Council Leaseholder Rights: Service Charges & Major Works Guide
A comprehensive guide to council leaseholder rights, covering Right to Buy service charge obligations, local authority leaseholder protections, council major works billing, Section 20 council consultation requirements, and how to challenge council service charge demands. Understand the caps, hardship provisions, and dispute resolution routes available to council flat service charge payers.
Introduction to Council Leasehold
A council leaseholder is someone who owns a long lease on a property within a building or estate that is still owned and managed by a local authority. In most cases, these leaseholders acquired their homes through the Right to Buy scheme, which gave council tenants the legal right to purchase the property they were renting at a significant discount. While the leaseholder owns their individual flat, the council retains the freehold of the building and responsibility for the structure, communal areas, and shared services.
This creates a relationship that is fundamentally similar to private leasehold ownership, but with some important differences. The local authority acts as both landlord and managing agent, and it must comply with the same statutory framework that governs private sector service charges, including the Landlord and Tenant Act 1985. However, councils also operate under public law duties and their own housing policies, which can provide additional protections for council flat service charge payers.
This guide explains the rights and obligations of council leaseholders in relation to council service charges, council major works, and the routes available for challenging charges you believe are unreasonable. For a general overview of how service charges work in all leasehold settings, see our service charge guide.
How Right to Buy Creates Council Leaseholders
The Right to Buy scheme, introduced by the Housing Act 1980 and now governed by the Housing Act 1985, allows qualifying council tenants to purchase their home at a discount. When the property is a flat within a larger building, the purchaser acquires a long lease rather than the freehold. This lease sets out the obligations of both the leaseholder and the council, including provisions for Right to Buy service charge contributions.
The Section 125 Notice
Before the Right to Buy sale completes, the council must serve a Section 125 notice on the tenant. This notice includes an estimate of the council service charge the leaseholder can expect to pay for the first five years, as well as details of any planned council major works and their estimated costs. The Section 125 notice is a critical document because the service charge estimates it contains form the basis of the cap on repair costs that applies during the initial years of ownership. Leaseholders should retain this document carefully as it is essential evidence if charges exceed the stated estimates.
Lease Terms and Obligations
The lease granted under the Right to Buy will typically require the leaseholder to pay a council flat service charge covering the costs of managing and maintaining the building, insurance, communal services, and contributions to a reserve or sinking fund. The specific terms vary between councils, but the structure is broadly similar to private leasehold arrangements. Understanding your lease terms is essential for knowing what you can and cannot be charged for, and for identifying whether the council has complied with its obligations under the lease and the relevant legislation.
Council Service Charges vs Private Service Charges
While council service charges and private service charges are governed by the same statutory framework, there are practical differences that local authority leaseholders should be aware of. Understanding these differences is important for managing your expectations and exercising your rights effectively.
Scale of Works
Councils often carry out council major works on a much larger scale than private freeholders or managing agents. Estate-wide programmes covering roofing, window replacement, cladding, or external decoration can affect dozens or even hundreds of properties at once. While this can achieve economies of scale, the individual bills presented to council leaseholders can be substantial. For further information on how major works are managed, see our major works guide.
Procurement and Value for Money
Local authorities are subject to public procurement rules that require them to follow formal tendering procedures. While this is designed to ensure value for money, some leaseholders argue that council procurement processes can result in higher costs compared to what a private managing agent might achieve. The Section 20 council consultation process gives leaseholders the right to nominate their own contractors, and you should use this opportunity to suggest alternatives if you believe the council's preferred contractor is too expensive.
Complaints and Accountability
Unlike private managing agents, councils are public bodies subject to the oversight of the Local Government and Social Care Ombudsman. This provides an additional route of complaint beyond the First-tier Tribunal. If you believe the council has acted with maladministration in the way it has levied or calculated your council service charge, you can escalate your complaint to the Ombudsman after exhausting the council's internal complaints procedure. This is an important distinction from private sector service charge dispute resolution.
Major Works Billing and Section 20 Consultation
Council major works represent one of the most significant costs that a council leaseholder can face. Major works programmes covering structural repairs, roof replacement, external redecoration, window renewal, or fire safety improvements can result in bills of tens of thousands of pounds. The Section 20 council consultation process is designed to ensure that leaseholders are informed about and have input into these works before they begin.
The Three-Stage Consultation Process
Under Section 20 of the Landlord and Tenant Act 1985, the council must follow a three-stage consultation process for qualifying works costing any leaseholder more than two hundred and fifty pounds. Stage one requires a notice of intention describing the proposed works and inviting observations and contractor nominations. Stage two involves obtaining estimates and providing a statement of estimates to leaseholders. Stage three requires a notice of the council's reasons for selecting a particular contractor. Each stage includes a minimum thirty-day consultation period during which leaseholders can submit their views.
Consequences of Non-Compliance
If the council fails to comply with the Section 20 council consultation requirements, the amount it can recover from each leaseholder for the qualifying works is capped at two hundred and fifty pounds, unless the council obtains a dispensation order from the First-tier Tribunal. This cap is a powerful protection for council leaseholders and underlines the importance of monitoring consultation notices and raising concerns during the consultation period. For a detailed explanation of the Section 20 process, see our Section 20 guide.
Service Charge Caps and Hardship Provisions
One of the key protections available to council leaseholders who purchased under the Right to Buy is the service charge cap that applies during the initial years of ownership. Additionally, many councils operate hardship policies that provide further assistance to leaseholders who are struggling to pay large bills.
The Five-Year Cap
For the first five years after a Right to Buy purchase, the council's Right to Buy service charge demands for repairs and improvements are capped at the amounts estimated in the Section 125 notice served before completion. This means that if the council carries out works that cost more than the original estimate, it cannot recover the excess from you during this period. The cap is designed to protect new leaseholders from being hit with unexpectedly large bills shortly after purchasing their home. After the five-year period expires, the cap no longer applies and the council can charge the actual cost of works, subject to reasonableness and proper Section 20 council consultation.
Hardship Provisions
Many local authorities have adopted hardship policies for council leaseholders facing large council major works bills. These policies may include interest-free payment plans spread over several years, voluntary buy-back schemes where the council repurchases the lease at market value, equity loan arrangements, and deferred payment schemes where a charge is placed on the property and the debt is repaid upon sale. The availability and terms of these provisions vary significantly between councils, so you should contact your local authority's leasehold services team to find out what options are available in your area.
Loan Schemes and Deferred Payment
Some councils offer formal loan schemes that allow local authority leaseholders to spread the cost of council major works over an extended period. These may be administered directly by the council or through a third-party lender. Deferred payment arrangements, where the outstanding balance is secured as a charge against the lease and repaid when the property is sold, transferred, or the lease is assigned, are particularly common for elderly or vulnerable leaseholders. These schemes ensure that no council leaseholder is forced to sell their home solely because of a major works bill.
Challenging Council Charges: Internal Complaints and Tribunal
If you believe your council service charge or council major works bill is unreasonable, there are several formal routes available for challenging the charges. It is important to follow the correct process and to act within the relevant time limits.
Internal Complaints Procedure
Your first step should be to raise your concerns through the council's internal complaints procedure. Write to the leasehold services team explaining which charges you are disputing and the reasons you believe they are unreasonable. Request copies of all supporting invoices and documentation under your rights under Section 22 of the Landlord and Tenant Act 1985. The council is obliged to respond within a reasonable timeframe, and if you are not satisfied with the initial response, you can escalate through the formal complaints stages. For broader guidance on resolving disputes, see our service charge dispute resolution guide.
First-tier Tribunal Application
The First-tier Tribunal (Property Chamber) has jurisdiction to determine whether your council service charge is reasonable and payable under Section 27A of the Landlord and Tenant Act 1985. You can apply to the Tribunal whether or not you have already used the council's complaints process. The Tribunal will consider whether the costs were reasonably incurred, whether the works or services were carried out to a reasonable standard, and whether the charges comply with the terms of your lease. The Tribunal process is designed to be accessible and affordable, and you do not need legal representation.
Local Government Ombudsman
If your complaint relates to maladministration by the council rather than the reasonableness of the charges themselves, you can refer the matter to the Local Government and Social Care Ombudsman after exhausting the council's internal complaints process. The Ombudsman can investigate whether the council followed proper procedures, communicated adequately, and treated you fairly. While the Ombudsman cannot determine whether a council flat service charge is reasonable in the way the Tribunal can, a finding of maladministration can result in recommendations for redress, compensation, and changes to the council's processes.
Transferring from Council to Private Management
In some cases, council leaseholders may find that their building is transferred from local authority management to private management. This can occur through stock transfer programmes, where the council transfers its housing stock to a housing association or registered provider, or through leaseholder-led initiatives such as the Right to Manage.
Stock Transfer
When a council transfers its housing stock to a housing association, existing leaseholders' rights are preserved. The new landlord steps into the shoes of the council and must honour the terms of the existing lease. However, the way services are delivered and charged for may change, and leaseholders should ensure they understand how the transfer affects their council service charge obligations. The transfer process usually involves consultation with tenants and leaseholders, and you should engage with this process to understand the implications for your charges and your rights.
Right to Manage
The Right to Manage under the Commonhold and Leasehold Reform Act 2002 allows qualifying leaseholders to take over the management of their building from the landlord, including the local authority. This gives council leaseholders direct control over how services are delivered and how the council flat service charge is spent. The Right to Manage does not require fault on the part of the current manager, and the council cannot refuse if the statutory requirements are met. For more on leaseholder rights council obligations and reform, see our leasehold reform guide.
Frequently Asked Questions About Council Leaseholder Rights
Can the council charge me for major works on my flat?
Yes, if you are a council leaseholder, the local authority can charge you for major works carried out to your building. When you purchased your flat under the Right to Buy scheme, your lease will contain provisions requiring you to contribute towards the cost of repairs, maintenance, and improvements to the building and communal areas. These obligations mirror those found in private leasehold arrangements, although the amounts can sometimes be higher because councils often carry out large-scale estate-wide programmes. The council must follow the Section 20 consultation process before commencing qualifying works that would cost any individual leaseholder more than two hundred and fifty pounds. This means you must be notified of the proposed works, given the opportunity to nominate contractors, and consulted on the estimates before the works begin. If the council fails to follow this process correctly, the amount it can recover from you may be capped. You should always review the consultation notices carefully and respond within the stated deadlines.
What rights do council leaseholders have over service charges?
Council leaseholders have the same statutory rights over service charges as leaseholders in the private sector. Under the Landlord and Tenant Act 1985, your service charge contributions must be reasonably incurred and any works or services must be carried out to a reasonable standard. You have the right to request a written summary of the costs that make up your service charge under Section 21, and you can inspect the accounts and receipts that support those costs under Section 22. The council must also comply with the Section 20 consultation requirements for major works and long-term qualifying agreements. If you believe any charges are unreasonable, you have the right to apply to the First-tier Tribunal (Property Chamber) for a determination on whether the charges are payable. Council leaseholders can also exercise the Right to Manage under the Commonhold and Leasehold Reform Act 2002, subject to eligibility requirements, allowing them to take over the management of their building from the local authority.
How do I challenge council service charge demands?
Challenging council service charge demands involves a structured process that begins with the council's own internal complaints procedure. You should first write to your council's housing or leasehold services department setting out clearly which charges you are disputing and why you believe they are unreasonable. The council is obliged to investigate and respond to your complaint. If you are not satisfied with the outcome, you can escalate to the council's formal complaints process, and ultimately to the Local Government and Social Care Ombudsman if maladministration is involved. For disputes specifically about whether the charges are reasonable and payable, the correct legal route is an application to the First-tier Tribunal (Property Chamber) under Section 27A of the Landlord and Tenant Act 1985. The Tribunal will examine whether the costs were reasonably incurred and whether the works or services were carried out to a reasonable standard. You do not need a solicitor to make an application, and the Tribunal process is designed to be accessible to leaseholders acting without legal representation.
What is the cap on Right to Buy service charges?
When you purchase a council property under the Right to Buy scheme, your lease may include a service charge cap that limits the amount the council can charge you for repairs and improvements during the initial years of ownership. The Housing Act 1985 provides that for the first five years after the Right to Buy completion, the council's service charge demands for repair costs cannot exceed the amount stated in the landlord's initial estimate provided as part of the Right to Buy process. This estimate is included in the Section 125 notice that the council serves before the sale completes. The cap applies to repairs and improvement works, not to routine service charge items such as management fees, insurance, or communal cleaning. After the initial five-year period, the cap no longer applies and the council can charge the full cost of any qualifying works, subject to the usual Section 20 consultation requirements. It is important to check the specific terms of your lease and the original Section 125 notice to understand exactly what cap, if any, applies to your property.
Do council leaseholders have to pay for communal heating?
Whether council leaseholders must pay for communal heating depends on the terms of the individual lease. Many council-built blocks, particularly those constructed in the 1960s and 1970s, have district or communal heating systems where a central boiler supplies heating and hot water to all flats in the building. If your lease includes provisions requiring you to contribute to the cost of communal heating, then yes, you are obliged to pay. The charge is typically included as part of the overall service charge and covers fuel costs, maintenance of the heating plant, and any necessary repairs or replacements. Some leaseholders find communal heating charges frustrating because they have limited control over when the heating is on and the temperature of their home. However, the charge must still be reasonably incurred under Section 19 of the Landlord and Tenant Act 1985, and you can challenge the amount if you believe the costs are excessive or inefficiently managed. Councils are increasingly investing in modernising communal heating systems to improve efficiency and reduce costs for leaseholders.
Can I get a payment plan for council major works bills?
Most councils offer payment plans for leaseholders who are unable to pay major works bills in a single lump sum. Local authorities recognise that major works invoices can run into thousands or even tens of thousands of pounds, and many council leaseholders purchased their properties at a discount precisely because they had limited financial resources. Councils typically offer interest-free payment plans spread over a number of years, and some authorities have specific hardship policies that allow extended repayment periods for those who can demonstrate financial difficulty. Under Section 20 of the Landlord and Tenant Act 1985, the council must consult leaseholders before carrying out qualifying works, and this consultation process should include details of how the costs will be recovered, including any payment plan options. Some councils also offer loan schemes or allow leaseholders to place a charge on the property so that the debt is repaid when the flat is eventually sold. You should contact your council's leasehold services team as soon as you receive a major works invoice to discuss the payment options available to you.
Need Help With Council Leaseholder Service Charges?
Whether you are a council leaseholder facing a large council major works bill, want to understand your leaseholder rights council obligations, or need guidance on challenging a council service charge through the First-tier Tribunal, Block is here to help. Our experienced team advises leaseholders and manages buildings across the country, including former local authority blocks transferred to private management.