I am in the process of buying a flat which is owned by a local authority it has to come to light that they plan to do major renovation works, roof, doors, windows etc however, they won’t state when just that it is between 2014 and 2015 and no idea how much I believe if I go ahead I could then be charged for these works which I can’t afford is there anything I can do to get more information as the council won’t give any?
Reply from Service Charge Dispute Guide
1. You are right to be carefully considering the implications of these planned works in relation to decision whether to purchase this property. Many prospective purchasers don’t, and this often creates significant financial problems both for the new leaseholder and the landlord.
2. If the works go ahead, the amount each leaseholder will be required to pay will depend on a number of factors including the scope of the work, the type of building, location and the effectiveness of the tendering process. This said, from the brief description you have given of the proposed works they sound very similar to types of programmes being carried out by local authorities during the last decade under the ‘Decent Homes’ initiative. From our experience, these programmes have typically resulted in individual leaseholders receiving bills in the region of £10,000 to £25,000, sometimes much more.
3. At this point in time it is in fact fairly likely that the local authority in question does not have a detailed idea of how much these planned works will cost, or precisely what they will involve. Section 20 of the Landlord and Tenant 1985 requires all landlords to consult with leaseholders before fixing the scope of the works (ie. what they will involve) and seeking quotes from contractors. If the ‘pre-assignment information’ you have received from the seller does not include a ‘section 20 notice’ it means that this consultation process has not commenced and as such there is no precise information about the planned works available. What we suspect the local authority will have, though, is a rough estimate of the cost of the work which they have prepared for their own budgetary purposes. Local authorities have limited finances and won’t include works in their long term planning unless they know that they can finance them. Knowing this rough estimate will of course be helpful to you in the absence of other information.
4. As a prospective purchaser the local authority has no legal obligation to provide you directly with any information about the property. In fact what legal restrictions there are relate to ensuring that the local authority doesn’t provide misleading information. Lawyers call the provision of misleading information ‘misrepresentation’, and this can result in landlord being unable to raise a service charge for something which they aware of, but didn’t provide accurate information about, prior to sale. The local authority may be reluctant to provide even a rough estimate because if the service charge bill for the works ends up being a lot higher than estimated they might be considered guilty of misrepresentation and the amount that they could charge would be capped.
5. In terms of getting the local authority to release what rough estimate they do have, there are two things you might try:
i. Explain very clearly to the seller that you will not go forward with the purchase without the Councils estimate of the cost of the planned works. The seller can then complain to the Council, either through their formal complaints procedure or through their local Councillor. This is the normal way these types of situation are resolved.
ii. You could try making a request to the Council under the Freedom of Information Act 2000 that they provide any estimates or other information they may have about this planned programme of works. A explanation of how to make such a request and what your rights are, can be found on the Government website by clicking on this link.
Click on the link to read more Reader’s Questions and Answers on Purchasing a Leasehold Property