Your Rights As A Leaseholder

Thanks to all 29 residents who came to our meeting on Your Rights As A Leaseholder. We covered sinking funds, damp and more


Apologies from Cllr Olga Fitzroy

These minutes were not drafted by a lawyer.  They are not a substitute for legal advice

Opening Remarks

The Leasehold Advisory Service exists to provide free advice on residential leases.  It cannot be your advocate in court, it can only provide general advice.  

There is no legal aid for leasehold issues unless you’re about to lose your home.  If you can’t afford to pay for advice the Leasehold Advisory Service is probably the only option.  You can book a 15 minute appointment with a 3 week wait.  It’s also possible to submit a written enquiry but the waiting time is 4-5 weeks.  It’s better to call

Nadeem is a solicitor with 25 years experience in dealing with housing disputes. 

Sinking Funds

The issue: NHG sent a service charge estimate in early March.  Between £248 and £1205 of the estimate was allocated to a “cyclical fund”.  This is what NHG calls sinking funds.  NHG have never charged for sinking funds before and St Martins leaseholders who rent from Optivo and MTVH don’t have them

Legal position: A sinking fund is a fund the landlord can ask a leaseholder to contribute to in addition to the standard service charge. They are used to spread the cost of large scale major works

Generally you need to have a clause in the lease that specifically authorises the landlord to institute a sinking fund.

It is perfectly reasonable to ask the landlord what clause in the lease they are using to justify the sinking fund.  If Nadeem was advising the housing associations he’d suggest they use the wording “whether incurring by regular or irregular periods” would be sufficient (this occurs in the 20th century Lambeth leases he’s seen).  But NHG told Yemi they are relying on a clause that the service charge will be a minimum £140. Nadeem thought this seemed weak.  

We can complain to the Housing Ombudsman, but only on the grounds of maladministration.  The Ombudsman is not there to settle legal disputes. Councillors can fast track a complaint.  

Conclusion: When NHG sends out service charge demands that include a sinking fund (which they’ll probably do this month, September 2022) Chris will ask all NHG leaseholders to complain.  They should write to NHG to ask what clause they are relying on to institute a sinking fund.  If NHG can’t give a simple answer, or give different answers to different leaseholders that aren’t explained by different leases, we may have a case for maladministration.


The issue: Some blocks on our estate have problems with damp.  The landlords are fixing the problem for some tenants but not for leaseholders.

Legal position: As a tenant the law relating to landlords obligations to repair are very generous.  They are less generous for leaseholders as they own the “first layer of plaster”.  

A HA can get round the problem by saying the problem is due to condensation, not damp (e.g. you’re drying clothes inside the house whilst the windows are closed).  This means they don’t have to do anything for either tenants and leaseholders.  They tried this approach with Sina

To get the landlords to take action you need to show it is penetrative damp.  A surveyor can provide this information.

The Housing Ombudsman has produced a guide

Conclusion: In September 2020 a council survey said our landlords “have been aware for a number of years, that there are significant structural defects to the fabric of buildings” but rather than fix the issue they ‘routinely assume that the “lifestyle” and “behaviour” of residents is the primary factor for the presence of condensation damp and mould in flats. No objective or quantifiable evidence has been produced to support these assertions’.  The residents association management committee will see if this survey can be the basis for action.

Claiming on the landlord’s Buildings Insurance

The issue: A leaseholder had problems in their flat caused by faulty guttering.

The legal position: The landlord is responsible for guttering and hence for any repairs to your property (but not the contents) resulting from their failure to maintain guttering.  They will often ask you to get quotes for repairs then claim on the landlord’s buildings insurance.  You are not obliged to pay any excess the insurance company charges you.  Put in a complaint to say the landlord should pay the excess.  If they refuse, put in a claim to the small claims court

The Leasehold Advisory Service has produced this briefing.  [Minute taker’s note, see also this story from a leaseholder who couldn’t attend the meeting]

Rateable Value

The issue: A leaseholder had works distributed in “accordance to rateable value”.  But she had no idea what the rateable value of her property was or if it was correct in comparison to other properties

The legal position: Every lease has a service charge apportionment principle.  Some just say “reasonable share of cost as determined by your landlord”.  Others explicitly say square footage or rateable value.  

Rates were abolished in the 1990s.  So if the landlords are using rateable value they’re either using values from decades ago or making it up as they go along.  


  • Stephen will ask MTVH for rateable values for the entire estate.  Yemi thinks they have them
  • If Stephen’s approach fails, Chris will ask every leaseholder to approach their landlord and ask for their rateable value.
  • We can use this approach to identify obvious discrepancies, similar to what we did with MTVH service charges

Administration Fees

The issue: Leases written in 1986 say administration fee is exactly 10%.  Post 1992 leases say administration fees are a minimum of 10%.  These administration fees have always applied to service charges.  There’s an issue about whether they should also apply to major works.

The legal position: The key issue is “reasonableness”.  Housing Associations have the legal right to charge administration fees but if they charge vastly more than comparable landlords we could argue it is not reasonable.

There’s no clear legal definition of what is “reasonable”.  But an administration fee of 15% on a service charge is likely to be ruled by the courts as reasonable.

Conclusion: Chris will check how administration fees compare among different landlords across the estate and advertise his findings.

Cost of Buildings Insurance

The issue: Buildings Insurance is listed as a unit cost of some service charge statements.  But surely it is the block that is insured, not the individual properties.

The legal position: The courts have decided it is reasonable for a landlord to buy an insurance policy that covers all their properties.  They will get a bulk discount for insurance which they wouldn’t get if they insured each block separately.

But you can still challenge the reasonableness of your share.  For example, if you live in a block without any major problems but rent from a landlord that has lots of old properties in their estate then your share may be inflated by the high insurance costs for the old blocks.  If an insurance broker says your insurance costs are higher than the market rate, challenge your landlord on reasonableness grounds.

Section 20 consultations

The issue: MTVH did a section 20 consultation on cyclical works and chose Greyline buildings as they were the cheapest.  MTVH claim Greyline have now increased their costs so have switched to Axis, resulting in higher costs for leaseholders.

The legal position: Leaseholders don’t have the legal right to request new quotes in this situation.  But we should put in a formal complaint to insist the landlords explain their reasoning in greater detail.

Conclusion: Chris & Mimi will work together to write an email to send to all leaseholders encouraging them to complain


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