By SHAC and Geri Girardi
Notting Hill Genesis (NHG) has lost a First Tier Tribunal Case after attempting to recover historic major works costs by raiding the residents’ reserve fund.
The decision of the First-tier Tribunal raises important questions about how registered social landlords recover the cost of major works from leaseholders. But it also represents more bad news for a serially scandal-hit association.
Notting Hill Genesis (NHG) has become notorious for poor decision-making, failing governance, and persistent mismanagement. Several major investigative pieces and news reports have highlighted widespread failures in tenant safety, severe service charge overpayments, and a worsening financial deficit.
Public exposure of NHG’s woes began towards the end of 2024 when the Regulator of Social Housing published a Regulatory Judgement downgrading the association to G3 for governance and a C3 for consumer standards, heavily criticising NHG for compromising tenant health ad safety, building data gaps, and a severe backlog in urgent home repairs.
The Regulator’s report declared NHG non-compliant with its governance standard, with weak risk management, ineffective board oversight of health and safety, and flaws in business planning. The landlord was likewise non-compliant with the Regulator’s consumer standards. Financially, NHG was declared to be compliant but requiring careful management of financial risks.
Unfortunately, the public naming and shaming and regulatory intervention did little to improve the landlord’s governance or management. Within five months, NHG twice hit the news for service charge scandals. These included two reports by the BBC in April 2025, with one case in Wembley – ‘Notting Hill Genesis tenants in Wembley pay for non-existent lift‘ and another in Hackney ‘Housing association sorry for service charge error‘ indicating systemic overcharging by the landlord.
Later that month, The Londoner investigated how a charity founded to solve the housing crisis became one of London’s biggest slum landlords. The article chronicled how NHG’s initial worthy ideals of rescuing families from slum landlordism had morphed into a corporate housing behemoth that tenants argue mimics the very slumlords it was designed to counteract. NHG’s tenants had suffered widespread neglect, severe mould and rat infestations, sewage leakages, fire hazards, and an excruciatingly difficult complaints process.
And it is not just the landlord’s service charge accounts that have been mismanaged. In July, trade magazine Housing Today revealed NHG’s escalating financial troubles (Notting Hill Genesis deficit more than doubles to £285m), with building safety remediation costs, major asset impairments, and operational delays ballooning NHG’s pre-tax deficit to a record £285.7 million.
Major Works in Dispute
In a case concerning Pioneer House in Central London, leaseholders successfully challenged service charge demands made by their freeholder, Notting Hill Genesis (NHG), relating to reserve fund contributions and management fees. The Tribunal found that no reserve fund contributions were payable for the service charge years being challenged and reduced the landlord’s management fee due to poor service and lack of transparency.
The dispute centred on two major works projects that had already been undertaken. The first was replacement of the building’s lift in 2021 and the second related to refurbishment of the internal and external common parts in 2017 and 2018.
Leaseholders were left with a huge deficit of more than £32,000 in their sinking fund – a pot of money set aside by residents to take care of large repairs and maintenance. After the last set of major works, two leasehold properties were sold, and their share of the debt in the sinking fund was, in essence, passed onto the new and existing leaseholders.
Despite one leaseholder trying for several years to resolve the situation with NHG, and struggling with the huge staff turnover in the organisation, they were continually gaslighted and told by different senior NHG staff that NHG had done no wrong.
Leaseholders were eventually forced to take the case to the Tribunal. In fact, during one of the property purchases, the conveyancing pack for the new owners stated that the sinking fund was in surplus of £17,000. It wasn’t until 2023 a year after the property purchase, that the new owners realised this wasn’t the case.
This evidence was provided as an exhibit during the Tribunal hearing, but NHG continued to suggest they had done no wrong, blaming the new owners’ solicitors for failing to undertake the appropriate checks. The Tribunal in fact challenged NHG on this point, quite literally astounded by NHG claims.
In any case, the tribunal found that while leaseholders were liable in principle to contribute towards these works under their leases, NHG had never issued formal service charge demands for those costs when the works were carried out.
Instead, the landlord paid the leaseholders’ share from the sinking fund even though it did not have sufficient funds, thus creating a substantial accounting deficit. It then sought to recover that deficit by dramatically increasing reserve fund contributions in later years.
Patrick Franco (pictured) is the chief executive of NHG, having assumed the role in January 2023.
Interpreting the Law
Under scrutiny was the interpretation of Section 20B of the Landlord and Tenant Act. This sets an 18-month time limit for landlords to demand service charges for costs they have paid or are due. Although the Tribunal did not make a formal declaration that Section 20B of the Landlord and Tenant Act 1985 had been breached, it made a significant observation:
“It seems likely that no direct service charge demand can now be made… as the 18-month time limit for making any such demand permitted by section 20B… has long expired, and we have no evidence that any notice has been served pursuant to section 20B(2).”
Rather than issuing service charge demands at the appropriate time, the Tribunal found that NHG had attempted to recover historic expenditure through later reserve fund contributions.
The Tribunal Decision
The tribunal carefully analysed the lease which required reserve fund contributions to be collected for expenditure that was likely to arise in future years. The Tribunal concluded that the landlord’s demands failed to comply with those lease provisions because the money was intended to reimburse expenditure that had already been incurred years earlier.
The judge decreed that:
“The sums demanded in respect of the reserve fund in 2023/2024 and 2024/2025 were not payable under the terms of the lease because they were used, and were intended… to cover the cost of past works and not potential future costs” and “it was not reasonable for the Respondent to make those demands when it was always its intention to put the money into a fund which was in deficit due to past expenditure.”
As a result, the tribunal determined that the amount payable towards the reserve fund for both years was £0, and NHG found themselves with no choice but to write off the debt in the sinking fund returning the balance to zero. Leaseholders were completely vindicated.
Management Charges Also Reduced
Leaseholders also challenged the annual management fee – an item often in dispute between leaseholders and the freeholder. Although the lease allowed a flat-rate management charge, the Tribunal decided that the annual charge was excessive.
The Tribunal criticised the landlord’s handling of the reserve fund, finding that it had not dealt with leaseholders’ concerns in a clear and transparent manner, and concluding that the management service had not been provided to a reasonable standard in relation to the reserve fund. It concluded by ordering a fee reduction, reimbursement of the leaseholders’ tribunal fees of £330, and a further order preventing the landlord from recovering its legal costs through the service charge or adding them to service charge bills as administration charges.
This Decision Matters
The decision highlights an important principle for landlords and leaseholders alike. Reserve funds exist to build up money for future expenditure. They are not necessarily a mechanism for recovering historic costs that were never demanded through the service charge process.
For leaseholders, the case demonstrates that Tribunal scrutiny extends beyond whether charges are simply authorised by the lease, but can also consider whether demands are consistent with the lease, reasonable in their purpose, and made transparently.
As the claim was won in the lower court, it does not set case law in the way that a claim might do in the higher court of appeal, as in another recent defeat for NHG on service charges (Service Charge Abuse: Audit Office Validates SHAC Risk Evidence and Campaigners Win Landmark Ruling). However, it is still important that tenants and residents utilise all available options to prevent landlords’ free-for-all when it comes to service charges.
The Wider Fight
SHAC is campaigning to make sure that tenants and residents are not left to fight service charge abuse case-by-case at Tribunals, or through complaints to the Housing Ombudsman Service. We want government to stop the rot at source.
SHAC’s Parliamentary petition calls for government to make it possible for tenants and leaseholders to pay disputed service charges to a court. The funds will then only pass to landlords if they can prove the charge’s legitimacy within a set timeframe. Otherwise, the money returns to the tenant or leaseholder. Please sign here and share via Facebook, Instagram, Twitter and Bluesky.
See SHAC’s service charge campaign here.
28 July 2026
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