Florrie’s Law and Council major works charges

Many council leaseholders have found themselves faced with huge charges for major works to their building or estate. Charges of £30,000 to £50,000 or more are no uncommon. Many more will find themselves facing such charges in the future.

Council leaseholders thought there might be some relief from these huge demands when, in August 2014, the Government brought in regulations commonly known as ‘Florrie’s Law’ (Social landlords reduction of service charges: mandatory and discretionary directions 2014).

What the Directions appeared to promise is that when councils or housing associations carried out major works which were partly paid for by central government funds, then there would be a cap on the amount that could be charged to leaseholders over 5 years for those works. In London that cap is £15,000.

Sadly for leaseholders, Florrie’s Law, at least in London, only applied to one very specific set of Government funds – the 2013 funding round ‘Decent Homes Backlog’ funds. Councils could apply for that in 2014. Only 9 London councils did so:

• Barking and Dagenham
• Hackney
• Haringey
• Tower Hamlets
• Camden
• Lambeth
• Kingston upon Thames
• Southwark
• Sutton

The amounts awarded varied, with Southwark getting the most at £53 million.

So ‘Florrie’s Law’ would not apply to any other London council than these 9.

But even then, any hopeful leaseholders could face a further disappointment. Because even when councils were carrying out major works at the same time as ‘decent homes’ (or ‘Warm Dry and Safe’) works, there was no requirement that the central ‘decent homes’ backlog funding was used for those works.

That is what some councils, including Southwark and Lambeth, have decided, it seems – that no central ‘decent homes’ funding would be spent by them on estates or buildings where there were substantial other works needing to be carried out at the same time as decent homes works.

Southwark claim that this was to make the decent homes funding cover more homes, but the effect is that the £15,000 cap does not apply to leaseholders in those buildings, so that the council can recover more of the cost of works from leaseholders. If this is a coincidence, it is one that works to Southwark’s benefit on recovering some of the costs of the large works programmes.

Lastly, the funds were received by councils for the year 2015/2016. It is likely that councils have largely now spent the funds.

For council leaseholders of the 9 councils, while it is always worth investigating if any of the ‘Decent Homes Backlog Funding’ was spent on major works, the likelihood is that ‘Florrie’s Law’ will not apply and there will be no cap on the very large major works charges.

It isn’t clear whether any London council leaseholders have had the benefit of the capped charges at all.

Leaseholders can still challenge major works charges in the First Tier Tribunal on the grounds that:

• Works of the sort aren’t recoverable from leaseholders under the lease
• The works weren’t reasonably required
• The charges aren’t reasonable in amount for those works
• The works haven’t been done to a reasonable standard for the cost
• Neglect and lack of repair has affected the leaseholder’s property

Anthony Gold have brought successful challenges reducing major works charges for groups of council leaseholders and can advise and assist on applications to the Tribunal.

Giles Peaker appeared on BCC London news discussing Southwark’s major works charges and how the council avoided Florrie’s Law on 14 February 2017

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*