'We will sue': residents fight sky-high service charges on affordable homes

Investigation finds shared-ownership flats are being hit by 'extortionate and unreasonable' fees, trapping people in homes they can't sell

- Jon Ungoed-Thomas & Tom Wall

Residents trapped in properties marketed as "affordable" are planning legal action against the government after being hit with service charges of up to £8,000 a year.

Shared-ownership homes are designed to allow people to get on the property ladder, with residents taking a mortgage on a share and paying subsidised rent on the rest. However, there are also service charges, which can initially be £250 to £350 a month. Once sold, some residents discover these charges can rise to £600 a month or more.

The Social Housing Action Campaign (Shac) will this week submit a dossier to the National Audit Office (NAO) on alleged service charge abuses, warning of inaccurate bills, overcharging and a failure to provide supporting evidence of costs.

It plans a judicial review if the National Audit Office refuses to investigate, warning that a chunk of the service charges are footed by the taxpayer in the form of housing benefit.

An investigation by the Observer reveals: