Leaseholders in Merton are facing a 266 per cent increase in service charges to correct an oversight dating back to when the right to buy scheme was introduced in the 1980s.

Letters proclaiming a rise in administration charge from £15 to £40 for the borough's 2000 leaseholders dropped through letterboxes last week.

Councillor Steve Austin, cabinet member for housing, explained the decision which will raise around £100,000 for the council.

"The reason behind this is leaseholders weren't paying the full administration charge that it costs to administer the service charge and therefore the shortfall was being met by other council tenants.

"It's a very small amount, about 50p a week extra, that leaseholders are having to pay, but it's the principal that I thought was wrong."

Former councillor Brian White, whose partner is a freeholder, was unimpressed by the high rise. "This seems to me a stealth tax, it's pretty over the top. He's implying he was forced to put up the processing charge because otherwise it was reflected in the rent that council tenants pay."

Coun Terry Sullivan, opposition housing spokesman, said he had not been given full details about the hike but reasoned it was a lot of work for little achievement.

April 29, 2003 10:00