Council defends use of “gagging” clauses in leaseholder disputes
A BBC London investigation has found the London Borough of Lambeth used well over 100 confidentiality clauses to prevent leaseholders who have successfully challenged maintenance bills from discussing this.
Lambeth told the BBC it had asked 136 residents to sign confidentiality clauses or non-disclosure agreements over five years having paid out nearly £1.6m in refunds.
Leaseholders told the BBC they were refunded for work done badly or in some cases never carried Out and were prevented by the clauses from telling neighbours in a similar position who might then have been able to negotiate a refund.
The BBC said it asked Lambeth why it legally prevents people from discussing refunds and was told this was “to avoid other leaseholders from using arguments made in separate and unrelated disputes. This enables the council to handle disputes on a case-by-case basis.”
A Lambeth Council spokesperson told Local Government Lawyer: “Under service charge laws leaseholders have the right to challenge their bill. Like all other reasonable landlords up and down the country the council will engage with its leaseholder if concerns are raised.
“Every case is different and so comparisons between individual scenarios are not necessarily valid. Where there is a dispute and legal action is likely, the council will consider mediation discussions.
“Confidentiality is one of the cornerstone principles of mediation and is a service offered nationally by both the Courts & Tribunal Services and the council to limit the time and costs of a protracted legal dispute.
“In very specific cases settlement agreements help the council maintain good relationships with leaseholders, reduce the burden on the court system, and avoid unnecessary costs while ensuring that we can collect any money owed.”
In October 2023 Lambeth admitted to spending more than £1.8m on legal fees for non-disclosure agreements with leaseholders and disclosed that between January 2019 to September 2023, there were 119 such agreements made.
Answering claims made by residents to the BBC that works were carried badly or not at all with full charges still being levied, a Lambeth statement said: “As a landlord, the council is responsible for day-to-day repairs, maintenance and major works at our buildings, to ensure they are safe and secure for all our residents. Under the terms of their lease agreements, leaseholders, as well as the council, are required to pay a share of the costs of this work.
“We work hard to ensure that all the work is carried out as professionally and economically as possible. Contracts are tendered under established rules, and we have a team of professionals who ensure the comprehensive management and auditing of all the works, costs and progress.
“The council makes an estimate of the costs, and then charges leaseholders, who have the option of paying in instalments. We are happy to discuss any issues with leaseholders and work with them to resolve any issues.”
Mark Smulian
