The Audit Commission no longer carries out research on housing-related issues. This briefing summarises the key findings of our past research that related to Leasehold Management.
Leaseholders
The proportion of leasehold properties managed by social landlords varies widely. For some London councils, leaseholds can comprise up to 40 per cent of the properties they manage. In some areas the figure may be just 1 - 2 per cent, and the service can be treated as a marginal one.
Leaseholders face the same problems as other tenants and residents - all policies need to deal with their impact on leaseholders. Leaseholder satisfaction is generally lower than for tenants and sometimes they have different views about what landlords should be paying for.
Landlords' collection rates for service charge are generally significantly lower than those achieved for tenants' rents.
The publication of ratings of social landlords' performance has encouraged managers to improve their practice. Leasehold services delivered by ALMOs, for example, improved more than any other service area between inspections.
Landlords need a customer focus
Service charges are a critical issue for leaseholders. Lower satisfaction rates can stem from service charges; the amount, value for money, accuracy, transparency and presentation of charges. Advance notice and consultation ahead of legal requirements increases a landlord's chance of understanding, winning trust and enabling schemes to proceed on programme.
Leaseholders' confidence in their landlord is important. With their trust, landlords may be able to harness their energies in a positive way, for example monitoring contracts or checking service charges.
How effectively councils invoice and recover leaseholder service charges and major works bills can have a major impact on service provision to all tenants. Good landlords help leaseholders to maximise their incomes and manage their finances by offering flexible payment options for major works bills and providing information, advice and support.
Social landlords often have a number of different forms of leases. The particular terms of a lease will determine exactly what items the landlord will be able to charge for, and this can present serious management problems. Good landlords review whether they need to simplify matters.
Good landlords encourage gas servicing by leaseholders. Some revisit the terms of the lease in this respect; others offer a basic service that leaseholders might more easily afford and some are taking the initiative where leaseholders have sub-let.
The changing regulatory framework
The social housing regulator will have an increased focus on value for money in future. Landlords should expect more challenge from leaseholders that their service charges are good value.
There are no statutory or regulatory performance indicators on service charges. However, in areas with a high proportion of leaseholders, neighbourhood panels may be keen to benchmark performance with their neighbouring landlords.
Leaseholder income collection needs to remain a high priority
While rental income may be the foundation on which services are built; leasehold service charges and major works bills represent significant sources of income for some councils and housing associations. Poor management can increase reputational risk, damage public trust, weaken frontline service deliver, lead to financial loss and poor value for money.
Income management alone is not enough
Good landlords develop a better understanding of their leaseholders to aid the targeting of direct debit and benefit campaigns.
Audit Commission resources
Previous Audit Commission reports and other resources can help councils review their approach to charging and learn from good practice elsewhere.
Tenant involvement : Assessing landlords' progress (March 2010) (No ISBN)
Cambridge Council's Housing Management Board includes a leaseholder rep.
Improving Income Collection: Efficient Collection of Council Tax: Housing Rent and Other Income by Direct Debit (June 2006) (No ISBN)
There are significant benefits in terms of efficiency by increasing direct debit take-up
Closing the Gap: Working Together to Reduce Rent Arrears (November 2002) ISBN 186240405 4
Landlords should explain service charges