Shared ownership issues, service charges, sinking funds and lease extension premiums. Second report back on the February 19 negotiations between the Joint Committee of Notting Hill and Genesis Residents and the Executive Team of NHG. 

Shared ownership issues, service charges, sinking funds and lease extension premiums. 

Second report back on the February 19 negotiations between the Joint Committee of Notting Hill and Genesis Residents and the Executive Team of NHG. 

The Joint Committee of Notting Hill and Genesis Residents met with representatives of the executive team of NHG on 19 February. 

We had three people on our side – two members of the Joint Committee of Notting Hill and Genesis Residents and the Chair of the UNITE housing workers branch as an external observer. 

For NHG, Carl Byrne, Group Director of Housing and Jeremy Stibbe, Group Director of Regeneration and Strategic Asset Management attended. 

After this meeting we wrote to Carl Byrne, on 3 March, setting out the issues on which we had agreed –  and those which were still in dispute or which we had not the time to discuss at the meeting.  Carl Byrne replied in a letter which arrived on 29 March. 

(You will find the two letters attached to the first post in the ‘Negotiations’ drop down menu called, ‘Rents.  First report back on the February 19 negotiations between the Joint Committee of Notting Hill and Genesis Residents and the Executive Team of NHG.’)

This report is the second of six report backs we are publishing on various aspects of the negotiations We are in the process of arranging general meetings for residents across NHG to discuss these negotiations and consider how to carry forward issues which are of concern to residents (which may not have appeared in these negotiations). 

1. What are the procedures for shared owners getting into difficulties including downward staircasing?’ (see points 1.1 and 1.2 in both letters).

We argued that many shared owners had difficulty ‘staircasing’  and that some shared owners were in real difficulties. We also put it to NHG that they needed to make sure that potential shared owners were warned of the difficulties. 

NHG response: NHG argue that shared owners are still staircasing up. In fact they say: “The volume of staircasing transactions year to date for 2018/19 is marginally higher than for the same period in 2017/18.” 

They also argue NHG have specialist mortgage advisors for shared owners who make sure that potential buyers do not sign for more than they can afford: “Overall the total cost of the mortgage, rent and service charges must be no more than 45- 50% of a buyers household income after tax.”

We think that the housing crisis and the lack of alternative social housing at a reasonable rent is forcing people to go for shared ownership. This is why we are hearing more and more worries expressed by shared owners who are struggling.

2   Extending the right to manage to shared owners (see point 1.4 in both letters).

Shared owners do not have the ‘right to manage’ their building –  leaseholders do. We argued the this should be changed. 

NHG Response: NHG say, in effect, that this is already their policy and they will not oppose applications from shared owners to manage their building in the future: “We will consider right to manage applications from a Right to Manage company including shared owners when served a claim notice. Previously applications of this type have not been opposed and future applications would also be considered on a case by case basis.”

3.  Unjustified use of forfeiture proceedings against shared owners and leaseholders (see point 1.5 in both letters).

We are aware of forfeiture proceedings being used by NHG to attempt to force residents to concede unfair service charges. Obviously we are opposed to this practice. This issue is closely connected to the next issue, service charges

NHG response: NHG did not really answer this point. They noted that: “We always attempt to engage and work with residents to address any concerns and to support them with signposting to any agencies that can help with financial concerns as well as agreeing appropriate payment plans.”

4.  The continuing problem of NHG including unrelated items in service charge calculations (see points 1.6 and 1.7 in both letters).

The extremely poor practices in relation to service charges are well known. Both housing associations (Notting Hill Housing and Genesis Housing Association) had really poor reputations on this point before the merger and NHG have promised to improve. However residents continue to have major problems with incorrect additions of irrelevant items on service charges

NHG response: NHG gave a commitment that incorrectly added items will be removed from the service charges: “If we mistakenly include costs in a service charge account for a cost that is not eligible for that scheme we will correct those errors.” 

5. The lack of clear accounting for sinking and reserve funds (see point 1.8 in both letters)

Poor accounting practices and confused accounts were also brought up by our sides; residents frequently complain about this – particularly in relation to major works and cyclical maintenance.  

NHG response:  

For legacy NHH blocks: “For legacy NH properties where we have combined reserve funds these are presented through service charge accounts on a block level, and estate level where applicable. Reserve funds are not held in separate accounts in trust as we are exempt as a registered social landlord. As such money is held in one account but represented on different legers.” 

For legacy GHA blocks they say: “For legacy GHA we endeavour to provide clear sinking fund statements at block level for all blocks that contribute to a sinking fund.” 

6. Removing the unjust 15% management fees added on to cyclical maintenance invoices (see point 1.9 in both letters)

NHG response: NHG flatly refuse this: “The 15% charge for major works is applied to recover the cost of administrative functions and has been in place for some years.”

7. The unfair policy of requiring payment of 100% Leasehold Extension Premiums of shared owners (see point 1.10 in both letters)

Shared owners in Genesis properties are paying 100% Leasehold Extension Premiums despite not owning 100% of the property. This is clearly unfair.

NHG response: NHG promise that the situation will be remedied: “The new corporate policy for NHG will calculate the premium payable by shared owners using the legacy NHH method from 1 April 2019.” 

8. Making ‘formal’ statutory lease extension available to shared owners (see point 1.11 in both letters)

We raised this issue as it is clear that the informal route to leasehold extensions is far less safe than the formal statutory route. 

NHG response: They agreed that this would now be accepted by NHG: “If a shared owner’s solicitor served notice for a formal lease extension we would allow them to pursue that course.”

9. Unjust changes in contractual terms on the extension of a leasehold (see point 1.12 in both letters)

This is an important issue for leaseholders extending their leases. What are the terms of the new contract? 

NHG Response: They did not really respond to this issue saying that we,  “issue lease extensions of a 90 year additional term which extinguishes the ground rent and this is calculated in the premium.” But the essential issue is: what terms does the new contract contain? 

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