Rent & Service (miss)charges
Over the past year, numerous UK social housing providers have been implicated in overcharging residents for rent and service charges. These issues have led to significant financial burdens for tenants, prompting widespread frustration and complaints.
Already considered an ever-increasing cost that spirals further out of control year on year, residents now have to question if they are being illegally overcharged or if these costs are simply being mismanaged. One thing we can all ponder is whether this is just the tip of the iceberg.
Many residents already feel overcharged when they pay these fees, yet see very little in response to raised issues, communal upkeep, and acceptable maintenance. Now, with valid concerns, residents must consider that they are actively being overcharged, either in error or knowingly.
The situation calls for a thorough review of billing practices and a demand for transparency from housing providers. Tenants should not only be informed about the breakdown of their service charges but also be assured that their payments are justified and utilised effectively. The mounting evidence of overcharging underscores the necessity for stronger regulatory oversight to protect residents from unjust financial strain.
Known over-chargers
Here are some notable providers who have been caught either with their fingers in the cookie jar or with questionable math skills.
Clarion Housing Group
Clarion faced scrutiny for inflated service charges, particularly in maintenance and communal services.
A Hertfordshire woman was overcharged by Clarion by about £3,500 over three years for weekly maintenance fees. Initially charged around £5 a week in 2013, the fee rose to £42 in 2022. After contacting BBC Three Counties Radio's JVS Show, she received a refund of £3,481.01 and an £800 goodwill top-up. Clarion apologised, recalculated the charges, and reduced the fee to £4.99 per week. The woman criticised the charges, noting minimal maintenance for the mostly concrete area around her home.
Your Housing Group
As reported by Inside Housing in February 2024, Your Housing Group (YHG) has announced that it has "fully reimbursed" residents who were collectively overcharged £648,000 in rent. This reimbursement follows an investigation by the English regulator, which has since withdrawn its regulatory notice for the landlord.
Metropolitan Thames Valley Housing (MTVH)
Accused of overcharging for services that were either not provided or overpriced, residents of Metropolitan Thames Valley Housing (MTVH) in an east London estate have initiated a service charge strike after a seven-year wait for transparent financial accounts, involving more than 20 residents, as reported in Inside Housing in May 2022.
Residents of The Rise estate, managed by MTVH near Wembley in west London, have begun a service charge strike due to disputed fees and inadequate engagement from their landlord. They requested detailed statements and invoice packs within a month, as legally entitled, but received incomplete information with unexplained charges. Issues include increased gardening fees without corresponding work and charges for services not rendered, such as window cleaning.
Security concerns are paramount, with thefts from reception areas and intruders causing damage and threats to residents. Maintenance failures, including heating outages and broken lifts, have exacerbated tensions, leading residents, supported by SHAC, to withhold payments until grievances are addressed. Similar actions have occurred at other MTVH properties, highlighting widespread dissatisfaction with service charge management.
https://shaction.org/2024/02/13/mtvh-rise-residents-on-service-charge-strike/
Peabody
Peabody have been investigated for unjustified service charge increases and billing errors.
An Early Day Motion (EDM 985), tabled on 20 March 2023 in the UK Parliament for the 2022-23 session, highlights concerns regarding customer service and engagement issues at Peabody Housing Association. Signed by 5 Members of Parliament, the motion expresses disappointment over the association's lack of response to enquiries from customers and MPs.
It criticises irregularly large service charge increases and the Chief Executive's failure to justify these hikes. Citing reports, including from The Financial Times, it notes widespread dissatisfaction among residents and calls for prompt action by Peabody Housing Association and scrutiny from the Secretary of State for the Department for Levelling Up, Housing and Communities.
https://edm.parliament.uk/early-day-motion/60709/peabody-housing-association
Southern Housing Group
Southern Housing Group Limited received a Regulatory Notice from the Regulator of Social Housing on 24 November 2021. The notice highlighted non-compliance with the Welfare Reform and Work Act 2016 (WRWA 2016) and the Rent Standard 2020. Specifically, Southern Housing Group incorrectly applied exceptions for Fair Rent properties between 1 April 2016 and 31 March 2020, resulting in overcharged rents for 677 general needs homes.
This failure to apply mandated 1% annual rent reductions led to incorrect rent increases under the Rent Standard thereafter.
Following their own review and independent investigations, Southern Housing Group identified approximately £1.05 million in overcharges from 2016 to 2021 due to these errors. They attributed these mistakes to misinterpretations of legislative requirements and improper application of exemptions under the WRWA 2016. Southern Housing Group has since committed to resetting affected rents, reimbursing overcharged tenants, and implementing an action plan that includes an independent review of rent policies and procedures, and an internal audit of rent setting processes.
Southern Housing Group, operating primarily in the South East of England and the Isle of Wight with over 30,000 homes, has accepted the regulatory findings and is working with external advisers to address the issues raised.
Notting Hill Genesis
Noted for billing discrepancies, with unexplained increases in service charges. As published by SHAC, tenants and residents of Notting Hill Genesis (NHG) have been affected by incorrect service charge estimates for the 2022/23 period, impacting nearly all social housing units. Despite residents' efforts to dispute these charges, clarity on the errors only came after a local councillor intervened on behalf of constituents. NHG acknowledged organization-wide issues due to a new management system, admitting that the majority of budget estimates for the current year were inaccurate. They also noted errors in final balances from the previous fiscal year.
NHG, one of London and the south east's largest housing associations managing over 66,000 homes, faced criticism for the scale of these errors, considered inexcusable for an organization of its size and resources. The association's financial oversight was questioned, given its substantial service charge revenue of £48 million from social housing in 2020/21 and an operating surplus of £119 million.
Molly, an NHG tenant, publicly expressed shock at her increased service charge estimate, describing the charges as "absolutely horrific" due to new items like bulk waste and graffiti removal, and additional fire risk assessment elements. Frustrated by NHG's lack of response to her inquiries about the sudden hikes, Molly withheld part of her service payment. Despite this, she faced incorrect claims of rent arrears from NHG's rent department.
Residents and tenants have called for accountability from NHG's board regarding financial management and service delivery failures, highlighting the significant distress caused to households.
https://shaction.org/2022/04/28/nhgs-shock-admission-almost-all-service-charges-wrong/
One Housing
As reported in MyLondon in January 2023, Ed Spencer, a resident of East London, successfully secured refunds totalling more than £25,000 for himself and fellow tenants from One Housing. This followed revelations that the housing association had failed to produce receipts for services charged, amounting to a significant oversight.
Mr Spencer criticized One Housing, likening it to a "mini mafia," as he uncovered numerous financial discrepancies over his ten-year tenure. Issues included inflated service charges for amenities such as a door entry system and communal electricity, where receipts were purportedly lost. He also discovered erroneous charges for services in neighboring buildings managed by the association. Despite facing hurdles and delays in response to his queries, Ed persisted and eventually secured refunds after challenging One Housing. He highlighted broader concerns about mismanagement and overcharging by housing associations, calling for greater accountability and transparency in their operations.
https://www.mylondon.news/news/east-london-news/man-slams-mini-mafia-housing-25965864
Joseph Rowntree Housing Trust
The Regulator of Social Housing (RSH) found that Joseph Rowntree Housing Trust (JRHT) breached the Rent Standard by incorrectly classifying 89 of its housing units as supported housing, resulting in overcharged rents since 2007. Additionally, 61 units designated as specialised supported housing were improperly exempt from the rent standard despite receiving public funding since 2017/18. Another 28 units categorized as supported housing did not provide relevant support services, leading to incorrect rent charges.
JRHT self-referred to RSH and acknowledged overcharging £479,000 due to these errors. JRHT is now working to reset rents, reimburse tenants, and review all rent policies and procedures.
https://www.gov.uk/government/news/rsh-publishes-regulatory-notice-for-joseph-rowntree-housing-trust
So what can you do?
Advice Disclaimer: The following information is provided as guidance only. Readers are urged to seek their own legal counsel before taking any actions that could potentially involve legal consequences. The author cannot be held responsible for any outcomes resulting from actions taken based on this guidance
You’re not alone
Navigating service charge disputes can often feel isolating, but it's crucial to remember that you're not alone in this journey. Here are steps you can take to find support and allies:
There are numerous resident groups, neighbourhood associations, and tenants' groups that exist to support individuals facing housing challenges. These groups provide a collective voice and offer valuable guidance on navigating complex issues such as disputing service charges.
Housing providers are accustomed to handling individual complaints, but collective action through resident groups can significantly amplify your impact. When residents unite, they are better positioned to negotiate fairer outcomes and hold landlords accountable.
By joining a resident group or neighbourhood network, you gain access to shared experiences, resources, and strategies for addressing common issues like unfair service charges. These groups often have established networks and can offer emotional support and practical advice.
Join SHAC
Joining the Social Housing Action Campaign (SHAC) connects you with a supportive community of residents dedicated to advocating for fair treatment and transparency in housing. SHAC provides more than just a platform—it's a collaborative network where residents.
Gain insights into effective strategies for navigating housing challenges, including disputes over service charges. Whether it's understanding lease agreements or organizing collective actions, SHAC members share practical tips and success stories.
Receive empathetic support from fellow residents who understand the frustrations and complexities of housing issues. From initial concerns to legal considerations, SHAC offers guidance every step of the way.
Sometimes, the first step to resolving a housing issue is to voice your concerns in a safe environment. SHAC provides a non-judgmental space where residents can express frustrations and share experiences openly.
By uniting with SHAC, your individual concerns gain collective strength. Housing providers are more responsive to coordinated efforts, making collective action through SHAC a powerful tool for effecting change.
Benefit from resources such as legal advice, advocacy support, and educational materials tailored to empower residents in understanding their rights and navigating complex housing landscapes.
https://shaction.org/
Legal and Advocacy Support
Seek out legal aid organizations or advocacy groups specializing in housing rights. They can provide expert advice, representation, and assistance in navigating legal processes, ensuring your rights are protected throughout the dispute resolution process.
Collective Action Against Housing Providers
Housing providers may find it challenging to dismiss collective concerns. When residents organize and present a unified front, they increase the likelihood of achieving fair resolutions and holding housing providers accountable for their actions.
Engage in community advocacy efforts to raise awareness about common issues and advocate for policy changes that promote fairness and transparency in housing practices.
Section 22
Section 22 of the Landlord and Tenant Act 1985 empowers leaseholders to review and obtain copies of documents pertaining to their service charges. Within six months of receiving the charge summary, leaseholders or recognized tenants' associations can formally request the landlord, either directly or through their agent, to provide access to and allow inspection of accounts, receipts, and other pertinent documents. The landlord is obliged to facilitate copying of these documents as well. Non-compliance without reasonable excuse constitutes a criminal offense, punishable by a fine. The landlord must make inspection facilities available within one month of the request, accessible for a period of two months.
What does this actually mean?
If you're a leaseholder concerned about your service charges, Section 22 of the Landlord and Tenant Act 1985 can be your friend. It allows you to review and obtain copies of important documents like accounts and receipts related to those charges. Within six months of receiving your service charge summary, you or your tenants' association can write to your landlord, or their agent, requesting access to inspect these documents and make copies. It's your right to ensure transparency and accuracy.
Make sure to send your request promptly and keep a record of all communications. The landlord must provide these facilities within one month of your request and keep them available for two months. If you encounter any resistance or delays without a valid reason, remember that failure to comply can lead to penalties for the landlord.
This process empowers you to verify the charges you're paying and ensures that you're treated fairly under the law. Don't hesitate to exercise your rights under Section 22 to protect your interests.
Service charges for leasehold properties are a common source of dispute between landlords and leaseholders. Understanding your rights and the legal framework is crucial before challenging any service charge demands.
Lease Agreement: The lease dictates what services can be charged and how costs are calculated. Only expenses explicitly stated in the lease can be recovered from leaseholders.
Reasonableness: Service charges must be reasonably incurred and must reflect works carried out to a reasonable standard. Leaseholders have the right to challenge charges that do not meet these criteria.
Information Rights: Leaseholders are entitled to detailed information about service charges, including the opportunity to inspect the landlord's accounts. This helps in verifying the reasonableness of the charges.
Statutory Controls: There are statutory controls in place to ensure fairness in service charges. For major works or long-term agreements, landlords must follow specific consultation procedures unless dispensation is granted by the Tribunal.
Disputing the Service Charge
Before disputing a service charge, consider the following factors:
Lease Compliance: Ensure the charge is allowed under the terms of the lease. Examples include limitations on what repairs are covered or procedural requirements for notifying leaseholders.
Period of Charge: Charges must relate to the correct accounting period as specified in the lease. If charges are for future costs, they may only be recoverable after the costs are incurred.
Procedural Compliance: If the landlord fails to comply with procedural requirements specified in the lease (e.g., providing estimates or certifications), the charge may not be enforceable.
Fair Apportionment: Charges must be fairly apportioned among leaseholders based on the lease terms or a fair determination by a third party like a surveyor.
History of Neglect: Costs resulting from the landlord's historical neglect of the property cannot be passed onto leaseholders through service charges.
Third-Party Contributions: Landlords must credit leaseholders for any third-party contributions towards works (e.g., insurance payouts or public sector funding) to avoid double recovery.
Applying to the First-tier Tribunal (Property Chamber)
If you believe a service charge is unfair or unreasonable, you can apply to the First-tier Tribunal (Property Chamber) for a determination:
Jurisdiction: The Tribunal can determine the reasonableness, amount, and payability of service charges. It is essential to gather evidence and submit a completed application form along with the relevant fee.
Process: The Tribunal may require a hearing to consider the case. It can also delegate tasks such as notifying other parties but must deliver its decision independently.
Binding Decision: The Tribunal's decision binds the parties involved in the case and may involve determining liability, the amount payable, and the manner of payment.
Other Remedies
In addition to challenging service charges through the Tribunal, leaseholders have other options:
Appointment of a Manager: If the landlord fails to fulfill their obligations or makes unreasonable demands, leaseholders can apply for the appointment of a manager.
Audit of Accounts: Leaseholders can request an audit of the landlord's accounts to ensure transparency in financial matters.
Leasehold Enfranchisement: This process allows leaseholders to purchase the freehold of their property, providing greater control over service charges and management.
Conclusion
Understanding your rights and the legal processes involved is crucial when disputing service charges. Each case is unique, so seek legal advice to navigate these complexities effectively. For detailed guidance and application procedures, visit Gov.uk or consult a legal professional specializing in property law.