§ Mr. ElletsonTo ask the Secretary of State for the Environment when and how he will use his powers under the Housing Act 1996 to help council leaseholders in difficulty with high service charges. [14460]
§ Mr. ClappisonResearch published in 1995 showed that, while the great majority of people who bought their council flat saw it as good value for money, a small proportion were in particular difficulties with service charges which were often much higher than they expected when they bought. Sometimes costly works were needed to maintain or repair large system-built blocks and leaseholders received little or no benefit from the work. In some cases, the landlord had received special assistance—for example, from the estate action programme—to carry out the works, but his leases still obliged him to charge leaseholders.
Following public consultation, we have today introduced two measures which will come into force later this month. They will lead to reductions in some of the highest bills for maintenance, repair and improvement works.
The first measure is the Social Landlords Discretionary Reduction of Service Charges (England) Directions 1997. This allows local authorities and other social landlords to reduce or waive service charges for past, current and future works of repair, maintenance or improvement carried out with assistance from estate action, city challenge, the single regeneration budget challenge fund or the estates renewal challenge fund, where the assistance was applied for before 25 February. It will also allow them to reduce or waive charges for works—even if they did not receive such special assistance—so that total service charges do not exceed £10,000 for the same property over any five-year period. Landlords will be able to reduce bills, including those which have already been sent out, and they will be able to offer refunds. We have set out criteria that they will have to consider in deciding whether and by how much to reduce charges.
The second measure is the Social Landlords Mandatory Reduction of Service Charges (England) Directions 1997. This requires social landlords to charge no more than £10,000 for the same property over any five-year period 538W for repair, maintenance or improvement works carried out with assistance from the single regeneration challenge fund or the estates renewal challenge fund, where assistance is bid for on or after 25 February. They may only charge more if the benefit to the leaseholder from the works exceeds that amount. In some cases, they must charge less. The cost of complying with the mandatory directions can be included in the bid for assistance.
The measures use our new powers in sections 219 and 220 of the Housing Act 1996. They will come into force on 25 February 1997. They are being sent to English local authorities and other social landlords, together with detailed guidance on how to comply. This will enable them to bring relief to some of their leaseholders who face difficulties with high bills.