Revolution at the Old School gates

Service charges have gone through the roof at a north London affordable housing scheme. Ben West reports

It was billed as the ultimate shared home ownership scheme, offering loft-style living for key workers. When the Metropolitan Housing Association (aka Metropolitan Home Ownership) renovated the High Cross Girls' School in Tottenham, north London, in 1999, and transformed it into 28 dinky, light and spacious affordable properties for key workers and people on lower incomes, there was no shortage of takers.

It was billed as the ultimate shared home ownership scheme, offering loft-style living for key workers. When the Metropolitan Housing Association (aka Metropolitan Home Ownership) renovated the High Cross Girls' School in Tottenham, north London, in 1999, and transformed it into 28 dinky, light and spacious affordable properties for key workers and people on lower incomes, there was no shortage of takers.

With shared ownership, a percentage of the property is bought from a social landlord such as a housing association and the remainder rented at a subsidised rate. This award-winning scheme was soon recognised as an excellent example and the people who took up the offer saw a fantastic opportunity to join the property ladder and live in a solidly built and secure building, oozing architectural charm - indeed, one of the most historic buildings in the area.

Yet soon after participants in the scheme moved into their new homes, things went downhill. As well as numerous frustrations such as repair delays, annual service charges rocketed. From 1999 to 2005, they increased almost four-fold, from £794.67 to £3,093.24 for the largest units. The latest annual increase was a whopping 60 per cent and residents now pay similar charges to those that would be applied at luxury developments with features such as 24-hour porterage, lifts and leisure facilities.

The combination of service charges, rent and the mortgage on the owned proportion means that residents - who include teachers, health workers and childminders - believe that they are paying more for participating in this "affordable" housing scheme than it would have cost to have started out by buying an equivalent property in the conventional way.

"When we originally considered the shared ownership scheme, the annual service charge quoted was £485.56," says one resident, Peter McCulloch, 46, a registered childminder. "Shortly after we had submitted our acceptance form, we were informed that there had been a mistake and that the annual service charge was, in fact, £794.67. This should have rung alarm bells for us, but we had no option but to proceed. Six years later, our annual service charge will be, from this April, £3,093.24, representing an increase of 537 per cent from the original quoted figure."

Metropolitan cite the age of the building and the cost of meeting health and safety requirements as reasons for the high cost of maintenance, yet the residents were not warned of the possibility of rocketing costs when they bought into the scheme. The latest massive service charge increase was largely caused by maintenance charges that had been estimated at £55,000 rising to £98,000 when the work was done.

The residents argue that, bearing in mind that the amount Metropolitan can raise the rent on their share of the properties is capped and that it can never be higher than the cost of the equivalent mortgage, the same should apply to service charges.

"We are absolutely committed to affordable housing," says Richard Tysall, leasehold services manager at Metropolitan. "There are always problems this time of year with service charges going up. The biggest factor is the cost of cyclical decoration every five years. It doesn't matter what you think it will cost, when you put the work to tender, that's what it will cost.

"The leaseholders have raised 30 questions which we are responding to. If they are unhappy with this they can follow the disputes procedure that all housing associations are required to have. We've offered further meetings, and they can go to mediation if they are unhappy. At the moment we're at an early stage of a whole series of things we've agreed to do. Some will take weeks, some months."

Ever since council housing began to be dismantled in the 1980s with the Right to Buy scheme, governments - both Labour and Conservative - have attempted to fill the void. Yet the different forms of subsidised housing available today all have shortcomings, sometimes considerable ones.

The central problem with key worker schemes, for example, is how you define a key worker. Displacing others in housing need, many of whom may fall just outside the definition of a key worker, yet who may be just as vital for our cities, can skew the idea of mixed communities. Keeping the definition very restricted is problematic but widening it also distorts the housing market.

Another popular wheeze has been providing affordable housing within new developments, where buyers who paid the market rate resent and are bemused by their subsidised neighbours paying or renting at a fraction of this. The subsidised residents are often also likely to feel bemused by the astronomical prices their wealthy neighbours paid.

Yet shared ownership probably remains the scheme that has caused the most misgivings. It is an excellent idea in principle, and, in many areas, scores of people - who see few other ways of getting onto the housing ladder - routinely complain that the queues to join their area's latest schemes are so great that they have little chance of participating themselves.

Yet an increasing number of those who do participate experience problems, most commonly rapidly rising maintenance charges as at Old School Court, and complicated resale rules that put off other buyers.

Vexed residents of Old School Court, without the patience for a lengthy resolution, are finding that they may have problems selling up and moving instead. Those wishing to move have already found that the massive increase in service charges has deterred potential buyers, and a teaching couple who recently managed to sell after the latest charges were applied, were forced to slash their asking price by £20,000 to do so.

Rachel Townsend, 30, a resident of the property and teacher and single mother, says: "Estate agents confirm that such a high service charge will act as a severe deterrent to purchasers. Ironically, had we bought a house on the open market and taken out a mortgage six years ago we would be financially no worse off, free from service charges and, probably, owners of the freehold. So much for affordable housing!"