[Report of the Director for Housing, Regeneration and Planning. To be introduced by the Cabinet Member for Housing and Estate Renewal.]
An update on the management, including the introduction of a further management band fee , which Cabinet will be asked to approve.
[The Cabinet Member for Neighbourhoods and the Cabinet Member for Local Investment and Economic Growth, recused themselves from the meeting following their earlier declarations of interest – 20.37]
The Cabinet Member for Housing and Estate Renewal introduced this report which provided an update on the management, including the introduction of a further management band fee, which Cabinet were asked to approve.
The Cabinet Member noted that administration was committed to providing high quality services and to ensuring that, where these were paid for by residents, all charges were fair and equitable and there were no unjustifiable unintended impacts of charging policy. As part of this the Council had been reviewing areas where existing charges may fail to meet that test.
The Cabinet Member highlighted there was a change to the banding of leaseholder charges in 2019/20, to reflect the costs of a new cleaning and inspection service. This had significant impacts on some leaseholders, in particular those in converted street properties, who were just under 10% of leaseholders and faced an increase of over £100 per year. The Cabinet Member considered that the scale of increase in charges those leaseholders faced was inequitable and placed an unfair proportion of the burden of these new charges on this group. Therefore, a new charging band was being proposed, specifically for these properties, to eliminate that inequity.
The Cabinet Member emphasised that this re-banding did not affect the level of overall service charges for leaseholders as a whole but sought to spread these costs more equitably. As a result, the three quarters of leaseholders who live on estates would now face a small increase of around £2 per year in their charges, while those who faced a manifestly unfair increase in their charges will have far more reasonable bills.
The Leader noted that the change to the service charge was expected to benefit the vast majority of tenants, with over 1,200 leaseholders seeing a decrease in their bills.
Further to consideration of exempt information at item 21,
Reasons for decision
A new band of leasehold management fee will ensure that the charges paid by leaseholders for the management of their homes better reflect the service they receive. It will also ensure that service charges are reasonable and reflect the requirements of section 19 of the Landlord and Tenant Act 1985.
Alternative options considered
A flat rate management fee: This would mean that one fee is applied to all leaseholders irrespective of the type of service received. Although some landlords use this mechanism, it would not be appropriate to implement a flat rate management fee because this would not reflect the different costs of managing different types of property owned by the Council
A percentage of total service charge: This was the method for calculating fees used by the Council prior to 2004/05. In 2004/05, a review of the management fee was carried out, which recommended that this method should be changed to a two band system (later revised to three). It would not be appropriate to revert to this method since it would lead to those properties which receive expensive services having an excessively high management fee.
Not to make any change: This option was rejected because it would fail to deal with the perceived unfairness of the charges currently being levied on leaseholders in converted street properties.