Hidden cost of exercising the right to buy: The dream of ownership becomes a nightmare for a former council tenant faced with a huge service charge. Caroline Merrell reports

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The Government's right-to-buy initiative seemed to give council tenants a cheap way of buying into an apparently unstoppable housing boom.

However, more than 10 years after the event, the dream of home ownership has turned sour for some. In one case, a former tenant had her home repossessed by Abbey National after arrears were increased spectacularly by a pounds 24,000 service charge levied by the council.

Mair Slattery bought her three-bedroom flat with her husband at a discount for pounds 18,000 in 1983. The property was one of 16 flats in a block in north London. About half the tenants decided to buy their properties. Abbey National provided the original loan for the Slatterys' flat.

Five years later Mrs Slattery decided to take out a further loan from Abbey National of pounds 12,000 for improvements that included replacing the windows and adding a bathroom, to bring the mortgage to pounds 30,000. The flat was then valued at pounds 60,000.

In 1990 arrears began to build up on the property. By March 1993 they had mounted to pounds 1,500. Mrs Slattery, a health authority worker, said: 'With the poll tax, I was finding it difficult to pay the mortgage.'

The problem was then made worse by Harrow Council, which added a service charge on the flat of pounds 24,000. The charge helped pay for a new roof and fire escape for the block. It also helped pay for new windows - in Mrs Slattery's case this involved ripping out windows she had borrowed money to install, because the council also wanted to put new insulation into the block. The tenants who had not bought their properties did not have to pay the service charge.

The Abbey National view is that in situations of this kind, when the borrower cannot pay a service charge, the lender pays it then adds it to the arrears on the property. An Abbey National official said: 'If we didn't do this we would have no security for our loan.' If the lender did not pay the service charge, then the council would gain possession of the lease.

Mrs Slattery said that she could not believe the size of the charge. 'The whole thing had started to turn into some sort of nightmare.'

Abbey National began court proceedings against Mrs Slattery for repossession in May last year. Jacqueline Bunce- Linsell, her solicitor, managed to stave off repossession by paying pounds 10,000 from money Mrs Slattery had inherited. Abbey National then reorganised Mrs Slattery's repayments so that she could repay the arrears at pounds 130 a month as well as the outstanding loan. Her difficulty was exacerbated because the addition of a service charge on her loan meant that it was no longer eligible for tax relief.

Again she began to run into difficulty, and last week Abbey National reinvoked the repossession order and locked her out. That decision was only reversed after Mrs Slattery's brother-in-law paid off the arrears through his Abbey National deposit account last week.

Derek Wiseman, a councillor with Harrow Council, said that Mrs Slattery had been the worst-hit of those paying the service charge. He said: 'Different people in the block paid different maintenance charges according to when they bought the property.' He said that the problems with the property had been brought up at a council meeting.

The council said Mrs Slattery had exercised her legal right to buy; it was incumbent on the buyer to have a survey carried out. The council was satisfied that it had acted fairly and within the law.

(Photograph omitted)