Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Shaw.]
I am extremely grateful to have this opportunity to raise a series of issues that are of grave concern to tens of thousands of Londoners, including thousands of my constituents, many of whom have very low incomes. Those people bought ex-council properties either through the right to buy or on their subsequent resale, and now face major works bills and service charges that are well in excess of what they can pay. I will describe the experiences of some of my constituents and explain why the argument that the increased value of their homes outweighs the pain of their bills is fundamentally flawed.
I welcome the recent improved deal offered by CityWest Homes to leaseholders in my borough of Westminster, which has come about as a consequence of pressure put on that organisation by my colleagues and me, but more needs to be done. I would like more assistance from the Government to support initiatives that will help my constituents and those in other areas who suffer equivalent problems.
Although I shall discuss these issues with particular reference to my constituents, I asked for this debate because I know that leaseholders in other boroughs also face problems. I commend in particular the hard work of and initiative shown by my hon. Friend the Member for Islington, South and Finsbury (Emily Thornberry), who has achieved more than anyone else, in the face of disinterest from the previous council administration in Islington, to raise the profile of local authority leaseholders in the past two years. She will speak for herself—I am delighted to see her in her place—but I know that some of the stories of personal hardship that she has heard are extremely distressing.
The Minister of State, Department for Constitutional Affairs, has also been very energetic in this campaign. She has been quoted as saying that Southwark council treats its leaseholders like “cash points” with its high charges and overheads, and she revealed that well over £1 million worth of mistakes were found in the leasehold management unit’s accounts in one year only. That is another theme of today’s debate: not only is there a problem with the size of the bills, but transparency regarding charges is often lacking and information is not provided to leaseholders in a way that makes it easy for them to understand their liabilities and responsibilities.
Clearly, although Westminster leaseholders are not alone in their predicament, their problems are particularly acute. That is partly because of the high cost of delivering services in central London and partly because we have an unusually high concentration of ex-council properties in high-rise blocks and on estates, but part of the problem is rooted in local history. Westminster leaseholders include people who were first enticed and encouraged to buy their homes in the 1980s and 1990s, in the years when Shirley Porter ran Westminster council. It is neither accident nor coincidence that one of the estates on which I shall focus today was central to the notorious and illegal designated sales programme. During that period, three tower blocks on the Warwick estate, which probably faces the largest major works bills in the country, were designated for sale with the explicit aim of replacing tenants who were assumed to be Labour voters with Conservative-voting home owners. The aim was also to create a smokescreen around the general sales programme which was, of course, concentrated on politically marginal wards.
In order to make home ownership an attractive option in estates and tower blocks, new leaseholders were offered immunity from major works bills through schemes such as the abatement and indemnity schemes, which were subsequently found to be illegal. Even more germane to today’s debate is the fact that major works were repeatedly postponed because the council lived in fear of alienating leaseholders by revealing the true cost of maintaining their homes. Roof replacements in the Little Venice estate village, for example, were originally planned for the early 1990s, but did not take place until last year. They were deferred for almost15 years because of fears about the consequences for the home ownership programme that the council was promoting.
Twenty years after the homes for votes scandal, today’s leaseholders, including many who did not originally purchase their properties through the right-to-buy scheme, are still paying the price. Why? Two of the reasons for that are of particular concern. First, many blocks and estates were neglected for decades, until the Labour Government brought in the decent homes initiative and gave £200 million to CityWest Homes alone to bring thousands of homes into the 21st century. Secondly, the dozens of different leases issued to purchasers in Westminster, which reflect the variety of different home-ownership schemes that there have been since the 1980s, have made it much more difficult for leaseholders to work together to influence major works programmes and to talk to their landlords.
Does the hon. Lady have any comparative statistics for other parts of London or the country? She makes a powerful political case, which I understand given her background as a former Westminster city councillor, but she has made statements about the complex lease arrangements. Is that an uncommon situation in London as a whole, given the variety of ownership schemes and the importance that has been attached to council and social housing in central London for longer than might be the case in other parts of the country?
The hon. Gentleman might like to address his question to the Minister. I ask her to take all that on board, because that is the kind of research that might usefully by undertaken to help establish what is happening with leaseholders in London. Clearly, the variety of home-ownership programmes in Westminster puts the residents there into a separate category to those in other boroughs. Most other boroughs had some experience of the right-to-buy scheme, but, as far as I am aware, none of them have gone through the process of designated sales or had the plethora of schemes that were unique to Westminster, where leaseholders are now dealing with the consequences of that variety of sales programmes.
On the positive side, the estates in my constituency are a forest of scaffolding, as much needed replacement roofing, lifts and windows are installed. Internal works are also being done, with new kitchens and bathrooms being fitted. Less happily, low-income leaseholders are faced with bills for tens of thousands of pounds. On the Warwick and Brindley estates, bills are topping £58,000. Many of the works being carried out are accompanying, but not part of, the decent homes initiatives. For example, the fitting of lifts is not part of decent homes standard. The Conservatives neglected estates, which are being brought up to standard through the decent homes initiative, and now the Government are being blamed and challenged on the cost of works. I would like councils to be required to have a sinking fund for work that is not part of the decent homes initiative, so that leaseholders pay as they go, effectively saving towards future major works which are bound to recur in 10 or 20 years.
It has been argued that the purchase price of the properties reflected their original disrepair and lack of refurbishment, but many people bought their homes at the limits of their financial capacity. Indeed, they were encouraged to do so, particularly in Westminster, openly in some cases and more subliminally in others. It does not make it any easier for them to pay today’s bills to be told that their property was cheaper to buy then than it would otherwise have been. Some of the works being carried out are likely to enhance value, but many are repairs rather than improvements. Replacing the roof on a tower block is unlikely to affect the resale price of the properties in it. That is one reason why good asset management would require an annual contribution to a sinking fund.
Who are the people who I am discussing? The ones who I am most concerned about own their properties and live in them as family homes. The families of the people in the examples that I will use have lived in those homes for many years as tenants. In some respects, they are the fortunate ones, because right-to-buy purchasers have a better deal than those with assigned leases. However, they also have their roots in the local community, and the neighbourhood, as well as the property, is their home. They do not want to move away because they cannot afford to maintain the property.
Let us consider Mr. S, who lives in a two bedroomed 16th-storey flat with his wife and two children. It was bought for £42,000 in 2003. Even with the proposed five-year extended period in which to repay the major works bill of £58,000, the family would need to make a monthly £1,000 repayment, on top of a monthly £140 service charge and £420 loan repayment, in lieu of the mortgage for their original purchase price. Even with additional equity now in the property, they would have no prospect of being able to sell and to recoup sufficient money to buy another property in the area. If they were to sell, as they are tempted to do, the property would almost certainly go back into the private rental market, reducing the capacity to provide permanent homes in the area.
Mr. K is a bus driver who also has a wife and two children. He and his wife paid £57,000 for their fourth-floor flat in 2002. They are now paying monthly a mortgage of £680, plus a £140 service charge and all other bills, from a monthly income of £1,800. They, too, received an estimate of £58,000 for their major works, again with an estimated requirement of £1,000 a month to repay. The economics simply do not stack up. They are impossible, even with a five-year repayment period, for people in this category. We are talking about those who work in local supermarkets or the health service, and bus drivers; people in the Warwick and Brindley estates whose average yearly household income is £14,000, £15,000, £16,000 or £17,000.
Pensioners have the option of having a charge put on the property so that the major works bills can be recouped at the time of sale or when they leave for other reasons. None the less, it is hard to imagine the shock and anxiety experienced by people who have worked hard to avoid debt and who now have to deal with what they perceive as a debt of tens of thousands of pounds hanging over their heads.
One lady wrote to me saying that she had recently been billed for £16,000. She is an 83-year-old stroke victim who was beside herself with anxiety. All of the systems put in place to tell her that she would not have to find that sum herself and that the bill would be a charge on the property had passed her by.
In some ways, the situation of pensioners is better than that of lower-income households of working age, but to avoid the stress and anxiety experienced by my constituent they need intensive personalised advice and support, preferably from someone one step removed from the landlord. That would enable there to be trust about the disinterested nature of the advice given. Such advice provision does not come cheap, but it should not be paid for from the housing revenue account—effectively at the expense of tenants—either.
Lessees are often seen as the key to mixed communities, which is a concept we all support, on the assumption that they will argue for better standards of management and regeneration. In fact, financial anxiety of the type I have described often pulls in a different direction. For entirely understandable reasons, low-income leaseholders can act as a brake on the improvement and regeneration that we want on our estates, because they worry about the bills that they will have to pay.
A proportion of leaseholders are not only quite capable of paying their bills, but are speculating on the property market. Figures that I have obtained show that a quarter of Westminster leaseholders are in the purchase-to-let market. We should not use public money to support people in that category, particularly as thousands of ex-council properties are let back to people on low incomes in housing need—homeless families—so the taxpayer picks up a weekly housing benefit bill of £300 to £450 to cover someone else’s mortgage.
Even having said that, I am conscious that the only way out some tenants could see was to buy and then re-let, and that the pressure will be intensified by unpayable major works bills. People who are stable members of a local community feel that the only way that they can transfer and get themselves out of housing need is to buy and then move on. The properties then go either to homeless families or into short-let, high-turnover markets, involving students and others who, through no fault of their own, erode the stability of the communities in which they live.
My case for greater assistance to low-income leaseholders is based not only on sympathy for their personal situation, but on a firm belief that we should sustain viable communities, which have been undermined by council house sales, and not encourage more of them into unstable, short-term rentals.
What needs to be done? First, CityWest Homes and Westminster council need to go further and faster in responding to my local leaseholders’ calls for greater transparency and accountability. Too many letters, bills and statements are impenetrable, computer-generated nonsense, and advice has come too late for too many people and it is often not trusted. Administrative overheads are high and need to be justified.
Secondly, right-to-buy and assigned leaseholders should be treated equally. There should be no hardship schemes that could mean that an original leaseholder who moves away and lets their flat gets a chance to defer payment, while someone who bought in good faith from another lessee gets hit by a huge bill, regardless of their personal circumstances.
Thirdly, there needs to be a simpler method of challenge to major works bills, especially given the plethora of different leases in places such as Westminster.
I hope to catch your eye later on in order to make my own contribution to this important debate, Mr. Jones.
On some of the specifics that the hon. Lady raises, will she not accept that Westminster council and CityWest Homes have gone to some trouble to try to engage local residents in the estates? I appreciate that there are a plethora of problems, as she mentioned. On occasion, particularly in relation to the large bills for major works, they have asked residents to come forward with their own quotations. All too often, residents have not come forward with a lower quotation or a different proposal for works to be undertaken. It is fair to say that there have been attempts to try to engage. Does she have any suggestions about how to ensure that residents associations and lessees associations on many of our estates put forward concrete proposals? Obviously, we will do our best as local Members of Parliament to oil the wheels of bureaucracy to ensure that people listen to any such proposals.
I accept that improvements have been made in recent months in responding to the needs of lessees. The chief executive of CityWest Homes, Brian Johnson, is committed to trying to resolve the difficulties. I do not believe that a landlord, be it CityWest Homes, a local authority in another area or an arm’s length management organisation, should require individuals, often members of working families or people with high levels of personal commitments, to take on all the responsibilities involved in challenging the bureaucracy. The complaint is frequently put forward that members of the community do not come forward saying, “This is how we are going to do it. These are our detailed business plans for the alternative running or management of our estate. These are our quotes for major works”. As such people are handicapped in terms of the skills and resources needed to make the challenge, it is assumed that they are not interested, incompetent or unable to be involved in the decisions that affect their lives.
I return to the example of the Warwick and Brindley estates, which is the one that has triggered my greatest anxiety because of the size of the bills. I organised my own meeting, and 100 angry lessees came to me with a list of concerns and complaints, which I was then able to feed on to CityWest Homes. It should not have to fall to the Member of Parliament to go out to reach those lessees. I am prepared to work alongside landlords and say, “I will play my part. You play your part in being proactive and in finding ways to reach people.” Local politicians can be very involved in that too.
Some leaseholders do not have English as a first language, and greater efforts need to be made in that regard. There is great deal of mistrust of the landlords, and people want independent advice because they are not necessarily convinced that the landlords will act in their interest; indeed, the landlords are not acting in their interests, because they have a fiduciary duty to act in their own interests. It is not unreasonable for lessees to believe that their interests are not best served by landlords. Lessees in the sort of financial predicament that I outlined and who face £58,000 bills may not be able to afford independent legal advice. If they have a bill of £58,000 hanging over them, they may feel that they cannot take on £5,000 of independent legal advice. The landlord must respond to that.
Some leaseholders want a general cap on their bills, as there is on some estates where there have been major regeneration projects. The danger is that public money would subsidise companies and big landlords in the buy-to-let market as well as vulnerable individual lessees and that would be an unacceptable use of public money. However, the Government should support efforts to get round the problem so that we target help on those who need it most. I have no great wish to help what I understand to be 770 limited companies and 173 multiple-property owners among the 9,000 Westminster leaseholders, although I wonder whether a policy that results in one in four of the properties sold through the right-to-buy scheme being sublet, including 1,000 being rented back to homeless families, represents good value for money. As things stand, caps can be funded only through the housing revenue account, so tenants would subsidise home owners. Any locally funded subsidies to leaseholders should come from general fund capital or revenue.
Fifthly, landlords must be facilitated and supported in providing more flexible repayment options in cases of hardship, including longer loan periods, buy-back options to protect households at risk of repossession by converting leases to tenancies, and reverse staircasing. The housing revenue account could help here and lessees could have the right to staircase down by selling part of their equity back to the council to help to fund major work, and to become shared owners. They could then staircase back up if and when their financial position improved. The council would receive equity instead of payment. That would all come with a cost. CityWest homes has £2 million of capital tied up in deferred payment schemes and that is likely to rise. That cost pressure must be recognised and I look to the Government for support.
Sixthly, the Government should support work with the Council of Mortgage Lenders to improve cost-effective equity release schemes for younger purchasers.
Seventhly, housing providers must be given the authority to establish sinking funds to prepare for future contingencies and to support tax-free savings accounts as another voluntary option to help to pay for future work.
Eighthly, recognition must be given to the financial cost of offering advice and Ministers could liaise with colleagues in the Department for Constitutional Affairs to ensure that housing advice services are strengthened and not compromised by the proposals in the Carter review.
Frankly, if I am finding all the problems that I have described in properties managed by CityWest Homes, which has just received three stars from the Audit Commission, I dread to think what is happening elsewhere in London. The truth is that thousands of individuals, pensioners and young families are in despair, and facing bills that they cannot pay and the prospect of leaving or even losing their homes. Many are confused by their liabilities and angry about charges that they did not anticipate and were not warned of. Many struggle to understand the documents that are sent out to them and do not know where to turn for help. All are paying the price for a legacy of neglect of council housing during the 1980s and 1990s. It is time for the Government to respond to those problems, to work with landlords on the front line of delivering service to lessees and to help to underpin some of the financial and practical pressures that are put upon them.
I congratulate my constituency neighbour, the hon. Member for Regent's Park and Kensington, North (Ms Buck), on initiating this debate. I stand here as another Westminster Member of Parliament, but not to praise or to bury Westminster city council. More importantly, the debate reflects the breadth of life in central London. It is often assumed that in my constituency I have an enormous number of wealthy people and would not have to deal with any of the social problems that are an integral part of the hon. Lady’s day-to-day case book. The reality, of course, is that there are some wealthy areas in my constituency, as in hers, but that the community is diverse. We all want to protect that diversity.
The hon. Lady and I have played a minor part in an important document produced for the Westminster housing commission to try to acquire a vision for the next 20 or 30 years on housing-related issues, many of which depend on some discretion at local level. I fully appreciate why a cold chill comes into her heart at the thought of discretion being in the hands of Westminster city council,but looking to the future and bearing in mind the past 10 years, there has been great success in much of the work that has been undertaken. I hope that that will continue in the years ahead.
Above all, this debate hinges on the notion of stable communities. The issues that the hon. Lady raised in some constituency cases are replicated in my postbag. It is tragic that long-standing residents—perhaps going back several generations—of a city centre are forced to move or that their children must move. The Government must be more flexible and ensure that we are not forced to put homeless people or asylum seekers into our scarce social housing.
I was glad that the hon. Lady made the important point that a key worker in the context of a city centre is not simply someone working in the public sector. They could be working in the private sector. Postmen, people who work in local supermarkets and stores, and so on are the glue of our communities and ensure that they are maintained.
I am entirely happy to do so. My point was simply that if people do not have a long-standing connection with an area, there is a breakdown in an important aspect of a community. That obviously arises with housing association properties, if not local authority housing.
The hon. Lady will be aware that a trend in recent years has been that many people who bought their leasehold flats from Westminster city council and, I suspect, many other London councils and local authorities throughout the United Kingdom, have proceeded to sell them to housing associations, which then turn to local authorities for people to put into those properties. Those people have little direct connection with the area and may not be there for long, so do not play a full part in ensuring that the community that makes up any estate is maintained.
Leaseholders own a share of their property and benefit in part from the investment, but the problems that have been raised today hinge on the Government’s failure to recognise the disproportionate effect that the decent homes programme has had on leaseholders, including right-to-buy leaseholders, many of whom are, as the hon. Lady said, elderly pensioners who are simply not in a position to make any great capital outlay.
I support the underlying aims of the decent homes programme—no one would disagree with what it is trying to achieve—but there is often a problem with unintended consequences. I regret that some of the proposals have been so prescriptive. There seems to be little flexibility to respond to local priorities expressed by residents—for example, lift access and security. As the hon. Lady rightly pointed out, in city centres with many high-rise blocks lift access is much more important for decent homes than in many other parts of the country.
Nowhere in the Government’s original proposals for the decent homes programme do the documents mention the effect on leaseholders specifically. Tenants may have updated kitchens and bathrooms, but for leaseholders it represents a headache of bills running into many tens of thousands of pounds.
In London alone, leaseholders make up a significant proportion of residents in local authority housing.In the city of Westminster, which is partly in my constituency and partly in that of the hon. Lady, there are more than 9,000 leaseholders representing some42 per cent. of the council’s residential stock.
Although leaseholders have always been aware that they are liable to be charged under the terms of their leases for works to improve and maintain their homes, the cost of such works is a major issue because the pace of the Government’s decent homes programme continues to increase. In Westminster, the council has invested more than £200 million in housing stock as part of the programme, with the vast majority of the funds coming from its own resources. To meet the Government’s determination to drive the programme forward, the offer of significant borrowing facilities has been used to incentivise the council to achieve the decent homes target by the end of the year. Again, we support much of that, but Government pressure to achieve the target conflicts directly with the interests of leaseholders, who understandably try to limit the charges. That is particularly true for purpose-built blocks, which are a common feature in London, because the cost of major works is generally higher, and that is the case, for example, in Churchill gardens in Pimlico, in my constituency.
As has been said, the bills run into many tens of thousands of pounds and have the potential to cause significant hardship for those who are unable to pay them. Often, it is the original right-to-buy leaseholders who are unable to pay, and many of them are now elderly and have nothing other than a fixed income.
The hon. Gentleman claims that much of the upgrade work is being paid for from the council’s own resources, although I do not believe that. If it is indeed the case, however, why is so much of the work needed to catch up on maintenance that was neglected for two decades? If work is paid for from the council’s own resources, why was it not scheduled throughout the 1980s and 1990s? The reason why many of the bills are now so high is that they are for works that have not been done for decades.
The hon. Lady makes her point, and I cannot judge the situation in her constituency, although she will have a view about the state of some of the estates there. Inevitably there have been mistakes, and relatively little work has been done over the years, although the same will apply in many other parts of the country. I understand why it is in the hon. Lady’s interests to make a slightly partisan political point, but I think that all of us now want to look to the future, and the decent homes programme is obviously an integral part of that. However, it needs to be utilised as flexibly as possible.
Is the hon. Gentleman surprised to learn that the experience of estate dwellers in the Islington area was also that their estates were allowed to rot for 18 years as a result of a lack of investment and interest on the part of the previous Conservative Government?
Funnily enough, as the hon. Lady knows, I used to be an Islington resident, albeit in the Islington, North constituency, which is so ably looked after by her political soul mate there. I am sure that there is a battle over the issue that she describes and that one reason why she takes an interest in it is that a Liberal Democrat council has emerged in recent years, although it might well be argued that there was a Labour council for much of the time that she is talking about. Again, however, I do not want to make a narrow partisan point. There are issues about redevelopment, particularly on many of the estates that were built in the 1960s and 1970s, which are in urgent need of work. One could argue that there has perhaps not been a consistent maintenance programme over the past 20 or 30 years and that we have therefore reached the Waterloo point at which significant spending must be carried out.
Local authorities have been doing everything that they can to support leaseholders, but the Government’s prescriptive framework for delivery—I understand that it needs to be prescriptive to ensure that works are done—means that many authorities feel that leaseholders are losing out most on many programmes. In that respect, I have been in touch with several of my local tenants’ and leaseholders’ associations, and Richard Beville of the Churchill Gardens Lessees Association kindly prepared some brief notes for me, which I want to put on the record.
Mr. Beville notes that the position of council lessees has not really improved in the past decade, despite many promises from the Government,
“as social landlords were exempted from many of the provisions”
of the most recent Act. He continues:
“It should be far easier than it is for the residents of socially owned blocks to obtain the rights to manage their homes and the freeholder’s powers to interfere should be reduced and discouraged”
to an extent. He feels that the leasehold valuation tribunals have not allowed straightforward
“solutions to disputes between landlord and tenant”.
As a result, the freeholder frequently employs expensive Queen’s counsel and then appeals
“to the Courts if the decision goes against him.”
Mr. Beville notes, therefore, that the real purpose of the LVTs—to provide a level playing field—has not been properly achieved, and the hon. Member for Regent's Park and Kensington, North noted that many leaseholders feel that they are up against it because of the professionalism and sheer spending power of the bodies that they face in many of the tribunals.
Mr. Beville goes on to say that leaseholders have faced
“huge charges from which no capping or relief is available.”
Like the hon. Lady, he notes that the lessees on the Warwick estate in her part of Westminster are currently paying bills to the tune of £58,000 each. In the same way, all the lessees in Churchill gardens, in Pimlico, are expecting bills of around £20,000. I was at their annual general meeting only last week, and it was heart-wrenching to hear the personal stories about genuine concerns from people who live there. It is expected that those bills will need to be paid over the next five years and that the programme of works will amount to£20 million. For many of the people living there, those costs are simply unaffordable and need to be reduced. The hon. Lady’s innovative thoughts about staircasing up and down are all very important, but the immediate worry for many of the folk who live in such places is the prospect of bills of tens of thousands of pounds.
Inevitably, prices in many bits of central London have reached almost absurd levels. If one goes to any estate agent and looks at former council properties with a couple of bedrooms on estates, one sees that they cost literally £500,000 or more. To that extent, it is perhaps easy to put a charge on a property, particularly for elderly folk who are looking to pass it on to their children or loved ones when they die. At that point, a relatively small charge could be made on the overall value of the property, but that is not really an option for many, and there is a day-to-day worry in people’s minds.
Previously, when large amounts of Government funding were made available to councils through housing action trusts and estate action bids, lessee costs for the work were capped at a maximum of £10,000 as a condition of the funding. Some capping still takes place when PFI funding is used, but there is currently no cap for lessees when the funding is channelled through arm’s length management organisations—hence the understandable demonstrations on the part of many lessees.
There are also one or two serious problems with the Government’s preferred equity release and loan scheme, which has involved just one small building society, the Dudley building society. Despite Government marketing and publicity, the take-up among leaseholders has been low for several reasons. Often, the scheme is geared towards private sector home owners, who want to make home improvements rather than pay decent homes bills. Often the scheme is too complex, and the administration costs have been so high—about £1,200 per applicant—that many households have failed to complete when the true cost of the scheme is revealed.
I am acutely aware that other hon. Members want to speak, so I shall try to keep my remaining comments to a minimum. However, we will obviously be addressing this issue extensively in the many years ahead, because housing is a very important issue in central London. At one level, one can be slightly glib about the issue as a Member of Parliament and say that it is a matter for local authorities and hard-working local councillors, and hon. Members on both sides of the political divide will agree that high-calibre, committed local councillors are involved. We must, however, look at many of the important decisions that have been made in the past. In that respect, some of the blame—this will warm the heart of the hon. Member for Islington, South and Finsbury (Emily Thornberry)—must go to the previous Conservative Government, who made so many of the rules on local housing so prescriptive. Many of the problems that we are identifying go back to the early 1980s, when many decisions became centralised, perhaps understandably, in an effort to keep local government expenditure to a minimum for general economic reasons. That has been a very unhealthy development, which I fear that the current Government have maintained.
Those involved need to use some imagination, particularly in our parts of central London, where we want a much more mixed community. Of course, the reality of living in central London is that we now have a totally polarised community. One has either to be so well off—effectively, that means working in financial services or an industry that is dependent on them—that one can afford to buy a property, or so poorly off that one qualifies for social housing. That group in the middle is increasingly being squeezed.
There are no easy answers. I suspect that a problem that has been known to us in central London in the past 15 to 20 years, and which has now accelerated, is now growing fast in many other parts of suburban London too. I often worry that there are too many unintended consequences of any Government action, which can make such problems somewhat worse. However, this debate is important. I know that the hon. Member for Regent's Park and Kensington, North will want the Minister to answer some specific questions in good time; but equally I am sure that we shall return to the debate, and I thank the hon. Lady for most of her comments this morning.
Order. Before I bring other hon. Members in, I should like to explain that I am not demoting the Opposition Front-Bench spokesmen, but we have a problem with the microphones on their side, so they have kindly agreed to demote themselves to their Back Benches.
I congratulate my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) on managing to secure this debate on an important subject, and I thank her for her kind words, although I feel that they were undeserved. For many new Members, it is of enormous assistance when we first come here and find Members of Parliament such as my hon. Friend, into whose slipstream we can fall. Her comments are of course richly applicable the Minister of State, Department for Constitutional Affairs, to my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) for her work in fighting for leaseholders. It is very important that the poor should be represented strongly by inner-London Members of Parliament, and it is fantastic to be able to fall in with such a strong team.
I have had a large number of letters and e-mails from leaseholders about today’s debate. They feel that no matter how strongly they try to explain their difficulties their case is not represented strongly enough, and that nothing is happening. There is enormous frustration. Perhaps I may begin by painting a picture of Islington; I apologise for having to do that, but people tend to make an assumption about Islington that is only partly true. They know it as leafy lanes, Georgian squares, coffee shops and the media, but that is because people who work in the media live in those leafy lanes and Georgian squares, and spend their time in the coffee shops. They do not spend a great deal of time on the other side of the road, on Islington’s estates.
Nearly half the people who live in my constituency live in council estates or former council estates. The average income of people living in council properties is £5,000 a year, according to the housing needs survey. That of people living in housing association estates is £6,000 a year, and that of people with homes in streets is £40,000 a year or more. Unfortunately, in my constituency, when a poor person moves out of social housing in Islington, an even poorer and more desperate person moves in; properties are increasingly in demand, and to get one people need to be so desperate as to get sufficient points to enable them to be rehoused. Equally, when a rich person moves out of one of the streets in Islington an even richer person moves in, because now housing prices are such that a small flat in Islington costs £300,000. That is 10 times the average income of a Londoner. I hate to think what will happen to my constituency in the years to come, because we do not have the people in the middle. Leaseholders often represent that group, and they are a very important part of my constituency. I strongly believe in mixed communities. We need to be able to work and live together. I am proud that my constituency is as mixed as it is, but economically we are becoming increasingly divided.
The picture that I want to give of my constituency is not only one of the rich tending to live in streets and the poor on estates—a result of what happened in the 1980s. While one famous and indefatigable national political leader was selling off council properties, another famous, strong-minded and indefatigable leader—of Islington council—was buying up street properties on the council’s behalf. The Minister for Industry and the Regions, my right hon. Friend the Member for Barking (Margaret Hodge), was at that time buying street properties on the open market and turning them into social housing. Thus we have a mixture: some people live in social housing in streets, and a number of leaseholders live on estates. I have lived for 14 years in a street in Islington, where nearly half the properties were owned by the council as social housing; but they have all been sold, and the street is now private housing. There is movement.
I want now to explain the core of the matter, and the fundamental injustice felt by leaseholders in Islington about the way that they are charged. I believe that when the Conservatives were in charge of this country they left estates in Islington and elsewhere to rot. They did not invest in them as they should have, and the estates were in a disgraceful condition. The state of the lifts and stairwells was disgusting. People were not treated with sufficient respect, and the level of investment that was needed was not something that a Labour council could deal with alone. Such investment must be made with the assistance of a Government, and at the time we did not have a Government who were interested.
We now have a generous and hyperactive Labour Government who want to make sure that social housing properties in places such as Islington are brought up to the decent homes standard. When we were elected in 1997 only 25 per cent. of the social housing in Islington was at that standard. We are now investing £157 million in doing up the social housing in Islington, so that we can be proud of it and people can be proud of living there. It is a good thing for us to be doing. The difficulty is that those who are caught in the fire are leaseholders who have bought their social housing, because they thought that that was the right thing to do, and who are now being hammered by huge bills.
As I described earlier, our properties are split into, on the whole, street properties and accommodation that is run by Homes for Islington, which is an arm’s length management organisation. The difficulty is that the law says that when street properties are done up, which happens under the private finance initiative, there must be a £10,000 cap. It would not be a caricature to say that leaseholders who live in the streets are often professional couples who have bought from original right-to-buyers and who now benefit from living in a flat in a Georgian square that was originally bought by my right hon. Friend the Member for Barking. When their properties are being done up they have to pay only £10,000, whereas pensioners—the original right-to-buyers—who live on the estates are being charged limitless amounts of money. It is terrifying and fundamentally unfair.
My first request today is that the Government should seriously consider adding arm’s length management organisations to a little bit of legislation: the Social Landlords Mandatory Reduction of Service Charges (England) Directions 1997 apply to someone whose property is being done up under the single regeneration budget or the estates renewal challenge fund, so why cannot we also include arm’s length management organisations? If we could just do that, leaseholders on estates in my constituency could have their charges capped at £10,000. At the moment enormous injustices are happening.
I completely agree with my hon. Friend, but does she also recognise that any cost of applying the cap should not benefit companies and that the cost of the cap should not fall on tenants because of ring-fencing within the housing revenue account? If a local authority chooses to fund a cap as my hon. Friend suggested, the resource should be found other than from the pockets of local authority tenants.
Yes. We should be considering that matter, among others. I wrote to the 80 leaseholders who had originally written to me, and sent them a survey. I do not know whether any politician has ever had the response that I did. Guess how many I got back? I got 80. I asked them about hardship and whether they felt they had been consulted and about fairness. I sent the results to the Department.
I then wrote to more leaseholders. I have pruned the responses from people whose answers were not as disciplined as I wanted, and I have sent the Department 134 cases, detailing the hardship and difficulties that Islington leaseholders have suffered. The Department is reviewing the effect of the decent homes standard on leaseholders, and I hope that that record of the experiences of Islington leaseholders, which I sent to the Department, will be taken seriously and inform their decisions. Something must be done.
Six thousand leaseholders have bought what was formerly social housing in Islington—a very large number. We must consider other factors to ensure fairness for leaseholders, and the legislation allows councils to exercise some discretion. Although we are all in favour of decentralising power and allowing local authorities to make decisions locally based on local information, what happens when we give a local authority the power to exercise discretion and fairness and, as with the Liberal Democrat council in Islington, it refuses to exercise any discretion or do anything to assist leaseholders who are pensioners, suffering because of bills of £35,000 and on pension credit?
The discretion allows the authority to extend the repayment period, but leaseholders receive bills—huge estimates—and they are told that they will have only two or three years to pay them. They come to me and say, “Emily, what are we going to do?” and I reply, “I’m putting pressure on the Government, and I’m trying to put pressure on the local authority,” to which they respond, “You’ve been doing this, Emily, but nothing is happening.” Authorities can extend the repayment period, provide loans, put a charge on the property—a discretion that the Liberal Democrat council in Islington is prepared to exercise—and even reduce the bills, but they must consider matters case by case.
The important point about the document to which the hon. Gentleman refers, as with many similar documents, is that it has a fantastic title and it can obtain good coverage in the local paper. However, I invite him to consider carefully what the Liberal Democrat council is actually going to do to assist leaseholders, as opposed to the headlines. He will see that it is not going to do anything. There is nothing of any substance; it is all spin.
Several difficulties can be addressed by exercising discretion and considering the issues case by case. I shall go through some cases. Mrs. A lives on pension credit, and is being charged £10,000. She says that that is very harsh, and she pays £240 a month. Another pensioner, Mrs. B, living on pension credit, has been charged £4,627. Her husband has undergone major surgery for cancer twice in the past four years, and they are struggling to keep their heads above water as it is. Mrs. C, who is expected to pay £8,468, also has a husband with cancer, and Mr. D, who is lucky enough to have a job, says that the £20,000 that he is being charged is one year’s pay.
Mrs. E, another pensioner living on benefit, is being charged £29,287, and she says that because they are leaseholders, it does not mean that they have ways of paying such bills. Mrs. F, another pensioner, will be paying £39,614 for repairs on her flat. She has lived on the estate since 1971, and in all that time no major repairs have been undertaken. Mr. G will be charged £41,000.
We all want our social housing to be brought up to a decent standard, but some Islington leaseholders are being asked to pay an unfair share of the cost. There should be a fair limit. Mrs. A is expected to pay £10,000 out of the £32,000 needed to repair her home, but that is because her property is being done up under a private finance initiative, so she receives a £22,000 subsidy on the work. However, Mrs. F, a pensioner in similar circumstances, is expected to pay the entire £39,000, almost four times as much, just because her property is an arm’s length management organisation property. When Islington tenants voted for an ALMO to take over their properties, would not the possibility of the leaseholders among them receiving limitless bills have affronted their inherent sense of fairness and decency and affected their views on whether they should vote for the ALMO?
We must help the poorest. Of the 134 leaseholders whose cases I have sent to the Department, 10 per cent. say that the bills do not cause them hardship, so 90 per cent. say that they do. They also say that they are not receiving value for money, and I agree profoundly. The difficulty is that on the face of it, the framework contracts for which organisations bid under the European Union Official Journal tendering process will include a tender for the cost of a new kitchen or bathroom, but nothing if the building is listed and, for example, one needs tiles from eastern Europe. The builders may originally say, “It’ll cost you £10,000 for a new kitchen,” but when they need to undertake outside works the cost can spiral out of control.
Owing to the new framework agreements, leaseholders do not feel that they are consulted. If they were consulted, they would be able to consider, for example, three builders and their prices, and during the consultation they would be able to opt not for the most expensive, but for the middle price or the lowest. However, because there is already an agreement anda system of preferred bidders, when so-called consultation takes place the leaseholders are not even asked which builder they want. They do not feel consulted, and they are right. There is also therefore little control over the prices that are charged.
In the end, it is largely public money that is being spent. When there are a couple of leaseholders in a block it often does us all a good turn, because they blow the whistle, saying, “That scaffolding has been up for eight weeks, they haven’t done any work on it and we are being charged for it to be up for eight weeks.” The alarm bells start ringing, because public money is being spent. The leaseholders still get charged, and we do, too, indirectly as taxpayers, but leaseholders play a helping role.
Leaseholders are not even told that they have a right to opt out of window installation under the decent homes standard. If one has just installed new windows, why would one need further new windows? It would be a clear waste of money. The leaseholders have a right not to have new windows put in, but in Islington they are not told about it. When they find out, they are told that because they have their new windows, they do not need to pay for new ones as long as they pay for a surveyor to assess them, and for a lawyer. For a leaseholder in Islington to keep their new windows when a property is done up, they have to pay £1,000—to keep their new windows. That is not fair, and people can see that it is not. They also cannot help but wonder, “How much can new windows cost, and how much more than £1,000 can they cost?”
There is a right to appeal, but it is to the leasehold valuation tribunal. Some leaseholders have none the less had some success. One indefatigable woman, Mrs. Wong, has appealed against her service charges generally, and she has enjoyed some success. She is now taking Islington council to the Audit Commission, and I shall certainly support her. We will also refer the matter of leaseholders’ charges in general to the commission. That might be another way in which we can get fairness. But it is a slow process, and the leasehold valuation tribunal is scary and intimidating, as is going to the Audit Commission. Why cannot leaseholders in Islington simply get justice?
This has been a worthwhile debate, and the essence of it is decent homes versus leaseholder means. That has been ably illustrated by hon. Members from at least two London boroughs, and I suspect that it applies to a number of others. I had hoped that we might avoid deep political controversy, but the hon. Member for Islington, South and Finsbury (Emily Thornberry) has tempted me into it. She drew extensively on her relevant experience in Islington but skipped over other relevant information that should have been brought to the Chamber’s attention.
It does not sound to me as though the hon. Gentleman is any better off for that.
To put the debate on a less partisan level, I wish to make the point that the information that I have been given—I cannot speak at first hand in the same way as other hon. Members—is that there are some 10,000 leaseholders in Islington with leases from the council. The council still has 27,000 social housing units, although they are now run by Homes for Islington, a separate ALMO. That means that about a quarter of the former stock is held by leaseholders. When the welcome and long overdue decent homes programme gets under way, a lot of leaseholders will find themselves in blocks and buildings for which, like it or not, they will be liable to pay for a slice of the action.
I gather that if leaseholders are lucky, they might get away with a bill for only £500, but if they are unlucky they may get a bill, such as the one to which the hon. Member for Islington, South and Finsbury referred, for £41,000. The average bill for leaseholders in Islington will be about £11,000. Contrary to what the hon. Lady said, that has been a matter of concern to the Liberal Democrat administration in Islington, which has been struggling to deal with it. It produced a significant change to its procedures by ensuring that notification was improved, which deals with the hon. Lady’s important point that there should be a level of certainty about the quotations given and the liabilities that a leaseholder faces.
There is great uncertainty in Manchester at the moment, because the proposed stock transfer will lead to a number of leaseholders not getting a vote but still being left with a bill to pay. They have not had any indication of the costs that they will incur. Does my hon. Friend agree that the Government ought to afford additional protection to leaseholders in areas where council stock transfers are taking place and leaseholders do not get a vote?
My hon. Friend makes a valuable point. He makes it clear that the problem is not exclusive to central London but arises elsewhere. There has been a tendency in public policy to take the view that if someone has chosen to buy their council home, they deserve everything that is coming to them and have foregone their right to be consulted or involved in the process. I agree that leaseholders who have bought their homes are in an exposed position, and perhaps that is a wider point for the Government to pay attention to.
The sense of unfairness is increased by the fact that regeneration programmes and PFI schemes have a cap of £10,000, to which the hon. Member for Islington, South and Finsbury properly referred. I hope that the Minister will tell us why one category of leaseholders has a £10,000 cap protection and another does not. Islington council wanted to know the answer to that question, and in March its then leader wrote to the Deputy Prime Minister in his role as Secretary of State, asking whether the Government would consider introducing a cap. He made the point that it ought not to be funded by a recharge to the housing revenue account, which, as the hon. Member for Regent's Park and Kensington, North (Ms Buck) rightly pointed out, would mean that tenants would be subsidising leaseholders. That would be deeply unfair. The letter said that the funding must come from a common pot from central Government.
I say to the Minister that according to my information from the leader’s office at Islington council, no answer of any sort has been received to that letter sent in March to the Deputy Prime Minister. I agree that it went to the Office of the Deputy Prime Minister at a difficult moment when it was probably more concerned about changing its name plates than answering correspondence, but I hope that the Minister can assure me that she will return to her office straight after the debate and ask somebody why the letter was not answered. I hope that she will indicate that help will be given to leaseholders.
Judging by the interventions from all parts of the Chamber, it sounds like we should all sit round a table and produce the correspondence that we have received from different people. Maybe we already have the solution but nobody has managed to put it together.
I know that the Minister wants as much time as possible to speak, and I want to give her that time. I simply say that there is a significant problem. A considerable group of people are at a serious disadvantage and are being discriminated against, and the Minister can provide a solution. I look forward to hearing it.
I hope that the microphone is working, Mr. Jones, so that I can speak to the assembled.
I congratulate the hon. Member for Regent's Park and Kensington, North (Ms Buck) on securing this debate. Fortunately, as I represent Poole, I do not see much of the problem in question, but it evidently causes great angst and difficulty for many thousands of people, particularly in London but also in other parts of our country. It is surprising that there has not been rather more debate on it. I know that the hon. Member for North Southwark and Bermondsey (Simon Hughes) introduced a private Member’s Bill at one point because of the problems in his borough, but I suspect that today will be the first of more debates if the figures that have been given are affecting hard-working families.
The Conservative Government had a successful policy in right-to-buy, but towards the end of their period in office they appreciated that there were problems with leaseholders. That was why the Housing Act 1996 made provisions for capping some of the charges to leaseholders. That led to the reduction of service charges directions of 1997, which capped charges on many leaseholders at £10,000 in a five-year period. Of course, those events were 10 and nine years ago, since when there have been substantial changes in housing policy. I hope that the Minister might comment on the reasons for the move away from that, particularly when it comes to ALMOs.
The hon. Member for Islington, South and Finsbury (Emily Thornberry) made the good point that there are not an awful lot of ALMOs at the moment. However, given that stock transfers are not taking place at the same rate as previously, I suspect that we shall see a large build-up in the ALMO sector, because the system works quite well. However, if there is a disadvantage, the Government will have to examine it.
As we all know, there are cost implications. Who pays? There is nervousness among local people and local government about whether the housing revenue account or the Government should pay. The question of who pays would also need to be considered if one were to review how the cap would work.
One of the major changes in housing policy and the debate over recent years has been the acceptance that it is good to have mixed communities of tenants and owner-occupiers on estates. As we have heard, however, because of the law of perverse incentives, the policy is unfortunately leading to the opposite. People are being put under pressure to sell and move. As the hon. Member for Regent's Park and Kensington, North said, properties end up being rented out by companies, rather for individuals who have lived on an estate, sometimes for generations. That is something that Ministers ought to take seriously.
We have also heard that some authorities are very good, given the parameters within which they operate, and that some are less good. The issue therefore needs a substantial review. Some of the better authorities look at limitations on works, easy payment, voluntary legal charges, loans and equity release, and give leaseholders full information on their choices. The Government have a scheme called “House proud”, which is run by the Dudley building society, but although it is meant to help, I understand that it is not functioning particularly well, not least because of the administrative costs of £12,000 for people who try to access the scheme and solve the problems that they have been given. More interest needs to be shown in how we use public policy to help the tenants who are putting leaseholders in such terrible difficulties.
The issue is a major problem. There are thousands of tenants in that position in central London, as we have heard. Westminster has 9,195 leaseholders, Kensington and Chelsea has 2,500 and Southwark has 1,400. They are just three inner London boroughs, so the problem needs to be dealt with.
What are the solutions? A number of solutions have arisen from the debate. We need to look at the legislative framework to see whether more legislation is necessary to give more protection to leaseholders, who feel very vulnerable in the current circumstances. We have all broadly signed up to the decent homes standard, but it is having a severe impact on that category of person, particularly in central London.
We need to consider consultation. There are some good models of consultation with leaseholders, but local authorities are quite often not used to dealing with that category. They are used to dealing with their tenants and have the structures in place to do so, but leaseholders are not always the easiest people to get to, although under the current circumstances rather more of them are banding together in groups to represent their case.
Transparency is a problem. When people are given a high bill, the first question they ask is how it reached £16,000, £20,000 or £30,000. We need to do a lot more to explain to people not only what works might be needed, but how such bills are arrived at. The hon. Member for Regent's Park and Kensington, North mentioned an interesting idea about advice and support. Giving a little bit of Government money towards advice and support might be a great advantage to people who are in that situation. If a local authority is trying to give somebody a large bill and that person does not know quite why, advice and support might be one way of sorting things out. The other interesting idea was to have a sinking fund for leaseholders. Logically, most people in central London do put money aside for years for large works, so the idea of providing funds is something to consider for the future.
A number of issues need to be looked at. The problem causes major heartache and concern. I am guesting today for our housing spokesman, who is no doubt doing important things, but when this debate was scheduled I received a number of phone calls and e-mails. There is a pent-up demand for policy makers and the Government to set out rather more clearly what will happen in the future. I understand the frustrations of the hon. Member for Islington, South and Finsbury, although leaseholders have said nice things about what she is doing in her constituency.
There is a real problem. Doing nothing is not an option, because people are sinking and drowning in a situation that is not of their own making, but which has arisen as a consequence of the laudable objective of the decent homes standard. Even if the Minister cannot give us all the answers today, I hope that she will go away and reflect on some of the stories that she has heard in this debate. I leave her ample time to address some of the concerns that have been expressed, particularly by hon. Members with inner-London constituencies.
I thank hon. Members for the tone and content of this debate. The Chamber is freezing cold today, so we might have expected a little heated debate, but the content and tone of the debate, and the recognition of the scale of the problem, have been welcome. I also thank hon. Members for allowing me adequate time to respond.
The main congratulations go to my hon. Friend the Member for Regent's Park and Kensington, North(Ms Buck) on securing the debate. There is a great consensus on the issue, but we would not enjoy that consensus were it not for my hon. Friend’s having raised the issues and the scale of the problems for her constituents. My hon. Friend the Member for Islington, South and Finsbury (Emily Thornberry) has also brought the issues to the fore since she has been in the House—I thought that her constituency was Islington, North, so my London geography needs some work. I shall try my best to respond to all the issues that have been raised in the time available.
I particularly welcome the fact that my hon. Friend the Member for Regent's Park and Kensington, North not only raised the scale of the problem in her constituency, but highlighted the complexity of the issue and how we got there in the first place. She recognised the complexities, contradictions and the difficulties faced in trying to address the problem, which are the kinds of issues that I should like to discuss.
Some background would be helpful. Between 60 and 70 per cent. of local authority leaseholders in London bought their flats under the right-to-buy scheme, but some early buyers have now moved on, and many people have bought ex-council flats on the open market. Right to buy has helped more than 1.7 million people to realise their aspirations to own their homes. It has brought home ownership within the reach of many who had perhaps not anticipated being able to buy their own home, but it has also led to significant problems. I welcome the tone of the comments that the hon. Member for Poole (Mr. Syms) made, but I was a bit disappointed that, although he welcomed the policy of right to buy, he said that there was a realisation later of the problems. It would have been helpful had some of those problems been recognised early on. We are talking about the cost to leaseholders today but, as many hon. Members will know, there have been other issues, such as antisocial behaviour. When such problems occur on a mixed tenure council estate, they are made all the more difficult to address because the estate is mixed tenure.
We must recognise that major refurbishments raise serious issues for local authority leaseholders, particularly older people and those on lower incomes. The problem largely affects people who live in flats in which major works are undertaken, which might involve replacing the roof or the windows of a block and, as we have heard, where the condition has deteriorated to such an extent that the work costs much more than it would have done some time ago. However, a balance must be struck between leaseholders’ interests and the benefits of those works to others, such as tenants and the local community generally.
Most leaseholders are required by the terms of their leases to pay annual service charges for general maintenance and major works charges towards the cost of works of repair or refurbishment of their blocks. It is the major works costs that people now find difficult to afford. The scale of that should be seen in context, however. A survey of 23 London boroughs showed that only 5 per cent. of the more than 100,000 local authority leaseholders there face bills of £10,000 or more, but large bills, which can come all at once, as my hon. Friend said, can exceed £50,000. Those can be extraordinarily daunting and frightening. Although the scale of the problem is not huge overall, it is concentrated in specific areas and there are pockets where it is most acute. [Interruption.] That was probably a leaseholder trying to gain entrance. The fact that fewer people are involved does not in any way diminish the scale of the problem or the worry felt by those affected.
I shall say something about the context. There is no dispute that right-to-buy leaseholders bought their flats at a significant discount, and at a valuation that reflected the condition of the property. Values have increased significantly. In 1980, the maximum discount was £25,000, a big proportion of the average market value in those days. That was raised to £35,000 in 1987; between 1989 and 1999, it went up to £50,000.
Recent open market sales show that flats in some of the blocks being refurbished are now worth more than £220,000. Major refurbishment may in some cases increase values further. Leaseholders, therefore, own valuable assets, but unless they are in a position to realise them, or they are assisted in doing so, they will have no help in paying their bills.
The major repair programmes now being undertaken by many local authorities are making good the£19 billion backlog of repairs faced by the Government in 1997. My hon. Friend the Member for Regent’s Park and Kensington, North outlined some of the excessive repairs that needed to be carried out in her constituency when she became its Member of Parliament. Her example of the Little Venice estate village displays that acutely.
Repairs undertaken now are made possible by additional resources and by the facility provided by the decent homes programme, which I am pleased to say has been welcomed by all hon. Members here today. As good landlords, local authorities must carry out works to all the flats in a block, whether they are tenanted or occupied by leaseholders. No one would dispute that that is necessary. We have made bringing council housing up to a decent standard a priority. When repairs are not done and properties deteriorate, prospects become worse for owners and tenants and costs become higher.
The Minister’s remarks have focused my mind on an issue that the Government could assist us with. Given the fact that most leaseholders have manageable bills of £10,000 or less, it is clear to my hon. Friend the Member for Islington, South and Finsbury and me that the problem is concentrated on estates and high-rise blocks. Targeted assistance is required for those households, whose bills are likely to be excessive and for which the decent homes initiative did not manage to catch the challenge. I am not asking the Minister to respond now, but I should be grateful if she went away and thought about how those leaseholders could be assisted and came back to us.
I am taking away all the comments made by my hon. Friends the Members for Regent’s Park and Kensington, North and for Islington, South and Finsbury. They are particularly valid. Both my hon. Friends spoke helpfully and made suggestions about how the issues can be taken forward. My hon. Friend the Member for Regent’s Park and Kensington, North is right: the problems seem to be concentrated in some areas and are not spread equally throughout London.
There are some complaints that local authorities are going too far in their repairs. However, many local authorities believe, quite properly, that refurbishment should not simply meet the decent homes standard and that other works should be undertaken to ensure that properties are sustainable in the longer term and do not lead to larger bills in future. For example, the decent homes standard does not include things such as lifts, but lifts have to be maintained and sometimes replaced to meet the needs of residents.
Local authorities are also having to continue to carry out work in a relatively short time to address problems accumulated over decades. That is ultimately more cost-effective than doing the work piecemeal. However, it imposes pressures and in the short term, service charges for such major works will be higher. Although in the longer term, maintenance costs are likely to be lower, there is currently a problem of particularly high costs.
The repair programmes are necessary for all the reasons that I have outlined. However, we know, appreciate and understand the problems faced by some leaseholders in specific areas, such as those of my hon. Friends the Members for Regent’s Park and Kensington, North and for Islington, South and Finsbury.
As my hon. Friend the Member for Regent's Park and Kensington, North said, not all purchasers knew what they were taking on when they bought their properties. Information was available, but it was not always fully understood and appreciated at the time. Leaseholders who bought their homes under the right-to-buy scheme would have been given an estimate of the service charges likely to arise during the first five years, and the landlord would not have been allowed to charge them any more than that figure plus a reasonable allowance for inflation. Such are the requirements of the Housing Act 1985.
Having said that, I have to take on board my hon. Friend’s comments; if substantial work had been unreasonably deferred during that five-year period—as she suggested happened in the Little Venice estate village—that might be challengeable at the leasehold valuation tribunal.
Since at least 1984, the Government’s booklet for tenants, “Your right to buy your home”, has contained a section outlining the responsibility of leaseholders to pay service charges. However, I do not think that the scale of charges seen, for example, on the Warwick estate was predicted at the time. Advisers should have made leaseholders who had bought ex-council flats on the open market aware of their liability to pay service charges.
We have to recognise that not all local authorities would have been able to warn all prospective purchasers about some major refurbishments. For example, they would not have known about the Government’s announcement of the decent homes programme and that that money would become available when it did.
My hon. Friend and other hon. Members have passed on to me what leaseholders have told them and suggestions on how the Government could proceed on this issue. Other leaseholders have written to my Department independently. I should like to outline some of the problems mentioned. As the hon. Member for Hazel Grove (Andrew Stunell) mentioned, leaseholders do not think it is fair that the mandatory £10,000 cap introduced by the Government in 1997 should apply to some works and not to others and want all bills capped at £10,000. One of the problems is that different charges reflect differences in direct grant funding and other funding mechanisms, but I shall take the issue back to my colleagues today.
Leaseholders have also said that unnecessary work is done and that work often costs more than seems necessary. They have complained that poor workmanship is not dealt with quickly to address any problems, that they are not consulted properly about works and that landlords do not take their views into account. They also say that local authorities do not take account of their individual circumstances.
In that context, we commissioned research into the scale and nature of the problem. We are publishing the results today. The research will inform our own review on the best way forward. My officials have consulted all the key stakeholders, including local authority landlord representatives from London and elsewhere, leaseholder representatives from London and elsewhere, the independent Leasehold Advisory Service, the Council of Mortgage Lenders, the Home Improvement Trust and the London Rebuilding Society. The latter two were set up to help home owners—particularly older people—to keep their homes in good condition.
My officials have also encouraged meetings between the London boroughs and the Council of Mortgage Lenders to discuss equity release options. It is clear from the consultations that the issues are complex and that there are no easy solutions. However, I assure hon. Members, and particularly my hon. Friend the Member for Regent’s Park and Kensington, North, that we recognise the problems and hope that the review can find a way to address some of them.
I want to say something about communication and support for leaseholders. Support and communication are available. There are well documented complaints procedures. Local authorities have told us that they monitor work undertaken, although I accept that that is not uniform throughout all local authority areas, and we want to ensure that more can be done on that issue. Help is available for leaseholders with large bills; some of it has been mentioned today. Leaseholders can get free advice on their rights from the Leasehold Advisory Service.
When reviewing something, it is unwise to say exactly how long the review will take. Today we publish the results of the survey that will inform the review. Given the scale of the problems, I assure the hon. Gentleman that there will be no unnecessary delays. Like everybody in the House, the Government want to give certainty to leaseholders on the issue that we are discussing.
A number of measures are available under directions brought in by the Government in 1997, and our research shows that local authorities are making use of them. We recognise the balance that needs to be struck among different forms of tenure, the cost burdens to local authorities and the problems faced by leaseholders. I said to the hon. Gentleman that there would be no unnecessary delays; I would have thought that the review will take a matter of months. I thank my hon. Friend for raising the issue and assure her that suggestions made by her and other hon. Friends are being taken forward. The Government are listening—