About service charges
This page covers all the information you need to know about their service charges.
What do service charges pay for?
Service charges pay for the cost of looking after a shared space beyond your own home. The service you receive will depend on where you live and what facilities are provided in your block or neighbourhood.
How is the Service Charge calculated?
Service Charge Estimate:
We set a budget for your scheme each financial year, which runs from 1 April to 31 March. As we don’t know in advance the exact amount it will cost us to provide services and repairs, Great Places estimates how the cost of services by looking at previous 12 months. We consider any changes that we know about for the next 12 months when calculating this.
Your service charge estimate is sent to you in February each year and the amount you pay during the year is based upon this estimate.
Service Charges are variable, meaning they will go up and down each year depending on the amount spent on your block or estate. Your estimate may increase some years or decrease in others.
Service Charge Statement:
At the end of the financial year, we carry out a reconciliation of the amount residents have paid during the year and the cost of providing services and repairs. We will then send you a summary of the accounts within 6 months of the year end.
Where we’ve spent less on providing the services than we’ve charged you, there will be a surplus on your Service Charge Statement. This is also known as an underspend.
Where we’ve spent more on providing the services than we’ve charged you, there will be a deficit on your Service Charge Statement. This is also known as an overspend.
The surplus or deficit will be carried forward and applied to your service charges the following year.
Service Chargeable Items and descriptions
The following are headings you will see on your service charge estimate and service charge statement. It is not a comprehensive list but should provide some insight into the services we arrange on your behalf.
Items you may see
- Cleaning of Common Parts and Refuse Collection - Cleaning of communal parts such as corridors, entrance halls, staircases, communal lounges etc. It also covers the cost of cleaning bin stores and refuse collection which is not part of the service provided by the Local Authority.
- Other Cleaning - this can include fly tipping, additional litter picking and carpet cleaning.
- Window Cleaning - Common Parts and Hard to Reach Area - Cleaning of communal windows and sometimes the windows of individual apartments where they cannot be safely cleaned by residents.
- Grounds Maintenance - This is the cost of maintaining any communal landscaped areas rather than individual gardens. It can vary depending on how labour intensive your garden area is. For example, grassed areas would require cutting at lease once a fortnightly in the growing season whereas a shrub bed would require less frequent visits. It covers the costs of general gardening, one off gardening/pruning, gritting, litter picking etc.
- Pest Control – this is the cost of providing pest control in the communal area or in individual homes if there is a risk if the pests will infest the communal area.
- Staff Costs - This could include any cleaner, caretaker, warden salaries. It also covers office costs such as office telephone, cleaning and caretaker equipment.
- Laundry Equipment - Hire, servicing and repairs to washing machines and/or tumble driers in communal areas.
- Security and CCTV – the cost of maintaining, monitoring and repairing equipment and obtaining CCTV images when required.
- Communal Electricity - For the supply of electricity for communal areas, which might include things like lighting both internal and external, lifts, alarm systems, CCTV etc.
- Water Used in Common Parts - Sometimes there is a communal water supply for the cleaner or for watering the garden areas.
- Repairs - Any repairs we undertake to the internal or external communal areas.
- Lift - Regular maintenance inspections, arranging health and safety upgrades and repairs. If your lift has an emergency telephone system this will also be covered here.
- Gate Entry Systems – repairs and maintenance.
- Fire Equipment - Includes annual maintenance checks to smoke detectors, fire alarms systems and emergency lighting.
- Health and Safety - This covers any additional requirements to comply with health and safety requirements such as preparing fire risk assessments, arranging legionella tests, check water systems etc.
- Portable Appliance Testing - The testing of communal electricity appliances or appliances used by staff at the scheme including laundry facilities, vacuum cleaner and garden equipment.
Large items such as door entry systems, lifts or TV aerial need to be replaced from time to time. To plan for this, and to avoid charging you the costs all at once, we collect regular amounts as part of the service charge which are added to a sinking fund for your particular scheme.
This cost relates to our fee for managing the services provided on your scheme. It is normally calculated at 15% of the total Service Charge excluding sinking funds. Sinking fund management charge is calculated at 10% of total the total yearly sinking fund collected. For schemes which are managed by a 3rd party agent a 5% management fee is added to cover Great Places administrative costs.
What does your management fee cover?
- Financial Matters - preparation and distribution of all accounts and budgets, arranging resident meetings to discuss where requested, collection of service charges, setting up direct debit mandates, pursuing unpaid service maintaining financial records, organising payment of invoices for works at your scheme.
- Administration - responding to customer queries, administration of repairs, communicating with residents and ensuring that records are updated, provision of Out of Hours emergency cover, ensuring compliance with the provisions of all statutory legislation.
- Scheme Visits – where there are communal areas inspecting the building and estate areas and recording repairs as necessary, dealing with any resident issues that arise from the scheme visits, arranging the removal of items stored in communal areas.
- Contractors - arranging repairs and managing contractors, coordinating service and maintenance contracts, ensuring all contractors comply with health and safety legislation, creating specification and monitoring works.
- Health and Safety – ensuring the building complies with the latest Health and Safety regulations, ensuring legal signage is displayed, arranging Fire Risk Assessments.
Can I claim Housing Benefit for service charges?
There are some Service Charges which you can claim with your rent for Housing Benefit. These are known as Eligible Service Charges.
Service Charges you can’t claim with your rent for Housing Benefit are known as ineligible Service Charges.
On your service charge estimate Eligible and Ineligible services will be clearly identified.
Service Charge Principles
Our key principles which set out our approach to service charge budget setting and management, so colleagues are clear and consistent with our offer. This aligns with the service delivery frameworks within Customer Services and Finance’s vision of supporting the delivery of the corporate plan, with a clear focus on financial viability.
1. We aim for all our service charges to be cost reflective, fair and value for money
- We will use data and our knowledge of schemes to ensure that all services and sinking fund provisions are accurately budgeted for and correctly reflected in the annual charge for customers
- We will correctly record and allocate all service charge costs first time.
- We will deliver an appropriate level of service to a scheme and we will demonstrate that the services offer value for money by procuring effectively i.e. going through a competitive process and benchmarking costs
- We will ensure that costs are apportioned accurately and fairly across all customers who benefit from the service(s)
- We will be prudent about how we spend customers’ money and make data driven decisions e.g. whether to continue to spend money repairing an asset or whether a replacement would be more cost effective
2. We set and manage service charges consistently across the organisation
- We will benchmark the cost of providing services across similar schemes
- We will monitor and manage service charge spend throughout the year
- We will use scheme knowledge and data to challenge over and underspend areas
- When assessing affordability, we will consider the whole property charge, i.e. rent and service charge, use local knowledge and information such as void and sustainability data
- We will recover costs in line with the terms of our tenancy or lease agreements
3. We will provide clear communication to our customers and seek customer feedback
- We will be open and transparent in explaining costs associated with providing services at a scheme
- We plan for all customers to be able to access their service charge cost breakdown via the self-service option on the customer portal (in future development scope)
- We will offer budget and account meetings involving customers so that we can seek feedback on service quality and costs to enable us to improve how we manage contracts and services provided
- We expect customers to raise any concerns with us regarding service charge related issues, e.g. issues relating to poor quality service so we can address them in a timely manner to ensure we are continually achieving value for money
4. We will regularly review our approach to service charge management to ensure our policy and practices are fit for purpose
- We will continually review and adapt our practices and approach to ensure we are in line with current legal and regulatory requirements
- We will utilise our networks and sector bodies, e.g. The National Housing Federation (NHF), to ensure we benefit from guidance, benchmarking and learning from best practice.
If you have any further questions about your service charge, please contact us.