Lambeth Council refunds £1.5m to ‘silenced’ leaseholders

London councils have forced residents into silence on the condition that they recover money they are owed for building works and services that were overcharged – in some cases, by tens of thousands of pounds.

The BBC asked Lambeth Council how many tenants it had asked to sign confidentiality clauses or non-disclosure agreements (NDAs) over a five-year period. The council said 136 residents had signed NDAs.

The Labour-run council has paid out nearly £1.6m in refunds to these residents for building work, averaging more than £11,500 per case. Leaseholders told the BBC how they were refunded after being charged for shoddy work on their properties – or sometimes no work at all.

They must make a legally binding promise not to tell anyone — including their neighbors.

Lambeth Council has around 9,400 leaseholders and is the freeholder of many of the blocks of flats. The council owns some properties outright as council homes.

When a building requires major works, such as window and roof repairs or external painting, the cost is shared between the tenant and the council. It is a condition of the lease that the tenant is obliged to pay for its share of the works.

Speaking about the council’s secrecy requirements, Tracey Gregory told BBC London that she had owned her home in Lambeth for 23 years and had her water bill cut by the authority. “They didn’t want us to tell our neighbours so they couldn’t claim the same reduction,” she said.

We asked the council why it legally prohibits people from telling others about their refund and it said it was to “avoid other leaseholders taking advantage of arguments raised in separate and unrelated disputes. This enables the council to deal with disputes on a case-by-case basis.”

Just before Christmas 2016, Tracy was notified that repair work on her street was expected to cost around £12,000. She knew the work needed to be done, so she paid for it.

The work was completed in 2017 but she did not receive the final bill until 2020, for £21,000. She said others had received final bills of between £15,000 and £65,000.

“We’re just ordinary people with ordinary jobs; we don’t have thousands of pounds to spare… When you get the final bill you have to pay it within 10 days,” she said.

Contractors billed the council a total of £2.6m for repairs to the property on Tracy’s side of the street. She said they were charged for loft insulation and replacing gutters and downpipes, but that work was not completed.

A breakdown seen by the BBC puts the cost of replacing the gate at £37,000.

“They said they had replaced all the side doors – but that wasn’t true,” Tracy said.

After years of back-and-forth with Lambeth Council, she says, the council offered her a 36 per cent refund, but the documents arrived with a confidentiality agreement attached. She refused to sign, which would have allowed her to speak to the BBC without fear of legal reprisal.

“They said you have to sign it or we’re going to withdraw our offer,” Tracy said.

The commission justified the terms in a statement, noting: “Confidentiality is one of the cornerstone principles of mediation.”

It added that settlement is used to “resolve disputes and avoid the stress, time, cost and resources of the courts”.

The BBC has seen an email from Lambeth Council to Tracy saying she had to pay the full amount because she had not signed the settlement agreement. When she sought legal advice, the council relented.

It is estimated By volunteer groups The contractor for a project in her street overcharged the council by £720,000.

Tracy said it was completely unreasonable to silence renters, adding: “The only reason companies use NDAs is to hide something.”

She also believes the council has been trying to cover up its poor contract management.

“The contractor was being paid for work they hadn’t done, so in order to protect their own finances, (the council) went after the leaseholder when in reality they should be going after the contractor,” she said.

Tracy said some residents in their 80s were told to “go get a bank loan” to pay off their debts. She and others helped elderly neighbors keep costs down, but she said five years of wrangling with authorities had taken its toll.

“It takes a lot of strength to keep fighting,” she said.

The commission told BBC London that “confidentiality clauses … are different to stand-alone confidentiality agreements”, but added that it was changing the way these agreements were entered into.

“Following the receipt of bespoke external legal advice, the committee was advised to improve its processes and introduce best practice by requiring parties to sign a confidentiality agreement prior to any potential negotiations,” the committee said.

Another leaseholder, Emma (not her real name), said the council told her the cost of work to replace windows and repaint the building’s exterior could be close to £70,000.

She challenged the council and later discovered it had contacted her mortgage adviser to say she was in breach of her lease.

Emma eventually managed to get the bill down to £26,000 and paid that, but she still believes she was overcharged and says the standard of work done was “terrible”.

She said the experience was “extremely stressful” and she wanted to escape, so she sold her apartment.

Public data shows the highest refund given by Lambeth Council was £63,000, meaning that if the individual had not objected to the bill they would have been overcharged tens of thousands of pounds.

In a freedom of information request, BBC London asked the council whether it knew how many other leaseholders might be entitled to compensation.

The court said: “Settlement agreements are tailored to unique factual circumstances…it would not be appropriate or possible to extrapolate the results of one specific case and apply them unilaterally to multiple properties or a large major works contract.”

BBC London spoke to three users who said they had to sign non-disclosure agreements to get some of their money back after being overcharged.

One of them, Richard (not his real name), said: “They do this to shut you up so you can’t tell your neighbours.”

He was refunded thousands of pounds after an independent surveyor confirmed the cost of renovation work on the exterior of his building had indeed been inflated, and he only had to pay a quarter of the original bill – more than £10,000.

Richard, whose BBC is not revealing the exact figure to protect his identity, said: “At the very least, this is a gross oversight by the city council.”

Anthony Wayne Lambeth Property Owners AssociationThe group has about 1,000 members, and he said he has heard many stories like Tracy, Emma and Richard’s.

“My phone keeps ringing off the hook every day. There are so many horror stories and it’s endless.”

He said contractors were continually overcharging the council and passing “huge bills” on to leaseholders, without properly investigating the matter despite the council repeatedly admitting it was overcharging.

“The overall attitude and culture of parliament is one of denial and a refusal to even begin to address the issue,” he said.

Anthony said that instead of investigating, police threatened to repossess people’s properties if they didn’t pay up. He added: “People end up having mental breakdowns; we’ve even had people on the forum having suicidal thoughts.”

He said some residents had won back compensation of up to £40,000 after a long dispute. He described the scale of the overcharges as “shocking” and argued the use of non-disclosure agreements showed the council was “trying to cover up its own mismanagement”.

Lambeth Council told us: “We work hard to ensure all work is carried out as professionally and economically as possible. Contracts are tendered in accordance with established rules and we have a professional team who ensure all work, costs and schedules are fully managed and audited.

“The council will estimate the costs and then charge the tenant, who will have the option to pay in instalments. We are happy to discuss any concerns with the tenant and work with them to resolve any issues.”

Another leaseholder battling the council is Alasdair Ross.

The software engineering manager said he was shocked when a bill for £18,000 arrived at his Brixton flat.

He told BBC London he was “breaking into a cold sweat – how am I going to find the money?”

He said the letter demanded he pay the full amount within 30 days or he would have to pay £300 a month for five years, plus an “exorbitant” service charge of £640 a month.

Alasdair said work on his block’s new central heating system had been planned three years before he moved in, and in the four years since he moved in he had received no notice of the works or upcoming bills.

He spent about 18 months challenging the bill, during which time he says he received threatening letters from the council saying it would contact his mortgage provider alleging he had breached his lease – which it did.

Alasdair, who did not have to sign a confidentiality agreement, said that after a lengthy process the council admitted it had not properly consulted on the work and his bill was capped at £250.

He said he asked council officials whether the 36 other leaseholders would be informed of the “mistake” but was told they would not.

“I’m shocked,” he said. “It doesn’t seem right that a public institution would continue to collect money when it knew it had made a mistake.”

A Lambeth Council spokesperson said: “As a landlord, the council is responsible for the day-to-day repairs, maintenance and major works in our buildings to ensure the safety of all residents.

“Under the terms of the lease agreement, the leaseholder and the council are required to pay for part of the cost of the works.”

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