Birmingham City Council’s charging policy for housing improvements is to be examined in court after residents in a tower block were handed bills of up to £18,000 each to cover the cost of modernisation work.
A Valuation Tribunal will hear claims that the council “grossly overcharged” for a £3 million renovation of Bakeman House, Yardley.
But the hearing will be held in private after the council successfully argued that commercially sensitive information should not be aired in public.
The test case is being brought by Keith Nall on behalf of about a dozen of his fellow Bakeman House residents who own the leases on their flats.
Bakeman House was sold to Tesco as part of a land deal surrounding the redevelopment of the Swan shopping centre.
The 120-apartment tower was leased on to the council by Tesco on the understanding that substantial improvement work would be carried out.
Most of the residents are council tenants and will not have to pay the one-off charges to cover the cost of building work. But anyone who bought their flat is facing a hefty bill and the likelihood of having to extend their mortgage.
John Spooner, a spokesman for the leaseholders, said charges imposed by the council to cover improvement work were “astronomical”.
The Leasehold Valuation Tribunal hearing next month will be told the cost of building work totalled £1.2 million.
It is alleged the rest of the £3 million bill was made up of on-costs, including a £350,000 payment to the council’s Urban Design unit.
Mr Spooner, vice-chairman of the Birmingham Leasehold Liaison Board, said owners of the Bakeman House flats thought they were getting a good deal at first.
Having been told by the council that they would have to pay about £21,000 each, the final bills came in under the estimate and worked out between £17,000 and £18,000.
But after hiring lawyers to obtain paperwork from the council and investigating the fine print of the charging system, the leaseholders decided to put their case to the valuation tribunal.
Mr Spooner added: “There are certain issues regarding the work that we think have been incorrectly charged to the leaseholders.
“An expert witness will say the charges for design costs are grossly over the norm.
“It is unfortunate that we have to take this action considering the time and cost involved to leaseholders in doing so but the issue is important and we cannot agree the high charges for the repairs.”
Mr Spooner, who described himself as a “thorn in the council’s side”, has been involved in bringing several similar cases to court in recent years and claims to have saved leaseholders thousands of pounds by challenging improvement costs.
The council plans to contest the Bakeman House case at the tribunal and said it would provide financial help for leaseholders who could not afford to pay their bills.
Cabinet member for housing, Coun John Lines (Con Bartley Green) said: “I’m very disappointed a small number of leaseholders have decided to pursue this action.
“We did make every effort to reach a compromise and a significant number of leaseholders have accepted the charges.
“We have made significant improvements to Bakeman House, including structural repairs, new double glazing, lighting, insulation and security measures.
“As a consequence the market value of the flats has increased considerably.
“I do appreciate that money is tight for many at the moment but for those who face financial difficulty to meet these costs, the council has a hardship policy which offers leaseholders extended payment terms or a charge against the property.”