The Director of Environment and Neighbourhood Services submitted a report seeking approval to establish a framework for financial assistance options to be offered to Council residential leaseholders, with regards to major works undertaken by the Council in relation to fire safety.

The report noted that the Council retained legal ownership of a large number of leasehold dwellings previously sold under the Right to Buy scheme (RTB) and consequently retained obligations to provide, maintain, refurbish and improve shared communal services and facilities and the structure and exterior of blocks of leasehold flats.  Leaseholders had a responsibility under the terms of their leases to pay a proportion of those costs via annual service charges, and in cases of major works the charge could be considerable.  Currently there were 215 leaseholders in Council flatted blocks in total and eight in the Coley High Rise blocks; the number would continue to increase as properties were sold under RTB.

The general provisions for the recovery of service charges and major works liabilities were set out in the respective leases of individual leaseholders and the Council could, under the terms of most of its leases, also collect an annual payment towards a sinking fund, so that where the charges might be considerable, a sum had already been set aside to minimise the cost to the leaseholders.

The report explained that the Council could assist leaseholders to meet their repayment obligations through a statutory right to a loan for leaseholders.  There were also additional discretionary powers available under the Social Landlords Discretionary Reduction of Service Charges (England) Directions 2014 (the Directions) to assist leaseholders facing large bills, including providing a range of repayment and loan options to leaseholders, the ability to purchase equity shares and offer equity loans, and, on application and in exceptional circumstances, to waive or reduce the service charge by an amount the Council considered to be reasonable.  The Directions set out criteria which should be considered by the Council and factors to consider relating to exceptional hardship.

The report proposed that the Council adopt the Directions to provide additional options for financial assistance to leaseholders facing large bills for major works in relation to the current fire safety programme and replacement cladding.  It summarised the criteria for leaseholders to qualify for assistance and the repayment options that would be offered, which were: a loan with a variable interest rate as set under the statutory scheme; an interest free loan over 36 months, provided payments were made by direct debit; a five year payment plan with 36 months interest free and 24 months at interest as set under the statutory scheme, provided payments were made by direct debit; and a Legal Charge entered into by the leaseholder and registered against the title of the property, with the Council’s outstanding sum to be recovered when the property was subsequently sold.  It was also proposed to adopt the process for dealing with exceptional hardship as set out in the Directions.

Resolved –

(1)     That the Financial Assistance Guidelines outlined in section 4.2 of the report, which set out the repayment options which may be offered to leaseholders being charged for major works undertaken by the Council on residential blocks of flats in relation to its fire safety and replacement cladding programme, be approved;

(2)     That, where leaseholders were unable to pay a major works invoice for works relating to the fire safety and cladding programme in full within 28 days of receipt, they be entitled to apply for assistance under the Financial Assistance Guidelines, and that applications be assessed based on the qualifying eligibility criteria as set out in the report;

(3)     That the Head of Finance and the Head of Housing and Neighbourhood Services be authorised to operate the Financial Assistance Guidelines and the assessment process;

(4)     That the Council adopt the process for dealing with exceptional hardship as set out in The Social Landlord’s Discretionary Reduction of Service Charges (England) Directions 2014 outlined within paragraph 4.2.1 of the report.