Annual service charges

Service charges are levied by landlords to recover the costs they incur in providing services to a dwelling. You pay service charges only for the services that you receive and the repairs, maintenance and improvements that are carried out to your building and estate.

 

Details of what can (and cannot) be charged by the Council as landlord, and the proportion of the charge to be paid by the individual leaseholder are all set out in general terms in the lease. In some cases freeholders are also liable to pay charges for services provided; provisions for these are included in the transfer agreement.

 

You will be billed each year for services provided to your property and communal areas of the building and estate within which your property is situated. The Council has a duty to collect the leaseholder’s share of these costs. The cost of building insurance (communal areas, structure and exterior only) will be included in the service charge bill sent to you. Examples of the services for which you will be charged are:

• General maintenance and repairs, and where the services are provided
• Communally supplied central heating
• Lifts 
• Lighting of communal areas 
• Cleaning of communal areas 
• Grounds maintenance

 

The charges also include the costs of management by the landlord or a professional managing agent. The lease also provides for the landlord to collect contributions to a sinking fund. This purpose of the sinking fund is to make provision for the cost of future works. At present Lewisham Homes does not operate any sinking funds.

 

Not all leaseholders receive all the services ,you are only charged for the services that are provided to your building and estate. The paragraphs below tell you about each of the main service charge items and how the charge is worked out.

 

This service is supplied internally to the communal areas of a building and to the communal areas of an estate. It includes: 

• Reporting damage to communal areas
• Washing communal areas 
• Replacing light bulbs and covers to lights in communal areas 
• Ensuring that public areas are safe and secure 
• Sweeping and cleaning of lifts and all communal areas 
• Dealing with blocked refuse chutes

The average amount of hours spent on a building and on an estate over the course of a year is used to work out the service charge. Multiplying the number of hours by the cost per hour of providing the service gives the annual charge. The hourly cost in includes wages, equipment, materials, supervision, uniforms, telephones etc. The cost is then divided equally between the number of properties benefiting from the service. Therefore the more work that the building requires from the caretaking service and environment services the higher the service charge.

 

The grounds maintenance service includes maintaining grassed areas, flower beds, trees etc. This work is, in the main, carried out by Glendales, under a contract. The contract is priced for each of the grass and shrubbed areas that are maintained. As a leaseholder you are charged your share of the costs for those areas that benefit your estate. The total cost for the area including the supervision of the contract is divided by the number of properties benefiting from the service. In some cases the block will not be part of an estate, in which case the costs are those incurred in maintaining the green areas around the block.

 

An amount per week equal to the charge which Council tenants in the same block have to pay is charged to the leaseholders in that block, and multiplied by the number of weeks in the financial year. The charge may change during the year, and if so the amount charged to leaseholders is amended at the same week as the change.

 

The charge for communal lighting is calculated by dividing equally the cost of electricity used to provide lighting to entrances, staircases and communal areas between all the dwellings that benefit. It does not include the cost of repairs; these are charged separately. Actual bills received from the energy company for your building are used to calculate the charges.

The Council tendered the contract for the supply of electricity to communal areas to obtain the best market rate for green energy. Unlike domestic electricity charges the Council does not have to pay any VAT on the electricity consumed. Leaseholders benefit from this exemption.

 

This is the cost of maintaining an entry phone door system in a building or block. These systems are not normally subject to routine monthly maintenance but are repaired as and when required. The cost of communal repairs to an entry phone door system is shared amongst all the units which have an entry phone handset connected to the entry phone door system.

If the handset inside your home needs repairing you will have to pay the full cost of the repair. The Council also has to add an amount for VAT as the repair is not to a communal part of the building. In some cases properties on the ground floor may have their own separate entrance, and be totally unconnected to a communal entry phone door. In such cases, leaseholders are not charged for the entry phone.

 

The lift charge includes the cost of the electricity used to run and light the lift, regular checks, servicing and maintenance, and the cost of call-outs to repair a broken down lift. The charge is calculated for each lift and equally divided by the number of dwellings in the building (excluding ground-floor dwellings).

 

This charge is for the cost of day-to-day repairs and maintenance works carried out to the structure and communal parts of your building and the estate. It includes maintenance works to:

• Communal parts, e.g. roof, communal doors, main storage tanks etc
• Drains and gutters, including estate jetting, refuse chutes jetting
• Communal heating and lighting systems
• Estate roads and paths

The above list does not include all the services that you may receive.
The cost of repairs to the estate and your building is divided equally between the properties that benefit.

 

The service charge that you pay each year is used to pay for the day-to-day services provided to your building or estate. It is worked out in such a way as to ensure that you pay a fair share of the actual cost of the services that you receive. The lease sets out how your share of the costs is worked out. The majority of Council leases require the cost of the service to be shared equally between all the properties benefiting from the service.