SHAC and FindOthers have published research which highlights the extent and impact of service charge abuse by housing associations.
The findings reveal the shocking effects of twin factors, with high levels of inaccuracy allowed to go unchecked by any government regulation or control, combined with a fierce resistance by landlords to addressing inaccuracies even when they are identified.
Download the report combining research by SHAC and Find Others
Analysis of 570 responses to an SHAC’s online survey showed that:
- Almost 90% of respondents experienced charges that were too high for the services provided.
- Just over 70% had been charged for services that have not been provided to an acceptable standard, with 44% being charged for services that didn’t apply to their home or estate.
- At least one third of respondents found receipts or invoices missing from their invoice packs, and more than 15% found duplicate invoices or receipts.
- More than 90% of respondents experienced stress or other mental health problems as a result of service charge problems.
- Service charges and the stress of trying to address inaccuracies were exacerbating physical health problems for 23% of respondents. This rose to 42% for disabled tenants and residents.
- Almost 40% found themselves facing increased debts or arrears as a result of the problems, although the impact was greater for shared owners (41%) compared to renters (32%).
- Service charge abuse was causing relationship problems for 18% of respondents.
FindOthers has collated data from 276 housing association residents who have made statutory requests for information on service charges. The requests were made under the provisions of the Landlord and Tenant Act 1985. This law allows leaseholders (but not full renters) a legal right to receive a summary of charges (Section 21), and a pack of invoices and receipts (Section 22).
The data was collated through a free online Request a Breakdown tool which helps tenants and residents make requests for service charge information from their landlords. It also provides an escalation through the complaints process if a satisfactory response is not received.
FindOthers reports that:
- Despite the legal obligation on landlords, 40% of residents had received no response to their Section 21 requests for a summary of charges within the 30-day legal limit.
- Of those who went on to make Section 22 requests for invoice packs, 40% received no response within the 30-day legal limit.
- Around 14% of those who received their invoice packs identified inaccuracies within the accounts.
- Not a single respondent housed by One Housing, Peabody, MTVH, Optivo, Notting Hill Genesis, Southern, Hyde, or THCH were satisfied with the response from their landlord.
- Only Clarion and L&Q received any positive responses on the satisfaction question at 3% and 18% respectively.
- In total to date, respondents have identified £2 million in overcharging.
No Access to Justice
The FindOthers report also captures the lack of enforcement from regulatory agencies and the courts, either because the agency does not have sufficient powers, or because at present there does not appear to be a willingness to challenge housing associations on service charging.
The Housing Ombudsman does not investigate service charge disputes. The Regulator of Social Housing refuses to investigate them. The Department for Work and Pensions financially penalises residents in receipt of housing benefits if they report overcharging by their landlords.
Any resident wishing to take their landlord to court would either need to self-represent, which requires a level of legal and financial competence, or would need to find around £45,000 for legal representation.
Legal fees are not recoverable for service charge cases.
Recommendations for Change
Together, SHAC and FindOthers have recommended that government introduces and enforces legislation which requires government to:
- Recommendation 1: Externally audit service charge systems using an accredited organisation.
- Recommendation 2: Externally audit service contract management and procurement processes, and where a sub-contractor repeatedly submits inaccurate invoices, the contract be terminated.
- Recommendation 3: Improve access to service charge invoice packs, making it a requirement that these are provided in alternative formats if requested.
- Recommendation 4: Standardise invoices and service charge packs to enable scrutiny by tenants and residents.
- Recommendation 5: Hire sufficient numbers of permanent staff in their service charge teams, with team size proportionate to the number of service-chargeable properties they manage. There must also be a team of dedicated staff for resolving inaccuracies.
- Recommendation 6: Provide tenants and residents who identify inaccuracies with the facility to deal directly with service charge resolution staff. They should be given a named contact who is leading on resolving their complaint, with a personalised phone and email address for contacting them.
- Recommendation 7: Provide tenants and residents with an automatic, legal right to compensation if it transpires that there are unacceptable and unreasonable errors in service charges.
- Recommendation 8: Publish tenant and resident rates of satisfaction with service charges.
- Recommendation 9: Impose substantial, meaningful fines on landlords who fail to meet targets, with compensation to those affected.
SHAC and FindOthers further recommend that government provides much better access to justice and extends Legal Aid to housing issues and providing community lawyers to take on housing cases.
SHAC is continuing to advise tenants and residents who find problems with their service charges to join SHAC. Once registered SHAC is able to support members who wish to withhold payment of any contested amount, contact the landlord about overcharges, and write to their MP and councillors asking them to intervene if they cannot get a satisfactory response.
If you have been affected we are also keen to hear about your experiences, so please scroll to the bottom of the page and leave a reply in the comments section.
27 July 2023
If you have a WordPress account, you can keep up to date with our blogs by subscribing to our site below: