Sheltered Accommodation

Penny Mordaunt Excerpts

Wednesday 17th November 2010 Westminster Hall

[Margot James]

I very much agree with the hon. Lady. It is true that elderly people buy into these schemes and originally have an on-site warden service. As she says, not only is that taken away, made off-site and shared by various other housing organisations, but it used to be free and is now chargeable. So, the service is getting worse and the fees are increasing in many cases.

[Penny Mordaunt (Portsmouth North) (Con)]

In Portsmouth, we have an additional problem to the wardens—whom the court case was about—in that bathing and other services are being charged for. This is all happening at once, and many elderly men and women are extremely frightened at the prospect of their bills going up by £20 a week or more.

[Margot James]

My hon. Friend makes a very good point. We must not forget that most of these residents and tenants are on fixed incomes. They have bought into the schemes on one basis, and a promise has been broken. I shall come on a little later to some of the options available to people in that position. Judicial reviews of decisions by housing providers have also been sought by tenants in no fewer than 50 housing schemes in 20 authorities. That gives the lie to the assertion by the housing providers that their residents “neither want nor value” on-site management services.

We are talking about a vulnerable group of people, many of whom are on fixed incomes. Many people in that situation are increasingly frail and are no match for large housing organisations and their teams of lawyers, which is presumably why some companies—charities even, which I find very surprising—have attempted to impose the sort of changes we have heard about this morning on leases and tenancy agreements, without consultation. Although the change that has caused the most distress is the replacement of a live-in warden service with an off-site visiting manager—with whom it is necessary to make an appointment, which is often charged for, even though it was free according to the terms of the original agreement—other changes such as the national procurement of local services and escalating management charges with no associated improvement in the service offered are also a big problem for owner-occupiers in the leasehold sector.

I was first alerted to this problem by two constituents of mine in Stourbridge, who do not wish to be named. They had bought into sheltered accommodation on a leasehold basis. A charity ran the establishment, along with several hundred other establishments nationwide. The charity has substituted the live-in warden service that was free at the point of use with a visiting service shared with other organisations, with which they have to make an appointment and for which they are charged. They have also suffered escalating management charges, and a housing provider that decided to procure nationally every single service. Such a system takes away any local connection and removes the resident’s empowerment and ability to effect improvements by making a phone call or spotting the window cleaner and having a word. Even window cleaning, garden maintenance and lift maintenance are nationally procured, and the excuse given to the residents is that that is under EU law. We have investigated and that is not the case. There is a way round the problem, and EU law does not force national procurement on organisations of that size. Nevertheless, that is what residents are being told.

After I raised the issue during Prime Minister’s questions in July, a family from Folkestone approached me. Their elderly mother was a tenant in an establishment managed by Peverel, which manages a large number of housing organisations country-wide. Again, the issue was the substitution of the live-in warden system. None of the residents wanted that, but Peverel said, “We’re going to sell the flat where the warden lives because we can’t find anyone to do the work. We will donate £10,000 from the proceeds of the sale into your management fund.” That is absolutely derisory, but when the residents challenged it, Peverel turned around and said, “We are under no obligation to do this—take it or leave it.”

Endless complaints appear in the press about Peverel. One of its tactics is to use myriad service organisations of its own, including insurance companies. It then foists the delivery of services by those companies on the residents in its apartments at a charge that is higher than the market rate. That creates a conflict of interest unless there are clear rules of transparency, so that residents can get competitive tenders and ensure that they are not being overcharged for their services.

One gentleman, Neil Healey, managed to take a subsidiary company of Peverel to court over such issues, and he won a case against Solitaire Property Management. Peverel does not exclusively provide sheltered accommodation, and the picture in the paper of Mr Healey shows he is a young man—32 years old. A man of that age is perhaps better equipped to take large housing organisations to court than many of the frail older tenants who are my concern this morning.

A survey by the Bristol older people’s forum showed that more than two thirds of elderly people who live in the Bristol sheltered accommodation sector state that their quality of life is now worse than it was when there was a resident warden. Furthermore, 83% of pensioners in sheltered housing say that the services provided by their council are now worse, and 68% say their quality of life has suffered.

I am pleased to note that the Deputy Prime Minister spoke in support of this cause. Sheltered Housing UK wrote to him a month ago, putting pressure on the Government to introduce rules to ensure that residents and tenants have a right to be consulted when changes to the terms of their leasehold and tenancy agreements are proposed. In response, the Deputy Prime Minister wrote that

“lots of people who move into sheltered housing do expect a 24-hour warden…I rather like the idea Help the Aged has come up with about putting changes to warden services to a vote of affected residents…That’s the kind of good practice I hope more housing associations and councils will use.”

[Penny Mordaunt]

Certainly in Portsmouth, and I am sure elsewhere, I am concerned that a tactic is being adopted whereby companies that have been taken to court for not consulting people now consult local residents, but still leave them with the bill. In that way they dodge the political bullet for effectively withdrawing the service. I pay tribute to my constituent, Ingrid Savir, who is older than 32 but has been extremely dynamic and has spearheaded the campaign that sued Portsmouth city council.

[Margot James]

I thank my hon. Friend for her intervention, and I am most heartened by her example. I stress that many older people are aware of their rights and are determined to push them through. I am delighted to hear about such cases. The problem is that when consultation requires a majority vote—as it should do—a lot of the frailer, more elderly people in the accommodation in question can be leaned on or bullied by the housing association. That is my point.

Let me turn my attention to what can be done about that state of affairs. In the private sector, many tenants have a legally binding service contract. Most sheltered housing providers subscribe to the code of practice for the provision of retirement housing that was established by the Association of Retirement Housing Managers—ARHM. That code makes it incumbent on providers to consult leaseholders about any changes to the terms of the lease. Some charities and housing associations find ways round that code of practice, foisting service charges on to leaseholders without proper consultation, as we have heard this morning.

Leaseholders should be made explicitly aware of their right to consultation under the code of practice, and their recourse to leasehold valuation tribunals should the code be breached. The statutory elements of leaseholders’ rights—such as the right to enfranchise a lease or, as a leaseholder group, to take over the management of services, away from the housing provider—should be extended to charitable organisations and housing trusts.

In my view, such rights should also be extended to the social housing sector. Age UK argues that tenants should be given proper information about the core services offered in their housing scheme, and the terms of reference for any future changes in those services, before they move in to the retirement housing of their choice.

Tenants in sheltered housing provided by local authorities should have a statutory right to be consulted on and challenge local authority decisions that reduce or significantly vary the provision of warden support and other services. Any changes to support services should be voted on by residents, who should have a say in the most appropriate system of alternative support when changes are proposed.

I am grateful for the expertise provided by Age UK and Sheltered Housing UK. Furthermore, my local authority of Dudley—under the recent rating system, it achieved a four-star rating for all its housing services—has proved an excellent support in my constituency for leaseholders in the private sector. I would like to thank Ron Sims and Theresa Kelly for their help with some of the proposals that I put forward this morning.

I look forward to learning more about this issue from the experiences of other hon. Members present for the debate, and I hope that some of the ideas proposed will merit due consideration by the Government.

[Laura Sandys (South Thanet) (Con)]

It is good to serve under your chairmanship, Mr Davies, and I would like to thank my hon. Friend the Member for Stourbridge (Margot James). The minute that I saw this debate listed in the Order Paper, I felt that I had to participate. For many years, my hon. Friend the Member for North Thanet (Mr Gale) and I have been running a local campaign. We have formed a group called the Thanet eight. It is eight buildings with over 1,500 residents who live in flats that are owned by one company, and were originally managed by the same company—Peverel.

Those residents are by definition not young, and their objective in buying their properties was to have safe, secure and affordable homes, possibly for the rest of their lives. The reality has been different with increased charges; expensive and sometimes unnecessary renovations; a lack of consultation of residents; the attempt to block the creation of active residents associations; a reduction in services, particularly house manager support; and disproportionate penalties if a property is sold or rented.

Age UK has recently raised this matter and completed a very comprehensive report highlighting four key issues that my local residents certainly experience: unfair transfer fees when a property is sold or rented; escalating service charges, compounded by a lack of transparency about what people are paying for; very expensive rents for house manager flats—mentioned by my hon. Friend the Member for Stourbridge—which do not reflect the market value at all; and the use of companies that are owned by the management companies to undertake work or provide services on behalf of residents.

In particular, I should like the Minister and the Government to examine what I call the vertical integration model. These businesses are being run by subsidiary companies where the group company owns the majority of the companies that provide services to these residential blocks. That throws up very interesting and questionable issues. I hope that those companies’ ownership of that vertically integrated supply chain causes concern to the Office of Fair Trading. The method by which they operate the vertically integrated business model is certainly of concern to consumer groups and, as I said, has been the subject of an Age UK report.

In my experience, the freeholders and management companies, which are all owned by the same holding company, own lift maintenance companies, buildings insurance firms—mentioned by my hon. Friend—building and maintenance operators, window cleaners and internal communications fitters. That might on the surface suggest that such a company knows its business well and understands all the different aspects of running sheltered accommodation, but is that really the case or is the vertical business model precluding competition, reducing choice for residents and creating incentives for the management company to propose and sometimes impose renovations, refurbishments or additional services that residents have not requested and do not desire?

[Penny Mordaunt]

It is not just the Office of Fair Trading that needs to be concerned. If a lift is not fixed or the night warden is not there, that will lead to potentially massive bills for the public purse. I am thinking of more hospital admissions, more people falling over and so on.

[Laura Sandys]

I very much welcome that intervention; I totally agree with my hon. Friend. We need to consider the holistic cost—the overall cost—of how in the future we will look after people who are getting older. Many years ago I wrote a paper called “How we keep the new old young”. That will be a big challenge for us. I am referring to how we keep people mobile and independent and ensure that they have the resources to be independent for as long as possible.

I now want to talk about the emotional impact and the worries and concerns of my local residents in Thanet, who have put their life savings into these small flats and do not have other resources. There is an emotional and physical impact from their concern about what will drop through their letterbox next week from the management company telling them that they owe another £1,500. That creates more health problems and anxiety and deters older people from making the independent choice and going for what is, on paper, excellent sheltered accommodation and a structure that gives them security for the future.