Last updated - 16 July 2018
What are Service Charges?
Service charges are imposed by landlords to recover the costs they incur in providing services to a building. The way in which the service charge is organized is set out in the tenant’s lease or agreement.
The landlord, or, sometimes, a management company that is party to the lease, provides the services, while the leaseholders pay for them. The landlord will generally make no financial contribution for the services, but sometimes has to pay for the services before they can get the money back from the tenant.
Details of what can and cannot be charged by the landlord and the proportion of the charge to be paid by the individual leaseholder will be set out in the lease.
What do Service Charges cover?
Service charges include items such as cleaning, concierges/caretakers, ground maintenance repairs, lifts, pest control, management costs and any other running expenses to the block or estate. Leaseholders also pay their share of building insurance and the maintenance of the building through the service charge (tenants pay these costs within their rent).
Tenants will only be charged if their home benefits from that service.
We aim to:
- deliver value for money on services
- consult about any significant changes to services
- give clear information about how services are managed
We are continuing to improve the way we manage service charges. We hope the improvements have already been noticed. Over the next year or so we will continue to implement improvements at every opportunity.
How are Service Charges calculated?
Service charges are variable, we base them on the actual or estimated cost of the services provided to each development. This means they vary from year to year.
Every February we send all our residents who pay a service charge an estimate for the forthcoming financial year which starts on the 1st of April. This is our forecast of how much we think it will cost us to provide the services during the year from April to March.
This is based on looking at spending in previous years, estimating the increase due to inflation and adding in any increases or decreases in spending that we know about for the coming year.
At the end of every financial year we compare how much it actually cost us to provide the services with the original estimate. If we have spent more than estimated there will be a deficit and this will be added to the service charge the next year. If we have spent less than estimated there will be a surplus and it will be taken off the following year’s charges.
Description of Services
Here are some of the services provided to our residents. These are service chargeable:
- Staff costs
- Communal Utilities
- Communal grounds maintenance
- Bulk refuse
- Communal internal cleaning
- TV and aerial costs
- Door entry-phone
- Electronic gate
- Manual gate
- Managing agent communal cost
- Communal water/Communal water – Legionella testing
- Communal fire safety
- Communal car park maintenance
- Communal repairs – estate
- Personal consumption
- Management fee
- Building insurance
- Examination fee (Audit fee)
- Sinking funds
Service Charges' Calendar
|Month||What to expect|
|February/March||Letter advising of charges from April based on estimated costs|
|April||New service charge year starts at beginning of April|
|May - August||We review expenditure and compile accounts for the previous year ending 31 March
NHG arranges an audit where there are 5 or more leaseholders
We prepare sinking fund accounts
|September||Residents receive service charge accounts pack including:
Sinking fund accounts
Audit report (Leasehold only)
|October - November||Works starts on budget setting for the proposed estimates|
|December||We complete estimated budgets, taking into account feedback from residents|
|February/March||Letter advising of estimated service charge from April.|