The service charge strike wave continues.
A significant number of households from the same Hexagon estate in London are the latest group of housing association residents to inform their landlord that they are withholding payment in a dispute over service charges.
The residents describe being forced to take this step as a last resort “in view of numerous attempts by Shared Owners and residents to engage with Hexagon, which have unfortunately been unsuccessful”.
The Hexagon residents have a long-running dispute stretching back 12 years. During this period, Hexagon has been able to supply only partial information, often resorting to screenshots or pages from an internal management system because proper invoices were unavailable.
Statutory Deadlines Disregarded
The long delays in Hexagon’s provision of information, often taking a year – or in some cases multiple years – instead of the 30 days’ response time required by law, together with changes to Hexagon’s accounting processes, have made it even harder for residents to reconcile receipts against works actually carried out.
One of the contributing factors appears to be a very high turnover rate for Hexagon staff. Rosie*, a resident withholding payment commented:
The regular turnover of Hexagon Rent & Service Charges staff – and in fact Hexagon staff generally – adversely impacts year on year continuity and accuracy of records, as each different Hexagon manager brings a different approach and level of understanding.
It usually takes between six and twelve months for them to fully assess the situation and get to grips with the system’s anomalies, if they in fact ever do”Rosie, Hexagon resident
Despite all these challenges, residents have nonetheless identified “multiple specific and recurring irregularities” which include, but are not limited to, withdrawals from the sinking fund without consultation or due process, service charges that Hexagon previously informed residents would not be charged to them, utility bills charged at incorrect rates, and other highly inflated bills.
Over the years, residents say they have consistently requested greater transparency of information and the provision of appropriate and accurate documentation, with little or no success.
There are also serious concerns over Hexagon’s general financial administration, which has been fraught with errors, such as repeated incorrect notices of rent increases within the same year, and service charges summaries which were issued, re-issued, and amended over the same period.
Hexagon resident Gary* said:
Hexagon has over the past 12 years been afforded multiple opportunities to rectify its mistakes … our trust has now been eroded and alongside this our hope that Hexagon is willing and able to engage seriously and effect a full and long-term resolution to these issues”Gary, Hexagon resident
Frustrated by Hexagon’s unacceptably poor financial management and evidence of service charge abuse, residents now want full refunds, disclosure of property insurance charges, transparent and complete accounts for the last financial year, and answers to questions on previous inaccuracies.
Shared Owner Rent Hikes
The group has also submitted a formal complaint in response to Hexagon’s decision to increase shared owner rents by 10%. Shared owners pay a mortgage on the proportion of their home that they ‘own’, and pay rent on the remainder. Tenancies normally have an inflation-linked formula for calculating annual rent rises, but because of the very high inflation figure this year, government advised landlords to set it at 7%. This was agreed voluntarily by the majority of housing associations.
Social Housing Magazine was one of many media outlets enthusiastically but wrongly reporting that housing associations would cap shared owner rents at 7%
Bucking the trend, Hexagon has disregarded both the economic hardships being endured by shared owners, and the precedent set across the sector. Hexagon has a healthy financial position, reporting in its 2021/22 financial statement that the operating margin from social housing lettings jumped from 7% to 22%, and its operating surplus exceeded £12 million.
SHAC Support for Service Charge Strikers
The Hexagon residents embarking on their service charge strike are being supported by SHAC.
* Not their real names
3rd April 2023
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