Even if you do buy a home, the pestilence of service charges could make it unaffordable
Tenants and leaseholders have been paying thousands of pounds of overcharge for the services provided by their housing associations because of a lack of oversight and accountability, writes Elena Siniscalco
Steve Huggins is a man with a plan, and his plan is to win a never-ending battle with his housing association on service charges. He owns a flat in London with One Housing Group, and has seen the costs for maintenance of gardens and grounds go up by 168 per cent this year. The charges for internal cleaning and window cleaning have increased by 151 per cent and 92 per cent respectively, so he’s started a partial service charge strike, withholding the budget increase for this year and paying only last year’s rate. He says the housing association has threatened him with forfeiture if he doesn’t settle.
Huggins is only one of many tenants and leaseholders at the centre of this housing storm. The problem of housing associations overcharging tenants without accountability is less known than health and safety issues like damp and mould, and campaigners admit they struggle to draw political attention to the issue. Yet affected tenants call it fraud, and say their housing association either ignores them or threatens them with unacceptable behaviour notices when they flag these issues.
Overcharge issues are endemic to the housing associations sector, and “can run to thousands of pounds for some tenants”, says Suzanne Muna, secretary of Social Housing Action Campaign (SHAC). It’s hard to pin down an average number of how much overcharge tenants are paying across the country: some leaseholders pay thousands of pounds yearly, for some tenants it’s in the hundreds. The lack of a national standard doesn’t help. Housing associations can blame inflation on any increases, without providing any breakdown of costs. Those who demand more details are often charged extra.
Muna believes the overcharges are mostly deliberate. Some services charges are paid by the Department for Work and Pensions for social housing tenants, while those who “own” on a long leasehold pay out of their own pocket. This means even if housing associations have to issue a refund, it’s unlikely the DWP will follow up.
Service charges don’t fall directly within the remit of the housing regulator, which governs affordable housing, so there’s nowhere for tenants to make a complaint. Linda Libetta, a tenant with Home Group, went to the housing ombudsman, a separate body, after services in her block were being cut while the service charge and rent went up. The ombudsman sent her on a wild goose chase first to a first-tier tribunal, which settles legal disputes, where she was referred back to the ombudsman, who said they have no powers over service charges.
Data from FindOthers, an online tool helping people make requests for service charge breakdowns, shows housing associations big and small often try to sweep matters under the carpet. Georgina Hallis, FindOthers’ co-founder, says almost a third of people who used the tool didn’t receive a response from their housing association within the legal timeframe of thirty days. Of those who received a response, only 1 per cent marked it as satisfactory.
Even when people get their money back, the same issues might arise the following year. Michael Savell, a tenant with Southern Housing, managed to recoup around £400,000 for tenants and residents on his estate. Yet he still has an open case with the first tier tribunal because he claims Southern Housing still owes them thousands of pounds related to gas payments.
Hyde, Clarion and Metropolitan Thames Valley, three of the big housing associations often accused of overcharging, all defend their position. “We’re doing everything we can to help by negotiating better prices with our suppliers and by being more efficient”, says Scott Lawrence, head of property charges at Hyde. “If we’ve made a mistake, it’s put right”, he adds. A Clarion spokesperson similarly notes they’re a charitable registered society existing “to provide homes for those that need them, not to make profits”. On the “rare occasions” where mistakes are made, Clarion claims to work with residents to fix them. So do Metropolitan Thames Valley, One Housing and Southern Housing. A Southern Housing spokesperson says the increase in the cost of service charge is due to “current high levels of inflation along with high energy costs”.
Yet the tenants Morning Wire spoke to share a negative experience of trying to engage with their housing association. Several others who were approached were too scared of the potential consequences that speaking to the media could have on the safety of their tenancy. So even if we want to believe every overcharge up and down the country is an honest mistake, when it’s managed in such a belittling way it can’t be called anything but financial abuse.