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Spend & Save

Power to the tenant

Leaseholders have won important rights: landlords will no longer be able to charge the earth for repairs.
Leaseholders have this week been given important new rights to manage their homes. The new laws aim to help tenants settle disputes with landlords over service charges and insurance for a small sum of money, through a Leasehold Valuation Tribunal (LVT), taking away the sting of autocratic managers. So landlords who fail to adhere to regulations and use brutal tactics to get their own way could soon find themselves under the spotlight.

Tenants have been given the power to challenge work landlords propose to carry out on a block, marking a fundamental change in the approach to this emotionally charged field. Under the old regime, it was difficult to challenge works until they had been completed.

In addition, flat owners are now able to ask the tribunal to appoint a new manager if the present one is not shaping up to his or her position. That could include anything from failing to keep the premises clean, to refusing information or access to details to which leaseholders are legally entitled.

The new procedure involves making an application to a LVT in your area. There are 11 in total, consisting of three members - a lawyer, a valuer and a lay person - and though you are not required to have a solicitor or barrister to represent you, professional advice in this complex area of law could help your case.

Jim McKeever, a partner at Comptons solicitors, says: "Landlords will know if they get dragged into a LVT that they won't be able to recover costs, so they will start negotiating." He adds that before the introduction of these rules and the Housing Act 1996, landlords had little incentive to negotiate because they could threaten court action and forfeiture. Now these threats would be hollow.

So if you suffer from any of the above and you want to explore the LVT option, the first step is to contact the Leasehold Advisory Service or the DoE for a booklet which explains the ins and outs of this whole procedure. They will also give you an application form if you choose to take this course of action.

If your problem is to do with service charges, your application could cover maintenance and repair to the building or services provided such as management, cleaning and building insurance. If the work for services has already been carried out, the tribunal can determine whether the costs were reasonably incurred, whether the works or services are of a reasonable standard or whether an amount payable before costs are incurred is fair. The tribunal can also determine if charges are reasonable for proposed works and services.

Any individual tenant or group of tenants who are paying a variable service charge can make an application. They will need to provide details of the applicant, a copy of the lease, names and addresses of all tenants contributing to the variable service charges, the amount currently being paid and a statement of the issues the tribunal is being asked to address.

Mr McKeever says one area often disputed is redecoration of the premises. He says: "Landlords have to follow a formal procedure for any major repairs costing more than pounds 1,000 or pounds 50 per flat, whichever is the greater. If they don't, in principle they can't charge for that work and this type of situation would be in support of an application to change existing management."

Tenants who want to challenge landlords over their choice of insurer for the dwelling can apply to the tribunal to establish whether the cover provided is unsatisfactory in any respect or whether the premiums are too high. Apart from the basic details, you will be required to provide in this case, the application should contain the premium currently being paid and again include a statement of the issues being disputed.

Tenants taking the above two actions may also want to sack their manager for not sticking to obligations and appoint a new one. The landlord may, for example, be breaching an obligation to do with the management of the building, have demanded or be likely to demand unacceptably high service charges, or have failed to comply with a government-approved code of management practice.

However, this procedure does not apply where the freehold landlord is resident on the premises and the property is a conversion. It does apply where a group of tenants have bought the freehold and formed a management company, as companies cannot be resident. Other landlords this final process does not apply to include local authorities or other public sector bodies and housing associations.

A plus point of this system is that each application will cost a maximum of pounds 500, though this does not include a tenant's own fees if he or she chooses to employ professional advice from a solicitor or surveyor. The tribunal cannot award costs, though it can order a full refund of the fee to that applicant by the other party in the action.

Fees are payable in two stages. The tribunal will send you an invoice for pounds 150 on receipt of the application and before arranging the hearing you will be issued another invoice for the rest of the fee. In the case of the service charge dispute or appointment of a new manager, the hearing fee will be pounds 150 for up to five dwellings, pounds 250 for between six and 10, and pounds 350 for more than 10.

If you are challenging the landlord's insurer, the hearing fee will be a flat pounds 150. The whole fee will be waived for people receiving income support, family credit, a disability working allowance, Jobseeker's allowance or housing benefit.

Peter Haler, chief executive of Lease, warns tenants to apply for a "Section 20c" order, part of the new laws, as a matter of course, to ensure that landlords cannot increase the service charge to pay their costs.

The new system puts pressure on landlords to play a straight game, but it is not a panacea to the basic problem - the very concept of leaseholds itself harks back to feudalism. The Government has promised an overhaul of the system, which is likely to bring it into modern times