Housing associations and councils who entered into partnering arrangements with contractors to repair their estates could lose millions of pounds of leaseholders' contributions.
A recent case, in which a leaseholder had her £10,000 bill reduced to £50, has highlighted a serious conflict between the 1985 Landlord and Tenant Act, which states that costs can only be recovered from leaseholders if at least two competitive bids are obtained for the works, and partnering, which excludes tendering.

The case was brought by Patricia Charman, a leaseholder of Charlton Triangle Homes, formed in 1999 as a subsidiary of the Family Housing Group to enable a partial stock transfer from Greenwich Council.

Charlton Triangle Homes got a £16m grant from the Estates Renewal Challenge Fund for improvements.

Charman disputed her bill because Charlton Triangle had not obtained two estimates for the works and because, she claimed, the work was substandard. Her lease stipulated that disputes be resolved by arbitration, and the arbitrator determined that Charlton Triangle had not complied with the statutory requirements and had not acted reasonably in awarding the £5.5m contract.

Family Housing claimed the arbitrator's finding was an "anomaly with what the government is asking us to do".

A spokeswoman for the Office of the Deputy Prime Minister said the government was aware the situation had "caused difficulties". New regulations, which will replace the existing requirements with consultation procedures, will come into force at the end of July and are intended to address these difficulties. However, the rules will not apply to works already carried out.

Source

Housing Today