Hard-pressed tenants investing in so-called ‘affordable homes’ say they are being over-charged thousands of pounds in service fees – as Britain’s leading housing associations face mounting pressure for a crackdown.
People who hoped to benefit from shared ownership schemes promising a foot on the property ladder say they are instead being hit by inflated extra fees.
Many have also been landed with ‘duplicate’ payments demanded for services already provided by local councils or energy utilities.
Now MPs have written to the National Audit Office demanding a probe in the ‘abuse’ of service charges by providers behind millions of properties UK-wide.
And residents taking up legal challenges against housing bosses have told MailOnline of their dismay and outrage at being landed with ‘unfair’ service charges – while also having to battle to claw back refunds.
Campaigners have launched a petition demanding an official cap on service charges and an industry body representing 15 of Britain’s largest housing associations – including Hyde Housing Group, Peabody and Southern Housing – has been urged to improve conditions for people living in their part-owned homes.
Ministers are now under pressure to boost tenants’ rights – while insisting they are pushing through more transparency on service charges, though one of Housing Secretary Angela Rayner’s ministers has just ruled out imposing a cap.
Housing associations involved in shared ownership schemes insist they do not profit from service charges and are dependent on costs they themselves are given by external managing agents contracted to carry out work.
Francesco Guerrieri, who lives in Bermondsey in south-east London, is among those calling for service charge reforms – after challenging thousands of pounds levied on residents
Among the properties where residents have raised concerns about service fees on top of mortgage and rent payments are those in Bermondsey in the London borough of Southwark
Bianca Malata, 44, lives in a property that is part of the former Pickle Factory in Bermondsey
Official data suggests there are about 4.1million rented or part-rented homes across England deemed as social or ‘affordable’ properties.
These include many provided through shared ownership schemes, with housing associations building and selling more than 100,000 such homes in the past 10 years.
These have often touted as a more affordable option than covering a full purchase – yet leaving many struggling with a combination of not only mortgage repayments and rental fees but service charges hiked by up to 400 per cent in some areas.
Despite promises to expand young first-time buyers’ prospects of getting on to the housing ladder, the number of affordable homes delivered in England dropped by two per cent last year to just 62,289.
The ‘affordable homes’ bracket is defined in the UK as those properties which are let at values pegged at least 20 per cent below local market rents.
There are also official differences between ‘affordable housing’ and ‘social housing’ – with the former being privately-owned and the latter under council control.
Yet residents and campaigners say housing associations are benefitting from confusion between the different categories, appearing to be public bodies yet acting as commercial enterprises.
Housing associations in England have been paid £1.95billion in service charges in the year to March 2024, according to Regulator of Social Housing figures – up by 15.8 per cent on the previous 12 months.
Concerns have been raised about extra service charge bills being handed to tenants on top of their rent and mortgage repayments – with some said to include fees for concierge services or lift repairs tenants say do not exist.
Another resident who has spoken out about service charges is Lucy Carr (pictured)
The former Pickle Factory development has homes overseen by housing association Peabody
Francesco Guerrieri, who heads the Bermondsey Spa estate’s residents’ association in south-east London, says he has clawed back £15,560 over a year in unfairly-levied service charges for himself and neighbours.
But he accused housing associations of being unhelpful when it came to challenging fees, with tenants needing to spot any mistakes and go through online processes to get responses.
And while activists have hailed his work on behalf of residents, they highlighted how many people were unknowingly going without such efforts on their behalf.
Mr Guerrieri, 46, told MailOnline of his frustration that tenants ‘receive a poor service for quite a bit of money’ and ‘have no control over how their money is spent’ nor ‘any transparency in their service charges’.
He added: ‘Ultimately the way to avoid all this is to give control to those who live in the building.
‘They will have a vested interest in a good service at a reasonable amount of money, whereas all landlords to is squeeze residents more and more to maximise their profits.
‘That includes housing associations who are supposed to offer affordable social housing.’
The Social Housing Action Campaign has launched a petitions calling for Parliament to introduce a cap on service charges.
Residents of homes at the former Crossse & Blackwell ‘Pickle Factory’ in Bermondsey, south-east London, say they are being unfairly billed too much when it comes to service charges
More than 400 homes have been provided at the former Pickle Factory site
They are also urging that fees be held by court services pending rulings on whether housing association demands are justified.
The group has highlighted Government plans which would allow social landlords – including housing associations as well as local authorities – to increase rents by inflation plus one per cent from this April and annually for the next decade.
And they say that allowing service charges to go uncapped and ‘barely regulated’, on top of rents, imposes ‘disastrous’ costs on tenants.
The group has carried out research suggesting 70 per cent of service charge challenges led to fees being reduced or cancelled by the Government’s First-Tier Property Tribunal last year.
The SHAC says: ‘We know from our research that service charge accounts are riddled with errors.’
Campaign group co-founder and secretary Suzanne Muna told MailOnline: ‘What we’d like to see is any disputed service charge being paid to the courts for them to rule on whether the landlord can prove the demand is legitimate.
‘So often we find housing associations charging for things that just don’t exist, like concierge services or lifts which either aren’t working or have never been there.
‘Then there are the duplication of charges too – landlords wanting money for waste management and emptying the bins which is already done by the council or for communal gas and electricity which is covered by the energy suppliers.
Housing campaigner and residents’ association head Francesco Guerrieri is among those living at this block of apartments in Bermondsey, south-east London
Mr Gurrieri has challenged more than £15,000 of service charges for fellow residents
‘It’s not unusual for tenants to be over-charged around £4,000 to £5,000 – for some it’s a few pounds a week, but over a hundred a week in some cases.
‘But we don’t really know just how many more are being affected – the scrutiny and regulation have been too weak.’
And she said of Mr Guerrieri’s efforts claiming back from housing associations: ‘There isn’t a Francesco on every estate so most of the time, they get away with it.’
Tenants in social housing in Bermondsey in south-east London, at a former pickle factory which has been converted into more than 400 properties, told MailOnline their increasing costs fund a plush concierge reception and private gardens to which they have no access.
And they say delivery parcels get refused at the concierge desk around the corner, where private tenants live in private apartments – some of which are ‘shared ownership’.
But those in the private apartments also complain that their service charges have risen sharply in recent months.
Bermondsey’s old Crosse & Blackwell factory is one of several old industrial sites in the area converted in recent years into housing blocks.
But many residents said the original price at which the houses were advertised were inflated by hundreds of pounds after signing for the properties.
Social housing has been let to people living at the converted former Crosse & Blackwell base
Nicola Johnson, 54, has questioned why tenants are being charged so much for services
Lucy Kerr, a 70-year-old disabled tenant on a mobility scooter, said: ‘I’m a pensioner and I can’t afford to live here. The biggest mistake of my life was coming – if it wasn’t for food banks and vouchers, I wouldn’t be able to live here.
‘It’s all right for those snobby ones [on the other side], but we are living in pain and suffering. We are paying for them.’
Bianca Malata, a 44-year-old mother one one, said: ‘We were some of the first people to move in, in June 2023.
‘The other side get a gym, a concierge – our service charge is increasing again in April, but we are getting much less.
‘When we bid for this place, the service charge was advertised as £18 per week [£72 a month]. On the day of signing, that’s when they tell you it’s £300 a month.
‘But we had no choice but to sign it or go back to bidding. We’re not allowed to use the gym and stuff – not only that, but nobody can give you a breakdown of the costs.’
Lorraine Cochrane, another disabled resident, said people living there had to pay water and heating costs on top of their rent and service charge but had no choice but to go with the company contracted by Peabody.
She added: ‘I’m financially worse off living here. We are getting nothing for it. I’ve got repairs waiting that are not being done.
Shibo, 31, who lives opposite, says his service charges have risen by about 10 per cent
Pickle Factory development residents told MailOnline their increasing costs fund a plush concierge reception and private gardens to which they have no access
‘The concierge refuses to take our parcels. Ambulances, police, and fire services don’t know where we are – they go round to the private part.’
Another neighbour, mother-of-four Simone, 37, said: ‘We’ve all got problems in the block. Nothing works properly. It’s ridiculous. It’s meant to be affordable rent.‘
Nicola Johnson, 54, said residents were coming together to organise a meeting ahead of taking their complaints to the housing association.
She said: ‘When it comes to service charge, it should be one charge for all. What are we getting for it? Cleaners who don’t clean properly?’
Shibo, a 31-year-old resident in one of the apartment buildings opposite the Pickle Factory, said he paid about £5,000 in service charges per year.
He added: ‘We have lived here about three years – I think the service charge has gone up around 10 per cent a year.’
Others rallying on behalf of fellow tenants is 75-year-old Michael Savell, alongside his wife Maureen, 72, and neighbours in Kidbrooke, south-east London, whose properties come under the control of Southern Housing.
Mr Savell, who has been there for the past 10 years, said he had challenged service charges worth £5,015 over the past three years – including fees for ‘communal heating that doesn’t exist’ as well as electrical and managing agent costs.
Michael Savell (pictured right, alongside his wife Maureen) has been campaigning to reclaim service charges for fellow residents in Kidbrooke, south-east London
He told MailOnline of complaints against Southern Housing from his Kidbrooke neighbourhood
He said: ‘Every single demand we get, you think, “This is wrong”. There is no justification for some of the charges yet we’re supposed to just suck it up, as cash cows.’
The new letter to the National Audit Office demanding an inquiry into service charge ‘abuse’ has been signed by 26 MPs, led by Labour backbencher Mohammad Yasin.
It highlights what are described as inaccurate bills as well as failures to inform tenants with evidence for why costs are rising.
Among those putting their names to the letter are the Liberal Democrats’ housing spokesperson Gideon Amos and Green MP Siân Berry.
The call to the NAO states: ‘There is mounting evidence of the very high proportion of landlord and freeholder service charge accounts that have been identified as being inaccurate.’
Mr Yasin highlighted how potential losses were being taken on by the Department of Work and Pensions since many service charges went into Housing Benefit payments.
He said: ‘It is clear that the benefits system is being defrauded by millions of pounds annually through service charge abuse.
‘This is not an issue that can be addressed by individuals, or simply by cutting housing benefit. This would penalise the victims of service charge abuse rather than the perpetrators.
Mr Savell, who has been there for the past 10 years, said he had challenged service charges worth £5,015 over the past three years
He said these covered fees for ‘communal heating that doesn’t exist’ as well as electrical and managing agent costs
‘This issue demands a major inquiry into service charge abuse perpetrated by councils, housing associations and private landlords.’
The previous Conservative government oversaw the Leasehold and Freehold Act 2024, passed by Parliament last May, with aims such as making it cheaper for people to extend leases or buy freeholds as well as banning new leasehold flats.
Labour have since said there should be a strengthening of powers including over service charge transparency.
But housing minister Matthew Pennycook told the Commons last week: ‘The Government has no plans to cap service charges for tenants and leaseholders given this will prevent necessary funds being raised for legitimate purposes.’
He also said: ‘We intend to strengthen the regulation of managing agents, imposing minimum standards in relation to, for example, qualifications.’
A public consultation has been promised on banning buildings insurance remuneration such as commissions for landlords, property managing agents and freeholders being passed on through service charges.
Mr Pennycock promised MPs last November: ‘Leaseholders will be able to more easily challenge service charges they consider unreasonable and landlords will be required to apply to the relevant court or tribunal for approval before they can pass legal costs from such challenges back to leaseholders.’
MailOnline has contacted for comment the G15 group representing the UK’s 15 largest housing associations as well as Hyde Housing Group and Peabody.
Housing minister Matthew Pennycook has said there are no plans to cap service charges
G15 pointed to a letter they wrote following concerns raised last year, addressed to the former Conservative government’s then-Housing Secretary Michael Gove.
The organisation’s chair Fiona Fletcher-Smith, who is also chief executive of housing association L&Q, stated: ‘G15 members provide more than 850,000 homes across the country, including around one in ten homes for Londoners.
‘We were deeply concerned to read service charge issues being described as a “form of abuse” and “this scandal also represents a new form of benefit fraud”.
‘Housing associations are charitable organisations that do not make a profit from service charges. If charges are overestimated, then residents will be refunded at the end of the year.
‘Housing associations only recharge residents for the actual costs of services which are provided, and all our suppliers are procured using Government-approved procurement processes and follow Government legislation.
‘We fully appreciate that increases, errors and inconsistencies are unwelcome and incredibly frustrating for residents, and so we do all we can to ensure charges are both accurate and reasonable.
‘G15 members accept that improvements need to be made to the way service charges are set, collected and how we respond to queries about them, and improvement plans are being urgently implemented to address this.’
The National Audit Office has said it would ‘carefully consider’ the latest correspondence alleging ‘service charge abuse”, ‘in line with our remit to audit government spending’.
Fiona Fletcher-Smith (left) chairs the G15 group bringing together Britain’s largest housing associations, while Ian McDermott (right) is its vice-chair
Southern Housing said in a statement: ‘At Southern Housing, we understand that rising service charges are a significant concern for many residents, and we’re committed to transparency, fairness, and keeping costs as low as possible.
‘Service charges reflect actual costs, and we don’t make a profit from them. However, inflation, rising building insurance premiums, and the costs of complying with new building safety regulations have led to increases.
‘We recognise that more can be done to improve the administration of the service charge process, which is why we’ve launched a dedicated Service Charge Improvement Board to enhance transparency and accuracy.
‘We’re also taking action to drive down costs by bringing more services in-house, renegotiating contracts, and holding managing agents to account.
‘We remain fully committed to working with residents to address concerns and ensure service charges are fair, transparent, and good value for money.’
Peabody highlighted the letter shared by the G15, while saying the housing association did not want to charge residents more than necessary but were dependent on external managing agents as charges go up ‘across the board’.
A spokesperson for the Ministry of Housing, Communities and Local Government said: ‘Far too many leaseholders and social housing tenants across the country are being asked to pay unreasonable and extortionate charges.
‘All service charges should be reasonable by law, and we will keep any action towards landlords under review.
‘We will also consult this year on implementing measures in the Leasehold and Freehold Reform Act to drive up transparency of service charges and hold landlords to account for the money they spend.’
