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Assembly Member demands rethink on Gowerton rents scandal

The Welsh Liberal Democrats Assembly Member for South Wales West, Peter Black has written to Swansea Council's Chief Executive demanding that the authority think again about the huge rent increases they are imposing on leaseholders living on the former Elba works site in Gowerton.

Mr. Black has written following a number of meetings he held with affected residents in their homes this morning. In his letter he has set out ten questions which he wants the Chief Executive to answer about how the review has been conducted and on what basis the issue can be resolved.

Mr. Black commented: "I am concerned at the impact of the rent review on the residents who live on this estate, none of whom are rich, many of whom have normal jobs with unremarkable salaries, children and other commitments, and some of whom are pensioners, unemployed or on a fixed income for some other reason.

The increase in ground rents by, in some cases, astronomical percentages appears to me to be completely unreasonable and in many cases will lead to home owners paying more than the value of their home over the next 25 year review period in rent.

It seems to me that if the legal basis for this review is correct, and residents dispute that as do I, then at the very least the Council should apply its powers of wellbeing to this situation so as to significantly reduce the impact on householders.

That though would only secure a fix for this 25 year period, so clearly there needs to be a longer term settlement which is acceptable to both sides and which is reached outside of the current legal process."


Note: The ten questions Mr. Black.put to Mr. Straw are as follows:

  1. 1. What is the basis for the calculations used in this rent review? Officers have advised residents that the formula they are using for this review is in their leases. It is not. I have inspected a number of the leases and the fourth schedule, which sets out the process just outlines the assumptions, the review period and arrangements for arbitration. It seems to me that a commercial formula is being applied to residential leases, which is not defensible. Can I please have a copy of the formula being used?
  2. 2. What account is being taken in the review of land values since 1989? At best the value of these homes has increased by two or two and a half times. Why is the ground rent going up by much more than that?
  3. 3. Why have requests by residents to purchase their freehold over the past year or so been refused? Residents have a right to do this under the Leasehold Reform Act 1967, which also contains a formula for calculating the purchase price. Yet residents who have applied to purchase their freehold have been told that they cannot do so at this time.
  4. 4. What provisions are being put in place for those on fixed incomes who cannot afford to pay the new ground rents?
  5. 5. Can you clarify whether the use of 28 acres as the basis for the calculation includes the area of social housing and the doctor's surgery, which formed part of the original parcel of land? Residents have been told that the review was undertaken by applying a 'formula' to the 28 acre site and then dividing up the resultant amount amongst the eligible properties.
  6. 6. In 1995-96 the former Lliw Valley Council wrote to all residents offering to cap the ground rent at £250 from 1 April 2014. In fact some of the original residents say they never had this letter, possibly because the councillor at the time stopped the process halfway through. Those who did respond will now pay £250 a year for the next 25 years and then their ground rent will increase by RPI for the remaining 75 years of the lease. How many properties signed up to that offer please?
  7. 7. What other ground rent reviews have taken place on council owned residential leaseholds since 1996 and what percentage increase applied in each case?
  8. 8. Clause 5 of the 4th Schedule to the leases says that the revised rent shall not at any time during the term exceed such a rent as may operate to preclude prevent or fetter the Lessee from exercising any rights enabling him to acquire the freehold reversion of the plot arising under any statutory provision. Could you please let me have the council's interpretation of that clause and whether you believe that the current review is in breach of it?
  9. 9. Given that the council has stated that they have applied this review evenly across the estate can you explain why residents in identical properties are experiencing different outcomes?
  10. 10. Will the council enter into negotiations with a representative group of residents to establish an agreed formula for rent reviews for this period and for the remaining rent review periods in place of the existing process so as to get closure on this issue?

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