Service Charges

Service Charges

This section gives you information on service charges

What are annual service charges?

How are service charges calculated?

Ground rent

When should I pay?

What should I do if I want to query my bill?

What happens if I do not pay?

What are annual service charges?

Annual service charges are made where the benefit of common services or facilities has been retained by purchases of flats and maisonettes. They cover routine repairs, maintenance, cleaning, caretaking, insurance, estate lighting, TV aerials, security systems, some roads and paths.

We will consult with you where the cost of the service provision exceeds £100 per flat in any one accounting year and on the tender process for any proposed long term contracts for the provision of leasehold services. The consultation process will be similar to that described for major works.

Service charges are shown under the following headings (leases vary)

Buildings Insurance- This is the annual premium payable by all leaseholders, where leases permit, to insure that property against the usual perils.

Caretakaing - This charge pays for the provision of the caretaking service, materials used and the supervision of the caretakers.

Concierge - The charge for security services.

Electricity consumption - This charge represents the cost of the electricity to the common areas over which you have rights of access. Streetlights on the public highway are paid for from council tax.

Gas - The charge for heating communal areas.

Lifts - This charge is the cost of electricity to the lift and routine maintenance.

Routine repairs - This charge is the cost of general day to day repairs to the common parts of the building and surrounding areas over which you rights.

Response Repairs - This charge is the cost of general day to day repairs to the common parts of the building and surrounding areas over which you have rights.

External Paint - This charge is made annually to cover the cyclical cost of painting the exterior and communal areas of the flat (usually every 5 years).

TV aerial - This pays for the cost of providing and maintaining the communal aerial and/or satellite systems

Grounds maintenance - The charge is the cost of the contract for maintaining the communal grassed and shrubbed areas adjacent or in close proximity of your flat.

Management fee - This is the cost of preparing estimates, billing, consultations, queries and administration work necessary to ensure the delivery of services and collection of charges. For most leaseholders the fee is equal to 20% of the other service charge costs. (10% for shared ownership leaseholders.)

How are service charges calculated?

You will receive two service charge notices each year. (the year runs from 1 April to 31 st March). One will notify you of the estimated charges calculated for the coming year. This is a prediction of how much we thing we are likely to spend and will be sent to you in March each year. The estimates are based on previous bills and are payable on a quarterly or annual basis (according to whatever method you prefer), although arrangements can be made to pay monthly if required. They are designed to help you spread your bills over the whole year.

The second notice is called the 'actual' or 'certified' charge that is usually sent in June or July of each year. This will set out the actual money spent on each service in the previous year.

The difference between the estimated and actual charges for the previous year will be shown in the notice and your remaining quarterly instalments for the current year will be updated to reflect those differences.

For example, if your estimates exceeded the actual charges by £30, then the three remaining quarterly charges for the current year would each be reduced by £10 to restore the balance. If the estimates were understated by the same amount then the instalments would have to be increased.

In certain circumstances where annual payers have overpaid then it will be necessary to make refunds or alternatively carry forward any credit to next year's account.

Ground rent

All Right to Buy leases provide for payment of an annual ground rent of no more than £10. This is due yearly in advance, usually on the anniversary of your purchase. The ground rent is not included with your other service charges so you will receive a separate bill from the Council when this is due. In some instances and by prior arrangement the fee is payable for four years in advance to cut down on administrative costs. You will be given the option to pay annually if you so wish.

When should I pay?

You can pay your service charges annually, quarterly or monthly. Payslips will be issued with each notification of estimated or actual charges. The bill will tell you where and when you should make your payments.

What should I do if I want to query my bill?

If you have any questions about your bill please contact the Rent and Right to Buy section either by writing or by telephone.

You have the right to ask a Leasehold Valuation Tribunal (LVT) to determine the reasonableness of a service charge and the liability to pay.

Northern LVT

20th Floor Sunley Tower

Piccadilly Plaza

Manchester

M1 4BE

What happens if I do not pay?

We are anxious to help people in financial difficulties. If you inform us of your problems, we will listen sympathetically and will try to work out an arrangement with you to clear the account as quickly as possible.

We have a duty to collect all the money we are owed and we will take all steps necessary to recover the amounts due. At first we will send you reminder letters. It is very important that you contact us if you are having difficulty paying. If you do not tell us about your problems and do not pay or keep to the agreements made, we may start legal action to collect the money.

Legal action could involve notifying your lender, if you have a mortgage; or making an application to the courts for forfeiture of your lease. This could result in you losing your home. If legal action is started you should consider taking legal advice on your position.

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Home Information and Services Become a Tenant Current Tenants Leaseholders - Buying a flat - Your lease - Repairs and improvements - Service charges - Insurance - Selling your leasehold - Make a complaint * * *		Service Charges This section gives you information on service charges What are annual service charges? How are service charges calculated? Ground rent When should I pay? What should I do if I want to query my bill? What happens if I do not pay? What are annual service charges? Annual service charges are made where the benefit of common services or facilities has been retained by purchases of flats and maisonettes. They cover routine repairs, maintenance, cleaning, caretaking, insurance, estate lighting, TV aerials, security systems, some roads and paths. We will consult with you where the cost of the service provision exceeds £100 per flat in any one accounting year and on the tender process for any proposed long term contracts for the provision of leasehold services. The consultation process will be similar to that described for major works. Service charges are shown under the following headings (leases vary) Buildings Insurance- This is the annual premium payable by all leaseholders, where leases permit, to insure that property against the usual perils. Caretakaing - This charge pays for the provision of the caretaking service, materials used and the supervision of the caretakers. Concierge - The charge for security services. Electricity consumption - This charge represents the cost of the electricity to the common areas over which you have rights of access. Streetlights on the public highway are paid for from council tax. Gas - The charge for heating communal areas. Lifts - This charge is the cost of electricity to the lift and routine maintenance. Routine repairs - This charge is the cost of general day to day repairs to the common parts of the building and surrounding areas over which you rights. Response Repairs - This charge is the cost of general day to day repairs to the common parts of the building and surrounding areas over which you have rights. External Paint - This charge is made annually to cover the cyclical cost of painting the exterior and communal areas of the flat (usually every 5 years). TV aerial - This pays for the cost of providing and maintaining the communal aerial and/or satellite systems Grounds maintenance - The charge is the cost of the contract for maintaining the communal grassed and shrubbed areas adjacent or in close proximity of your flat. Management fee - This is the cost of preparing estimates, billing, consultations, queries and administration work necessary to ensure the delivery of services and collection of charges. For most leaseholders the fee is equal to 20% of the other service charge costs. (10% for shared ownership leaseholders.) How are service charges calculated? You will receive two service charge notices each year. (the year runs from 1 April to 31 st March). One will notify you of the estimated charges calculated for the coming year. This is a prediction of how much we thing we are likely to spend and will be sent to you in March each year. The estimates are based on previous bills and are payable on a quarterly or annual basis (according to whatever method you prefer), although arrangements can be made to pay monthly if required. They are designed to help you spread your bills over the whole year. The second notice is called the 'actual' or 'certified' charge that is usually sent in June or July of each year. This will set out the actual money spent on each service in the previous year. The difference between the estimated and actual charges for the previous year will be shown in the notice and your remaining quarterly instalments for the current year will be updated to reflect those differences. For example, if your estimates exceeded the actual charges by £30, then the three remaining quarterly charges for the current year would each be reduced by £10 to restore the balance. If the estimates were understated by the same amount then the instalments would have to be increased. In certain circumstances where annual payers have overpaid then it will be necessary to make refunds or alternatively carry forward any credit to next year's account. Ground rent All Right to Buy leases provide for payment of an annual ground rent of no more than £10. This is due yearly in advance, usually on the anniversary of your purchase. The ground rent is not included with your other service charges so you will receive a separate bill from the Council when this is due. In some instances and by prior arrangement the fee is payable for four years in advance to cut down on administrative costs. You will be given the option to pay annually if you so wish. When should I pay? You can pay your service charges annually, quarterly or monthly. Payslips will be issued with each notification of estimated or actual charges. The bill will tell you where and when you should make your payments. What should I do if I want to query my bill? If you have any questions about your bill please contact the Rent and Right to Buy section either by writing or by telephone. You have the right to ask a Leasehold Valuation Tribunal (LVT) to determine the reasonableness of a service charge and the liability to pay. Northern LVT 20th Floor Sunley Tower Piccadilly Plaza Manchester M1 4BE What happens if I do not pay? We are anxious to help people in financial difficulties. If you inform us of your problems, we will listen sympathetically and will try to work out an arrangement with you to clear the account as quickly as possible. We have a duty to collect all the money we are owed and we will take all steps necessary to recover the amounts due. At first we will send you reminder letters. It is very important that you contact us if you are having difficulty paying. If you do not tell us about your problems and do not pay or keep to the agreements made, we may start legal action to collect the money. Legal action could involve notifying your lender, if you have a mortgage; or making an application to the courts for forfeiture of your lease. This could result in you losing your home. If legal action is started you should consider taking legal advice on your position. Back to Leaseholders Guide