by Some of the UK’s biggest housing providers have seen annual service charges rise by thousands of pounds, putting residents in financial crisis, and Observer An investigation has been found.
Many residents who bought shared ownership properties built as affordable homes have been billed in recent weeks with increases of more than 40%. Some say they are unable to sell the properties because they now have “extortionate” fees and no limit to future increases. More than 1,000 people across the country are now threatening to refuse to pay.
In most cases analysis by the Observer, Residents say they have not been given detailed evidence to support the sharp rise in service charges. Many in shared ownership homes say service charges are now higher than their rents, with one expert warning a parliamentary inquiry that the rises are “often out of control”.
The investigation puts more pressure on the housing secretary, Michael Gove, who has been forced to scale back his plans for tenancy reform in a bill going through parliament. A spokesman for Gove told the Observer that “increases in service charges without proper justification are completely unacceptable” but that the new government bill would strengthen the protection for lessors”.
The housing ombudsman, Richard Blakeway, warned this weekend that there could be a need for a “fundamental rethink” of how shared ownership schemes, intended to give people the first step on the housing ladder, work.
Suzanne Muna, from the Action Campaign for Social Housing, said: “These are outrageous demands beyond anything reasonable, and bear no resemblance to the services provided. Abuse of service charges is widespread.
“Residents can’t move because potential buyers won’t want to buy a property with these service charges.” She said many residents were affected by the alleged abuse and asked ministers to intervene.
Labor MP Clive Betts, chairman of the Leveling Up, Housing and Communities committee, said people in affordable homes were facing “appalling” demands. “There is no clarity on what people are being charged for,” he said. “These are not affordable homes and there is a lack of proper shared ownership advice.”
Shared ownership properties have strictly controlled rent increases, but there are usually no similar limits on service charges. Residents who were required to meet strict eligibility and affordability tests when they bought shared ownership homes complain they can no longer afford them.
Residents in shared homes in Marson flats, part of the £2.5bn Elephant Park regeneration project near Elephant and Castle, south London, have been told they face a service charge rise of almost 40%.
The fees include paying for the running costs of the public facilities delivered by developer Lendlease, including a park and tree house, a community space in the park with a cafe, and a public roof terrace.
Amada Teruel Sanchez, 36, and her partner José Mellado, 47, now face a total annual charge of £5,633. Mellado said: “They did not tell us that we would be paying these fees. It’s a joke.”
Michelle Furber, 52, a primary school teacher and single mother who lives in Brighton, said her service charge in her affordable home, a shared ownership property, increased from £125 a month when she moved in to £417 a month from 1 April. , an increase of 234%. She also has a claim for £2,221 to help cover a shortfall in the 2022-23 budget.
“This is a newly built property so I have no idea why this has increased so much,” she said. “It’s very stressful.”
The Housing Ombudsman Service said it examined 85 complaints relating to service charges in share ownership properties in 2023-24 and found maladministration in 79% of cases. One of the highest annual service charges in the country is a shared one-bedroom flat in King’s Cross, north London, with a demand of almost £16,000, according to a BBC report.
“There may need to be a fundamental rethinking of how shared ownership works,” Blakeway said. “Too often we find ourselves standing up to complaints. This is often because fees are opaque and landlords have not provided transparent or detailed information to residents when challenged.
“There can also be concerns about the quality and level of service provided, which can lead to feelings of injustice, particularly with the increasing cost of living pressures many residents face.”
A parliamentary inquiry published by the equalisation, housing and communities committee last week warned that shared property ownership was a major failure to provide an affordable route to home ownership. Alison Wallace, a senior lecturer in social policy and housing at the University of York, said the inquiry service fees were “opaque” and “often unregulated”.
Gove said last year that he wanted to end the “feudal” tenancy system, but his ambitions have been scaled back in the tenancy and freehold reform bill making its way through parliament. Labor peer Baroness Taylor of Stevenage has described the bill as “virtually a gutted shell”.
The bill is intended to improve the management of service charges, with increased transparency. The proposals are also intended to ensure that relevant information and supporting evidence is provided for any increases to residents.
