The service charge is based on an estimate or budget we prepare each year of all the running costs relating to the communal areas of your block. These could include a number of elements. Some of the most common are
- estate or landscape maintenance – such as cutting the grass, maintaining communal gardens, watering and sweeping,
- fire equipment maintenance,
- other electrical and mechanical equipment maintenance,
- general repairs and maintenance,
- buildings insurance – in the case of apartments, full buildings insurance is required under the terms of the lease to cover the risks relevant to the development. Standard insurance risks might include fire, explosion, lightning, aircraft, terrorism, storm or flood, sprinkler leakage, subsidence or landside etc.,
- management fee,
- bank charges and audit fees.
When are year-end accounts prepared?
Income and Expenditure accounts for the period 1st April – 31st March, will be prepared 6 months following the end of the financial year.
Service charge demands for a given year are based on an estimate of costs, so owners, therefore, pay an estimated service charge. Once the actual costs incurred for the service charge accounting year have been calculated, they are set against the estimated costs to establish whether there was a surplus or deficit of funds.
The difference between the actual and estimated costs represents the service charge adjustment. This is then added to each owner’s service charge account in the form of a credit, where there is a surplus of funds for the year or a debit if there is a deficit of funds. It is a covenant within each Lease that the service charge adjustment is paid on demand.
The financial year runs from 1st April to 31 March, service charge estimates are normally issued in February. The service charge is payment in advance, which is called an interim or alternatively, you can set up a monthly direct debit.
The service charges you pay depend on where you live, and the actual cost of the services that you receive. 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 one of the following;
- those customers who receive the service, or
- by floor area of each flat, 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.
Your lease says that you will pay your proportionate share of the costs of services, So, if your flat is in a block of 10 and we provide a cleaning service in the communal area, you will pay 1/10th of the cost. All service costs are shared equally in this way.
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
Management Fee for this development is indicated in the service charge breakdown and is subject to an annual increase. These fees form part of the service charge costs payable by the leaseholder.
In addition to the management fee, you can be charged up to 10% + VAT supervision fee (if applicable) could be charged in relation to repairs and maintenance works not covered by annual contracts, such as Major Works.
The management fee, or charge, for your property is the amount you pay towards the cost of the services we provide, which are listed below.
- Collect service charges and administer leaseholders’ accounts.
- Credit control and recovery of arrears.
- Advice and support from the Money Matters team for resident leaseholders.
- Send out statements of actual expenditure to all owners.
- Calculate estimated charges for the following year, and advise owners.
- Administer records, check and process invoices for estate and/or block expenditure.
- Deal with legal papers when owners sell their homes to someone else.
- Calculate major works charges and send bills to owners.
- Answer queries from owners about service charges, major works charges, payment options, etc.
- Monitor estate maintenance and cleaning contracts, and deal with queries/complaints.
- Deal with anti-social behaviour and neighbour complaints; act as a mediator where necessary.
- Dealing with breach of lease.
- Attend consultation meetings for major works and planned repairs.
- Arrange for communal or structural repairs.
- Inspect repairs to communal areas, fencing, car parks, etc.
- Overheads: office, IT, fleet vehicles, depot, etc.
- Arranging insurance of the block your flat is in; dealing with insurance claims.
All leaseholders who receive a service from Valleys to Coast will be charged their proportionate share of the cost of these services – your lease states that you have a responsibility to pay.
We are reviewing how we provide services to leaseholders. We provided some services for free in the past; others were included in the ‘Global Service Charge’ heading on your estimates. Where we provide a service, we must collect the cost of it as we cannot subsidise leaseholders.
We work hard each year to review the services we provide to ensure they are meeting the needs of all residents. We use our bulk purchasing power to ensure we achieve the best possible prices for energy and other supplies.
If you are living in a leasehold flat, you can speak to your Customer Income Partner.
If you are an Investment Landlord and rent out your leasehold flat, you can get advice from:
- Money Helper
- Citizens Advice
- An independent financial advisor
Under a lease agreement owners are responsible for the payment service charges. and other associated costs.
An estimate will be provided at the start of the financial year, and an interim arrangement must be made
- payable in full, or
- monthly instalments.
Leaseholders are offered monthly payments by direct debit at no additional charge, direct payments to our offices or by payment card in the post office.
We ask that you contact us as soon as possible if you are unable to make a payment to come to an agreement to prevent an arrear building on your account.
The following action will be taken when your account goes into arrears:
ONE MONTH’S ARREARS
If a payment is missed we will write to you by letter or email to advise that we have not received a payment and asking you to clear the balance. If you have financial difficulties an agreement can be made to clear your arrears within a timescale of 3 – 6 months
TWO MONTH’S ARREAR
If your account has more than two month’s arrears we will write advising that an agreement must be made, or maintained and will detail the actions that we can take to recover the arrears. At this stage an administration charge of £10 will be added to you account.
THREE MONTH’S ARREARS
If your account has more than three month’s arrears we will write advising that an agreement must be made or the option to pay monthly will be withdrawn. An administration charge of up to £25 will be added to you account each time we send you a letter.
PERSISTENT ARREARS
If you fail to make payments or agree to clear your outstanding balance, then Valleys to Coast may instruct solicitors as a part of our debt recovery where residents fail to meet their obligations under the terms of the lease and will be responsible for all associated costs. Summary of charges are shown overleaf.
If no contact has been made, or an agreement has been ignored we may approach your mortgage lender and request that they pay the outstanding balance on your behalf. This will only be used where you do not maintain an agreement or do not contact us.
Example of Administration charges (Excluding VAT):
| Initial arrears letter | £10.00 |
| Second arrears letter | £25.00 |
| Notification on unreturned cheque or Direct debit | £10.00 |
| Solicitors Letter for Action | £50.00 |
| Court Proceedings | £80.00 |
| Enforcement action | £250.00 |