Court orders council to repay £2.5Million to tenants after water rates case
By Julia Gregory, local democracy reporter
Some 9,000 council tenants will get a refund on their water bill after Kensington and Chelsea council was told to repay a £2.5m commission its housing management company earned for collecting water rates from Thames Water.
The move follows a test case in the Court of Appeal in October 2020 which ruled that Kingston Council should return water rates commission from its residents.
The courts also told Southwark council it had to pay money back .
The refund in Kensington and Chelsea covers bills from April 2006 to August 2017.
Tenants paid their water rates weekly to the Kensington and Chelsea Tenant Management Organisation (KCTMO) which managed the council’s 9,000 homes, along with rent, service charge and heating costs.
The TMO was paid a seven per cent commission for collecting the money by Thames Water to cover collection costs and any losses if it couldn’t collect the money.
It got an additional two per cent ‘voids allowance’ when homes were empty for three months or less.
After the Grenfell fire in June 2017 the council brought its housing management back in house.
Many other councils, including Southwark, had the same deal with the water authority and had to refund their tenants millions of pounds.
The money was ploughed into housing management.
Current residents will now get a credit on their bills or a refund.
The council will write to every tenant with the calculation of how much money they are owed, plus interest. It has been advised it “made the error in terms of not initially deducting this commission from the charges”.
Council leader Elizabeth Campbell said: “It’s unfortunate but straightforward” as the leadership team agreed the move after the council got legal advice on what it should do.
Councillor Judith Blakeman, who represents Notting Dale asked if the 72 residents who died at Grenfell Tower in June 2017, or their estates, will also be reimbursed, along with survivors of the tragedy.
The director of housing management Doug Goldring said: “They would be and we will look at a mechanism for that.”
There are some 2,800 former tenants who are eligible for the refund.
The council does not plan to write to the last known address of former tenants, as some of them may have passed away and it does not want to cause anxiety, said Mr Goldring. Instead it will advertise how they can apply for a refund by contacting the council.
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