The right to buy policy has had much more success with respect to council houses than it has for flats. That is no surprise. Most of those living in council tower blocks would rather live somewhere else – their dream of home ownership would be as strong as anyone’s but not on the 17th floor of a concrete block with a broken lift.
Yet there are also many thousands of beautiful council flats. For instance, the main council estate I represent – Flora Gardens in Hammersmith – mostly consists of attractive 1930s buildings (a couple of small modernist blocks were added in the 1950s).
However, there is another hurdle for those considering right to buy: the danger that they will be stung by excessive leaseholder charges. Councils are also very inefficient about arranging for work to be carried out. Scaffolding will stay up for months without any discernible sign of activity. Then, unnecessary work will be carried out – work that diminishes the value of the property such as ripping out sash windows and putting in PVC windows, under the name of “decent homes”. Meanwhile work that is needed is delayed or botched. Amidst all this comes a huge bill – for council tenants the taxpayer will stump up, but for leaseholders their share of the bill is frightening. Not only is it high but they have little control over it – and they will see a chunky “management fee” added to their bill.
Even when no major works are carried out, regular charges often lack transparency and are excessive.
There is also a wide variation in service charges between different local authorities. I put in FOI requests to the 32 local authorities in London asking for the average service charge for council leaseholders in the current financial year. The replies I got show the range. Here are the figures I was provided with, in descending order:
- Kensington and Chelsea £1,634.27
- Camden £1,347
- Southwark £1,300
- Tower Hamlets £1,231
- Haringey – £1,214.60
- Lambeth £1,140
- Newham £1,062.50
- Westminster £1,054
- Hackney £1,041.92
- Islington £971.79
- Barking and Dagenham £862.88
- Hammersmith and Fulham £827
- Lewisham – £788.15
- Wandsworth £785
- Barnet £780.99
- Enfield – £751.21
- Ealing – £748.83
- Sutton – £734.85
- Havering £723.66
- Kingston upon Thames £684.24
- Hounslow – £672.70
- Greenwich – £667.61
- Croydon £589.36
- Redbridge £567.76
- Hillingdon – £378.37
- Harrow – £357.90
There could be all sorts of explanations for these huge differences. For instance, the higher the ratio of council housing consisting of tower blocks, the higher the maintenance costs.
Perhaps some councils have calculated their charges differently to others. We need some robust transparency requirements so that the data is comparable.
Even so, surely, for example, the council leaseholders I represent in Hammersmith & Fulham are entitled to know why their bills are more than twice as high as those in Hillingdon or Harrow. The council leaseholders of Hackney might be curious to know why they pay nearly three times as much.
The Government should also consider what protection could be offered to those who exercise their right to buy and then find their socialist council punishes them with unreasonable charges.
There is an escape route for council leaseholders: where they own two thirds or more of the flats in a block they can buy the freehold. This is their right under Chapter 28 of the Leasehold Reform, Housing and Urban Development Act 1993. But there would be nothing to stop a local authority offering to sell the freehold where there is a lower threshold of leaseholders – for instance 50 per cent. Or indeed something lower still. After all, both the local council and the council tenants in these small blocks would benefit from the greater efficiency that resident leaseholders would have an interest in ensuring.
For council leaseholders to buy a share of their freehold would give them control over their own destiny. But there would also be financial advantages. Apart from lower annual charges, the value of their property would increase. In my borough (where admittedly property prices are ludicrously high) it might cost £2,000-£3,000 to buy the share of freehold from the Council – the cost would typically be modest as the lease would be for over 90 years. Buying the share of freehold might add ten per cent to the value of the property – perhaps £30,000 or £40,000 for a council flat on my patch. Elsewhere the sums will vary but the general point that everyone benefits from the freehold being bought out applies.
The Government should act to empower far more Council and housing association leaseholders to have the chance to become freeholders. But there is nothing to stop progressive Conservative councils that believe in wider share ownership taking some action in the meantime.