As discussed in a recent opinion piece, service charges are a significant contributor towards dissatisfaction. But a recent First-Tier Tribunal (FTT) ruling takes the conversation in an entirely new direction.

Here, Shared Ownership Resources founder, Sue Phillips, talks with shared ownership leaseholder, Jennifer Docherty, about the FTT ruling on Viridian Apartments, and what it means for entrants to the shared ownership scheme.

Sue Phillips: Jennifer, you and your neighbours took your landlord, Notting Hill Genesis (NHG), to the FTT. Why?

Jennifer Doherty: We were being treated unfairly, and I wanted to fight it. Not just for us but also in hope of setting a precedent that would help other people in a similar situation. My neighbours and I purchased shared ownership flats and agreed to the estimated service charges, which appeared reasonable at the time. But, since 2012, NHG has forced us to pay for service charges for the private side of the development, which we could not access from our affordable housing side.

SP: Can you give me some examples?

JD: Since 2012, social housing leaseholders were forced to pay for the costs of a 24-hour concierge for the private flats, a block and a half away from our simple or ‘poor door’ entrance, and to maintain a central garden, even though we did not have access to those services and benefits. When we purchased our flats we were told that we were not allowed to use the central garden or the services of the concierge, and agreed on the basis that it would keep our service charges low. Now our service charges are as high as the private side, for shared ownership flats built with cheaper materials.

As a result our service charges have increased by three-fold since 2011, and now cost £7,000 per year for a flat with a floor area of only 739 square feet.

SP: Why did NHG start passing on costs for the luxury side of the development?

JD: What came out during the FTT process was that NHG had signed a poorly drafted lease. They had agreed a headlease that obliged them to pay costs that neither they nor their shared ownership leaseholders derived any benefit from. Incredibly, when they discovered this discrepancy, instead of challenging it with the parties of their headlease, they went after the ‘little guys’ and imposed sweeping additional costs on their ‘affordable’ housing residents.

As the FTT pointed out in their ruling: “The management fees charged to the applicants are in excess of those charged to Blocks V2 to V7 although the services and amenities provided under the sub-leases are considerably less”.

SP: What financial impact has this had on you and your neighbours?

JD: When I bought my first share in 2008, my annual service charges were around £1,200. But now they’re over £7,000.

What was the financial impact? Most of us managed to staircase to 100%. However, it would have been tremendously helpful to pay down our mortgage considering rates were almost at 10% at one point. Instead, after paying these extortionate service charges, not to mention spending £35,000 on legal fees during a cost-of-living crisis, we are financially – and emotionally – tapped out.

SP: Could you tell me more about being emotionally “tapped out”?

JD: The time I have spent over the last 12 years on organising this effort, leading 25 flats and communicating with our legal team, has taken away from everything else in life that is more meaningful and pleasurable – such as spending time with family and friends, working on my PhD, or watching paint dry (kidding).

SP: What have you learnt during the FTT process?

JD: The main take away for anyone protesting a service charge is to consistently have a written record that you are ‘paying the service charges under protest’. If people end up taking their landlord to the FTT, even if they win, reimbursement of past service charges will only be considered if they communicated that they were paying under protest.

NHG argued that since we paid the service charges, we had accepted them. But, if we had not paid them, then they could seek to re-possess our flats.

Finally, it is best if you can get a group together. I never could have accomplished this on my own given the costs.

SP: Has anything taken you by surprise during the FTT process?

JD: Yes. My neighbours and I thought there was a moral argument at stake. As I already mentioned, we imagined we had the opportunity to set a precedent that could benefit thousands of other people who’d bought a shared ownership home. But it doesn’t work like that. Even if we’ve won a battle, we haven’t won the war.

The FTT rejected our argument that it would be morally wrong to require us to contribute to costs for parts of the development we had no access to. In the end, it all came down to the contractual lease terms.

We bought into shared ownership believing in an affordable home ownership dream, but it has largely been one big nightmare. Shared ownership buyers, beware.

SP: What was the FTT ruling?

JD: The FTT found in our favour for both cases. The FTT agreed that our lease only allows NHG to recover costs as specified in our lease: the costs of services, repairs and maintenance which are directly associated with our block and our individual balconies or terraces. In a rather nasty response to our bringing our case against NHG to the FTT, NHG brought a counter case to change our leases to enable them to charge us for the service charges pertaining to the private side significantly increasing our legal costs. They lost this second case as well.

Unfortunately for us, NHG are seeking to appeal both case rulings and we may need to go back to the tribunal. In any case it will probably cost more money. I am so sad that this is not over.

In a statement in response to the FTT ruling, Notting Hill Genesis, said: “We have exercised our right to seek an appeal against the tribunal’s determination and are awaiting a decision from the Upper Tribunal as to whether this application has been accepted. We will continue to engage with our leaseholders and the leaseholder-run management company throughout this time.”