By Anne Jones*
Ten years ago I used to catch an evening bus to go from the city to my village. I had this new bus driver for the first time. I had asked him for a single to my destination. It was cash and a paper ticket in those days as opposed to the digital money and e-tickets of today.
When I got off the bus I looked at my ticket and it said ‘Pensioner Free Fare’ and ‘£0.00’ paid. I thought to myself it was either a genuine mistake or that the bus driver was pocketing the money I had paid. (I can assure you I am not in my mid 60s even now).
On another evening I had to go from my village to the city with my relative. The same bus driver turned up and I asked for a single as did my relative. My relative paid and got his ticket first and I then got mine, but noticed that the bus driver had done exactly the same thing as before – taking the money but issuing a ‘free’ ticket. I told the driver that he’d given us the wrong tickets. He looked embarrassed and provided us with the correct tickets.
It was clear and obvious that the driver was pocketing the cash. The errors were intentional. No passengers were checking their tickets and each evening he would be taking home some additional earnings. This incident always stuck with me.
Later in life, I began working in the finance department of a housing association and I saw the same method being used, but this time it was deployed on a grand scale to earn the organisation a vast amount of unearned income. It was the same scam, but built into the corporate DNA.
Within finance, there are ledgers that record transactions. Journal entries would be made to record costs. There can be errors, but from what I saw, the errors were intentional. The ledger would show costs incurred which were not genuine. Subsequent internal checks to remedy these were very limited.
This would cause revenue to be gained which was not genuine. The landlord’s corporate mentality was “let’s see if the residents spot the errors, and only then will non-genuine charges be removed.” This would run into 1000s of transactions which would result in £1000s in overcharging every year.
There should have been more reversals to these non-genuine transactions. Some residents raised complaints and highlighted the inaccuracies, but often most residents just accepted what they were charged. At least until recently because the service charges are much higher than normal and there is an increased awareness than before thanks to groups like SHAC.
It was clear cut that if no evidence existed of the costs incurred, then refunds were due. When no invoices supported the ledger entries this meant that the cost was not genuine. Sometimes we knew there was no such service – like communal cleaning – but the residents would still be charged for it, and fobbed off by being told that some form of minimal sweeping and wiping had been carried out.
The message here is simple. Errors with service charges almost always occur because they are done intentionally. The bus driver example above is no different to what some social landlords do. The key difference with the bus driver was that he did not charge more than the actual fare, but landlords regularly charge in excess of the cost of the service allegedly being delivered.
Depending on the type of service charge, this was down to either an arrangement with the contractor to charge more (inflated invoices) or boost the revenue whilst manipulating the costs which would not match. The legislation says the charges just need to be ‘reasonable’, but no-one is checking.
Leaseholders and shared owners in blocks of flats might have a lease that says that service charges would be audited. Usually this would be by an external accountant. There is a second opportunity for audit when it comes to year-end financial reporting. But external auditors do not rigorously review the transactions. They are limited as to what they review and only check a small sample in order to provide a statement of opinion.
Therefore always make sure that any service charge is reviewed and checked. If the landlord fails to remedy the errors then escalate to a complaint. And ask for evidence as to whether the actual service was even delivered, for example asking explicitly whether the cleaner turned up, a description of what cleaning they did, and whether there are photos of the cleaned areas. You can send your own photos if the work has not been done.
Recently The Big Issue (housing and homelessness magazine) asked the question ‘could a cavalier attitude to overcharging until you’re caught be part of the business model?’ I would say that this is now the dominant business model for the big housing associations who are independent of any real scrutiny or regulation as long as they have money in the bank. Creaming off service charges makes sure this is pretty much always the case.
* Not her real name
10 June 2024
If you have a WordPress account, get notifications about new articles by subscribing below:
I am a victim of this scam by my housing association. As a social housing tenant fully managed by the housing association, I have been charged External Agent Management Fee, Communal Cleaning and Management/ Admin fees since 2018.
I have complained yearly on this with letters and emails, attended my local housing office for discussion only to constantly told that I will be contacted without further action.
I question the legality of charging me these fees of £16+ PW in some years.
Currently, it seems nobody is willing to take responsibility to reply to my query and I am not leaving them until I get my money back
I said I was going to the ombudsman, and I needed the times and dates of when these things were done, somehow they removed them with money back
I rent, our service charge accounts are horrendous, not only are they always late, but the way they are presented, its impossible to understand. And… they are always incorrect. Recently, I noticed nearly 300 pounds on my rent account and thought what is that payment. Turns out I have been overpaying SC and instead of giving me the money back, they put it back into their rent account. And it was from circa 21/22? How… when its 2024. And I should have been told about the payment due, and it should of been credited to me, not back in their pockets. Its just disgusting what’s going on, I really don’t understand what’s happening in this country.
I would want a professional forensic financial review of my rent and SC since 2016 to see exactly what has been going on. I would bet I’m owed something back.
One year my rent/SC was put down to 109 per wk then the following year it went up to 123 per wk, then down then up again. They haven’t got a clue what they are doing and have lost control. The government needs to step in and do something about these horrendous companies, I hear all the large HAs are the same.
My flat is now being sold, thankfully I’m not longer going to rent from this one but I pray I’m not going from bad to worse!
I live in a apartment block in Mayfair – I know you’re thinking of why I’d been concerned about over charging but I found the time one evening to actually check a yearly accounts report from our building manager and noticed a charge of £32,000 for lift repairs. Previous to me checking this particular report it had always been done by my husband who was a very busy man and obviously just took for granted that all would be correct. As we are only in residence for 5/6 months a year I decided to email the other flat owners (there are only 11 of us) to ask if they knew of these repairs. They all responded that they didn’t. I rang the management company and asked to speak to the senior person and explained the situation. They reported back to me the next day that there had been a fraud by one of the girls in the office and our £32,000 had bought her a holiday caravan on the coast. The work had never been carried out – she had just directed the money into another account of hers. They immediately sacked her, but she was re-employed the very next day by another management company which did not know about the fraud because it hadn’t gone to court yet. So she is still out there managing people’s property. In court she got a ‘rap over the knuckles’, and told to repay the money though I don’t know if she ever did. We changed managers immediately. I’m writing to say it isn’t just social housing that has the problem. It’s could be all over. Check everything and hold them to account. We’ll never know how much she stole over the years and it appears the courts don’t care about white collar crime. There needs to be a government enquiry into how collected money is used and a more transparent system as to how buildings are managed . Beware!!!!!
The law needs changed. Can take years from date of work > invoice > charges paperwork for inspection = most customers are not interested, forget, don’t chase.
Those that do will be met with fierce resistance to see all paperwork which will be far from clear. And if you dare (how dare you, shut up customer!), they will bully you. More chance with bully thugs than get honest and correct service charges and any errors swiftly rectified!
Us gawd damn horrendous nasty customers having the audacity asking for proof that the thousands we’re asked to pay is legit……………………………..
The law needs to change!