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Understanding service charges

What is a service charge?

A service charge is your contribution towards the costs of additional services which are beyond the benefit of occupying your home.

Service charges can include the provision of security (CCTV monitoring, equipment depreciation and maintenance), cleaning, heating and lighting in communal areas, as well as grounds maintenance and other services. Depending on your tenancy agreement, some (or maybe even all) of the service charges below may apply to you. 

Different Service Charges

  • Communal cleaning

    Cleaning of communal area – This may include cleaning of landings, hallways, lifts and external / internal windows (where applicable)

  • Security

    CCTV monitoring

    Equipment depreciation and maintenance

  • Door entry

    Security doors (maintenance) and access control equipment (depreciation and annual maintenance)

  • Digital aerial

    Provision of a communal aerial and/or other equipment to receive digital TV (depreciation and annual maintenance)

  • Communal utilities

    This may include costs associated with communal utilities including electricity, gas, water, lighting, phones, broadband, tv licences (where applicable)

  • Management charge

    The administration costs incurred when organising and managing these additional services

  • Buildings insurance

    The cost of insuring your home (bricks and mortar only) if you are a leaseholder or shared owner

  • Compliance

    The costs associated with statutory building safety, maintenance, equipment and testing (where applicable).  This may include:

    • Legionella
    • General health and safety
    • Fire safety/alarms
    • Emergency lighting/Portable Appliance Testing (PAT)
    • Lift maintenance
    • Sprinkler systems
  • Retirement or General Needs facilities

    Provision and running cost of communal lounge (where available)

    Provision and running cost of kitchen, laundry and salon facilities (where available)

    Depreciation and maintenance of communal facilities, furniture and equipment (where applicable)

  • Furniture packages

    Provision of furniture

  • Independent Living Officer

    Provision of staff time to support Independent Living Services

  • Estate management
    • Landscaping
    • Grounds maintenance and tree management
    • Sewerage
    • Signage

    Typically these charges are applied on new development schemes

  • Personal utilities

    Private use utilities (gas, electricity, water charges where applicable)*.  These costs are not covered by Housing Benefit or Universal Credit. Typically, these are charges for utilities associated with communal boilers or heating systems.

    * If you are an Independent Living Customer and have a personal utility charge you are also required to pay some of your own utilities (e.g. water, gas and electric) and council tax. If you are unsure what utilities you are required to pay please speak to your Independent Living Officer who will be able to assist. 

    All other customers will have a personal utility charge and are also required to pay for their own utilities (e.g. water, gas and electric) and council tax.

  • Careline charges

    Call monitoring

  • Lifeline charges

    Provision of lifeline equipment/pendant (depreciation and maintenance)

  • Agency managed services

    Provision of specialist support services by an external agency (for example YMCA, Making Space, Options for Supported Living, Expect)

Details of your service charges will be confirmed to you annually in your rent and service charge notification letter.

Service charges must be reasonable and the services provided must be carried out to a reasonable standard. You will only be charged a service charge if your home benefits from the service.

If you are required to pay a service charge, your tenancy agreement will summarise how we will consult with you and notify you of any changes in services and/or costs.

Calculating service charges

The service charges you pay depend on where you live, the actual cost of the services that you receive, and whether your tenancy agreement is fixed or variable.

Each year we assess how much we expect to spend on providing services to your property. This is based on an estimate of costs, and it includes inflation and reflects the costs charged by our contractors.

These costs are then apportioned (divided) by:

  • those customers who receive the service, or
  • by the number of properties in each block of flats, or
  • by the number of properties within each specialist/specified accommodation unit.

We regularly review our service costs to ensure that they deliver value for money, and to ensure that our charges remain as accurate as possible.

Fixed and variable service charges

Your tenancy agreement confirms if your service charge is fixed or variable.

Fixed Service Charge: This charge is fixed at the start of the year, based on an estimate of the service cost.

If the actual cost of the service at the end of the year is higher or lower than the estimate, the charge cannot be changed. However, the charge may be changed the following year to ensure that the full cost of the service is recovered from customers.

Variable Service Charge: This charge can vary and is set at the start of the year, based on an estimate of the service cost.

Unlike a fixed service charge, if the cost of the service increases or decreases, the charge can be changed accordingly to ensure that customers pay the true cost of the service. In these cases, surpluses/deficits will be dealt with in accordance with your tenancy agreement.

What is depreciation?

Some services require significant capital investment, e.g. door entry systems. These can be expensive, and once installed can have a lifespan of 15 years.

Depreciation is a method used to recover high value service costs over the assessed life of an item. By charging depreciation we spread the cost annually to make these services more affordable, e.g. in the case of a door entry system we would spread the cost over 15 years and recover one year’s contribution per annum until the full cost is recovered.

Will Housing Benefit or Universal Credit help me to meet these costs?

If you are in receipt of Housing Benefit or Universal Credit most service charges will be covered through your benefits.

You are, however, liable to pay for any personal heating or water charges, as these are not covered by Housing Benefit or Universal Credit.

How do I know what to pay?

The rent and service charges that you are required to pay will be detailed in your annual rent and service charges notification letter, which you will receive in February each year.

If you are in receipt of benefits, we will contact your Local Authority and inform them of any increase or decrease in your rent and service charges. If you pay by Direct Debit, we will also make the arrangements to increase or decrease your regular payment.

If you pay by alternative means, you should continue to pay your rent/service charges in this way. Find information about payment methods here.

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This page was last updated on 06/06/2024