UK

26 MPs Urge National Audit Office to Investigate Service Charge Payments to Landlords

By Suzanne Muna

A total of 26 MPs have signed a letter urging the National Audit Office (NAO) to investigate service charge payments made through the benefits system to
landlords in respect of service charges.

Research compiled by the housing campaign group SHAC over a number of years demonstrates that a high proportion of service charge accounts contain overcharges. The MPs’ letter has been shared with the NAO together with a letter from the Public Interest Law Centre (PILC) which is working with SHAC to end service charge abuse. The letter explains that “Housing associations [are] imposing often fictitious and/or excessive service charges, which, when covered by universal credit and housing benefit, burden the public purse without adequate scrutiny.”

The payments are managed by the Department for Work and Pensions (DWP) and amount to millions of pounds every year. Housing associations, for example, collect around £1.7 billion in respect of service charges annually, approximately half of which is met through Housing Benefit payments. Yet there is currently no scrutiny in place to ensure that landlord service charge demands are legitimate.

A bundle of evidence has been submitted with the letters to the Audit Office by lawyers working with SHAC which challenges the lack of action to ensure that public funds are only spent on reasonable and legitimately incurred charges.

Suzanne Muna, SHAC Secretary and co-founder said: “Over the years, SHAC has amassed a body of evidence on systematic overcharging by landlords. We have seen landlords charge for services provided by local councils which tenants and residents pay twice for because they are covered by their council tax. We have seen charges for lift maintenance in buildings where no lifts exist. We rarely see service charges that are 100% accurate, even though the amounts total thousands of pounds in some cases.

“Unfortunately, even when landlords are alerted to these illegitimate charges, it is often a long and drawn-out battle to get them to make refunds when these are conceded to, which isn’t always the case. Despite years of highlighting such cases, service charge abuse has only increased. It seems that landlords are incapable of putting their own house in order, and it now needs enforcement by a public body.”

Should the NAO refuse to investigate, SHAC will consider legal action as part of its wider campaign to highlight landlord service charge abuse.

Saskia O’Hara, manager of PILC’s Gentrification Project said: “There is an immediate need to scrutinise service charges made through the benefits system to ensure fairness for both residents and taxpayers. The National Audit Office is the appropriate body to conduct this review, and we strongly urge them to act on this now.”

Suzanne Muna is Secretary of the Social Housing Action Campaign, a campaign group linking tenants, renters, shared owners, and leaseholders living in homes owned by housing associations, councils and private landlords. It campaigns to improve housing conditions and to reduce the commercialisation of housing. More details of SHAC’s End Service Charge Abuse campaign can be found here. PILC is a law centre and registered charity which exists to challenge systemic injustice through legal representation, strategic litigation, research and legal education.