder recharges for major works as close to £10,000 or less wherever possible through application of the Council policy on individual projects.
Individual leases will need to be checked as these will say precisely what works may and may not be charged for.

Poplar HARCA has been working with a small group of other Housing Choice RSL's on assessment of the types of works applicable under the policy, on behalf of all RSL's involved with Housing Choice and it is proposed to present this joint work to the Council this week(s). Poplar HARCA intends to give all leaseholders an individual assessment of their recharge based on proposed works and the application of the policy to any exempt works before(re) any ballot takes place.

Outstanding queries

I have raised two queries with LBTH which, I have been informed, are currently being looked at. These are:

Do the works exemptions referred to apply to all leaseholders i.e. resident and non- resident?
We think they do but are awaiting clarification.
Does the 7 year repayment rule apply to exempt works?
Current information is that exempt works will not have to be repaid with 7 years if the property is sold.

Updated 23rd Feb 2004 with LBTH comments.
Rob Hannabuss - Housing Choice Manager

That's all folks