Widespread Overcharging on Service Charges Confirmed by Tribunal Cases

A survey conducted by the Social Housing Action Campaign (SHAC) has found that more than 63% of landlords challenged at the First-tier Tribunal (FTT) were found to be overcharging on service charges. The figure rises to over 66% for housing association landlords, indicating a significant issue across both private and social housing sectors.

Service charges cover costs for communal services such as cleaning, lighting, and heating, and are paid by private tenants, shared owners, and leaseholders. While some private tenants pay these charges as part of their rent, others pay them separately. Shared owners and leaseholders typically pay service charges in addition to mortgage or ownership costs.

Profile of Landlords and Tribunal Cases

SHAC reviewed 238 tribunal judgements concerning service charges. The majority of cases were brought against private landlords or their managing agents, accounting for 79.4% (189 cases). Housing associations were involved in 13.9% (33 cases), and councils in 6.3% (15 cases).

More than 63% of private landlords were found to be overcharging, while 40% of councils faced similar findings. These figures suggest that overcharging is a widespread problem affecting various types of landlords.

Landlords Often Admit Overcharging Only After Tribunal Claims

SHAC highlights that many cases are settled out of court, with landlords admitting to overcharging only after a tribunal claim has been lodged. The group also reports that landlords frequently threaten claimants with demands for compensation to cover legal costs if the tenant or resident fails to prove overcharging.

This practice can deter tenants and residents from challenging unfair charges, exacerbating the financial burden on those affected.

Financial and Psychological Impact of Service Charge Abuse

SHAC secretary and cofounder Suzanne Muna described service charge abuse as “both financially and psychologically devastating” for tenants and residents. She emphasised that the cases reaching tribunal represent only a fraction of the problem, which has persisted for over a decade without sufficient government intervention.

“This abuse has been going on under the noses of one housing minister after another for more than a decade,” Muna said. “All have chosen to turn a blind eye. It is a massive disservice to tenants and residents who pay directly, and is also draining the Housing Benefit budget when it is used to pay for services which are non-existent. We urge the government to act now along the lines we recommend.”

Calls for Legal Reform and Tenant Protections

SHAC is calling for reforms to protect tenants and residents disputing service charges. One key proposal is to allow disputed service charge payments to be paid into court, preventing landlords from marking tenants as in arrears while requiring landlords to prove the legitimacy of charges within a set timeframe. If landlords fail to do so, the funds would be returned to the tenant or resident.

The group also recommends expanding and funding Legal Aid to cover housing-related cases and introducing stronger sanctions against landlords who breach service charge rules. Currently, tenants and residents have representation in only around 20% of tribunal cases, compared to 60% for landlords and managing agents, highlighting an imbalance in legal support.

What This Means for UK Landlords

These findings serve as a warning to landlords and managing agents to ensure service charges are fair, transparent, and compliant with regulations. Overcharging not only risks tribunal challenges but also damages landlord reputations and tenant relations. Landlords should review their service charge practices and maintain clear, justifiable records to avoid disputes and potential sanctions.

Suggested internal link anchors

• service charges
• First-tier Tribunal
• private landlords
• housing associations
• leaseholders
• Legal Aid for tenants
• housing benefit
• tenant protections
• managing agents
• disputed service charges

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/