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London
Tenants Federation
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London Tenants Federation - BRIEFING - June '03
By 2011 council tenants rents will rise on average by 16% in real terms as a result of rent restructuring. With the separation of service charges the total average increase is likely to be nearer 33%. Concerns expressed in the London Tenants Federations response to the Office of the Deputy Prime Minister's consultation on service charges are already being realised. Wide variations in rents charged across local authorities in London are occurring, with tenants in high property value areas apparently paying the price - not for better conditions and services on their estates - but simply because they are living in 'trendy' areas. This clearly makes a closer link between the market and our rents rather than the qualities we value in our homes and neighbourhoods - which was a stated government intention in rent restructuring. The separation of service charges from rents was sold to our local authorities with 'financial incentives'. Government implied that there would be 'no claw back of service charge income' - effectively meaning that councils would have more money in the HRA if they complied with government's wishes. But it seems that the government is already planning to renege on this. They are in the process of reviewing the formula for assessing management and maintenance allowance. What is being proposed is that from next year they will claw back service charge income by excluding service charge costs from the management and maintenance allowance calculation. That is, when assessing management and maintenance allowance subsidy levels, they will make an assumption about the level of service charges that a local authority will be collect from it's tenants and this amount will be deducted from level of subsidy allocated. When the vast majority of councils in London get government subsidy this could have huge implications in relation to the amount that our councils have to spend on maintaining our homes. The knock on effect of our councils losing out financially will almost certainly result in increased service charges to make up the shortfall. The argument that we put forward to the ODPM's consultation on
this issue was that without the benefit that leaseholders have of
being able to challenge services charged, the separation of service
charges form rent seemed to be little more than a method of increasing
rents. It seems that if the proposed changes to the assessment of
the management and maintenance allowance are implemented, the result
for tenants could be even worse than we first thought. More on Rent Restructuring
From the press
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