A group of 70 pensioners and other residents fear they could be made homeless if a judge rules massive refurbishment costs for their flats are reasonable.
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Residents at Lindsay Court, off Squires Gate Lane, fear they will have to pay a £2.8m bill for extensive work to repair the 16 blocks of flats.
A housing tribunal held at Blackpool Magistrates Court this week saw around 30 of the leaseholders from the 96 flats present their case to Tribunal Judge Laurence Bennett and Deputy Regional Valuer Niall Walsh.
They were contesting housing management company Homestead’s application for the judges to rule on whether the scheme to repair the flats should go ahead.
The court heard that Homestead, which had been appointed as manager at Lindsay Court by a previous tribunal around four years ago after a series of problems with previous managers, sent out tenders to eight contractors to deal with serious issues with damp, rain getting into some flats, replacement of concrete lintels and wall ties, balconies and roof replacements.
It got six replies and chose the cheapest at £2.8m.
But residents say they will simply not be able to pay the £30,000 cost to each of them and if they fail to pay, then they will forfeit their leases and lose their homes.
In an emotional hearing, residents told the tribunal that many were pensioners with an income of less than £10,000 a year and that they could not afford to pay even the first instalment of £10,000 to allow the work to start, never mind the following two £10,000 payments within two years.
Patrick Brown spoke for many to give evidence and said that everyone agreed that work had to be done otherwise the flats would become uninhabitable. But he took issue with the cost of the proposed scheme.
He said “How can we find £30,000 as individuals? It has been suggested we go down the equity release route but it is not possible.
“Most lease holders are elderly with a fixed income and don’t have any way of funding it.”
The tribunal heard how some people had paid £90,000 for their flats years ago but that one was sold at auction last month for just £45,000 as the value had plummeted due to disrepair.
Mr Brown said equity release on a £85,000 flat would produce only £25,000 leaving £5,000 more to find.
He added that pensioners would struggle to get bank approval for loans due to their age and lack of income.
Resident Maurice Myers said it would be possible to do the work cheaper if a less “grandiose” scheme was adopted.
Residents offered a couple of alternatives but Judge Bennett noted that detail was lacking in the tenders compared to the ones that Homestead had got from bigger companies.
He said that the residents at the last hearing had been given time to get a surveyor and legal representation to argue the case in detail but they had not and that was “disappointing”.
But residents replied they had been told they had to get approval from 96 leaseholder but could not, since 12 leases were held by the freeholder of the flats Blair Estates.
Of the 96 properties at Lindsay Court , more than 50 are investor owned and rented out to tenants.
Resident Tony Watterson said: “If people cannot pay the bill then the next move would be forfeiture of their leases. Many residents only get a state pension of less than £10,000.”
Judge Bennett said he and the Deputy Regional Valuer had to consider whether the cost of the work was reasonable and affordable and to consider the phasing of the payments.
He said if the price for the work was reasonable but no-one could afford to pay then it was not feasible for it to go ahead.
He asked if the work could be done over a longer period to spread the bill, but was told by Homestead’s surveyor James Alderson that it would just add to the overall cost that the residents would have to pay.
David Bentham Managing Director of Homestead said that the firm had tried for years to get grants from a variety of sources such as eco-grants, local authorities, to help with the cost of repairs but had so far failed.
But he told the judge that he had got a message from Fylde Borough Council that morning which said they were interested in talking about the possibility of raising finance towards the problem.
He said: “We manage 6,400 properties and have never had a single forfeiture, which is something I am proud of.
“There has been a slight change in attitude towards housing since the Grenfell Tower tragedy and we are hopeful that funding may become available.
“The choice of managers Lindsay Court has had in the past has put the residents in the position they are in today.”
Judge Bennett said the tribunal would retire to make their decision “as quickly as possible in the next couple of weeks.”
Speaking outside court, one of the residents Christina Robinson, said: “I am lucky, I live in a block that is not to badly affected, but when I have been visiting other residents I have seen walls that are black with mould and damp, but all it needs is to have the gable ends pointing.
“Nothing has been done to these flats for years but we have been paying our fees.”
Maurice Myers said: “If this scheme goes ahead and people have to pay £30,000 each, then we are looking at the potential forfeiture of 70 flats. People cannot afford this scheme and if they cant pay they will forfeit their lease.
“Then the leases would revert to the freeholder who could sell off the flats or rent them out.
“The local authority would have around 70 people homeless and would have to find them accommodation, which doesn’t make sense.”
Resident Norma Booth, who has lived there since 1974, said: “We are in an awful situation. The residents cannot afford this.
“People cannot sell their flats now because the value has fallen on many of them so much and so they cannot raise money against them.
“It used to be a lovely place to live but it has been neglected over the years. People are desperate.”
But Mr Myers pointed out that many of the residents had already paid out for small repairs on their homes and many were in a good condition.
He said: “I paid to have parts of the outside wall painted and the concrete lintels replaced. We just don’t think that a huge repairs scheme is necessary.”
How did residents end up facing a bill for £30,000?
Speaking after the hearing, David Bentham from management company Homestead said: “It is difficult not to write an essay on the current state of affairs at Lindsay Court and it has to be said that whilst the situation at Lindsay Court caused by the condition of the buildings is extreme and very difficult, it is only different by degree from a number of other developments on the Fylde Coast which reflects a National problem.
“Around 25 per cent of properties in this country are either badly built or badly maintained.”
He said in 2007 the flats were managed by a company in Manchester which announced it would have to spend £10,000 per flat to repair the properties.
The residents objected and exercised their Right to Manage under the Commonhold and Leasehold Reform Act 2002 to take control of the management of their flats.
They appointed one estate agent to manage the flats which later waled away from the job and then a second which also was “ineffectual”.
He said: “The Residents Right to Manage Company was then wound up, with no money and considerable debts from Leaseholders, by the residents which lead to the intervention of the Tribunal and the appointment of Homestead as Managers.
“The Terms of my appointment by the courts require that I seek a solution for the problems with the buildings and as a professional person I take this obligation extremely seriously.
“In the absence of external funding for refurbishment the only option was to embark on a conventional solution addressing all elements of the building which were defective and dilapidated.
“This course resulted in a fully costed scheme prepared by a highly reputable local surveyor.
“I was aware that the prices that we received would cause consternation and in the interest of transparency I made an application to the First Tier Tribunal for its determination on the reasonableness of the proposals.
This is an approach which is inclusive of all owners and culminated in two hearings, one on November 24, 2017 and the one this week.
“We now have to ascertain the extent of the reasonable works which is what the tribunal has been asked to do, we then have to investigate how we track down ethical funding which I am already trying to do via the MP and local authority and equity release has to be an option.
Homestead manages 6,400 properties throughout the North West and have won national awards and commendations for our management of properties and customer service.
“We are a company which is regulated by the Royal Institution of Chartered Surveyors and the Association of Residential Managing Agents and follow their strict codes of practice.”