Housing

Stop service charge 'scam' costing people thousands, Tories told: 'It's dishonest'

Housing associations are hiking service charges as a way to get around rent increase limits, says former minister, urging Michael Gove to act

The Conservatives can stop service charge ripoffs before the next election, said Gavin Williamson. Image: Simon Dawson/No 10 Downing Street/Flickr

Ex-minister Gavin Williamson has called for the Tory government to cap service charge increases and stop a “collective scam” being played on social housing residents.

The former minister said housing associations are hiking service charges as a way to get around rent increase limits, while making tenants foot the bill for longer-term improvements that drive up the value of properties for their owners.

Housing secretary Michael Gove can make changes without legislation and should enforce a cap along with a code of practice on housing providers, said Williamson.

“To me, it feels like a bit of a collective scam, that housing associations have felt they can get away with,” Williamson told the Big Issue. 

“You seem to see a systemic approach by housing associations, where all of their service charges are considerably above what the rent increases are. To me, it seems to be almost a quiet policy decision that housing associations have taken: we can’t get extra money through here, so we’re going to see if we can get money elsewhere.

“It seems to be getting increasingly to a point where anything that is done to a building, this is almost then a service charge.”

Service charges are paid by tenants and leaseholders, often to a housing association or management company, to cover maintenance, insurance or building works. While social rent increases are capped at 7.7% this year, service charges can be increased by any amount – although councils and housing associations are “encouraged” to stick to this limit.

As the Big Issue has reported, tenants have been fighting back against dubious service charge increases, including an estate in Newham, East London, where fees rose from £3,500 to £4,500 in the space of a year. In some cases, residents have been charged £300 to change a lightbulb.

Tory MP Williamson spoke of a block in his South Staffordshire constituency, where elderly residents had their service charges increased from £25 to £48 a week – a 93% hike totalling almost £1,200 in a year.

On Williamson’s visit, he saw a mock fireplace had been installed into a common area. “It was an impressive mock fireplace, but there was no need or requirement for the said mock fireplace, but they’d all had to pay for said mock fireplace,” the former fireplace salesman said.

This reflected a wider problem facing tenants, he said. “They are tenants of the property, but they are being asked to enhance the value of the actual property, which of course is then used by the owners and the housing association to leverage more money out of them, because it’s increasing the value of the total asset,” Williamson said.

“I think there’s a little bit of dishonesty there in terms of that approach. There doesn’t seem to be enough clarity from government in this area, that actually is holding housing associations to account. It could be a relatively small move that could have an enormous impact on some of the most vulnerable people in society.”

Frustration has grown over a lack of progress on housing reform, despite Conservative promises. A long-awaited ban on no-fault evictions is, according to Gove, waiting for court reform, while plans to reform leasehold are yet to have a third reading in parliament.

In a backbench intervention, the former education and defence secretary – who was ordered to apologise in September 2023 after an inquiry found he had bullied former Conservative chief whip Wendy Morton – called on Gove to take action to stop residents being ripped off. Any increases above inflation should be granted a clear exemption to avoid a “creep, creep” of ever-rising fees.

“I think the only way you can do it, is Michael [Gove] has to take the action that’s required, in order to make sure there is a code, what is acceptable, what isn’t acceptable. And if there is going to be rises above inflation, there’s got to be a clear set of rules as to what can actually justify that. If there is a cap being put on rents, there should be a cap put on service charges,” Wililamson said.

Michael has always been a zealous reformer and someone who wants to try and change. Well, actually, you are going to be able to do something that will benefit the lives of literally hundreds of thousands of people, almost overnight. Do I think this is something that can be done before an election? I absolutely do.”

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