Leaseholders

The Financial Conduct Authority (FCA) has introduced new regulations which mean insurers and brokers must provide more information about building insurance policies to leaseholders and shared owners.

The regulations are designed to make sure insurers act in the best interests of and protect leaseholders who live in multi-occupancy buildings (those which contain more than one household).

You can find more information on the regulations in these Frequently Asked Questions (FAQs) put together by Gibbs Laidler, our insurance advisors.

We carry out annual in person visits to leasehold properties to offer advice and support and to make sure lease obligations are being followed. This is our responsibility as the freeholder.

As a leaseholder your obligations include making sure:

• your property meets statutory building and fire safety obligations
• your gas and electric installations are safe and compliant
• we hold up to date records of everyone who lives in your property
• you give us access to carry out visual inspections of your property every year

Giving access for home visits is a requirement within your lease. The cost for it is recharged to you as an administration cost.  If access is not given, you will be in breach of your lease.

You can find more information on leasehold obligations from The Leasehold Advisory Service.

As a leaseholder or shared owner, you have legal fire safety responsibilities. These are detailed on the Government’s website.

We carry out inspections to make sure that:

• boiler and gas appliances are regularly serviced
• communal areas are clear
• electrical wiring meets current regulations
• fire protection between properties and between rooms has not been compromised
• flammable materials are not being stored
• front door and kitchen door are ‘self-closing’ fire doors
• replacement windows are made of a fire-resisting material and properly installed
• security gates or grilles do not impede exit or access in an emergency

You can extend your lease as long as you have been a leaseholder for at least 2 years. As time passes, the time left on your lease diminishes. For new leases this isn’t a problem, but once the lease term falls below 80 years your property’s value can be seriously affected and it becomes more difficult to sell. It is worth thinking about extending your lease when you have between 100 and 90 years remaining on your lease.

To enquire about extending your lease, get in touch with us via your MyHARCA account or by emailing housingteam@poplarharca.co.uk. There are fees associated which include a valuation fee, and legal administrative fees. These will be broken down for you when you enquire.

If your lease includes a clause about doubling ground rent, don’t worry – Poplar HARCA will not be actioning this. The reason we haven’t amended your lease to reflect this is because there are legal costs in doing so, which leaseholders would need to cover. Read more here.

If you do want to have your lease varied, please contact housingteam@poplarharca.co.uk. Please note the legal fee for this is £600 +VAT and disbursements, and the instructions must be carried out by a solicitor.

Yes, but you need our consent to carry out work to the structure of the building e.g. windows, internal walls or changing the layout.

If you carry out work without our approval you will be in breach of your lease. There may be other consents needed too, such as planning and building control.

If you change your front entrance door it must comply with fire safety regulations and be fire resistant for a minimum of 30 minutes. Please contact us to obtain a specification.

Useful advice is available from the links below:

Independent advice on your lease

Independent guide to service charges

Advice on Leasehold Valuation Tribunals

Leaks can be annoying and disruptive, especially when they come from a neighbouring property and affect yours. The first step is to find the source of the leak as soon as possible.

We’ll investigate to see if the leak is caused by a building issue or if it’s from a property rented by a Poplar HARCA tenant. If the leak is between two leasehold properties, the leaseholders must agree a solution. You can ask us to assist and contact the other leaseholder for you. This service costs around £1,500.

If you’re a leaseholder and need help paying for your major works, please contact us. We can discuss available options, including setting up repayment plans to help make the costs more manageable.

You can reach us at:
Phone: 0800 035 1991
Email: info@poplarharca.co.uk

You can request a copy of the Policy Terms and Conditions Pack arranged by JLT Specialty through our Housing team. The pack includes full details about:

• Property Damage
• Public Liability
• Contract of Works

To request a copy, please contact our Housing team by emailing info@poplarharca.co.uk

If you sublet your property, you continue to be responsible for:

• paying service charges and ground rent
• the terms of your lease

As a landlord, you will also be responsible for:

• ensuring your tenant does not cause any problems, including antisocial behaviour
• arranging an annual gas safety service by a registered engineer
• providing at least one smoke alarm on every storey of the property used as living accommodation
• ensuring that the front door and kitchen door are ‘self-closing’ fire doors

The London Fire Brigade‘s website provides detailed advice on fire safety responsibilities of landlords.

If you plan to sublet your property you must inform:

• Poplar HARCA’s Leasehold team
• Your bank or building society, if you have a mortgage
• Your home contents insurance provider

You must also inform us if your property is going to be left empty for any length of time, as this could affect any insurance claims.

If you want to sell your home, you must give us details of the solicitor who is acting on your behalf to sell the property. Please ensure that a letter of authority signed by all leaseholders is provided with their request, stating that they are your legal representative.

The solicitor will ask us for a resale management pack. The pack covers details of the annual ground rent and information about your service charge accounts including the last 3 years’ invoices. We also provide details of the cover under the building insurance policy and any planned major works on the property block and other lease related information. There is a charge for providing this information to your solicitor.

We expect you to pay any bills for service charges, building insurance, ground rent and major works on your account in full up until the end of the financial year. You will need to do this on or before the date you complete the sale.

Your solicitors will be responsible for claiming from the purchaser’s solicitor any money due from the date of completion until the end of the financial year on the 31st of March.

The purchaser’s solicitor must send us a notice of transfer/assignment within four weeks before we are able to update our records with the new owner’s details. If the purchaser’s solicitor does not do this, we will continue to charge you for services and you will be responsible for any problems that may arise.

If you sell your home within five years of buying it through Right to Buy/Right to Acquire, you will have to pay back some or all of the discount you received. The amount of discount you have to pay back will be a percentage of your home’s market value when you sell it.

When you buy extra shares in your shared ownership property, this is called staircasing.

You need to put your interest in writing by emailing housingteam@poplarharca.co.uk with your full name and address. A Notice of Intention to Staircase form will then be sent out to you; please fill out and return the completed form, outlining the share you wish to purchase.

A valuation of your home will need to be carried out, as instructed by Poplar HARCA. The basis of the valuation is set out in your lease. You can instruct a valuer of your choice but they must be a member of the Royal Institution of Chartered Surveyors. The cost of the valuation will be payable by you and is non-refundable. The valuation is normally valid for 3 months; if you do not complete the transaction in this time the property will have to be re-valued, and any additional costs will be payable by you.

If you are in arrears with your shared ownership rent or service charges, you will not be eligible to staircase until you have a clear account balance.

When you buy more shares in your home, your shared ownership rent decreases. You will continue to pay shared ownership rent based on the share that Poplar HARCA still owns, along with full service charges.

When purchasing a further share in your property, there will be legal fees, mortgage arrangement fees, stamp duty (if applicable), and other associated costs. There may also be further costs charged by your mortgage lender. Your solicitor will advise you on these costs and be able to give you an itemised breakdown.

An increase in the share of your property will involve changes to your existing lease. This means you will need to instruct a solicitor to act for you. Ideally they should be experienced in dealing with shared ownership transactions.

Increasing your mortgage to staircase is known as a Further Advance. Taking out a new loan with a new lender is known as a Re-Mortgage. If you are considering either of these options, contact an independent Financial Adviser to check whether you will be able to afford the additional share you wish to purchase. You will also need to contact your lender directly to organise the additional amount.

Once you’ve reached 100% you will no longer pay shared ownership rent. You will instead pay ground rent and full service charges.

It’s a fee that covers the cost of maintaining and managing a building and estate. Charges only apply to the services provided.

When you signed your tenancy or lease agreement you agreed to contribute to the cost of looking after the building and estate.

There are a number of services included in the service charge, such as building insurance, caretaking and maintenance. For the full list, please click here.

Everyone who has a tenancy or lease must pay a share of the costs. This includes tenants, leaseholders, shared owners, and sometimes freeholders. We cover the cost when a property we rent out is empty.

If you’re a tenant: we send you a breakdown of your service charge every February for the next financial year (April to March).

If you’re a leaseholder: we send you an estimate of costs before every April for the past year (April to March). We then send a breakdown of the actual costs incurred for the previous year (April to March) in October.

Service charges vary depending on property size, so larger properties pay more.

Leaseholders, shared owners, and, in some cases, freeholders all pay service charges.

No, we don’t make a profit from service charges. Some managing agents do include a charge for profit.

Yes, there are 3 types of service charge:

Fixed charges: most tenants pay a weekly set amount each year which is set at the start of the financial year and does not change based on actual costs

Variable charges: leaseholders, shared owners, and some freeholders pay an estimated charge which is adjusted once actual costs are known

Inclusive charges: in some cases, the service charge is included in the total rent charge.

If you think there’s a mistake, let us know. If the issue isn’t resolved, you can ask the First-Tier Tribunal (Property Chamber) to review and decide what charge is payable.

Citizens Advice: citizensadvice.org.uk – free advice on various issues, including housing

Shelter: shelter.org.uk – support and advice on housing-related issues

Law Centres: lawcentres.org.uk – free legal advice if you can’t afford a lawyer

Leasehold Advisory Service: lease-advice.org – government-funded advice on service charges

Leasehold Association: lease-assn.org – joining or forming an association may provide support and resources

Residential Property Tribunal Service: gov.uk/housing-tribunals – decides service charge disputes

Solicitors: solicitors.lawsociety.org.uk – for complex issues, consult a housing or property specialist

Charges are based on an average cost from previous years, adjusted for inflation, and include expected large expenses, like replacing a roof. For full details on how we calculate each charge, please click here.

The service charge consultation process is governed by the Landlord and Tenant Act 1985, and subsequent amendments.

We must consult leaseholders if we plan to:
• Carry out works that will cost each property more than £250, or
• Enter into a qualifying long-term agreement lasting more than 12 months and costing each property more than £100 in a year.

The Consultation Process

1. Initial Notice (Section 20 Notice)
   We must issue a notice detailing the proposed works or services and explaining their necessity. You have 30 days to provide written feedback
   and may nominate a contractor.
2. Obtaining Estimates
   We get at least two estimates, one of which must be from a nominated contractor if any nominations have been received. A second notice must then be sent, summarising estimates and feedback, and asking for observations.
3. Deciding
   We must review and consider all feedback. We then let you know which contractor or service provider has been chosen, and why they were selected.

Emergency works

In urgent situations, we will do works without completing the full consultation process. If we do, we will send you a summary of the reasons and costs. We may sometime also apply to the First-Tier Tribunal for dispensation from having to carry out a consultation.

Disputes

First-Tier Tribunal (Property Chamber): You may challenge the reasonableness of service charges and the consultation process. The tribunal will decide how much you must pay and whether the consultation was properly carried out.

Why consultation is important

Leaseholders have an opportunity to share their feedback on proposals and suggest a more suitable or cost-effective contractor before we make a final decision. If the consultation process is not carried out correctly, we may be unable to recover the full costs. For qualifying works, recovery is capped at £250 per property, and for qualifying long-term agreements it is capped at £100 per property. This shortfall would need to be covered by the rent paid by social housing tenants.

There is certain information that leaseholders are legally entitled to, and Poplar HARCA must provide. Details of common requests are in the FAQs below, and more information is available here.

Under Section 21 of the Landlord & Tenant Act 1985, you may request a summary of relevant costs. This must be in writing and can only be for the costs of the previous accounting years, or the costs of the last twelve months.

Poplar HARCA must reply to a s21 request within one month or 6 months of the end of the accounting period (whichever is later) and the summary must show how these costs have been or will be included in the service.

They must also show:

• any bills that were paid by the landlord in the 12 month period but were incurred before the 12 month period.
• any demands that have been received by the landlord in the 12 month period but not yet paid.
• any demands that have been received and paid by the landlord in the 12 month period.
• any costs related to works where the landlord has received an improvement grant.

Under Section 22 of the Landlord & Tenant Act 1985, you may request to physically inspect accounts. This request can only be made after you have already made a request for a summary under s.21 (see FAQ above), and within six months of receiving that summary. This request must be made in writing.

Poplar HARCA must provide reasonable access within one month after receiving the request for leaseholders to inspect any accounts, receipts or other documents supporting the account summary, and make copies of these documents. These must remain accessible for two months.

If there is a superior landlord, some of the costs are incurred by them or on their behalf. Under Section 23 of the Landlord & Tenant Act 1985, if the landlord is not in possession of the relevant documents because they are held by the superior landlord, they must make a written request to the superior landlord for that information. The superior landlord must then respond within a reasonable time. The rule allows for a reasonable extension to the one month time limit in this situation.

To make a request, email homeownershipteam@poplarharca.co.uk.

Gibbs Laidler Consulting LLP (Gibbs Laidler) are independent Insurance and Risk Consultants working with many Housing Associations across the UK, including Poplar HARCA. Poplar HARCA have asked us to provide our expert opinion on the most frequently asked questions received by their Leaseholders. We are not legal advisers however, and cannot comment on legal matters or provide legal advice. The answers below may be subject to change

The Financial Conduct Authority (FCA) has implemented new regulations designed to protect the interests of leaseholders and ensure they receive fair and transparent treatment from insurance providers and brokers. The new rules are focussed on the treatment of leaseholders in multi-occupancy buildings. For housing associations, the term “leaseholder” will include shared owners.

Under the new rules, leaseholders will now be considered customers. This shift emphasises the need for brokers and insurers to act in the best interests of leaseholders.

The FCA is the regulatory body for insurance providers, and the rules apply to them. One of the key elements of the new requirements is that insurers and brokers provide information about the policy to the landlord, and asks the landlord to pass it to all leaseholders so that they have clear details about what is insured and what it costs.

The regulation came into force for insurers on 31 December 2023, however change will not need to be implemented for each of their clients until the following renewal date. In the case of Poplar HARCA, this is 14 June 2024.

In most cases, you should expect to receive a summary of cover document issued by your buildings insurer via Poplar HARCA, which will detail the insurance cover provided and will state your address, the sum insured for either your individual home or, in the case of blocks of flats, the building in which you reside, and the premium applicable to you or your block.

In previous years, you may have only received the summary of cover which detailed your cover and the overall sum insured of the Leaseholder/Shared Owner portfolio. There will also be information about the remuneration given to the broker and insurer.

As a Leaseholder, you will not need to do anything. The regulation has been implemented to ensure that Leaseholders benefit from transparency and fair value from their building insurers. Insurers and brokers must now provide more information about the insurance policy provided and details of the premium applicable to each owner.

Under the terms of the lease, the building owner or ‘freeholder’ (in most cases this will be Poplar HARCA) is responsible for maintaining buildings insurance, with leaseholders and shared owners contributing towards the cost of the insurance through the service charge.

No, the insurance policies will be dealt with in the same way as previously carried out by Poplar HARCA.

The change in regulation does not affect the premium rates in the insurance market. In the past, Poplar HARCA will have been charged one premium for the whole Leasehold and Shared Owner portfolio and this premium will have been charged back to owners via their service charge in the best way available to Poplar HARCA. Going forward, this premium allocation will be provided in accordance with the regulations by the insurers to the association, and the insurers will have used their rating methods to calculate the apportionment.

In some cases, you may have up to several insurers providing different types of insurance cover for your building, and therefore you may receive notice of premium amounts from different insurers which have been totalled and included within your service charge calculations. No additional cost is added to this by the association.

You are not being asked to pay an additional amount. The insurers are now required to inform you of the premium applicable to you, which you will receive as part of your summary of cover. This amount will be included within your service charge.

As the freeholder of the property, Poplar HARCA has a financial interest in the property. Therefore, they need to be sure that all of the properties are insured and in arranging a block policy that covers all of the leaseholders, they can be confident that the policy will respond to a loss.

If the leaseholders arranged buildings cover for their individual flats, in the event of a major claim, we could potentially be dealing with a separate insurer for each flat and if one of the leaseholders had not arranged insurance, or the policy failed to pay out, the remaining leaseholders would be responsible for the costs.

Whilst it is appreciated that insurance can sometimes be purchased cheaper elsewhere, having a block policy benefits both Poplar HARCA and leaseholders. Therefore, there is no need to take out additional buildings cover, but it is strongly recommended that cover for your own possessions is obtained by way of a contents policy.

No, the current lease will not change. The regulation impacts the insurers and insurance brokers and will therefore not affect any other contract or service you have with Poplar HARCA.

The valuation you likely received on your property will be the Market Value, which determines how much your property could sell for in the current property market. This is different to the rebuild value, which purely looks at the costs associated with demolishing and rebuilding the building to its current state. Your mortgage provider will require you to have buildings insurance for your property to cover the rebuild costs and the mortgage provider will lend based on the Market Value of your property. Poplar HARCA ensures your property has appropriate levels of building insurance by including it within their block policy.