Charter, Complaints Procedures, Electricity Charges, Gas, Gas Charges, HA Service Charges, Housing Law, Optivo, Service charge fraud, Tenant & Resident Democracy

Optivo on Trial Over Service Charges

By guest writer, Samuel Kitney*

The dispute with Viridian Housing, my original landlord, started in 2015 when I noticed that the service charge statement included a charge for gas that we do not have.

The only gas in the building is used in the plant room to run the communal heating system and the commercial kitchen. The heating system is metred and paid for by the individual tenants and the gas for the kitchen is payable by the operator of the restaurant.

I argued that the charge should be removed as responsibility for gas falls on the heating suppliers, not tenants. The discussions went on for several years, and were still underway when Viridian and Amicus Horizon merged to form Optivo.

Ahead of the merger, we were promised that Amicus had the best service charge team in the industry and disputes would be a thing of the past. This would turn out to be wildly optimistic!

Admissions of Errors

In 2020 Optivo agreed that we had been overcharged and refunded a total of £270, per flat plus £150 compensation. The following year they refunded £661 per flat, but strangely claimed that we had been underpaying to the tune of £57k.

Unfortunately it is quite difficult to keep up with the changing demands. We are sent first drafts, which we challenge. Then we get send a further draft still containing errors which we challenge. We get the final account at the end of January, and find that many of the errors are still there.

A Staggering Scale of Errors

Getting nowhere with the internal complaints process, I made an application to the First Tier Tribunal (FTT) in 2020 over the fairness of the service charges covering 2018 to 2020. The court directed Optivo to produce the invoices for the years in question. As a result, we identified further duplications of invoices and overpayment. It didn’t appear that Optivo had checked these before supplying them to the courts.

Optivo then acknowledged that we were owed substantial refunds. The landlord itself was refunded a large amount by the energy supplier, but had not passed this on to tenants and residents. They ended up refunding a total of £143k.

Another area in dispute is staff costs. These ran at about £130-145k per year and included 50% of costs for the front of house manager’s salary, and the concierge service that operates 24/7.

Staff costs include a Front of House Manager

The Residents Association successfully argued that the residents should not have to pay for the full salary and in the end we agreed to cover just 25% of the front of house manager’s cost. The amounts are still incorrect though.

Electricity costs have also risen sharply, even before the recent spike. Our electricity charges increased by 41% in the first year that Optivo took over. We have no way to validate whether the charges are correct or not.

Gas and electricity charges are under dispute

These are important issues. When Optivo took over the management of the building, staff costs rose by £60k overall due to their mismanagement and increases in scheme managers.

This overspend happened for 2 years and returned to the pre takeover figure only in the year ended March 2021. I have argued that this shows that they must accept that we have been overcharged and should refund the £120k  overcharged for 2 years. This is included in the £1000 I have demanded for each tenant.

I want Optivo to pay every tenant resident on at least £1000 each in respect of electricity and other overcharging. I also want a service charge cap in place to force Optivo to live within a budget.

The Service Charge Scandal

In total we have been refunded just over £600,000 in three years. I believe there is more to come. If it hadn’t been for our challenges and constant digging into the accounts, we would probably have never got a penny.

Some of these refunds would not have been forthcoming without the meticulous work we put in to comb through accounts, challenge them, and threaten the landlord with tribunals or, as we see elsewhere now, service charge strikes.

Tenants and residents have a right to expect charges are right first time

It should not take such action to get service charging right. Housing associations must be made to get it right first time, and to review their systems if any errors come to light.

At the moment, they seem to look at each case in isolation. When a case comes to light, they should be legally obliged to investigate the reasons for the error, and see whether others have been affected, with immediate and automatic refunds. Almost all the onus at the moment is on the tenant, and this is unacceptable.

SHAC Service Charge Campaign

SHAC receives frequent and sometimes shocking reports about problems with service charges. Some landlords are clearly worse than others.

However, across the sector it is evident that tenants and residents are getting a raw deal, and the ability of housing associations to manage this aspect of their business responsibly is questionable.

SHAC has compiled a report on the abuse of the service charging mechanism by housing associations and are using it to demand sweeping changes.

We are seeking an amendment to the new housing bill to make it mandatory for social housing landlords to have a totally independent audit of all service charge accounts with proper certification, rather than the farce they currently have.

For more details of the service charge campaign, please see here. We are also supporting tenants and residents withholding service charge payments in protest, often against high rents and charges. For more details, please see here.

* Samuel’s name has been changed to protect his identity

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