An investigation by housing campaign group SHAC has exposed a systemic failure in the UK welfare system. It reveals that landlords are siphoning off millions of pounds in inflated and illegitimate service charges through Housing Benefit, which is funded directly by the taxpayer.

Despite the government’s focus on cutting individual benefits, SHAC’s research highlights a massive and neglected hole in the welfare system. Data obtained from 225 Freedom of Information requests reveals that while local authorities check that service charges are eligible for Housing Benefit, almost none check whether the services actually exist.

Key Findings of the SHAC Report:

• Widespread Overcharging: A review of 2025 Tribunal decisions found an overcharging rate of 63%. For Housing Associations, this rose to 66.7%.
• The Ghost Service Loophole: Councils routinely block claims for ineligible items (such as personal heating in a claimant’s home), but their systems are incapable of identifying charges for non-existent services, such as lift maintenance in buildings where no lift exists.
• Systemic Negligence: Local authorities wrongly assume that landlords are self-regulating. Yet in one of three in-depth case studies, it was discovered that a staggering 54% of expenditure – £592,432 – for Peabody Housing lacked any invoices to corroborate the charges. They also made inaccurate statements to a local MP and the Housing Ombudsman about full disclosure of the invoices.
• Regulator Blind Spot: The Regulator of Social Housing does not scrutinise service charge accounts, leaving a black hole of accountability for the £37.8 billion spent annually on Housing Benefit.

Systemic Financial Abuse

SHAC’s evidence suggests that private landlords and social housing providers alike are either grossly incompetent or are deliberately inflating charges, knowing that the burden of proof sits entirely on the tenant.

For benefit recipients, the system is rigged: if a tenant reports an overcharge to their council, it can result in a reduced Housing Benefit payment while the landlord continues to demand the original full service charge. This leaves the tenant to cover the shortfall themselves for services that may never have existed or were unfairly priced.

SHAC Secretary and Cofounder Suzanne Muna said: “Large-scale service charge abuse perpetrated against taxpayers is a scandal which government chooses to ignore while squeezed taxpayers pick up the tab. Landlords are treating the Housing Benefit system as a convenient cash machine, while all the gatekeepers look the other way.”

SHAC’s Call to Action

SHAC is demanding immediate intervention:

• A National Audit Office (NAO) investigation to uncover the true scale of funds lost to service charge abuse.
• Legislative reform, with the introduction of new laws to compel landlords to automatically refund overpaid public funds to local authorities.
• Stronger oversight by regulatory bodies to move the burden of scrutiny from overstretched councils and tenants onto the government.

SHAC  is a housing campaign group linking tenants, renters, shared owners, and leaseholders living in social and private housing, campaigning to improve the conditions of homes and neighbourhoods, and to reduce the commercialisation of housing. More information on the End Service Charge Abuse campaign can be found here.