Service Charges

Since our launch, we have received frequent and sometimes shocking reports about problems with service charges.

We wanted to build a fuller picture of the problem so we asked tenants and residents to help us by sharing their experiences. Our was launched in early November and initial findings were published in December 2020.

You can participate in the survey here and see our summary findings and conclusions below. Download the full report here.

Letter to Your Local Member of Parliament

To permanently clean up housing association service charging, we are asking everyone to write to their local MP. See here.

Landlord Letter Templates

We also urge all housing association tenants and residents to write to the Board Chair for their landlord demanding remedial action on service charges.

To make it easy, we have produced template letters and provided contact details.

Please see here to download and send your letter.

Our Findings:

Around 40% of tenants and residents had experienced service charges increases which vastly outstripped inflation. Service charge bills had more than doubled between 2018 and 2019 for around 15% of respondents. More than a third of respondents had to meet a 10% to 29% rise in bills over the same period. A further third had to meet service charge increases ranging between 30% and 100%.

Around 52% of respondents had been overcharged compared to just 16% who had ever been undercharged. The error rate in favour of the landlord is therefore more than three times higher than it is in favour of the tenant or resident. The most that any respondent had been undercharged was £800, which contrasts with a £6,000 maximum overcharge amongst respondents.

There was also a large discrepancy in the size of overcharging errors compared to undercharging errors. Errors which increased the bill between 1% and 10% were found in 12% of cases, between 11% and 50% of the bill were present in a third of cases, between 51% and 100% of the bill in almost half the cases, and 12% of respondents had errors which more than doubled their bill. By contrast, none of the undercharging errors exceeded 20% of the bill.

Tenants and residents who pay their bills struggle to get reimbursed if an error is identified. Around 70% of overcharged respondents had not yet been reimbursed, and around 35% were still battling between 12 months and two years after the billing date. In all cases of undercharging, the landlord had recouped the loss.

Landlords are far more likely to pass on supplier cost increases than efficiency savings resulting from reduced supplier costs. In both cases, the financial benefit leans toward the landlord. Around 5% of respondents had been informed of efficiency savings, but only a quarter of these received lower bills as a result. By contrast, a fifth of respondents had been informed of supplier cost increases, all resulting in higher bills.

Conclusions

Some landlords are clearly worse than others; Hyde, Clarion and Sanctuary featured heavily in the survey and amongst complaints received by SHAC.

However, across the sector it is evident that tenants and residents are getting a raw deal, and the ability of housing associations to manage this aspect of their business responsibly is questionable.

Far more needs to be done to improve transparency and fairness, redressing the balance in favour of tenants and residents rights. Measures could include for example:

  • Mandatory itemised billing with supplier receipts
  • Set timescales for refunds
  • Mandatory reporting through regulatory returns on overcharging and undercharging errors
  • Automatic reporting to a regulatory body when overcharging exceeds a certain level;
  • Automatic compensation to tenants and residents (beyond like-for-like refunds) when overcharging occurs
  • Automatic compensation to tenants and residents when landlords are slow to reimburse tenants after overcharging
  • A mandatory requirement to pass on efficiency savings to tenants and residents when supplier costs reduce

It is only through such measures that the system of service charging can be made transparent, and tenants and residents can be sufficiently empowered to address errors.

Next Steps

SHAC will now consult tenants and residents on the findings in this report.

2nd December 2020

Articles:

2 thoughts on “Service Charges”

  1. I rent a flat in Luton, Wilson Court, Stirling Drive. The heating looks like a scam. There is what looks like an electric boiler in the utility room, it’s the size of a boiler, but the management company claim the hit water they provide is piped in from a central source. The standing charge is high, higher than the amount of hot water we use. We lived in a three bedroom house that cost less to heat then this two bedroom modern insulated flat. None of the bills are itemized, just a total I have to pay. They want a direct debit but I refused as they could drain my account without warning. I can’t switch providers, which in this day and age should be illegal to force to use a specific provider.

    Liked by 1 person

  2. I have no idea what my service charge is covering. I do know I’ve lived in this new block of flats for five years with inadequate heating (I have an engineer out yearly to fix it), l&q squabbling over who should pay for parts and what surveyor needs to sign this off and my electricity bill as no gas is extortionate.
    It’s very expensive being cold.

    Liked by 1 person

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