Without any prior consultation with residents, Tower Hamlets registered social landlord, East End Homes, applied to the housing court, LVT, to change the leases of homeowners in Loweswater House in Mile End.
Loweswater leaseholders considered the proposals ominously significant and approached the Eastend Homes Leaseholders And Freeholders Association, (EEHLFA), for help.
EEHLFA felt it essential to defend the action with the active involvement of a strong legal team to ensure that no longterm prejudice was caused by this application to other homeowners living on EEH estates.
The landlord’s proposed four important changes to the lease:
- Leaseholders would have to pay legal costs incurred by EEH in any action to recover service charge arrears irrespective of the outcome – win or lose.
- Leaseholders would have to submit gas safety certificates annually.
- Change wording of the leases in order that these included provision for calculation of service charges by floor area.
- Leaseholders would be charged interest on late payment.
A Pre-Trial hearing directed the two sides to meet and try to settle their differences without the need to go to a full hearing. “I don’t need to remind you that it is commonly accepted practice for landlords to seek the agreement of leaseholders to proposed changes, rather than apply to have them imposed unilaterally”, the judge said.
At the meeting in August the parties couldn’t agree any common ground to avoid a full trial hearing, which was listed for one and a half days in December. The barrister specialising in housing law who EEHLFA briefed to represent the leaseholders was highly critical of the application, which in his professional opinion appeared to have been made “without the benefit of any specialist legal advice and largely without any jurisdictional basis”. ( Read the full submission here)
The court rejected outright Eastend Homes’ first proposal that leaseholders should pay the landlord’s legal costs, win or lose. The court accepted EEHLFA’s defence that it was ‘simply breathtaking’ that the landlord would, as a matter of contract, be entitled to recover its costs of the proceedings and, win or lose, the leaseholder would bear its own costs: “it is precisely the sort of unfair, unbalanced and disproportionate provision that the Office of Fair trading considers to be an unfair term in a tenancy agreement”.
The court rejected Eastend Homes’ second proposal regarding gas safety certificates, ruling that this could not be sought under the section of the act being used and it was something that would best be secured by agreement with the residents.
The court rejected the third proposal concerning the change to the basis on which service charges are apportioned to individual leaseholders. Neither the court nor EEHLFA could obtain an explanation from EEH as to why the landlord’s proposal to charge by floor area needed a change to the lease. The wording of the existing lease allows the landlord to collect service charges by any reasonable method. The court explained to EeH that it could achieve its object without changing anything.
The fourth proposal concerned charging interest on late service charge payments – as expected this was allowed, as the law has been changed so that this provision can be added to leases.
This was a test case that will encourage and galvanise leaseholders to take concerted action to defend their interests. The result reaffirms leaseholder rights for the future.
EEHLFA Chair Jan Anstey Hayes said “This decision was particularly important as EEH had indicated that this was a pilot case and based on the court’s findings regarding Loweswater House, EEH would look to amend the leases of all 1500 EeH leasehold owners in the same way.”
She went on to say “We will continue to arrange legal advice and representation for leaseholder and freeholder members of the Association in cases such as this, where homeowners’ interests are directly under attack; we are building up the number of regular local surgeries we run for homeowners on EeH estates, to ensure that our members receive value for money with respect to service and major works charges; and our regular meetings with EeH Home Ownership and Senior Management Team will continue to guarantee that our members’ views and concerns are brought to the attention of EeH Main Board when it is considering strategic and policy matters affecting home owners”.
Any EEH leaseholder or freeholder who wishes to join EEHLFA or find out more should contact the Association on 07943 373699 or EEHLFA@aol.com