Pickles to cap service charges, claiming councils use them as "cash cow"

The Communities Secretary has unveiled plans for a cap on the amount that local authorities can charge leaseholders for maintaining their homes.

Directions for the mandatory reduction of service charges were introduced in 1997 and extended in 1999 to take account of funding available through the Private Finance Initiative. They only related to specific, named programmes, however.

A consultation says the Government intends that all future central government assistance for works of repair, maintenance or improvement, provided by the Secretary of State or the Homes and Communities Agency is included in the Directions.

Under the proposals, councils that receive government funding will only be able to charge a maximum of £10,000 over a five-year period or £15,000 for those in London.

“This acknowledges the higher prices in the capital, and that the nature of the stock, with many homes in tower blocks, makes it more expensive to repair and maintain,” the consultation paper said.

The caps would not affect any funding already confirmed, but would affect any allocations from the 2013 Spending Round Decent Homes funding.

Eric Pickles claimed that some leaseholders had received bills of nearly £50,000.

The Communities Secretary said: “There is absolutely no excuse for councils to terrify hard-working homeowners with ridiculous and excessive charges for repairs to their building.

“While the vast majority of councils behave responsibly, there are some who have utterly failed to maintain standards alongside a common sense approach to charges, leaving their leaseholders crushed by outrageous bills.”

He added: “This is not fair, and where government funding is used we won’t stand by and let leaseholders get pushed around by their council.”

In the forward to the consultation, Pickles said: “Of course, leaseholders must pay their fair share of costs to maintain their homes, and they should pay as required under the terms of their lease but I, and the Minister for Housing, do want to limit any excessive claims on these owner occupiers.”

The consultation, which can be viewed here, runs until 18 November.