Tower Hamlets Community Housing: Association overcharged tenants by ‘thousands’, tribunal found

An east London housing association has been granted permission to appeal a tribunal decision after being found to have incorrectly charged residents in one of its blocks for the last 17 years.

Tower Hamlets Community Housing (THCH) was found in May by a housing tribunal to have been overcharging leaseholders in Painter House, Shadwell.

THCH is in the process of negotiating a potential merger with another east London housing association, Poplar HARCA,

The tribunal found that residents of Painter House, which is on the corner of Sidney Street and Commercial Road and is connected to another block, Peter House, were paying a higher rate than was stipulated in most of their leases. Some residents have lived there since it was built in 2007.

One of the block’s residents, Peter Mengerink, told LondonWorld he estimated he had been overcharged around £6,000, and was struggling to get the full refund back from THCH.

The housing association has since been granted permission to appeal the decision on five grounds, with a potential for two more to also be allowed at a hearing in the new year.

What did the tribunal find?

In his decision notice, Judge Donegan wrote THCH had been “demanding incorrect service charges” from leaseholders, which they had been paying “for many years, without demur”.

Rather than being charged 1/38th of the total service cost, as was detailed in most of the residents’ leases, THCH was instead demanding 1/24th, due to there being 24 flats in the block.

The reasoning for the initial 1/38th, said THCH, was due to there being 38 flats in the wider estate, which also includes those in Peter House.

This was contested by the leaseholders, partly due to the Peter House flats being intended to be used as social housing, and so not liable to contribute towards the service charge, but also because THCH’s head office is located beneath Painter House in a commercial unit, meaning it could plausibly cover the shortfall as it would be using some of the services themselves.

Mr Mengerink’s particular case was even more peculiar, with his signed lease stating he would pay 1/38th, while his draft lease instead dictated his charge would be a ‘fair proportion’.

THCH had applied to the tribunal to vary the leases to allow for them to read 1/24th, though this was refused by the judge.

The nature of the incorrect charging means that Painter House leaseholders were potentially subsidising services used by THCH.

As part of the tribunal process, THCH’s solicitors provided documents including an invoice for July 2019 to December 2019 from water provider Castle Water.

The document detailed total costs of £3,159. The service charge to Painter House residents for 2019/20, meanwhile, also included a water bill, of £3,159.20.

In his judgement, Judge Donegan, wrote: “The applicant’s solicitors provided four additional documents on the second morning of the hearing, being a complete copy of the Castle Water invoice, a sample tenancy for Peter House, the applicant’s service charge guide for leaseholders and a printout of the service charge pages on their website. Mr Blakeney (THCH’s solicitor) provided additional information about the water charges, based on further instructions.

“Historically there were separate meters and bills for the Commercial Unit and residential parts, with the applicant paying the bill for the former. It appears the commercial meter is no longer in use, as there is now one bill for the entire Development.

“The applicant paid 7% of this bill in 2016/17 and 2017/18, for the Commercial Unit. They are still investigating the apportionment for 2018/19 onwards and Mr Blakeney had no information on this or the reasons the commercial meter was decommissioned.”

Mr Mengerink told LondonWorld that THCH has since refunded parts of the water bill, though he is unsure whether it was for this particular year. The tribunal is unable to demand THCH refund the amount each resident was overcharged

Judge Donegan did grant another part of THCH’s application, allowing the replacement of the term ‘building’ with ‘block’ in clause seven of the leases, due to inconsistencies in the terminology used.

A new hearing

Since the tribunal’s decision earlier this year, THCH has requested permission to appeal against the finding on seven grounds.

In July, Judge Donegan granted such permission on five of the seven. And in August, following a further request from THCH, the Upper Tribunal directed the remaining two grounds to be considered at the hearing itself.

Mr Mengerink told LondonWorld the case will be heard sometime between January and April next year.

In the meantime, THCH residents are due to hear this autumn whether a proposed merger between THCH and another east London housing association, Poplar HARCA, will go ahead.

Residents, including some of those at Painter House, have already raised concerns about what a merger would mean for them, in-light of rapidly rising service charges and claims of poor maintenance.

A THCH spokesperson declined to comment on the tribunal’s initial decision, due to the ongoing legal case.