We understand that most people are not able to pay large bills for major work without adjusting their budgets or arranging loans. The following information covers the main ways you can pay the charges for major work.

Paying the full amount

If you can, please pay the total debt immediately (within three weeks of the date of the invoice) using your own funds.

Paying in instalments before work is completed

If we have sent you an estimated service-charge invoice for major work at the start of a contract, we will accept monthly interest-free instalments for the length of the contract, until we have agreed a final account with the contractor. When we are sent a breakdown of the final account, we will work out the actual payment for the work and send you a statement showing the difference between the estimated bill we sent you and the actual costs. If the estimated bill we sent you was too low, we will send you another invoice. You will need to make arrangements for paying the extra invoice and any money still owing from the earlier estimated invoice immediately, using any of the other options shown here.

If the estimated bill was too high, we will tell you how much is due to you. We will only give you a refund if your service-charge account is fully paid.

Paying in instalments after the end of a contract

We may be able to agree with you that you can pay the amount you owe us over 12 months. If you want to do this, you must write to us within three weeks of the date of the invoice and let us know how much you are going to pay each month. We will not be able to arrange this over the phone. As long as the amount you offer to pay will clear the debt within 12 months, we will agree to your offer and tell you when you must make your first payment. You must make regular payments every month – a standing order form will help you do this.

Please remember that if you miss any of the monthly payments, we will refer the debt to our solicitors immediately to recover the amount you owe in the county court.

A ‘statutory’ or ‘discretionary’ service-charge loan from the council

You may be entitled to a loan from the council, either by law (a statutory loan) or, if you are not entitled to a statutory loan, a discretionary loan.

Any invoices we send you for major work will include information about how you can apply for a service-charge loan. Please note that at the moment, we can only offer a service-charge loan where the service charge is for repairs or maintenance. We cannot give you a loan to pay off other service-charge debts.

The loan would be secured by a charge on the property. However, the interest rate that applies is set by the Government so it is likely that you should be able to get a loan at a lower rate of interest from a commercial mortgage lender.

If you are entitled to a statutory loan the council must allow it, whether you can afford it or not. But the law sets out the amount you can borrow and the term of the loan. If you are not entitled to a statutory loan, the council can offer you a discretionary loan. The terms of discretionary loans can be a bit more flexible than for statutory loans. For example, with a discretionary loan, the council would be able to agree a longer repayment period than would be allowed for a statutory loan.

If you are receiving Income Support, the council can offer an ‘interest-only’ loan. This means that you do not repay the amount of loan we offer (the capital), but instead it is set up as a charge on the property. You only pay the interest due on the loan each month. If you are on Income Support, your benefit can be adjusted to include the amount of interest you have to pay. You would have to apply to the Benefits Agency for help to meet the interest payments. The loan (the capital) would be repaid when the property is sold, or it can be repaid earlier with a lump-sum payment.

Remortgaging

This option does not directly involve either us or the council. You could ask your existing mortgage lender for another loan to pay the service-charge bill for the work. Usually, this would involve the amount of the loan being added to the amount you already owe on your mortgage. Your mortgage lender would then work out a new rate of repayment on your mortgage. They may also consider extending the mortgage term – for example, from 25 to 30 years – to keep the repayments affordable.

If you want to consider this option, you should contact your existing lender in good time to discuss the matter. Most lenders are prepared to approve or refuse a loan in principle before the council has sent you the details of your share of the cost of the work.

Please note that where the bill is not in dispute, or where you have disputed the bill but a court (or arbitration panel) has ruled that you should pay the bill, we are entitled to contact your mortgage lender to ask them to settle the debt on your behalf.

If you are over 60 or under 60 with disabilities, you may be able to get help in the form of a low-cost loan from the Home Improvement Trust. Ask the Right to Buy and Leasehold Services team for a leaflet, or contact the trust directly.

The Home Improvement Trust

7 Mansfield Road

Nottingham

NG1 3FB.

Freephone helpline: 0800 783 7569

E-mail: info@hitrust.org

Fax: 0115 934 9501
Website: www.hitrust.org

We take a charge on the property

If we agree that you cannot afford any of the options described above, with your agreement we could consider taking a charge on the flat to secure the debt. This is similar to a mortgage, but you would not have to make any monthly payments towards the debt. Instead, when the lease of the flat is transferred (for example, if the flat was sold), you would have to pay the charge in full, along with the interest due.

This option would be a last resort, and would only be considered if the only alternative was court action to recover the lease – this means repossessing your home.

Support from the Benefits Agency

If you are entitled to benefits such as Income Support or Job Seeker’s Allowance, the Benefits Agency can help with interest payments due on loans that you have to take out to pay the service charges for certain types of work done to your building. For more information about help from the Benefits Agency, please contact:

Benefits Agency Mortgage Section

Wentworth House

350 Eastern Avenue

Ilford

Essex

IG2 1BR

Alternatively, you can phone the Benefits Agency Mortgage Section on 020 8532 4200.

In some circumstances, the agency may pay the full cost of a repair on your behalf, without you having to take out a loan.