Residents living in properties owned by L&Q are understandably shocked. They are staring down double-digit increases in service charges, with at least one municipality seeing service charge increases reaching 41%. This explosion is just a piece of a larger phenomenon. Over the last two years, increases in service charges have been substantial enough for tenants to take to the streets in protest and express troubling concerns over transparency and affordability.
L&Q, a charitable association responsible for managing numerous residential properties, announced a 15% increase on top of existing service charges. The organization argues that this change is meant to ensure a healthy financial cushion and protect residents from unforeseen costs. Tens of thousands of tenants across the country are still battling rising expenses that break their bottom lines.
One of the residents, referred to as DS, was given an 80% increase in his service charge, reported DS. It has increased from £135 to £242 per month just in the period since he purchased his flat two years ago. L&Q welcomed the fact that 25% of this increase is due to admission of previously underestimated expected spend. In DS’s estate alone, L&Q had overestimated the costs by £255 per household last year.
MB, another resident, finds herself in the same predicument. Their service charge has increased dramatically, having gone up by 41% from £182.46 to £257.58 since they first moved in. Yet her salary had only increased by 3 percent over those years. On top of that, the increasing expenses have her feeling strapped for cash. Further complicating poo-gate, we’ve seen the cleaning bill on her estate soar by 173%!
Complaints about service charges have increased by 100% since 2020, with 65% of those complaints in favour of the consumer during the most recent financial year. Richard Blakeway, the ombudsman, highlighted the importance of transparency, stating, “Our investigations show that landlords are not always as clear and transparent about charges as they could be.” He added, “With the reports of significant increases to service charges, it is hugely important that landlords can show they have been fair, reasonable and open.”
The jump in service fees isn’t just an unfortunate one-off. On DS’s estate, the cost of upkeeping a communal water pump has increased by a jaw-dropping 378% from last year. These drastic operational increases have led many to question whether L&Q is managing the operation itself or financially planning well.
Adrian Shaw, head of rent and service charge at L&Q, accepted that insurance, materials and service charges have gone up. He stated, “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.”
With these issues at the forefront, L&Q is directly addressing increasing concerns. They are developing better processes for earlier and more effective collaboration of building owners and managing agents on future developments. Shaw noted, “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.”
London & Quadrant has recently begun a review of its affordability checks for incoming tenants. This decision is intended to address rising service costs. This concerted effort to do so is an important step towards protecting future tenants from being surprised by soaring fees.
L&Q recently stated it does not make a profit on service charges. Major fare hikes quickly drew fire and raised the ire of advocacy groups and watchdogs from the city’s citizenry. In just the past year, the ombudsman has ruled against L&Q in over 86% of cases brought by leaseholders. This is a troubling sign that accountability is urgently needed.