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Associations Enjoy £33 million Service Charge Income Bonanza

The amount collected by housing associations as service charge income has increased by 2.3% (£33 million) in one year, according to the consolidated returns of housing associations made to the Regulator of Social Housing.

It brings the total income generated through this income stream to £1.5 billion in the 2020 financial year.

Upward Trend

The latest figures continue the trend of rapidly growing cash generation for housing associations through their service charge systems. In 2019, the figure rose by 2.8% (£39 million), and by a whopping 7% (£94 million) the year before. The rises do not reflect an increase in the number of social housing homes – the reverse is in fact true – and therefore suggest that tenants and residents are being charged vastly inflated amounts for the same services.

Tenants and residents are increasingly angered by rising service charges and declining service standards

The sector collectively reports spending more on services than it recovers in payments, but the picture is far from transparent. For example, the figures represent income and expenditure from social rented homes only, therefore exclude all the income from properties let by associations at full market rent, leasehold, shared ownership, and other tenures.

Rogue Landlords

Many notorious names appear in the top 10 associations based on service charge income. Clarion Housing Group which owns or manages around 109,000 social housing homes received £45 million in service charge payments. Hyde Housing, with a portfolio of just under 40,000 social homes received £20 million.

The top ten housing associations when ranked by service charge income collected in the financial year ending March 2020:

  • Anchor Hanover Group – £83,101m
  • The Riverside Group Limited – £65,735m
  • Notting Hill Genesis – £55,600m
  • London & Quadrant Housing Trust – £50,435m
  • Sanctuary Housing Association – £45,400m
  • Clarion Housing Group Limited – £45,200m
  • Housing 21 – £40,498m
  • Peabody Trust – £37,479m
  • Places for People Group Limited – £36,686m
  • Thames Valley Housing Association Limited – £32,973m

Universal Credit Exploited

The accuracy of service charging mechanisms has long been questioned by SHAC. Members regularly struggle to get information about what the charges are actually for. Getting a detailed breakdown is a battle. When the invoice pack eventually arrives, they all too often find abundant evidence of blatant overcharging.

A proportion of service charge costs is paid through the housing benefit element of Universal Credit. Tenants and residents paying their own service charges are more motivated to go through the protracted, bureaucratic, and wearing process of challenging inaccuracies. By contrast, government appears to have no system in place for validating payments made through Universal Credit.

This admission was made by David Rutley MP, speaking on behalf of the Secretary of State for Work and Pensions. In response to a written question submitted by Lucy Powell MP, Shadow Housing Minister, on behalf of SHAC, he replied that government had no record of how much and what proportion of housing benefit payments are spent annually on service charges. This applies not just in relation to the amount going to housing associations, but to private and council landlords too. (Hansard 71342, 8 November 2021).

Ending Service Charge Abuse

It is clear that landlord abuse of the service charge system will not end until new legislation is introduced to make collection more transparent and accurate, with vastly increased legal protections for residents, and easy access to justice. In the meantime, many are turning towards service charge ‘strikes’ – withholding payments – when they cannot get clear and accurate bills from their landlord.

At 6.30pm on Monday 20th December, SHAC is hosting an open, online meeting about rent and service charge strikes. Register here to join.

23 November 2021

The views expressed in this article are the author’s own.

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