The housing minister has condemned "sweetheart deals" between local authorities and contractors that have seen some councils overcharge tenants for repairs.
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Research by Channel 4 has found that some councils in England and Wales have entered into potentially lucrative profit-share arrangements with favoured contractors.
This means if the business makes over a certain amount of money then some of the cash will go back into council coffers.
Analysts warn that leaseholders are at risk of being overcharged and the Housing Minister has described some of these deals as "unforgivable".
Private leaseholders in council blocks can be landed with hefty bills for repairs and have little control over the decision-making process.
A Dispatches team spoke to one tenant who was asked to pay £28,000. When leaseholders went to a tribunal, the council's spend on the estate was found to be £1m too high.
There are fears that other councils may be inflating the costs and scooping some of the profit thanks to deals with repair companies.
And the extent of overcharging in the private sector, where leasehold properties account for 40 per cent of new builds, is unknown.
These councils are public bodies who have an absolute duty to all of their residents. For them to be overcharging is absolutely shameful. Grant Shapps
The housing minister, Grant Shapps, said: "These councils are public bodies who have an absolute duty to all of their residents. For them to be overcharging is absolutely shameful."
"I think that's unforgivable, these kind of sweetheart deals, and I feel very strongly, particularly when it's a local authority doing this sort of thing. They should have the interests of their tenants automatically at heart."
Mr Shapps said he was not minded to introduce new legislation to protect leaseholders either in the private or council sectors, but said he would monitor the situation.