Service Charges explained

A service charge is a payment made by a homeowner towards the cost of services and repairs beyond those specifically for their house or flat.

Remember, payment of your rent and service charge is a priority.

 

Service charge obligations

If you receive any service to any part of your property, you will have to pay service charges. Your lease will set out your service charge obligations in terms of what you must pay for and whether the service charges are fixed or variable.

Fixed service charges are based on the service offered. Customers with fixed service charges will only receive an estimate each year.

Variable service charges are changed according to the actual costs.

Your estimate is a calculation of how much we think we’re going to spend during the upcoming year based on the services you receive. For example, we do not know how much we might spend on bulk rubbish removal. Therefore, we ask you to pay an estimated charge throughout the year.

Following the end of the financial year, we add up how much we’ve spent. During the year, we may have charged you more (surplus) or less (deficit) than we spent.

Some schemes also have freeholder service charges set by external companies who may control certain services. We cannot control their charges, but will ensure they are reasonable and that the services, which you are paying for, are carried out.

For customers with variable service charges, we will then send you a service charge statement with the actual costs.

Homeowners are expected to pay any deficit once they’ve received their statement or can have a refund for any surplus.

For customers on fixed service charges, we can only charge what we budgeted, so you will not receive a statement. If you see an increase in your service charges the following year, it is likely that we spent more than anticipated during the previous year and have increased our budget accordingly.

If you bought a house under DIYSO or you hold a shared ownership lease on a house, the services we provide are limited because most responsibilities will fall to you. We also provide only limited services if you bought a flat under DIYSO because there the responsibilities will fall either to the freeholder or a managing agent/management company.

SBHA offer you a range of ways to make rent and service charge payments 24/7. We have made it easier for you to pay your rent online.

We can accept payments using the following methods:

• By direct debit – this is the preferred option
• By internet banking
• By debit or credit card
• Online through your Customer Portal - Coming Soon using your tenancy reference number to access your account.
• By standing order – please contact us for details
• Recurring Payments
• At any post office or PayPoint outlets. We will give you an Allpay rent payment card to do this

IMPORTANT: You can no longer pay your rent in the SBHA Offices. Please do not send cash in the post to us.

 

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Maintenance of communal areas

In most cases we are responsible for carrying out maintenance to the common parts of an estate (but not where you have bought a house or flat under DIYSO).

 

Lighting and electrics in common parts

In most communal buildings there will be lighting in hallways and outside. The cost of providing these services will be included in the service charges.

 

Lifts

We will arrange a lift maintenance contract if there are lifts in the building for which we are responsible. Costs for maintenance and regular work will be included in the service charges.

 

Water

In some newer schemes, the water authority will supply only a single service pipe and the water pressure must be boosted for individual properties to receive their supply. In such cases, we need to collect water and sewerage charges from you. The service charge includes the water authority costs, the equipment costs and our costs for collecting the charges.

 

Building insurance

If we are required to insure the building as landlord, we will contract with a suitable insurer. You will be charged the cost of the premium applicable to your property.

It is your responsibility to arrange any contents insurance for your home.

 

Fire Risk Assessments

A charge per property will be made for the legal requirement of carrying out a fire risk assessment for communal areas where you live.

 

Reserve (or sinking) fund for cyclical works

Under the terms of most of our flat leases (other than DIYSO flat leases), we are required to maintain a reserve (or sinking) fund for cyclical redecoration and maintenance works and, depending on requirements, these are carried out on five to six year cycles. If the fund holds enough, residents will not get a large bill for such work.

All money paid into the reserve fund is held in trust (and accrues interest) so it cannot be used for other purposes. The benefit of any reserve will pass to the new owner if you sell.

 

Other reserve funds

In some newer schemes we maintain reserve funds for other purposes (see also section 16). We will let you know if these exist. Generally, they are kept to build funds to deal with long-term replacement of lifts, roadways (if private) and play areas, for example.

 

Management costs

These are our charges for providing services to you and include:

• Negotiating contracts for services.
• Monitoring contracts for services.
• IT systems.
• Costing services.
• Maintaining account records of income and expenditure.
• Issuing estimated and final accounts.
• Recording charges and payments.
• Managing the reserve fund(s).
• Collecting payments.
• Referral for debt advice.
• Arrears management.
• Providing facilities for reporting repairs.
• Answering enquiries regarding leases.
• Providing general information to residents.
• Dealing with anti-social behaviour.
• Stock condition survey.
• Resident involvement.
• Consulting over proposals.
• Publications.

 

Please note that management costs exclude the fees we will charge for major works and cyclical (external decoration) programmes. These fees are charged to cover pre-inspections, contract administration, consultation on works, contract liaison and management and post-inspection and are usually a percentage of the contract cost.

 

Major works

These will not usually be included in your annual estimates.

 

Other

In some developments there will be other services provided such as controlled gate entry or CCTV. There may also be charges for dealing with pests such as rodents in communal areas.

In some instances, you will be liable to pay ground rent. This is not a service charge, but a separate payment you must pay under your lease.

Service charge estimates are sent out by the end of February each year.

At the end of each service charge year, which is by the by 30th September, you will receive a summary of the final (or actual) costs for the year.