L&Q has raised my flat’s service charge by 41%. I can’t afford it

I own 35% of a one-bedroom shared ownership apartment run by the housing association L&Q. Since completion, 15 months ago, the ­service charge has increased by 41% from £182.46 a month to £257.58, though my salary has only gone up by 3%. There is no attempt in L&Q’s letter to justify this extortionate hike, which is creating enormous financial and emotional stress.

MB, London

DS, who is a leaseholder on a ­different L&Q estate in London, informs me that his service charge has risen by 80% from £135 a month to £242 since he bought his flat two years ago. “If a local authority wanted to raise council tax this much in two years there would be scrutiny and accountability, and other sectors would be regulated by the market,” he writes.

“But L&Q’s housing provider ­status seems to make it unaccountable to anyone. There doesn’t seem any way of establishing how the figures are calculated, or getting them reduced. At this rate my flat will become unaffordable. I feel so isolated.”

The shocking fact is that while shared ownership properties are supposed to be an affordable way on to the housing ladder, purchasers are rigorously means-tested to ensure they can fund the commitment, and rents are strictly controlled, there is no limit on how much can be levied in service charges. Nor is there transparency in how costs are calculated.

A recent parliamentary inquiry into the problem was told by Alison Wallace, a senior lecturer in social policy and housing at York University, that charges were “opaque” and “often uncontrollable”.

The more I delve into the bald costings provided by DS, the more baffled and outraged I become.

The charge for the maintenance of the water pump on DS’s estate has risen, for instance, by 378% since last year. The cleaning bill has soared by 173%.

Both are estimates based on what L&Q calls “historic costs”, despite the fact the water pump is new and already paid for. MB says she has not been provided with a detailed breakdown at all.

L&Q tells me it owns the head lease for the affordable homes in MB’s building, rather than the ­freehold, and that its service charges are based on annual budgets provided by the freeholder’s managing agent.

It then claims blithely that 25% of this year’s increase is because it (L&Q) had invoiced residents in advance of the agent’s budget, and had significantly underestimated the predicted expenditure.

It has plonked an extra 15% on top of that, too, to keep the coffers flush or, in its words, to protect residents from shock bills.

What this boils down to is residents such as MB, who bought via shared ownership early last year, were lulled into a false sense of security by inadequate forecasts and are now, without warning or explanation, being sent the very shock bills they wished to avoid.

L&Q says it underestimated the costs on DS’s estate last year, too, to the tune of £255 a household, even though it is the freeholder and sets budgets. There are no planned building works for either estate.

L&Q says that it is a charitable association and does not profit from service charges.

“Whilst the reasons behind changes in service charges at individual buildings will vary, the costs of insurance, procuring materials and providing services have generally increased in recent years,” says Adrian Shaw, head of rent and service charge at L&Q.

“We’re looking at how we can simplify the way we work with building owners and managing agents on new developments where we are not the freeholder, so that we have more control over the services residents must contribute towards.

“We’ve also started a review about how we carry out affordability checks for new residents to reflect the rising cost of many services.”

It tells fearful residents they can chat to its money advice service.

It is possible to challenge service charges under the Landlord and Tenant Act 1985, and the housing charity Shelter has a useful guide on how to go about it.

Leaseholders have a right to demand a breakdown of bills, and evidence of costings and expenditure, and can complain to the housing ombudsman if these are not provided.

The number of complaints to the service has doubled since 2020 and 65% were upheld in the last financial year, suggesting that freeholders are falling short of their responsibilities. Significantly, the ombudsman found against L&Q in more than 86% of cases brought by its leaseholders.

“Our investigations show that landlords are not always as clear and transparent about charges as they could be,” the ombudsman, Richard Blakeway, tells me. “With the reports of significant increases to service charges, it is hugely important that landlords can show they have been fair, reasonable and open.”

To challenge the reasonableness of any service charges, leaseholders must go to a first-tier tribunal.

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