Tenants fight back against rising service charges

Walking around the balconies and stairwells of her East London estate, Nasima Begum has no shortage of things to point out. The rubbish chute is blocked, so unusable and pungent she has to keep her kitchen window closed. A drain empties in front of a neighbour’s front door, spilling waste water across the pavement and onto the car park. Bits of the concrete stairs are crumbling, chunks threatening to fall onto the head of somebody bringing some shopping up or coming home from school. Things aren’t going well at Robert Sutton House. For the privilege, she has been told her service charges are going up to more than £2,000 a year. Or they would be if she was paying.

“They’re just extorting money from us. It’s extortion as far as I’m concerned,” she said.

Begum has been on service charge strike for three years, refusing to pay the fees levied by her housing provider to cover services like maintenance, security, pest control and repairs. Like Begum, residents of Tower Hamlets Community Housing (THCH) on strike are livid at paying increasing charges while their homes are falling into disrepair. They feel they’re paying a premium for substandard services – and have little say in the matter.

“We’re a local landlord and we care about our community. We provide safe, affordable, and well-maintained homes. And we listen to our residents,” is how THCH describes itself on Google. It is not how residents who spoke to The Big Issue feel.

The residents of THCH encompass social housing tenants, leaseholders and shared owners. Nearly three quarters are Black or ethnic minority. This is not reflected in the staff (58 per cent) or the executive and board (25 per cent). Fellow THCH resident Peter Mengerink has lived in his two-bedroom flat above THCH’s offices since 2007 thanks to shared ownership, but in recent years has started digging deeper.

“I really enjoyed my time here up until 2017, Grenfell. Things really changed drastically. It was the first time I really noticed how badly the landlord treated us, the disdain they had for us,” he says, sitting on his sofa. Mengerink hasn’t been paying service charges since March 2021. It’s the only way, in his mind, to get accountability. “I thought the only thing I can do, since I don’t have the money to take them to court, is stop paying,” he says.

How are service charges worked out? Well, it turns out residents have the right to know. Under section 22 of the Landlord and Tenant Act, leaseholders can request the documents relating to their service charges. By law, the landlord or housing association must make these available for inspection. Typically, they’re a tangle of invoices and bills.

Opening up his laptop, Mengerink shows me the result, zooming in on the 2019/20 year. He talks me through invoices that, he says, don’t match the charges or simply don’t make sense. There’s a £3,159 water bill for the whole building – including the THCH offices – paid only by the residents. He believes leaseholders across THCH are paying a disproportionate share of a £324,701 building insurance bill. There is a monthly £8,273 bill for bulk rubbish collection. Mengerink asks why this is needed when the council can provide bulk rubbish services. The council does so for free, twice per year per resident. For fire safety, he has calculated his building’s total cost as £203 for a year but shows me residents were charged a total of £320.

In a way, he acknowledges, it’s like a second job. “I spend a lot of time on it, reading up on the law,” he says. As we speak, Mengerink is preparing for a tribunal with THCH, where he hopes he will find clarity on exactly how much of the total bills he is expected to pay.

“There are so many mistakes in there. You’ve seen the regulator noticed the other day and said their accounting is terrible, and it shows, you know,” he says.

Housing conditions here have been in the headlines: a fatal fire in an overcrowded flat a stone’s throw from Begum’s estate revealed at least 18 people had been living in a three-room flat. The council has launched a criminal investigation and pledged to take Tower Hamlets Homes, which leased the building, back into council control. Pressure is building for residents. Rents in the social housing sector are regulated and typically will rise every April by one per cent above the inflation rate in the preceding autumn.

Soaring inflation meant tenants would be facing an 11.1 per cent rise this month, but Chancellor Jeremy Hunt announced in the Autumn Statement that rent increases would be capped at seven per cent. However, service charges, which residents pay to cover communal energy bills and other services housing associations are obliged to provide, are not capped and can rise by an unlimited amount. There has been no such support to help tenants with service charges.

Some THCH residents are striking to force change and want their houses to be managed by the council again. Others just want to pay their fair charges and see a co-op as a good endpoint. Either way, they’ve joined forces, having to take on the burden of sticking up for themselves. Their fight, in a corner of East London, has been raging for two years. But as the housing crisis intensifies, they are increasingly less alone. A growing wave of social housing tenants are fighting back. Along the way they’re discovering the power they have, and the toll of standing up for decent homes.

A service charge strike wave, as the Social Housing Action Campaign (SHAC) has dubbed it, is now in full swing, with six groups of residents around the country withholding payment of rent or charges. Last week 30 households from an estate in Newham, also in East London, began a partial service charge strike after residents claimed charges rose from £3,500 to £4,500 in the space of a year.

“Service charge abuse has been going on within the housing association sector for years, and has reached a point where tenants and residents are no longer prepared to tolerate it. It is one of the top two causes of complaints from our members, often combined with a declining standard of service and an increase in disrepairs,” said Suzanne Muna, SHAC secretary.

“We have seen evidence of tenants and residents being charged upwards of £300 to change a lightbulb, £9,000 for communal electricity in a block of just seven flats and payments for public spaces, lighting and waste removal. There have been charges for lifts where none exist, and concierges that are absent. Another example was a charge for a permanently flooded car park that couldn’t be used. Shockingly, it is the largest and most well-resourced landlords that have the worst track record.”

In recent months, residents have joined forces to try to uncover how widespread the practice of hiking up service charges or overcharging residents is. Social justice platform Find Others has been asking residents to tell them about their experiences since January.

In that time 200 people have contacted the platform reporting nearly £2 million in overcharges from across England over multiple years, ranging from incorrect billing and double charging to inflated fees for basic services. Find Others is aiming to gather data from at least 1,000 residents to try and uncover a national picture of the problem. Some of the residents who have contacted Find Others have been reimbursed by housing associations for six-figure overpayments.

Georgina Hollis, co-founder of Find Others, said: “The fact that so many residents have come forward to report overcharges shows the extent of the problem and the urgent need for greater transparency and accountability in the housing sector.” She urges all housing association residents to use the platform.

Michael Savell, who lives at Halton Court, a 170-flat housing scheme for over-55s in Kidbrooke, south-east London, has been complaining about service charges since he moved into the property in 2013. He discovered that residents were paying for communal gas in 2016, paying £20,000 a year collectively. The problem was simple: the property uses no communal gas.

The error was repeated in the following years and it took until last year for the housing association, previously Optivo before a merger to become Southern Housing Group, to reimburse £143,000 collectively to residents. The housing association said it had inherited service charge issues in the 2017 merger and was “incredibly sorry for any distress caused by the charging inconsistencies previously made”.

“It’s been an absolute nightmare for years,” said Savell, a 73-year-old retired balloon shop owner.

“We’ve had £318,000 back and I reckon there was another £180,000. We’ve just got next year’s bill, and the service charge has gone up 13.8 per cent. Just looking at it you think, this is crazy.”

John O’Rourke, a retired IT professional, has also managed to get a reimbursement from his housing association for the 28 flats at Salcombe Lodge in Gospel Oak, north-west London. “What’s happened with us is that for four years we received budgets that were cloud cuckoo stuff,” said O’Rourke.

“In 2019/2020, the budget went up by 40 per cent and we were a bit concerned because there wasn’t really much justification provided.”

O’Rourke later found that Salcombe Lodge residents were being overcharged £1,000 per flat each year and managed to win back a reimbursement from One Housing association. Overall, residents have had to fight to claw back around £90,000, he added.

“They have given the money back. But naturally enough, there are no apologies or no excuses and they haven’t used the information that they have gleaned from the certification process to amend the way they do their budgets,” said O’Rourke, who has lived at the property for 32 years. Both retired residents told The Big Issue they had the time to dig into the issue and recover the funds, but that is not a luxury everyone living in social housing can afford.

A spokesperson for One Housing said: “We want to sincerely apologise for overcharging service charges for residents at Salcombe Lodge. “In the current financial climate, we know that any incorrect billing may cause concern, but we believe a solution has now been offered.  Our teams remain on hand to provide support to anyone who may need it.”

Savell faced similar roadblocks: “It isn’t easy to get any information out of the housing associations,” he said. “I couldn’t get them to talk to me for a long time until I put in an application for a first-tier tribunal. It was only then I got a call from the head of their legal team to say, ‘Can we discuss it?’

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There is a movement to connect social housing residents to fight back. Now aided by social media and inspired by the campaigning of Kwajo Tweneboa on the state of social housing, residents are joining forces through Find Others and the Social Housing Action Campaign to take on housing giants.

“You have to spend hours reading through rubbish, challenging, dealing with stupid systems that they have and being treated with contempt, it does wear you down,” said O’Rourke.

“For many years, they have been overcharging. I wouldn’t have known that the people down the road with the same landlord had been overcharged because there weren’t any organisations where you could share information.

“Now that social media’s used so much, an awful lot of people are realising that they have been ripped off and it’s not just an error made by somebody putting the wrong information into a computer system, it’s systemic. We’re trying to see how we can organise to not be fobbed off.”

Back to East London, where Nasima Begum moved into her flat in 1994 as a leaseholder.

“God knows how many times I’ve had water leakages from the property above,” she says. Recently, she had to spend £7,500 refitting it thanks to the damage, while THCH has offered some money as a “goodwill” payment. All around her flat there are signs of water damage. And in March, she received a letter telling her what her costs would be from April 1. She thinks these don’t match up.

For example, she has been billed £98.47 a year for “estate security and concierge”. But her block does not have a concierge. She also bridles at the £148.09 charge for “estate maintenance and horticulture” – pointing to a small, drab, enclosed patch of grass and trees. “What horticulture?” she asks.

THCH says Begum pays only for what she gets – a ParkGuard security service, and maintenance of trees, grounds, and roads on the estate. But the lack of clarity has pushed her to fight back.

“They need to agree or they need to say these are willy-nilly bills. They’re charging us for something that doesn’t exist,” she says.

When the pandemic took hold in 2020, Begum decided things couldn’t keep on in the same way. She and two others started knocking on doors and found neighbours were receptive.  Justice for THCH residents, their vessel for fighting back, was born.

“We could see the problems people were having even from before, but it was during the pandemic, when we saw these really hiked-up bills, that we felt we had to do something about it,” she says.

Begum hadn’t done anything like this before, and worried whether she’d get threatening letters or be taken to court. She’s not against paying service charges, but says: “I want to see them come down first. I’m not saying I won’t pay my service charges, I’m saying I will only pay for what I’ve had. Not for the services I haven’t.”

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Also on strike in nearby Charles Dickens House is social housing tenant Sumaiya Joly. As we speak, she sends a video of what had happened a few hours earlier. She woke up to discover water burst through her bathroom ceiling, causing it to partially collapse.

“My kid was screaming because it’s all over the floor,” she says.

Joly has been on service charge strike for a year, and wants to know why charges have increased so much. “We didn’t see any service provided,” she says.

“We will pay, but you have to tell us why we are paying this extra money.”

THCH says it is “continuously” improving the service charge process, and is working to provide more transparency on the costs. It says social tenants in Charles Dickens House pay less than the cost of delivering services, and that it has consulted residents on whether to remove optional services, but was unable to due to a low rate of response.

Those who do not pay service charges, it says, are in breach of their tenancy or lease agreement. As tenants fight for their homes and peace of mind, the behind-the-scenes turmoil is becoming public. THCH is in deep trouble. After an investigation, the regulator of social housing in March spelled out the picture. THCH is “unable to meet the cost of its day-to-day activities”.  Its board “has not been managing its affairs with an appropriate degree of skill, diligence, prudence and foresight”.

As a result, the regulator downgraded its governance and viability rankings to “non-compliant”. THCH says this “does not reflect the quality of our services”, and that it is “committed” to improving financial resilience.

It says service charges are “directly linked to the costs of delivering services”,  while rents have been “capped” at a seven per cent increase, rather than the 13 per cent that inflation would have warranted. THCH is absorbing the difference itself.

The dial has been shifted on social housing in the last couple of years. Horror stories have shown shocking conditions at the Eastfields Estate in Merton, South London, and the death of Rochdale toddler Awaab Ishak from damp and mould has forced action from government.

The Social Housing (Regulation) Bill is now nearing its passage through Parliament, and it will give regulators more power to take action against landlords who are leaving tenants in terrible conditions and failing to act on complaints. While more is being done to protect tenants’ health, what will be done to protect their pockets, and help them protect themselves?

A report from July 2022 by Parliament’s Levelling Up, Housing and Communities Committee found that “the power imbalance between tenants and housing providers is one of the biggest problems facing the social housing sector today”.

One of its recommendations was that housing providers give tenants money to run independent tenants and residents’ associations. It’s a measure which could provide muscle to a battle residents are having to fight themselves.

A spokesperson for Tower Hamlets Community Housing told The Big Issue: “We recognise that some of our residents feel unhappy with the cost of our services. We appreciate it’s an especially difficult time and understand the increased financial pressures for many households. We offer a range of dedicated support and encourage any resident who may struggle to pay to get in touch so that we can help.

“We’re a not-for-profit housing association and invest our income into providing, managing, and maintaining homes and delivering services. Our service charges are directly linked to the cost to deliver services, and unfortunately, the cost-of-living crisis has had an impact on our charges. 

“As part of our commitment to transparency and accountability, we’re continuously improving our service charge process. We’ve provided more detailed information about each charge and its apportionment, carried out extensive reviews for some buildings and consulted with residents to offer the opportunity to remove optional services and their charges. 

“We welcome feedback from residents and are working hard to resolve historic issues. However, those who choose to not pay their service charge will be in breach of their tenancy or lease agreement, as we have a duty to our wider resident community to make sure that rents and service charges are paid. 

“The recent news on our regulatory downgrade does not reflect the quality of our services, which we have continued to prioritise, along with safety, despite financial implications. Significant building safety investment, inflation, a rent cap, the cost-of-living crisis, and a shortage of affordable homes is having a considerable impact on the long-term survival of housing providers our size. 

“We take the regulator’s judgement seriously and are committed to addressing its concerns to improve our financial resilience. It’s positive that the regulator is confident we have the capacity, capability, and resources to do that. We remain focused on providing good, safe homes and services to our residents in Tower Hamlets.”

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For more information on the Find Others campaign head to : findothers.com/campaign/servicecharges