A ‘Notice of Service Charge Strike’ has been sent to the Peabody executive, signed by the residents of 42 flats on an estate in central London.
The residents are withholding all or part of their service charge payments over concerns that:
Some of the charges appear to be opaque, completely unjustified [and] plucked out of thin air”
Jason*, Peabody service charge strikers representative
In 2021, the actual annual service charge for a one-bedroomed flat on the estate was £2,093, but in the space of just two years, the charge has increased by 63% to a projected £3,300 cost for 2023. Residents now fear that this makes their properties unsellable.
Service Charge Guesswork
The specific concerns described in the residents’ letter include an increase to the managing agent’s fee from £82,788 to £148,474. This represents a staggering rise of 80%, even though the agent, Knight Frank, advised residents that it had not yet prepared a budget for this period.
Peabody’s excuse for the hike was that Knight Frank had not sent a projected budget, therefore Peabody had added a percentage uplift to the figure for the previous year. They don’t however explain how they arrived at an uplift of 80%.
Electricity Shock
Similarly shocking was a four-fold rise in electricity costs over four years. The bill was £12,500 in 2017 but had jumped to £59,347 in 2020, despite the building itself having low electricity usage. Residents believe they are subsidising electricity usage in other buildings.
Peabody has recently received bad press for failures across several aspects of its work
Jason goes on to question whether electricity is being apportioned based on the size of the building alone rather than actual usage, and points out:
Clearly, this wouldn’t be fair given that [another block] has a heated swimming pool, jacuzzi, sauna, gym, water wall fountain, car park and a car park lift, while we have a lift that’s often out of service and corridor lighting, most of which doesn’t work.”
Jason*, Peabody service charge strikers representative
Crude methods of apportioning costs are a common complaint regarding service charges. Not least because they inevitably result in an overcharge to tenants and residents.
Fire and Waste
A bulk waste removal bill has also left residents baffled. The charge has significantly increased from £450 to £1,250, but residents were previously told that Peabody “will be removing the bulk refuse cost from next year’s estimate. Peabody does not need to budget for this as it is taken care of by Knight Frank”. This indicates that residents are being double-charged for waste removal.
Residents have asked to see the invoices for fire equipment and risers, which have increased in cost by 40% in four years, and also argue that the ‘sinking fund’ (reserves) should anyway cover such works. However, they also point out that if the costs relate to cladding, residents should not be charged for them at all.
Strikes: A Growing Trend
The action of the Peabody strikers follows similar moves by tenants and residents of other housing associations with the support of SHAC.
Southern (Optivo) Tenants Declare Service Charge Strike
Another Service Charge Strike at L&Q
One Housing Tenant’s Non-Payment Forces Service Charge Freeze
SHAC’s Service Charge Campaign supports tenants and residents challenging their service charges. We have also teamed up with FindOthers to #EndServiceChargeAbuse, and their specialist platform includes a unique online tool to request and chase service charge packs.
* Not his real name
26 March 2023
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