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
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
PROMOTED VIDEO
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Arts and Entertainment
Pharrell Williams' “Happy” was the most searched-for song lyric of 2014
musicThe power of song never greater, according to our internet searches
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
Danielle George is both science professor and presenter
people
News
i100
News
Caplan says of Jacobs: 'She is a very collaborative director, and gives actors a lot of freedom. She makes things happen.'
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015