Shane Conway and his neighbours have seen service charges rocket. Photograph: Frank Baron/Guardian

If you have been thinking about buying one of those “shared equity” homes that are aimed at struggling first-time buyers, you may reconsider after reading Shane Conway’s story.

Six years ago, the corporate manager was one of seven tenants who bought shared-equity flats in a newly built scheme in Greenford, west London – lured in part by the government-promoted dream of owning his own “affordable home”.

Today these tenants are facing demands for £1,100 per household, on top of the £2,000 a year they pay in service charges, to cover overspending by the housing association that is supposed to look after their interests.

They say the dream of homeownership has turned into a nightmare, and they fear being stuck in flats no one wants to buy. They blame “appalling mismanagement” by Shepherd’s Bush Housing Association (SBHA), which owns and manages 5,000 homes.

Conway’s story is perhaps typical. It started in 2003 when, with his brother, he bought a 75% share in a two-bedroom flat then valued at £185,000.

“It was a brand-new and very smart apartment block being offered through the government’s shared ownership scheme,” says Conway. “We had all saved for our deposits, and this was our first step on the property ladder. The scheme was advertised as a means of affordable housing, and we all agreed a monthly service charge of £90 to pay for the upkeep of the block through the housing association, Bush Homes, which later became Shepherd’s Bush Housing Association.”

Within months of his moving in, it became clear that the building had problems. “The housing association had also put council flat tenants into the block and a minority of them quickly went about vandalising the premises. We endured graffiti, damage to walls and doors, young children running wild and a woman with mental health problems who slashed her arms and bled heavily in the corridors.”

As a result, Conway says, the service charges started rising steadily and within two years hit £160 per month, or almost £2,000 per year.

The residents felt this figure rather made a mockery of the “affordable housing” tag and, distinctly unimpressed with the service they were getting for such high fees, got together to fight the increases. They took Bush Homes to the Leaseholders Valuation Tribunal in 2006, arguing the charges were excessive. The tribunal found in their favour and was critical of the association, saying the higher charges were unjustifiable because Bush Homes could not produce details of, or vouchers for, any repairs carried out.

“The judges also said that the absence of all receipts was ‘suspicious’ and ordered the association to pay each of us a partial refund on the services charges we had paid, and to cap the service charges for a period of one year at £119 a month,” says Conway.

However, as soon as the year ended, SBHA raised its service charges again, this time to £167 per month. The final straw came last October, when SBHA demanded that the tenants pay £1,149 each on top of what they had already paid for 2007-08, because it had overspent for the last financial year. The group, who had bought all of, or part shares in, their affordable homes found themselves paying up to £3,153 year.

“The whole thing is incredible,” says Conway. “I have friends in South Kensington who aren’t paying this much in service charges. We are apparently being asked to pay for the housing association’s incompetence. We are perfectly willing to pay charges that are fair and reasonable, but these are absurd. We have asked them to justify the figures and they won’t. They have treated us with utter disdain. I would advise anyone else thinking of buying a shared equity home to think carefully.”

Fellow resident Allison Clancy says: “The charges have gone crazy at a time we can least afford it. I’ve just gone back to work after maternity leave, and the whole thing has been very stressful. We were supposed to have a meeting with the bodies concerned last week and they didn’t turn up. We’ve asked for information and they’ve ignored us. How can you deal with people who behave like this?”

A spokeswoman for SBHA blamed the big increases on the privately run management company, Ringley, that controls most of the costs associated with the service charge. She said there had been an emergency lift door replacement, and that the association had failed to include water charges.

“We recognise that a request for payments of between £800 and £1,000 for under-recovery of service charges in 2007/08 is unwelcome. We are pursuing Ringley for clarification and proof of the charges, but we have a legal duty to collect it and then refund if necessary,” a statement said. “SBHA arranged a meeting between residents and Ringley on 13 January, but Ringley didn’t attend as planned. SBHA will continue to pursue Ringley.”

It said that the service charge would return to previous levels next year, but offered no explanation as to why many of its charges had risen so much, or why it had not acted sooner to try to reduce the tenants’ costs. Ringley said it was unaware of the planned meeting and that the increase in charges reflects problems with car park gates. “The early service charge levels were based on projected day-to-day running costs. This did not allow for the cost of future major works projects. We have estimated that the external decorations, programmed for 2010, will cost in the order of £65,000. From 2005 we phased in reserve fund collection gradually,” it said. It added that someone in a privately-owned flat in the same block and of similar size to Conway’s is paying a £1,700 service charge this year – substantially less than the £3,153 he is paying for the year.

Conway is unimpressed. “They have been blaming Ringley for five years, and the excuse doesn’t wash any more. My contract is with them, but they have failed us. I would caution anyone thinking of buying a shared equity home to take a long look at the housing association and how it’s managed before signing up.”