Examination of Witnesses (Questions 32-39)
MR ANTHONY
ESSIEN AND
MR JOHN
BRYANT
5 MARCH 2007
Q32 Chair: Can I ask you to briefly introduce
yourselves?
Mr Essien: My name is Tony Essien.
I am the Principal Legal Adviser of the Leasehold Advisory Service.
Mr Bryant: I am John Bryant; I
am a policy leader at the National Housing Federation.
Q33 Chair: The National Housing Federation
speaks on behalf of?
Mr Bryant: We are the trade body
for housing associations, and obviously leasehold is a significant
part of our work.
Q34 Anne Main: Mr Bryant, some councils—and
the London Borough of Hammersmith and Fulham for example—suggested
that the average bills are going to rise as a result of the decent
home programmes, and they have given a figure of £10,000.
Do you share this view?
Mr Bryant: I should not like to
put a figure on it, but I think it is inevitable that Decent Homes
will have an impact on the level of charges, though I would stress
that this issue of leaseholders and high service charges would
be a significant problem even if the Decent Homes programme did
not exist. It certainly adds to the problem. I could not put a
figure on it.
Q35 Anne Main: You cannot put a figure.
Would you say how much percentage it might add to the bill then?
Mr Bryant: I do not think I could
offer a figure, I am sorry.
Q36 Anne Main: Taking that one step
further, our previous witnesses mentioned double-glazing and that
those were not part of the lease. Can you think of reasons why
the bills would have risen then?
Mr Bryant: I think there has been
a general, well-attested increase in construction-related inflation
in recent years that has affected all types of building projects,
and it has naturally had an impact on this one as well. The existence
of government improvement programmes such as Decent Homes is a
factor. Probably the biggest single factor is long-term under
investment in a lot of this stock, and from the point of view
of housing associations I think particularly of stock transfer
housing associations that have taken over stock from local authorities.
I think the chickens are coming home to roost in terms of the
long-term lack of investment in a lot of this property, and works
are now becoming pressing and in some cases are unavoidably very
expensive.
Q37 Anne Main: Can I ask you to expand
slightly on that? It would be long-term investment in those properties.
Is it something to do as well with some of the construction methods
that were previously used in those properties? Are those making
it disproportionately expensive?
Mr Bryant: Yes, in many cases.
Q38 Anne Main: Mr Essien, do you
have anything to add on the questions I have just asked?
Mr Essien: I think there is no
question that the issues John has raised have added to cost. A
primary issue that is constantly raised in leasehold valuation
tribunals is neglect. The lack of investment over a lengthy period
of time—there is a particular case that went to the Lands
Tribunal where this lack of neglect gave the lessees an opportunity
to argue to set off charges. That was a private sector property,
but it certainly has consequences for the public sector. This
neglect argument, the lack of investment historically, is going
to be used to challenge what are essentially very large bills
directly related, it is fair to say in the light of the Tribunal's
decision, to the Decent Homes initiative.
Q39 Chair: Can I press you on that,
Mr Essien? I think we would all accept that there has been a huge
under investment in central rental housing, which is the point
of the Decent Homes programme of course; but presumably the value
of the properties that were bought reflected their dilapidation,
if I can put it that way?
Mr Essien: They may have done
to an extent, but the difficulty is of course the cost of the
works now in some cases will far exceed the value of what they
are getting back perhaps, and the value of that property itself
is subject to the ravages of the property market; so irrespective
of the investment that is put in there and the money they have
spent on it, if for wider issues the value of the property declines,
they are still left in a difficult position.
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