Service Charge Abuse by Housing Associations - A National Scandal

Let's talk about Housing Association service charge abuse and how it is a national scandal affecting up to 2 million people across the UK. Find Others and Social Housing Action Campaign (SHAC) have partnered to launch a national campaign to raise awareness, assist with resources and provide a platform for leaseholders and tenants to be heard on this issue. 

What is service charge abuse? According to SHAC's 'Report on service charge abuse by Housing Association landlords,' it is when "housing associations are wrongly extracting money from tenants and residents. Landlords are getting away with the abuse because the field is firmly tilted in their favour." The problem is systemic, and holding the associations accountable is exceptionally challenging and daunting for residents when trying to tackle the issue alone.

Myra Butterworth, property expert, states,

"increases in service charges are set to become more of an issue. As the Government begins to clamp down on other freehold and developer revenue streams such as ground rents, service charges are a proven way for investors to make money" (Mail Online, November 2021).

Not only is this a way for landlords to siphon money from residents and tenants, but the investors also appear to have their hat in the ring, so to speak. 

SHAC believes Housing Association Landlords get away with this level of abuse by utilising tactics like:

1. Invisibility

2. Inconsistent record-keeping

3. Erroneous methods for apportioning costs

4. Preventative measures that deter tenants and residents from addressing errors

5. Institutional barriers that make remedies inaccessible to victims

Invisibility occurs because bills are not always scrutinised because the tenant receives housing benefits, which in some cases go straight to the landlord. The introduction of Universal Credit in 2013 plays a significant factor in this as the housing funds are not separated from other aspects of the benefit payment. This makes it harder to understand and track how much money the housing associations receive.

Inconsistent record-keeping by housing associations also makes it harder for tenants and residents to understand how the amounts for the charges were arrived at. If the records are sloppy, vague, or worse, there are no records; it is almost impossible to decipher how the costs are calculated. 

Bills are also rife with errors that are in favour of the landlord. For example, residents we've spoken to have discovered they are paying for services they've never received, or the costs have been grossly inflated.

Michael, a resident of Optivo Housing Association, said:

"I first started looking at the service charge accounts in 2015 when I noticed that we were being charged for personal gas supply totalling some £23,000. This was obviously incorrect as the only gas coming into the building is for the plant room and the commercial kitchen, neither of which are service chargeable.

Together with some of the board members of the residents association I challenged this cost with the senior management of the housing association. This led to us reviewing other charges that were suspicious and eventually led to refunds totalling over £318,000 and reductions of a further £109,000 in the charges for 2017-18.

We also received credits for the rent of our guest room, village hall and car parking, none of which had been allowed before and probably amounts to around £30,000 a year. There is also a further £180,000 that I believe has been overcharged due to the hopeless mismanagement of the building by the current landlords."

It is challenging for residents and tenants to pursue landlords to question them about what is happening. Landlords use a strategy called attrition which causes residents and tenants to become so financially and mentally exhausted when trying to get answers that they eventually give up. The landlord then gets away with exploiting the residents as no one is there to hold them to account. 

Although there is legislation that provides some protection for residents, such as the Landlord and Tenant Act 1985, which states that residents have the right to inspect the accounts that relate to their service charges, this is often not complied with, and there is no governing body to enforce the act. Therefore, the housing associations are not compelled to comply with these sections of the law. 

"Every stage of the service charge process is made excruciatingly problematic and designed to deter tenants and residents. It is a battle just to get the landlord to send the pack of invoices and receipts for works allegedly carried out. If they manage that, in every case we have found errors. Sometimes tenants and residents are charged multiple times for the same piece of work, or they can be charged for services that were never provided. In other cases, the charges are extortionate for the scale of work. Allocation of costs are wrong, invoices or receipts are missing, or evidence just doesn't tally with statements. There are frequently vague and unexplained charges necessitating further queries to the landlord." Suzanne Muna, Secretary of SHAC

So what can you do?

Firstly, please support our campaign to End Service Charge Abuse which aims to unite all tenants and residents under one campaign to stop this abuse of power.

Then, use our free tool to request a breakdown of your service charges from your housing association. If you find discrepancies, we can help you to request further information and raise complaints.

In the background, we'll be collecting data on which housing associations perform well and abide by legislation, and which ones are guilty of service charge abuse so we can collectively hold them accountable.

Visit the campaign to find out more and stay updated on this issue.