The Regulator of Social Housing has reported that service charge income for housing associations soared by 15.8% to £1.9 billion in the year to March 2024.
Also in 2024, service charge disputes brought to the First Tier Tribunal concurred that tenants and residents had been overcharged in over 70% of cases.
Taken together, these figures lend support to SHAC’s claims that service charge abuse by landlords and managing agents is systemic.
Service Charge Challenges
SHAC researchers reviewed the 233 English First-tier Property Tribunal judgements involving tenants or residents challenging the level or payability of service charges during 2024 where an outcome had been reached.
The courts removed or reduced all of the disputed charges in 67 cases (28.8%), and removed or reduced some of the disputed charges in 103 cases (44.2%). This adds to the growing body of evidence on the sheer scale of overcharging.
The challenges were brought against councils, housing associations, and private landlords, and against intermediary managing agents, demonstrating that the practice of overcharging is widespread.
Some of the challenges to the reasonableness and payability of service charges were brought by individuals, and others by a small group of tenants or residents. However, the overcharging often applied to an entire block or estate, and affected renters, shared owners and leaseholders. It appears that no-one is safe from service charge abuse.
The Tip of the Mountain
These cases represent the tip of a very tall mountain. Only a very small proportion of service charge disputes ever reach the courts, with access to legal justice severely constrained for tenants and residents.
Whereas landlords are generally able to afford all the legal advice they need, the landlord’s occupants are rarely able to secure legal representation. Legal Aid is not available for most housing issues, and free legal representation is almost impossible to find. On top of this, bringing a claim means finding £300 to pay the Tribunal fee.
The lack of legal representation means that tenants or residents are at a considerable disadvantage when preparing legal documents, presenting arguments, and navigating the Tribunal’s procedures.
The stakes are also mismatched. Should the tenant or resident lose their legal challenge, landlords regularly request that costs are awarded, in other words, the tenant or resident would have to pay the landlord’s legal fees.
Larger landlords are often represented by a barrister, a team of solicitors, plus their own legal staff, therefore the costs mount up. While it is rare for a court to make a costs order, the risk of it happening is often a huge deterrent for tenants and residents even when they believe that they have a solid case.
By contrast, the financial risks to the landlord are negligible because the only legal cost likely incurred by the tenant or resident is the Tribunal fee. A trifle for a landlord with a multi-million pound turnover.
Housing Association Service Charge Income Soars
Coinciding with SHAC’s research, the Regulator of Social Housing published the Global Accounts to the end of March 2024. This publication is an annual summary of housing association finances for those owning or managing at least 1,000 homes.
The Global Accounts show that housing associations collected £1.9 billion in service charges from tenants and residents in the twelve months to 31st March 2024. This represents a 15.8% jump in service charge income from the previous year – a hike that cannot be explained by inflation alone. In April 2023, the Consumer Price Index (CPI) inflationary measure stood at 8.7%, and had reduced to 3.2% by March 2024.
And those paying service charges had already absorbed huge rises in previous years. Most notably, housing associations collected £1.6 billion in service charges from tenants and residents in the twelve months to 31st March 2023, representing an 11.1% rise from the previous year.
| Financial Year | CPI Inflation at start of financial year (%)* | Service charge income at end of financial year (£ billion)** | Percentage rise in service charge income from previous Year (%)** |
|---|---|---|---|
| April 2023 – March 2024 | 10.1 | £1.95 | 15.8 |
| April 2022 – March 2023 | 7.0 | £1.69 | 11.1 |
| April 2021 – March 2022 | 0.7 | £1.52 | 1.8 |
| April 2019 – March 2021 | 1.5 | £1.49 | 5.0 |
| April 2018 – March 2019 | 2.3 | £1.42 | 2.8 |
* Source: Office for National Statistics – Inflation and Price Indices
** Source: Regulator of Social Housing Global Accounts of Private Registered Providers, 2019-2024
Trend analysis shows that service charge income rose just 2.8% between 2019 and 2020, although this was still above the inflationary average. Since then, the rate of increase is both startling and inflation-busting, suggesting that housing association landlords and managing agents are profiteering from service charges.
Rent Arrears Rise Again
The Global Accounts also show dramatic rises in rent arrears for housing association social tenants. In March 2024, arrears stood at £885 million, having increased by almost 9% from the previous year. Trend analysis using the Regulator’s data shows that this is a growing problem.
| Financial Year | Social rent cap rise at start of financial year (%)* | Social housing rent arrears at end of financial year (£ million)** | Percentage rise in rent arrears from previous year (%)** |
|---|---|---|---|
| April 2023 – March 2024 | 7.0 | £886 | 8.18 |
| April 2022 – March 2023 | 1.6 | £819 | 8.91 |
| April 2021 – March 2022 | 1.7 | £752 | 6.67 |
| April 2020 – March 2021 | -1.0 | £705 | 4.60 |
| April 2019- March 2020 | -1.0 | £674 | 13.89 |
* Source: Limit on annual rent increases 2024-25 – from April 2024
** Source: Regulator of Social Housing Global Accounts of Private Registered Providers, 2019-2024
The growing level of rent arrears underscores the folly of government and housing association claims that increasing rents will allow housing associations to build more new homes.
This narrative was neatly captured in an article published in the Guardian in August 2024 on government proposals to raise the social rent cap by CPI inflation plus one percent for the next ten years. The Guardian reported that
“Social housing rents will rise by more than inflation over the next decade as part of government plans to boost affordable housebuilding and shore up the finances of struggling landlords”.
The Guardian
The representative body for housing associations, the National Housing Federation (NHF), inevitably welcomed the news, noting that the new policy was exactly what they have been lobbying for:
“for a 10-year rent settlement to give landlords more certainty over cashflows, and the confidence to invest in new stock”.
The Guardian
The narrative we are being asked to swallow creates a false link between long-term rent rises and new house building. There is however no evidence to back this up, and – even more importantly – no guarantees that the additional income will in fact be invested in new housing as opposed to, for example, higher executive pay.
None of the claims made by government and the NHF were challenged in the article. For example, far from ‘struggling’ financially, housing associations at the start of 2024 had a collective surplus of £4.2 billion, a rise of 3.2% on the previous twelve months**.
Nor was any question raised about the underlying assumption that increasing rents above inflation will lead to a flurry of house building. Conversely, the hard data shows that it leads to more tenants defaulting on rents, and a greater household debt burden. This exacerbates rather than alleviates the housing crisis.
Now, the evidence provided through the Global Accounts undermines claims by both government and the NHF that charging tenants higher rents will help to solve the housing supply crisis.
Take Action
SHAC is campaigning on rents and services, and urges all to support our action.
- Our Unfair and Uncapped campaign calls on government to freeze rents and cap service charges.
- Our End Service Charge Abuse campaign demands that more is done to prevent systematic overcharging by landlords and managing agents.
- Our Service Charge Law petition demands that disputed service charges should be payable to the courts and only released to landlords and managing agents if they are able to prove legitimacy.
- Our Parliamentary Petition demands a new regulator for service charges.
11 January 2025
The Guardian, Social housing rents to rise as part of UK chancellor’s push to build affordable homes, 21 August 2024
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