Housing Revenue Account – Draft Service Charges Policy
Residents, both tenants and leaseholders, have a right to know what additional services will be provided and how services charges will be calculated. These service charges are set in accordance with the Regulator of Social Housing Rent Standard and in accordance with any Lease. This is an explanation of why we charge service charges, what these service charges are, and the broad principles of how they are calculated.
The rent paid by tenants covers the provision of basic services such as maintenance and improvements to properties, lettings, estate management and advice and support on issues such as anti-social behaviour. This helps us to effectively manage our housing stock.
Where costs are incurred for providing services over and above what is normally included in the rent paid by tenants, a service charge is calculated to recover these costs. In line with our legal requirements, we ensure service charges are set no higher than what is needed to cover our costs for those services and that they are reasonable. If we do not charge tenants for these services, then this will reduce the money we have to pay for the basic services such as carrying out repairs, improvements and building new homes.
Rent Payments
Tenants pay rent for the exclusive use of their home. In return we are required to:
- Repair the structure and exterior of properties (including drains, gutters and external pipes)
- Repair the installations that supply water, gas and electricity and sanitation (including basins, sinks, baths and sanitary conveniences
- Repair the installations for heating and heating water (including boilers and immersion heaters)
Rent charges are collected weekly over 48 weeks of the year rather than the full 52 weeks. As rent falls due on a Monday, every 5 to 6 years there are 53 Mondays in a year which means 49 rent payments are due.
Service Charges
Service charges are calculated to recover the costs of providing communal services, such as cleaning, grounds maintenance and electricity, to tenants. Not all tenants receive additional services and the amount that is charged will depend on what type of property a tenant lives in, and what services are provided. Service charges are collected weekly over 48 weeks of the year rather than the full 52 weeks. As rent falls due on a Monday, every 5 to 6 years there are 53 Mondays in a year which means 49 rent payments are due.
Additional items may be charged for as part of your service charge from time to time. The fact that a service is listed does not mean that we will provide it. These are examples of services that you may be charged for by way of a service charge.
- Grounds maintenance
- Cleaning of communal areas, and window cleaning
- Door Entry System
- Electricity charges for communal areas
There are additional services that some tenants living in our Retirement Living Courts (including bungalows attached to the Court) might pay for, including:
- Court Manager Service, including emergency alarm and door entry system
- Communal heating and lighting
- Domestic heating, electricity & water
- Laundry charge
- Scooter storage charge
How to find out your rental and service charge cost
At the point of being offered a tenancy the offer letter will set out the weekly rental cost (charged over 48 weeks) as well as the weekly service charge, including details of what services are included within this charge. When the annual rent increase letters go out in March each year this will set out the new weekly charges both for the rent and any service charges. This will include a full breakdown (This will apply to Retirement Living from 2025/26 onwards) of what services are provided at what cost will be given. In addition, this can be provided at anytime upon request.
Calculating service charges
Each year, normally in February or March, we will write to tenants to notify them of any changes in their rent for the coming year, April to March. The notification will also tell them how much service charge they will have to pay for the year.
Service charges will be calculated based on what we know or estimate it will cost to provide services to a block of flats or other group of properties. Normally the charge will be based on what has been spent in previous years but we may also consider how inflation or other costs such as prices from contractors may affect the charge. The provision of new services will also affect the charge and sometimes we will estimate a charge. Where we are considering previous years’ costs in our calculations, we will need to refer to those costs incurred in the last full financial year. For example, for setting charges for 2020/21 we will refer to costs incurred in 2018/19.
The rent notification letter will set out a schedule of services that will be provided and how much we will charge for them.
We will only increase service charges within the legal requirement that they will not exceed the cost of the services and will always be reasonable.
Sharing costs between residents
Once the full year costs are worked out for each estate, road, block of flats or group of properties receiving extra services this is divided by the number of flats or properties to calculate the annual cost for each. Costs are also shared with leaseholders (those people who have bought their flats).
Variable Service Charges
In almost all circumstances, the service charges are variable meaning that they reflect the actual cost incurred, or where this is not known, they are estimated and adjusted when the costs are known. For tenants, these charges are collected together with the weekly rent, apart from the few sites where domestic gas, electric and water charges are collected monthly in arrears.
Variable charges are payable directly or indirectly for services, repairs, maintenance, improvements or insurance, or the landlord’s costs of management in respect of a dwelling. The whole or part of the charge varies or may vary depending on the cost actually incurred.
Tenants on affordable rents
For all tenants except those on affordable rents they will have a weekly rental cost as well as weekly service charge cost. The service charge can include any combination of those services detailed above.
Tenants living in properties that have affordable rents are set at up to 80% of gross Market Rent. These rents include all service charges, so they do not have an additional service charge. All of these properties are charged a gross rent only and a separate service charge is not provided.
Types of Service Charge
Grounds Maintenance
Many estates and Retirement Living Courts benefit from our contractors carrying out work on communal grounds. This can include grass cutting, works to beds and borders, hedge cutting, ditch clearance and hard landscaping. This work is carried out by our contractor, but only to areas where we have a responsibility to carry out this work such as external communal areas that surround a building or group of properties which are not for the sole use of an individual resident. This work is carried out by a contractor.
A separate contractor is responsible for works to trees. Generally, the only tree work carried out is where there is an urgent need.
The cost is divided equally among the properties in a building or group. At present works carried out on our general needs estates, the cost is divided by the number of properties on an estate and not by the number of properties under our management.
There is a separate charge, called Grounds Maintenance Additional. These charges are usually for one-off works, most often remedial or emergency works to trees on an estate or road. The works are carried out by a specialist tree contractor and not the grounds maintenance contractor. The cost of the work is divided among all properties on the estate or road where the work is carried out. We only carry out work to trees that are our responsibility. This charge only applies to properties that are charged for Grounds Maintenance.
Pumping Station Charges
Some small estates have a pumping station to remove waste from the properties. Wealden District Council pays the service charge for this and recovers it through a service charge to our residents on the estate.
Management Fees
Some mixed tenure estates have a management company to maintain communal areas. Wealden District Council pays the service charge to the management company for each of our properties on the estate and then recovers it from the affected properties through a service.
Cleaning of communal areas
All our Retirement Living Courts and many of our generals needs blocks of flats where there are communal hall, landings and stairs, benefit from a regular cleaning service from our contractor. Retirement Living Courts also have other communal areas, such as a communal lounge, laundry room and bin area that is cleaned. There will also be ad hoc additional cleaning in communal areas.
Windows in most Retirement Living schemes, and in general needs blocks of flats are cleaned. It is generally just the communal windows that are cleaned.
The cleaning costs are divided equally among the properties in a building or group. This work is carried out by our cleaning contractor.
Electricity charges for communal areas
This charge relates to the supply of electricity to any communal areas in our general. Electricity is used for lighting to corridors, stairwells and entrances, door entry system and fire alarm system. In some blocks of flats electricity is also used to heat communal areas. Each block of flats has a communal meter for electricity usage in shared areas. The cost is divided equally among the properties in a building or group. This is an annual contract. For communal electricity, we use a consultant to ensure we obtain a competitive rate for these charges.
Door Entry System
All retirement living Courts and most general needs flats where there is a communal front door benefit from a communal door entry system. Costs associated with this system, such as servicing, are divided equally among the properties in the Court or block.
This work is carried out by a specialist contractor, or by our electrical contractor.
Court Manager Service
This charge relates to all costs associated with providing this service to Retirement Living Courts, including staffing costs and the emergency alarm system. Staff are employed by Wealden District Council, although on occasions, temporary agency staff may be taken on to ensure service provision. The emergency alarm is provided by a specialist contractor.
Costs are divided equally among properties in the Court or block.
Heating and hot water charge
This generally relates to the supply of heating and hot water to communal areas in Retirement Living Courts.
In some cases, it may relate to the costs of providing heating and hot water to individual properties; this is known as domestic supply.
Some properties have heating and hot water provided by a communal boiler, and we also charge for the cost of having meters read and the cost for distribution of heat and water throughout the building or scheme. In most cases, the cost is divided between communal and domestic supply. The charge is then divided between the number of properties, with the large properties paying a higher amount.
Some newer flats and Retirement Living Courts have individual flow meters for domestic supply which allow us to charge tenants for what is used. In these circumstances, the charges will not be collected with the weekly rent. Depending on the site, residents will either have a pre-payment meter, or will be charged monthly in arrears. In the latter case, there will be a small additional charge as a contractor has to download and analyse the data on our behalf.
If we experience billing difficulties for the whole site, we do reserve the right to calculate charges by dividing the total cost amongst residents, and charge with the weekly rent until such time as the billing difficulties are overcome. This does mean that residents will avoid large bills when difficulties are resolved.
For communal heating and hot water, whether this is supplied by gas or electricity we use a consultant to ensure we obtain a competitive rate for these charges. This is an annual contract.
Water and sewerage
Where these charges apply, the costs will be divided equally amongst all residents in the building.
Laundry charge
This charge relates to Retirement Living Courts only. The cost of servicing equipment and the cost of water and electricity. Washing machines are provided in most of our Retirement Living schemes for residents to use. The cost is divided equally among the properties in a building or group (In the context of Retirement Living Courts “group” refers to properties outside the block that have access to the services provided in the block.) Costs for water and electricity are obtained from utility companies. Repairs are undertaken by a specialist contractor.
Scooter storage charges
Some Retirement Living Courts are provided with scooter storage where tenants can also charge their mobility scooters. Tenants who use this are charged for electricity and electrical tests. Our electrical contractors undertake the electric tests.
Wi-Fi
Some Retirement Living Courts are provided with Wi-Fi in the communal areas. The cost of providing this service is divided equally among the properties in a building or group.
Service charges to leaseholders will reflect what is in their leasehold agreement. Contained here is general guidance rather than detailed information. As leasehold agreements do vary, where there is any difference between what is stated in this document and the lease, it is the lease that takes priority.
Rent Payments
For shared equity leaseholders, there is a rent payment to cover the equity that is rented from the landlord. Repairing obligations remain with the leaseholder.
Service Charges
These are dictated by what is contained in your lease. Service charges are calculated to recover the costs of providing communal services, such as cleaning, repairs, grounds maintenance and electricity. Not all leaseholders receive additional services and the amount that is charged will depend on the type of property a leaseholder lives in, and what services are provided. The fact that a service is listed does not mean that we will provide it. These are examples of services that you may be charged for by way of a service charge.
Typical ongoing service charges that leaseholders living in our Retirement Living Courts might pay for, include:
- Court Manager Service, including emergency alarm and door entry system
- Communal heating and lighting charges
- Domestic heating, electricity & water
- Laundry charge
- Scooter storage charge
- Major works
- Annual servicing and testing such as alarm testing, PAT testing, lift/boiler servicing
- Communal Cleaning and window cleaning
- Grounds Maintenance
- Wi-Fi/Broadband services
This is not an exhaustive list.
Additional items may be charged for as part of your service charge from time to time.
- Ad hoc grounds maintenance – such as works to communal trees
- Repairs to communal areas
Some leases provide for an administration charge of 10%, but this does not apply to utility bills.
Calculating service charges
Each year, normally in February or March, we will write to shared ownership Retirement Living leaseholders to notify them how much service charges they will have to pay for the year, April to March. The notification will also tell them of any changes in their rent, where payable, for the coming year.
Right to Buy leaseholders are usually notified in April with an annual estimated charge and again within six months of the year end with the Final account figures.
Service charges will be calculated based on what we know or estimate it will cost to provide services to a block of flats or other group of properties. Normally the charge will be based on what has been spent in previous years but we may also consider how inflation or other costs such as prices from contractors may affect the charge. The provision of new services will also affect the charge and sometimes we will estimate a charge. Where we are considering previous years’ costs in our calculations, we will need to refer to those costs incurred in the last full financial year.
We will only increase service charges within the legal requirement that they will not exceed the cost of the services and will always be reasonable.
Sharing costs between residents
Once the full year costs are worked out for each block of flats or group of properties receiving services this is divided by the number of flats or properties to calculate the annual cost for each. Most costs are also shared with tenants although leaseholders do pay for services such as buildings insurance, communal repairs and servicing, and their share of capital works to the block, for example the replacement of roofs.
Variable Service Charges
In almost all circumstances, the service charges are variable meaning that they reflect the actual cost incurred, or where this is not known, they are estimated and adjusted when the costs are known. For Right to Buy leaseholders, service charges are collected annually.
Variable charges are payable directly or indirectly for services, repairs, maintenance, improvements or insurance, or the landlord’s costs of management in respect of a dwelling. The whole or part of the charge varies or may vary depending on the cost actually incurred.
Grounds Maintenance
Many estates and Retirement Living Courts benefit from our contractors carrying out work on communal grounds. This can include grass cutting, works to beds and borders, hedge cutting, ditch clearance and hard landscaping. This work is carried out by our contractor, but only to areas where we have a responsibility to carry out this work such as external communal areas that surround a building or group of properties which are not for the sole use of an individual resident. This work is carried out by a contractor.
A separate contractor is responsible for works to trees. Generally, the only tree work carried out is where there is an urgent need, such as where the tree is dangerous.
The cost is divided equally among the properties in a building or group.
Cleaning of communal areas
All our Retirement Living Courts, and many of our generals needs blocks of flats where Leaseholders reside and where there are communal halls, landings and stairs, benefit from a regular cleaning service from our contractor. Retirement Living Courts also have other communal areas, such as a communal lounge, laundry room and bin area that is cleaned. There will also be ad hoc additional cleaning in communal areas.
In general needs blocks of flats it is communal windows only that are cleaned.
The cleaning costs are divided equally among the properties in a building or group. This work is carried out by our cleaning contractor.
Electricity charges for communal areas
This charge relates to the supply of electricity to any communal areas. Electricity is used for lighting to corridors, stairwells and entrances, door entry system and fire alarm systems. In some blocks of flats electricity is also used to heat communal areas. Each block of flats has a communal meter for electricity usage in shared areas. The cost is divided equally among the properties in a building or group. For communal electricity, we are a member of a consortium that ensures we obtain a competitive rate for these charges. This is an annual contract.
Door Entry System
All Retirement Living Courts and most general needs flats where there is a communal front door benefit from a communal door entry system. Costs associated with this system, such as servicing, are divided equally among the properties in the Court or block. There may also be a broadband or Wi-Fi charge relating to this provision (see below).
This work is carried out by a specialist contractor, or by our electrical contractor.
Emergency Alarm Service
All individual flats in Retirement Living and some of our age restricted properties benefit from an emergency lifeline service. The costs associated with the provision of this service are divided amongst the properties in the Court or block. There may also be a broadband or Wi-Fi charge relating to this provision (see below).
Wi-Fi/Broadband
Some of our Retirement Living Courts benefit from Wi-Fi to communal areas including the communal lounges. The cost of providing this service is divided amongst the properties in the Court or block. For other courts there is still a broadband cost for the provision of services to the Court Managers Office/Emergency Lifeline services.
Leaseholder Building Insurance
For most leaseholders and shared owners, the Council will obtain buildings insurance and then charge the cost of this to leaseholders.
Court Manager Service
This charge relates to all costs in Retirement Living Courts associated with providing this service within, including staffing costs and the emergency alarm system. Staff are employed by Wealden District Council, although on occasions, temporary agency staff may be taken on to ensure service provision. The emergency alarm is provided by a specialist contractor.
Costs are divided equally among properties in the Court or block.
Heating and hot water charge
This generally relates to the supply of heating and hot water to communal areas in Retirement Living Courts.
In some cases, it may relate to the costs of providing heating and hot water to individual properties; this is known as domestic supply.
Some properties have heating and hot water provided by a communal boiler, and we also charge for the cost of having meters read and the cost for distribution of heat and water throughout the building or scheme. In most cases, the cost is divided between communal and domestic supply. The charge is then divided between the number of properties, with the large properties paying a higher amount.
Some newer properties have individual meters for domestic supply which allow us to charge residents for what is used. In these circumstances, the charges will not be collected with the weekly rent. Depending on the site, residents will either have a pre-payment meter, or will be charged monthly in arrears. However, if we experience billing difficulties, we do reserve the right to calculate charges by dividing the total cost amongst residents, and charge with the weekly rent until such time as the billing difficulties are overcome. This does mean that residents will avoid large bills when difficulties are resolved.
For communal heating and hot water, whether this is supplied by gas or electricity we are a member of a consortium that ensures we obtain a competitive rate for these charges. This is an annual contract.
Water and sewerage
Where these charges apply, the costs will be divided equally amongst all residents in the building.
Laundry charge
The cost of servicing equipment and the cost of water and electricity. Washing machines are provided in most of our Retirement Living Courts for residents to use. The cost is divided equally among the properties in a building or group. Costs for water and electricity are obtained from utility companies. Repairs are undertaken by a specialist contractor.
Scooter storage charges
Some Retirement Living Courts are provided with scooter storage where residents can also charge their mobility scooters. Residents who use this are charged for electricity and electrical tests. Our electrical contractors undertake the electric tests.
Communal Repairs
Usually, leaseholders are responsible for paying a proportion of the cost of repairs carried out to the communal areas. These costs are divided amongst the number of flats in the block or Court. For Retirement Living Shared Ownership Leaseholders, this cost will be collected weekly with the rent and service charge in arrears.
Major works
Usually, leaseholders are responsible for paying a proportion of the cost of major works to the building. These costs are divided amongst the number of flats in the block or Court.
When works are carried out, the costs can be substantial. For Retirement Living Shared Ownership Leaseholders, there is a sinking fund that is used to off-set these costs in whole or part. Unfortunately, the sinking funds are not sufficient to cover the total costs so a weekly charge has been introduced to top up the sinking fund.
For costs that the sinking fund cannot cover, the charge must be met by the leaseholder. Once the costs are known, we will write to leaseholders. The terms of most leases require the costs to be paid within 28 days. Sometimes we will agree to the amount be paid together with the service charge, to clear the whole amount in 12 months. In exceptional circumstances, where there will be severe financial hardship, we may agree to payments over a longer period although interest will be charged.
Contracts
The Council contracts out many works and services. For any contract longer than 12 months, and for certain types of major works, the Council must carry out consultations with leaseholders. The relevant legislation is section 20 of the Landlord and Tenant Act 1985 (as amended), and the consultation is generally known as a section 20 consultation.
Most of these consultations are in two stages. In the first stage, the Council will notify leaseholders that it intends going to tender or similar for a particular contract and invites leaseholders for their observations. In the second stage, the Council has completed the tender, notifies leaseholders of the company to whom it intends awarding the contract and invites leaseholders to make observations.
Some consultations, for instance for major works to be carried out by an existing contractor there may only be one stage, inviting leaseholders for their observations.
For some types of contracts there will be a third stage. The number of stages is dependent upon a number of factors including the cost, the length of the contract, whether the contractor is an existing contractor and the type of works.
For all of the above, observations must be received by the date specified in the consultation letter, with a minimum 30-day period given to make observations.
For all these Schedules, the Council has to “have regard” to observations made by leaseholders. For some stages, the Council must provide a summary of observations received to all affected leaseholders. For other stages, the Council must write individually to the leaseholder, usually within 21 days of receipt. There is no obligation to have regard to observations received outside the consultation period.
Please note that the legislation for this is extremely complex; the above is only intended as a brief explanation.
Summary of Rights and Obligations
With your rent and service charge demands, you will be sent a Summary of Rights that briefly sets out your rights and obligations.
One-off Charges
These are charges that are not applied every year. They include items such as the cost of removing rubbish in communal areas, replacement of communal television aerials. This may be work carried out by our staff, our contractors or specialist contractors, depending on the nature of the work. Should this happen, the cost will be divided equally among the properties in the building or site and added to the relevant charge, such as cleaning or grounds maintenance.
New service charges
There may be times when we need to consider the introduction of a new service for which we will charge all residents. This may be to comply with legislation, to improve a service or because of feedback from residents.
In these circumstances, we will consult all residents who may be affected by the proposal asking for feedback, giving four weeks’ notice. We will give at least 4 weeks’ notice of any increased charge.
If we want to introduce any new services or charge you for one that we already provide but you do not pay for, then we will give you 28 days’ notice of the new charges. These will not exceed the cost of the new service provided and will always be reasonable. We may decide to phase in any new charges.
Eligible and Non-Eligible Service Charges
For Retirement Living tenants, occasionally reference will be made to eligible and non-eligible service charges. Many tenants and leaseholder are in receipt of Housing Benefit or Universal Credit. Some service charges are eligible for Housing Benefit or the housing element of Universal Credit, and these are called Eligible Service Charges.
Examples of eligible service charges include:
- Communal grounds maintenance
- Communal laundry services
- Cleaning of communal windows
Non-eligible service charges are those that are not eligible for Housing Benefit or the housing element of Universal Credit,
Examples of non-eligible service charges include:
- Water, sewerage and utility charges relating to anything other than communal areas i.e. those for an individual property
- Individual emergency alarm systems
Complaints
If a resident has a query with the charges being made, then they can seek further information from us. If they feel that we have not adhered to our policy, or are otherwise unhappy about the service, then they can use our formal complaints procedure. We will always attempt to resolve complaints but if a resident is unhappy with our response, they have the right to refer the matter to the Housing Ombudsman.
We will provide clear information on how service charges are set in accordance with the Regulator of Social Housing (formerly the Homes and Communities Agency) Rent Standard.
A leaseholder can challenge the reasonableness of a service charge ultimately, by applying to the appropriate Tribunal. In England, this is the First-tier Tribunal (Property Chamber). They have power to make a ruling whether, or how much of, a service charge is reasonable or payable.
Review of Policy
This policy will be kept under review and amended as necessary.