In March 2012, the Planning and Housing Committee of the London Assembly produced its report into service charges, Highly Charged. News on the Block meets the London Assembly Member, Steven O'Connell, who led the report and is determined to make leasehold life better.
NOTB: What motivated you to start the Review into residential leasehold service charges?
SO’C: It was informed very much by case work and contact I’ve had, personally, with constituents over ten years of public life and also anecdotal evidence of experiences people that I know who have had difficulties with leasehold and service charges over the years.
What attracted me to this piece of work is that it affects my anecdotal little old lady, “Mrs Jones” who is on her own and the large organisations of leaseholders – they are all having problems.
NOTB: What was your impression of the leasehold system beforehand?
SO’C: In the past I’ve owned flats, and had personal difficulties even with a working understanding of leasehold. So beforehand I judged it was a system causing people difficulty.
NOTB: Now what is your view?
SO’C: It’s confirmed the sort of thoughts I and other elected colleagues had. It reflects their postbags too. It’s not as transparent as it should be and frankly people have got other things to worry about. What we gleaned from the evidence we heard gave us ideas and suggestions on how it could be improved.
NOTB: You’ve made a number of Recommendations. Where do we go from here?
SO’C: One thing that came from talking to Government is no immediate appetite to change legislation - which personally disappoints me. Having said that, I think this is a body of work pointing itself at Government as a lobbying tool. By shining a light on this, it gives a voice to many people and the Government needs to accept and realise it will need to look at and review it.
NOTB: What timetable do you place against your Recommendations?
SO’C: Some are short and some medium term. We can talk to the Law Society and quite quickly improve the information given to people proposing to buy a lease. There needs to be some onus on conveyancers to be more careful and helpful to their clients.
We’re also keen on a mediation service. One thing that upset me to hear was the difficulties people are having, the smaller guy - my anecdotal “Mrs Jones” who is 80 years old and has a problem and if she’s not careful it could end up escalating to a Tribunal (where it is unbalanced and she’s got frankly little chance in my view).
Also the Report did point out clearly that public landlords have a pretty good record. I’m happy with good news stories and I didn’t want this to be landlord bashing (and it’s not), but the private sector has a lot to learn from the public sector.
Transparency around bills is a big issue. People are signing up to a lease, they’re excited, they’re moving into the block and then suddenly the bills come in and there is this lack understanding about the amount, what they’re getting for it and how it is controlled. We recommend private landlords and managing agents make bills more transparent. That’s something we want earlier rather than later.
NOTB: What reassurances can you give that your Review is not going to collect dust on a shelf?
SO’C: We’re not an executive body but we have a very good track record when the subject is right. I believe the subject is right here. I personally will be lobbying MPs, and I would expect others to point out their constituents’ problems. This report offers solutions and we will follow up our Recommendations to see where the movement has been in the sector. There is no way we will be letting leaseholders down. We had 100 plus organisations and people contributing. That’s a very high figure for City Hall. That tells me there’s an appetite out there. I personally just won’t let this go.
NOTB: There were only two private sector managing agents who contributed to your Review, and no private sector landlords. Does this concern you?
SO’C: Yes. It wasn’t ideal because I wanted to position this report as even handed recognising that there were problems for all sorts of people, including landlords. Perhaps private landlords didn’t see a reason to engage, which is disappointing. I would have liked to have heard more from private landlords and managing agents, but at the end of the day the people I want to help are largely the people that contributed. So I think it reflected where the problems are.
NOTB: ARMA said “transparency comes with a price”. If so, is it a price worth paying?
SO’C: There is some truth behind that although they would probably say that wouldn’t they? In fairness, I don’t completely buy into that. But in the long run I wouldn’t have complete difficulty with it because with some of the horror stories we’ve heard, there could be a good saving.
NOTB: If private sector managing agents and landlords want to get involved now, how can they?
SO’C: Already I’ve been contacted by half a dozen groups since the report. They’ve read the report, are quite excited or challenged by it. I want people to understand this is actually going to help change the environment out there. I’d like to engage with them and to hear how they respond. I will be expecting us in the London Assembly to re-visit this on a regular basis as a living document. People out there who perhaps missed it at the time or didn’t think it was relevant can still contribute.
NOTB: Why is there no recommendation for a review of Commonhold?
SO’C: Our term of reference was very broad and I can’t answer this specifically but it just didn’t come through as something that concerned us. My commitment to this is as a living report so if a group thinks it is something we address I would suggest we look at it. There is no design to exclude it. Such was the breadth of the consultation we haven’t caught everything.
NOTB: You mention issues on transparency but did not spotlight insurance commissions. Why?
SO’C: That did come up in hearings and that’s a fair point. It’s a good critique of the report and I would be happy to take that further when we get our next iteration. One of the difficulties is we wanted to try not to be too specific in individual cases. Insurance commissions are a problem because they are something that worry people due to the opaqueness of how it could be loaded and then charged on.
NOTB: Another recommendation is for mediation as an informal forum. Originally that was the idea behind the LVT. Has the LVT become too formal?
SO’C: Yes. We interviewed the LVT and they were very helpful. I think they’ve become too big. When you get to that stage you worry about imbalance and costs. The problem is recognised by the LVT and they accepted there’s room for improvement.
NOTB: Is there a danger mediation could go the same way?
SO’C: I take your point but the case is to make mediation a compulsory process. The large bulk of issues would be dealt with at mediation. The evidence we were given is it can then move on to the LVT. If, at a very early stage, a leaseholder could just sit down with a representative and try and work it through then I think many of the problems we’ve seen could be averted. It would help my Mrs Jones, if you like, to be in a non intimidating atmosphere. You have to be positive, you just can’t say ‘well if you bring it in it will just be the same’ otherwise we will get nowhere.
NOTB: What about adding a cost sanction?
SO’C: I’m happy to take that as a further subsequent recommendation.
NOTB: Should the LVT have a system of precedent?
SO’C: If precedent can help those individuals so that cases don’t escalate and save on costs; logically it would be a good idea. We’ve got to make Government feel there’s a need. At present Government feels the system works in broad terms. The more you get under the bonnet, there are some tragic cases out there.
NOTB: Should the LVT be given more power to deal with costs?
SO’C: Yes, it would be helpful.
NOTB: The report said, “There needs to be a cultural change in the approach to managing service charges”. What is your vision for this?
SO’C: I would like people to have more control, more democracy over managing their own properties. There’s naturally less conflict if people are more in control. Cultural change would allow more empowerment for leaseholders – that would take friction out of it. Also, a cultural change at the beginning of the process would help the opaqueness, the mystery of it all. I would like people to be able to be much clearer on what they’re committing themselves to upfront and their rights. If we can get to that situation you genuinely will be improving people’s quality of life.
Click here to download the full report from the London Assembly website.
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