Understanding service charges
A service charge is a payment you have to make towards the costs of providing services, repairs, maintenance, insurance and management of the building where your home is. If your home is on an estate, you also contribute towards managing and maintaining the shared areas of the estate.
The rights of a landlord to collect service charges are set out in your lease.
Service charges may be actual or estimated costs. We split service charges fairly between all the properties in the building.
It is important to note that the cost of the services to tenants is not subsidised in any way by leaseholders. We pay the social tenants share of costs of the service charge and Major Works via their rent.
Service charge types
Service charges may come in two forms:
- Annual service charges
- Major Works charges
Please note the services you receive and pay for will depend on where you live.
Annual service charges
Our service charge year is a financial year, which runs from 1 April to 31 March of the following year. The annual service charge invoice usually includes some or all of the following types of charges although you should refer to your own lease for specific details:
Caretaking and cleaning services – this includes the costs of inspecting the estate and building where you live, reporting faults, cleaning communal areas, picking up litter, moving rubbish bins and carrying out bulk refuse collections
An administration or management charge - this is your contribution to the cost of administering your accounts, including arranging insurance, working out and collecting service charges, together with a charge towards the cost of managing our buildings and estates. It includes leasehold services staff and staff involved in managing the estate such as monitoring, resident involvement, nuisance and repairs.
Building Insurance - the cost of your annual insurance premium under the leaseholders' block policy.
Lift and lighting power (Communal Electricity) - the costs of lighting shared parts, and power for items such as door-entry systems, aerial boosters, security lights outside, lifts and heating
Communal heating - if you are connected to a group or district heating scheme you will pay a share of the costs of heating and maintenance.
Service Contracts/ Maintenance:
Communal TV aerial - the cost of keeping a shared television aerial in working order.
Door-entry phone system - the cost of maintaining remote controlled door entry systems (if these services are in place), including regular visits under a planned maintenance contract.
Lift Maintenance - the cost of inspecting, maintaining and servicing lifts to ensure that they are in good working order.
Communal heating - if you are connected to a group or district heating scheme you will pay a share of the costs of maintenance.
Repair and maintenance:
Day to Day maintenance - the cost of day-to-day repairs to the communal areas of your building (for more information please see chapter on Repairs and Maintenance)
Major Works - You will pay a share of the cost of major works.
Section 125 Notice and the first five years of your lease
When you bought your home from us under the Right to Buy scheme, you received an important document called a Section125 Notice. This document described your property and provided details of the purchase price and the discount available to you. It also listed possible major works that might be required during the first five years of your lease, together with the estimated costs.
We cannot charge you more than the amount shown on the notice (other than an allowance for inflation) during this five-year period. If work was not mentioned and is required during this time, we might not be able to charge you anything for it.
Please note that after the initial period has ended, we can charge you for your full share of the reasonable cost of any work.
Major Works after the first five years of your lease
We are responsible for the upkeep, maintenance, repair and improvement of your building and estate as a whole. As a leaseholder you have to contribute towards the cost and are responsible for paying your share through your service charge.
We programme major work each year as part of our obligation to maintain the structure and outside of the block in which you live. This may also include improvements to your building e.g. re-roofing work and external decoration.
Service charge statement queries
When you receive your statement, please take time to check it carefully. You may have made a payment through your bank that is not shown on the statement. To make an enquiry, please contact us providing as much information as possible. You can email firstname.lastname@example.org.
Service charge arrears
Your lease states that you have to pay service charges promptly on demand. If you fail to do so, you have broken the conditions of your lease and you could lose your home.
If you are having financial difficulty, please get in touch with us as soon as possible. In most cases, we will be able to help you, and by taking early action, you may be able to avoid court action and extra costs.
Depending on your circumstances we may allow you to repay any arrears in instalments. Alternatively, we will be able to offer advice such as putting you in touch with independent debt counsellors or the Citizens Advice Bureau who will help you to claim any benefits you might be entitled to.
If you are having financial difficulty
The welfare benefit system can provide help to owner occupiers in certain circumstances if they have become unemployed or are suffering financial hardship.
If you are in receipt of benefits you should inform the benefits agency of the service charges you are required to pay. You will need to send a copy of each bill you receive, including your estimated service charge, your final account and any details of proposed works. You are required to inform them of any changes to your service charge within four weeks of receipt of the demand.
If you would like independent advice about service charge arrears or other debts, you can contact the Citizens Advice Bureau or a solicitor.
What to do if you fall behind with your mortgage payments
You must contact your mortgage lender as soon as possible. We are unable to offer any guidance in connection with your mortgage.
Annual Ground Rent invoice
We also send out an invoice for Ground Rent in July of each year. The ground rent is an annual payment of £10, which is set out in your lease. The charge is made because we are the freeholder of the land.
Get in touch
To get in touch with one of our advisors about your lease, please email email@example.com