Water bill ruling 'could leave landlords owing millions'
Dozens of housing associations and councils across London and the South East could have to repay millions of pounds to tenants in water charges following a landmark legal case.
The High Court case, which could affect as many as 70 local authorities and housing associations covering 375,000 properties, found that a London council had overcharged tenants for their water charges.
The decision, published on Friday, means Southwark Council will owe tenants millions in water charge repayments unless it wins an appeal. The ruling could also affect the council’s ability to evict tenants for arrears.
Giles Peaker, partner at Anthony Gold Solicitors, said: “If I was a council or housing association with an agreement with Thames Water to collect the water charges, I would now be looking at it very carefully.”
Southwark Council collects payment for water and sewerage services from 37,000 of its tenants on behalf of Thames Water. The court case hinged on whether the council was acting as an ‘agency’ for Thames Water or a ‘customer’ under the Water Resale Order 2006, in which case they were reselling water services and should have passed on savings to tenants.
Under the arrangement, Southwark Council pays Thames Water a quarterly lump sum, which is reduced by 5% to reflect voids and 18% for the council’s commission fee.
However, these reductions were not reflected in tenants’ water bills, with residents charged the full rate. The court found that Southwark Council should have passed this money on to tenants.
As a result, Southwark Council is likely to have to pay 37,000 tenants a total of £2.3m for each year between 2010 and 2013.
Thames Water told the court it has “similar arrangements” with 69 councils and housing associations, although it is not clear if these individual arrangements are likely to lead to a repayment to tenants as a result of the court ruling.
Southwark Council and Thames Water changed the arrangement, to make it clear in the contract it is not re-selling, from 23 July 2013, so Friday’s ruling only applies to water charges before that date. The court will decide on the council’s post-2013 arrangements at a later date.
The council will now decide whether to appeal. Richard Livingstone, cabinet member for housing, said: “We don’t think this decision is in anyone’s interest, and are considering our next steps.”