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Marco Scalvini was thrilled to move into a shared ownership flat on a stylish development in south London. “I felt like I had won the lottery. The apartment was beautiful. It was central and near to the university [where I work]. The price was affordable … compared with the private market,” he says.
Scalvini, a lecturer, met the criteria for affordable housing: he was a first-time buyer and had been priced out of the capital’s housing market. But in the past year, his dream has turned into a nightmare. Peabody – the housing association managing the affordable flats in the development – has increased his service charge by 77%: he has gone from paying about £4,500 in 2023/24 to about £8,000 in 2024/25.
To make matters worse, in November, Peabody sent him a letter demanding £3,000 more because there had been “a shortfall” in the service charge for 2023/24. “I’m already struggling,” he says. “They have offered me a payment plan, but that’s just for the adjustment [for 2023/24]. Then there is the permanent increase [in my service charge]. There is no way I can pay … it is breaking my heart.”
Like other councils, Southwark insists developers sign up to planning agreements to ensure residents in affordable homes do not spend more than 40% of their household income after tax on housing costs, including service charges. But there is nothing to stop private management companies and housing associations from hiking up service charges after people move in. An email from Southwark council’s head of planning enforcement to Scalvini states: “The test of affordability is only carried out on the date of exchange of contracts.”
Scalvini, who is the acting chair of the block’s newly formed residents association, says the “affordable” flats in the development – a former Crosse & Blackwell factory – are now beyond the reach of people on low and middle incomes. “Everyone in the block is spending more than 40% of their incomes on housing. You need to earn between £80,000 and £90,000 to afford to live here [to stay below the threshold]. It is shocking.”
John Whelan, a theatre director, and his partner Alan Crookham, bought a one-bedroom flat in the development in 2021. Their service charge for 2023/24 is £4,029, compared with an original estimate of £2,687. “It looks like there is going to be another massive increase next year,” said Whelan. “How can you market something as affordable when it’s not affordable?”
The residents also complain they are paying for facilities used by better-off private residents. Shared ownership residents use relatively modest entrances into their apartments while private residents enter through gated, landscaped gardens, which are open to the public during the day. There is a concierge service at two private entrances of the development, which all residents are expected to contribute to through the service charge.
A budget breakdown supplied by the private equity-owned managing agents of the building, Rendall & Rittner, reveals that Scalvini and other shared ownership residents are paying for the concierge service as well as landscape and tree maintenance on the estate. “It is a total injustice … we are subsidising the services for private residents … it is outrageous,” he said. The entrance to Scalvini’s block has been labelled a “poor door” by the affordable housing residents on the development. “They insist they treat us all equally but they are denying reality,” said Scalvini. “Our entrance is on the street at the back of the building. The private residents’ entrance has a concierge. That’s a textbook definition of a poor door.”
He is frustrated Peabody has passed the maintenance bill from Rendall & Rittner to the shared ownership residents. “[Peabody] should advocate for us because these charges are not sustainable for affordable housing.”
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Some shared ownership residents are refusing to pay the service charges. Others are paying under protest. Peabody has sent letters and text messages demanding payment. Scalvini is worried he may eventually have to sell, but there is nowhere else he could afford in the borough: “It is driving me out of my mind. Everyone is in the same situation.”
Southwark council said it understood service charges can be “shockingly” high. “We want homes to be genuinely affordable to residents and support leaseholders in negotiations with their landlords to ensure charges are fair and available for scrutiny,” said Helen Dennis, Southwark’s cabinet member for new homes. “We have been exploring if we can do anything in planning to secure affordable service charges in perpetuity.”
Peabody said it never made a profit on service charges, and advocated on behalf of residents to ensure charges were calculated accurately and transparently. A spokesperson for Rendall & Rittner said: “At all our developments, we strive to keep service charges as reasonable as possible as we understand the pressure this puts on leaseholders. To this effect, we have raised our concerns with government over the pressure faced by leaseholders as a result of service charge increases.”
The property management firm said new requirements under the Building Safety Act, along with inflation and rising energy costs, had contributed to rising costs.
