Leaseholders/Shared Owners - Changes to your Rent & Service Charge 2023/24
These FAQs are for leaseholders and shared owners. In February you will have received your rent increase and service charge estimates for April 23 – March 24.
Please get in touch, 020 8996 4200, if you have any questions that are not answered here.
Our Income Team, firstname.lastname@example.org , are available to provide support if you have any affordability or money worries.
We also offer a range of initiatives that can be found in our Customer Welfare Support Offer .
How are my service charges calculated?
At this time of year we send you an estimated service charge for the coming year. We try to make our estimate as accurate as possible by looking at the cost of services in the previous year, and at what work needs to be done to keep your building and grounds in good condition. This is our estimate of how much we think the service charge should be to provide the services from this April through to March next year.
You can find out more about service charges, here.
What is the service charge cycle?
We charge you each year for services from 1 April to 31 March the following year. When the year finishes in March, we check everything carefully so we can send the final account to you in September. This means there is a service charge ‘cycle’ of 18 months for each year’s charges.
What happens at the end of the service charge cycle?
Each year we will check the actual cost of services and compare this to the estimated amount we collected through the year. There is normally a difference and this is called the “balancing charge”, which means we may owe you money, or that you may owe us. When we write in September we’ll let you know how any balancing charge can be settled between us and we will make this as easy as we can for you. For most homeowners, your service charge account will be audited, as required in the lease. This means it will be checked by an independent auditor to protect you and make sure everything is charged correctly. The checked accounts are then sent to you in September.
How is my rent calculated?
Where you own a percentage of the property and pay rent on the remainder owned by SBHA your rent is normally calculated using RPI* plus 0.5%, 1% or 2%, dependent on lease. RPI is a common measure of inflation and in November 2022 was 14%. Usually, this would mean that your rent could increase by a maximum of 16%. However, because we have voluntarily decided to implement the social rent cap introduced by the government, for the next financial year (April 2023 to March 2024), across our leasehold properties your rent will increase by a maximum of 7%.
*Retail Prices Index (RPI): The RPI is published by the Office for National Statistics. It measures the average change from month to month in the prices of goods and services purchased by most households in the UK.
Why is my service charge increasing?
Your service charge covers the cost of services we provide to you, your block and/or estate. With your rent increase letter, you’ll receive a breakdown of your service charges. This will show you exactly how much you pay for each service and where there has been an increase in the cost to provide this service.
Inflation has been particularly high recently. When inflation is high, costs tend to increase including our own.
We’ve also reviewed fire safety in all our buildings following the tragic Grenfell Tower fire. Your safety is our number one priority. There’s an increase in the fire safety related services we’re now delivering. We’re carrying out more fire safety inspections by specialist contractors. We’re also investing in fire safety measures and fire safety equipment.
There are also increases in the cost of electricity, which has been widely publicised and is a national issue. It is important to note that these are estimated charges and with the introduction of smart metering we will be able to fully assess the actual costs throughout the year and ensure that the balancing charge is reflective of the actual costs incurred.
We have also improved the way that we assess and calculate your estimated charges, there has been greater scrutiny and interrogation of the data and we consider these estimates to be more accurate than previous years, which should result in the balancing charge being more in line with estimated costs.
Where we spend your rent?
What if I can’t pay or want to dispute my service charge?
We appreciate you may be unhappy about the rent and service charge increase. However, you must pay your rent under the terms of your tenancy or lease. If you don’t pay your full rent, arrears will build up and we’ll take action to recover the unpaid rent. You may end up facing more debt and court costs, making things even more difficult. If you have concerns about affordability, our Income team is here to help: email@example.com.
Independently, you can get free advice and support from your local Citizens Advice, or from StepChange if you’re struggling with debts.
There is also a free independent advice service for leaseholders/shared owners; Frequently Asked Questions - The Leasehold Advisory Service (lease-advice.org)