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Memorandum to the Communities and Local Government Select Committee Leasehold and Major Works
Question 1. At QQ73 - 76 the Committee sought confirmation as to (a) the number of leaseholders in London (b) the number of bills for works costing over £10,000 in London and (c) the number of estimates prepared for works in London which indicated that the costs would be over £10,000, in the survey data from May 2006
1. The table annexed below sets out the total number of council leaseholders in each of 26 London Boroughs, and the total number of major works estimates and bills for £10,000 and more issued by those Boroughs during the financial years 2003/04, 2004/05, 2005/06 and 2006/07, and (in nine boroughs) planned for issue in 2007/08. The Boroughs have not distinguished between estimates and bills, but the figures indicate the number of council leaseholders who under the terms of their leases are liable to pay these amounts. Of the leaseholders in these boroughs, 5.9 per cent have received or on current plans will receive bills of £10,000 or more.
2. This information has been provided by the Boroughs concerned, and is a snapshot of the position at the end of March 2007 (the position as reported to us in May 2006 was that 5 per cent of leaseholders had received or would receive bills of this size). Each borough operates its own system for billing leaseholders, and the number of leaseholders liable to pay these amounts reflects the stage reached in each Borough's programme of major works.
Question 2. At Q101-2, Ms Kirkham indicated that estimates had been carried out of the cost of works across the country, and that the figures and related assumptions could be made available to the Committee
3. The Department's best estimates of work still to be carried out under Decent Homes programme and related works to blocks and estates give a conservative estimate of the cost of capping all future bills to £10,000 across England of around £75 million per year for the 4 years to 2011.
4. This estimate is based on the following assumptions:
a. there will be 315,000 social leaseholders in England by 2011 (a figure derived from social landlord records of sales to date, making assumptions about the proportion of these that are flats and likely future sales during the period to 2011).
b. the average £10,000+ bill is £20,000, so that capping would cost £10,000 per qualifying leaseholder
c. proportionately more of the difficult and therefore costly works will be undertaken during this later part of the Decent Homes programme
d. some 20 per cent of leaseholders will be liable for major works charges of £10,000 or more. In our judgement, this is a reasonable assumption that balances higher future estimates derived from a small sample of authorities' programmes (see below) against the much lower proportion of such bills actually issued and planned in London.
The higher estimates referred to above derive from figures provided as part of applications by 17 local authorities for Large Scale Voluntary Transfer (LSVT) or Arms Length Management Organisation (ALMO) status (five London boroughs, one metropolitan borough, and eleven other authorities). As part of the application process, local authorities provide a detailed and costed model which outlines the type and current condition of their housing stock and what they plan to do to bring it up to Decent Homes standard; it also includes wider works to estates and blocks.
The planned work for flats in these 17 authorities suggests that 45 per cent of their leaseholders are likely to receive bills of £10,000 or more. If this was the position across England, the cost of capping could be as high as £260 million per year to 2011. But the much smaller proportion of such bills actually issued or planned by a wider range of London boroughs (see above) does not suggest that these estimates are representative of the position across England as a whole. In fact, the highest proportion of bills of £10,000 or more actually issued and planned by any of the five London Boroughs included in the sample is 7.8 per cent by Islington.
ANNEX
MAJOR WORKS BILLS ISSUED BY LONDON BOROUGHS (provided by London Councils in March 2007)
[1] based on 'bills-as-percentage-of-leaseholders' figures provided by London Boroughs
[2] bills issued in years 2003/04 - 2006/07. Not all LBs have issued bills in each year
[3] bills issued in years 2003/04 - 2006/07. Not all LBs have issued bills in each year
[4] bills issued in years 2003/04 - 2006/07. Not all LBs have issued bills in each year |