Service Charges Explained
What are Service Charges?
On top of rent, some residents also pay a Service Charge. This leaflet explains what you are paying for and how it is calculated. Residents can receive a schedule on request giving details of the Service Charge that they are expected to pay and how it has been calculated. The rules for Residents, Leaseholders and Shared Owners are different in some respects, and these differences are explained below.
Who pays a Service Charge?
Mostly Service Charges apply to flats with common areas, although some houses may also have a Service Charge if there are communal grounds. They cover things such as cleaning shared hallways, gardening of communal grounds, electricity for the lighting in communal areas etc.
Only those residents who benefit from a service have to pay a Service Charge. Normally the cost of the service is divided equally between all of the residents who benefit from the services.
Types of Service Charges
This can cover street lighting, the lighting of communal halls and stairs, TV boosters etc.
The cost of replacement light bulbs in communal areas.
The cost of gardening in shared areas. This includes grass cutting, hedge trimming, maintaining shrub beds, weed killing, litter removal and trimming back overhanging bushes and trees.
The cost of cleaning the communal areas and of cleaning any communal windows. This includes cleaning bin stores and litter picking. Cleaning of windows to flats or houses is not included.
Clearing any dumped rubbish that has been left in communal areas. We will normally try to find out who has dumped any rubbish and charge them directly. However, if we are unable to find out who is responsible, the cost will be borne by all of the residents.
The cost of repairs to TV systems where these are shared between residents (normally flats).
Door Entry Systems
The cost of repairs to door entry systems or intercoms. This includes resetting time switches.
Fire Equipment Maintenance
The cost of maintaining emergency lightingsystems and fire alarms, where these are present. This also includes the cost of testing fire alarms and emergency lighting systems.
The cost to BCHG of insuring the structure of the building (this Service Charge element is only paid by Leaseholders and Shared Owners).
The cost of repairs to the common parts, such as walls, roofs, communal lighting, paths, roads, window frames, guttering etc. (this Service Charge element is only paid by Leaseholders and Shared Owners)
The cost of maintaining, repairing, and insuring communal lifts and the telephone charges for the emergency lift alarm. This charge is applied to all residents of a block with a lift, including those on the ground floor, regardless of their floor level.
This is a charge made to cover the cost of supplying certain large items. It is worked out by taking the cost of the item and dividing this figure by its estimated life. For example a lift might be charged over 20 years, meaning that the amount charged to residents is 1/20th of the total cost every year. The type of things covered by depreciation at BCHG are door entry systems (15 years), emergency lighting systems (20 years), fire alarms (15 years), TV systems (20 years) or communal carpets (8 years), although this list is not exhaustive.
The Administration Charge
BCHG charges a flat 15% fee for administration. This covers the costs of monitoring services, selecting contractors, paying invoices etc.
How the Service Charge is calculated (Residents)
BCHG operates a Fixed Service Charge for residents. The Service Charge is calculated each year in the October prior to the rent increase. The Service Charge is calculated by taking the cost of providing the services for the preceding 12 months and adding inflation (RPI). In this way, residents only pay for services that they have actually received, and BCHG is able to manage the service charge calculation in a straightforward way.
How the Service Charge is calculated (Leaseholders and Shared Owners)
The way that Leaseholders’ and Shared Owners’ Service Charges are calculated is set out in their lease.
Concerns about Services Charges
If you have any concerns with your service charge we do request that you contact us and let us know. Our Income Team is here to help explain how we set your service charge.
Even after you have contacted us, if you still think that part of your service charge is unreasonable, you can make a formal complaint. As fixed service charges apply to some of our general needs properties these are not determined by a Tribunal.
Where a variable service charge is applicable, as might be in some of our leases, we would if we cannot resolve the matter refer the case to an independent advisor who will look into our reasons for charging you, and your reasons for disagreeing with the charge. They will then decide who is right, or suggest a compromise, you may be asked to pay part of the costs for this. Alternatively we could look at using the Mediation service as a way of resolution.
If you feel that any of the service charges that we ask you to pay are unreasonable, you need to explain this to our Income Team. You must give a full account of why you feel the charge is unreasonable. First Tier Tribunal have the power to decide whether service charges are reasonable and whether you have to pay them or not.