L&Q sees the flaw in its 80% price rise

Last month I reported how residents on an estate run by the housing association L&Q had seen their monthly service charge rise by nearly 80% in two years.

Leaseholder DS feared he might be priced out of his home after his charges jumped by £66 a month this financial year, following a £38-a-month rise in 2023.

Half the latest increase was due to maintenance of the estate’s water pump, which L&Q decided would cost 378% more than the previous 12 months, despite the fact it had just been replaced. It stuck to its guns when I asked why a new pump should cost so much more to run than an elderly, ailing one. It claimed, illogically, that it had based the figure on average costs over the past three years to spare residents unpleasant surprises.

Pressed further, it’s had sudden enlightenment. It did not realise it had installed a new pump, it now claims. Having remembered this enormous investment, it’s informed residents that their bills will plummet. The pump will cost £1,398 a year to service, instead of the £9,600 they were quoted. DS’s monthly charge will therefore drop by £34 once he’s cleared the arrears that mounted when the costs exceeded his disposable income.

The blunder has given L&Q a brainwave. Henceforth, it says, infrastructure upgrades will be taken into account when calculating future service charges.

Adrian Shaw, head of rent and service charge at L&Q, says: “We’re very sorry for any stress or inconvenience this unintentional miscalculation caused. We investigated when concerns were raised, and have applied credits to residents’ accounts for any overpayments already made.”

Service charges are an opaque business. Leaseholders can demand evidence of costings, and can complain to the housing ombudsman if these are not provided. Significantly, it found against L&Q in more than 86% of cases brought by leaseholders. To challenge the reasonableness of service charges, leaseholders must go to a first-tier tribunal.

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