Thousands of homeowners in shared-ownership properties are preparing legal action against the government due to soaring service charges. Many expected affordable housing to be a stepping stone to homeownership, but instead, they face unexpected financial burdens.
Service charges in these homes start at £250 to £350 per month but can later exceed £600. Some residents now pay as much as £8,000 annually. Rising service charges in affordable homes have left many struggling to keep up with costs.
The Social Housing Action Campaign (Shac) plans to submit a report to the National Audit Office (NAO). The group accuses housing associations of overcharging and providing inaccurate bills. If the NAO refuses to investigate, Shac will seek a judicial review.
An investigation uncovered shocking cases of overbilling. Residents at a former pickle factory in London pay steep service charges but must enter their homes through separate doors. Private residents enjoy concierge services funded by all tenants. Some shared-ownership residents have seen service charges jump by 83% in two years. Others have been charged excessive fees, including £1,218 to replace 14 light bulbs—an average of £87 per bulb.
Shac spokesperson Suzanne Muna criticized the lack of oversight. “Rising service charges in affordable homes are a serious issue, and no proper scrutiny exists,” she said. A review of property tribunal cases this year found that 70% of residents disputing charges had been overcharged.
Housing associations collected nearly £2 billion in service charges in the last year, a 15.8% increase. Some homeowners say their charges skyrocketed after purchase. Campaigners now demand new regulations to prevent steep increases once a sale is finalized.
At one development in Bermondsey, residents say they can no longer afford their homes due to rising service charges in affordable homes. Despite contributing to communal costs, they enter through smaller, less maintained entrances.
In another case, shared-ownership residents in Islington faced demands for over £7,400 annually. Some have received letters warning that non-payment could lead to eviction. Many fear they cannot sell their homes due to high service charges.
Marketing professional Wayne Baxter saw his monthly service charge climb from £337 in 2022 to £617 in 2024. “We are under extreme stress,” he said. “Had I known this, I wouldn’t have bought here.” He claims the housing association has not provided a clear breakdown of the costs.
Residents at various developments have stopped direct debit payments and are demanding proof of charges. Some have successfully challenged excessive fees. At a Peabody development in East London, a £2,280 charge for testing and replacing a lamp was reduced to £253 after residents disputed the cost. Other refunds included £49,085 for communal boiler expenses and £9,000 for gate repairs.
Shac is pushing for stricter laws on service charges, including penalties for landlords and housing associations that impose unfair fees. The Leasehold and Reform Act 2024 aims to increase transparency and give homeowners new rights to challenge service charges. The government plans to consult on these measures later this year.
A Peabody spokesperson said they sympathize with residents and are reviewing concerns. The NAO confirmed it would consider the submitted complaints. The Ministry of Housing pledged to hold landlords accountable and ensure all service charges remain reasonable.
As the battle continues, homeowners trapped in these situations hope legal action will lead to fairer policies and stronger protections.
Stay tuned to London Pulse News for more updates.
