Peabody leaseholders threaten action over soaring charges

A group of north London leaseholders are planning to take the Peabody Trust to court over rocketing service charges.

The bills have almost quadrupled in the four years since the eight leaseholders moved into the Islington block, which is owned by a private freeholder.

Peabody said the increase was necessary because the freeholder had not billed the trust for several years for services such as buildings insurance and water rates. The mistake was discovered and the trust was billed for the backdated charges when a new freeholder took over in June 2003.

The Peabody leaseholders, some of whom moved out of social rented housing and are on low incomes, bought 40% stakes in the flats but do not pay additional rent. The remaining flats are privately owned.

The charges for the central London flats started at £59 a month in 2001 but shot up to £165 last April. A fortnight ago, the Peabody leaseholders were hit with a £191-a-month bill for the new financial year. In addition, the trust billed them for an extra £1000 last September, which went towards the service charge debt.

The leaseholders said the rising charges were causing them financial difficulties and that they would never have moved into the block if they had known the charges would rocket. One of the leaseholders, Brian Burns, said: “We cannot sell because nobody on a low to moderate income could afford it now.”

I wouldn’t have moved out of secure accommodation if I had known the charges

Brenda Keneghan, leaseholder

Another leaseholder, Brenda Keneghan, said: “Most people would not have got involved had they known the charges. I feel I wouldn’t have moved out of secure [social rented] accommodation.”

Peabody wrote to some of the leaseholders and said if they did not pay the bills, it would contact their mortgage lenders. However, the trust said this was the standard response of landlords to arrears and it would use such measures only as a last resort.

The leaseholders have consulted lawyers and may take legal action over the increase.

A Peabody spokeswoman said the trust had exercised its right to only pay bills dating back 18 months, saving its leaseholders £700 a year in charges. It had also reduced the amount it asked leaseholders to pay it for management and removed the costs of lighting, rubbish collection and insurance. Overall it removed £290 of costs for the year.