Bought a council flat? You could be owed thousands

As Many as 200,000 owners of former council flats could be owed millions because they have been overcharged by local authorities for insurance premiums to cover the structure of their blocks.

Several councils face legal action to force them to repay part of the premiums, accumulated over periods as long as 13 years. Some flat-owners could be due thousands of pounds.

In one action expected to be heard in court this month, the borough of Hammersmith and Fulham in west London is accused of making a profit of pounds 120,000 because of alleged overcharging. Meanwhile, Lambeth, in south London, is about to authorise the repayment of pounds 1m.

For many years it had been customary for councils to pass on insurance charges at standard premiums to flat-owners who had bought under the Government's right-to-buy scheme, while retaining any bulk discounts. But since a test case against Camden, settled out of court in September, the north London council has been forced to repay almost pounds 2m. Last year it agreed to pass on the discounts that had accrued since 1993, but the council has now accepted legal advice that it must also repay all retained discounts for earlier periods. It says leaseholders are now being charged about half the premium they would pay if they arranged insurance privately.

Patricia Peck, who runs the Association of Camden Council Leaseholders, took the test case against Camden that forced it to change its practice. The council settled out of court and agreed to repay Mr and Mrs Peck more than pounds 500 of premiums dating back to 1986.

"On my estate we got together because we were not happy with our service charges," said Mrs Peck. "We brought along our bills and found we were all paying different insurance premiums for the same types of property and policy. I was paying pounds 278, and my neighbour was paying pounds 136."

The Camden case, though not strictly setting a precedent because it was settled out of court, could nevertheless help thousands of former tenants in similar situations, particularly in London. Flat-owners who bought leasehold properties from former council tenants who exercised their right- to-buy are equally affected, as are commercial leaseholders where a local authority is the freeholder.

While right-to-buy legislation gave tenants the option to buy the freehold, those living in blocks of flats were only able to buy their leaseholds with the local authority keeping freehold ownership. About 200,000 of these tenants bought the leasehold of their flats.

Right-to-buy flat-owners have started, or are about to start, action against a number of other councils, including Enfield, Islington, Southwark and Lambeth. A spokesman for Lambeth said: "Like most other boroughs we have this problem. We will report this to councillors shortly and expect them to offer due recompense.

"We know there is about pounds 1m due. [But] we did feel we were doing nothing more than [simply] earning commission, so it did come as a bit of a shock to all the councils involved."

A spokesman for the Waltham Forest council in east London, where flat- owners are also talking of starting legal action, said its situation was different from other councils. Although discounts on insurance premiums were not passed on to flat-owners, they were not retained by the council either but used to reduce the size of the flat-owners' service charges. He said the council would defend any legal action taken to recover discounts.

Other councils and housing action trusts, which took over some run- down tower blocks from councils, also argue that they did not make a profit from retained discounts so they should not be required to make any repayments.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
books...begging to differ, John Walsh can't even begin to number the ways
Jose Mourinho on Sky Sports
footballEXCLUSIVE COLUMN Paul Scholes: It was not a leg-breaking tackle, as the Chelsea manager had claimed
Romelu Lukaku scored twice to add to the hat-trick he registered in the first leg in Switzerland
Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Anna Woodward: German Speaking Accountant

£45,000: Anna Woodward: My client is aleading global manufacturer and service ...

Danielle Degan: Accounts Payable Executive

£13 - £15 Hourly Rate: Danielle Degan: Are you looking for a Purchase Ledger r...

Jemma Gent: International Management Accountant

£150 - £200 Day Rate: Jemma Gent: Are you as an experienced accountant with ex...

George Parlour: Assistant Accountant

£13 - £15 Hourly Rate: George Parlour: Do you want to give something back? Th...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower