A guide to your service
charges
and
Summary of rights and
obligations
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Contents
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Service charges – how we work
Description of services
Home ownership costs
Summary of tenants’ rights and obligations
Contact us
If you have a query about your service charges:
033 3000 3000
www.genesisha.org.uk
contact@genesisha.org.uk
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Do you have rent arrears due to benefit problems?
Do you have issues with housing benefit or the Department
for Work and Pensions?
Are you being chased because of outstanding debts?
Genesis can offer residents free and confidential advice,
information and support to deal with these issues.
Contact us for further information or to be referred to an advisor.
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Service charges - how we work
As you will know, Genesis Housing Association provides or manages
the common services to your scheme – things like cleaning;
communal maintenance, servicing of plant and equipment and
gardening – or they are provided on our behalf by a managing
agent. We also ensure that your building is insured and deal with any
queries or general management issues you may have.
We want to offer value for money and are committed to
becoming more efficient.
This booklet describes how we manage service charges and
answers the common questions people ask us.
We are improving the way we manage service charges. We hope
you’ve already noticed some improvements. Over the next year
or so, we’ll be introducing new improvements every time we
send you information about service charges.
We aim to:
• get better value for money on your services
• consult you about any significant changes to your services
• give you clear information about how your services are managed
What are service charges?
Service charges cover the costs of managing, maintaining,
repairing, insuring and providing services to residents beyond the
benefit of occupying their own home. The law says the charge
must be ‘reasonable’ and the services provided must be carried
out to a ‘reasonable’ standard.
Service charges include items such as cleaning,
concierge/caretaker, ground maintenance repair, lifts, pest
control, management costs and any other running expenses
to the block or estate.
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Leaseholders also pay their share of building insurance and
the maintenance of the building through the service charge
(tenants pay these costs within their rent).
What does my service charge cover?
Services received can vary depending on the location, the type
and size of the property you live in. For example, if you live in a block
with a lift on an estate, you will receive more services than living in a
flat in a converted street property or a low rise block without a lift.
How are charges calculated?
We charge you an amount each week or month that is our
estimate of what the services will cost over the year. We
calculate this by looking at spending in previous years,
estimating the increase due to inflation and adding in any
increases or decreases in spending that we know about for the
coming year. Charges normally change in April and we will try to
give you a month’s notice of any changes.
When do I receive the actual costs?
We will send you the actual costs in September each year – within
six months of the end of our financial year. The actual accounts will
show you the difference between the estimate that charges were
based on and the actual expenditure, and the resulting surplus or
deficit.
When do I settle the surplus/deficit?
If we have overestimated the budget and you are a leaseholder
you may claim back the surplus or leave it on your account to
offset future charges. If there is a deficit, we will write to you to
advise you of the amount due. If you cannot pay immediately
we will discuss a payment plan with you.
If you are a tenant any surplus or deficit will be rolled into the
following year’s service charge.
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If you have difficulties in paying your service charge, we will discuss
a plan to pay by installments. Please contact your Credit Controller
or Supported Housing Area Manager to discuss the options.
Why have my charges gone up this year?
Some costs have risen. If cost increases are forecast, we will make
an allowance for this in the estimate but if the changes happen in
the middle of the year the actual costs may be higher than the
estimated charges.
Which service charges are eligible for housing benefit?
Housing benefit will cover all service charges that you have to pay
linked to your home but are not within your home - for example
cleaning of common parts or common parts’ electricity costs.
Housing benefit will not cover heating, utilities costs, water
charges related to your home or meals. These costs are
shown under personal consumption on your accounts.
What is the difference between block and estate services?
We organise services by block and estate to ensure we only
charge you for the services you receive. Depending on where
you live you may receive both types of services.
Block: When we provide services or carry out work to the
communal area of a building, such as a lift, a block charge will be
made. The cost of these repairs is shared by all units within that
block.
Estate: An estate charge applies to services to the communal
areas of an estate, such as a grassy area or play equipment.
These costs will be shared by all properties on the estate enjoying
the benefits of this service.
Why do my neighbour and I pay different amounts?
The cost is shared out amongst the homes in the block or estate in
a ‘reasonable’ way. This can be equal shares but may also be based
on rateable value, floor area or number of rooms. If you are a
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leaseholder, your lease may set out the method of apportioning
costs.
Why do I pay for communal/estate electricity charges?
You are required to pay for your share of the communal light
power consumption provided in your block and any outside
lighting on the estate, the maintenance of the lights, appliances,
replacing of light bulbs and any standing charges levied by the
energy provider.
How often is cleaning done?
This can be done once or twice a week based on the size of the
block or estate, the amount of traffic or requests by residents.
Your Property Manager can provide you with details of when your
cleaning is done.
Who monitors the contractors?
Your Property Manager monitors the contractors and carries out
regular inspections of the block and estate. The cleaning should
meet specific standards agreed with the contractor and residents.
If you believe the quality of cleaning and ground works are poor,
please discuss the problem with your Property Manager.
Does cleaning include bulk rubbish?
Yes. Bulk rubbish collections may be part of a cleaning contract or
may be invoiced separately. However, if we are able to identify the
culprits, we will recharge them directly. Otherwise, the cost will be
shared amongst all residents.
I do not use the communal gardens. Why should I pay?
The communal gardens are a shared area available to all
residents. You have to pay this charge whether or not you
choose to use the gardens.
I am a freeholder. Why should I pay?
If your property is on an estate, your transfer documents will
specify which costs of maintaining the estate you must contribute
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to. If you do not have a transfer document, please contact your
mortgage provider or the Land Registry directly to obtain a copy.
How are water rates calculated?
If we charge water rates, they are estimated based on your costs
over the previous year. We may need to adjust them if the final bill
sent to us by the water company is higher or lower than the
estimate. Most residents pay directly to their local water company.
Why is there no council tax charge?
It is generally residents’ responsibility to pay council tax directly to
the local authority. If it is included in your charges, it will show as a
separate amount. If you are unsure who should pay council tax
please contact your Property Manager or Supported Housing Area
Manager.
What if I can’t afford my service charge?
Contact us for confidential help and advice regarding any
difficulties in paying your service charges. If you receive housing
benefit you should contact your local housing benefit
department to ensure you are receiving the right level of
benefit.
What can I do if I do not believe my service
charges are reasonable?
Once you have received the summary of actual costs (in
September) you can request to view, inspect and take copies
of invoices and other documents that support the service
charge.
If you pay a variable service charge you can then apply to the
Leasehold Valuation Tribunal, which will determine whether the
charge is reasonable.
If you have a fixed service charge you can apply to a rent officer at
the Valuation Office Agency.
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Who does what on service charges?
Property Manager
• Monitors quality of work
• Sets budgets for service
charges
• Deals with enquiries
Credit Controller
• Takes payments
• Negotiates payment
by installments
• Advice about Housing Benefit
Contact Centre (Customer
Services Officer)
• Receives and action
repair requests
Supported Housing Area
Manager
• Monitors quality of work
• Sets budgets for service
charges
• Deals with enquiries
• Takes payments
• Negotiates payment
by installments
• Advice about benefits
• Deals with
straightforward
enquiries
• Takes payments
Service Charge Officer
• Deals with complex enquiries
• Sends out accounts
and estimates
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Description of services
This section gives an explanation of each of the service
headings appearing on your service charge schedule and
accounts. Each service heading may include a number of
individual services.
Staff costs
This is the cost of staff - such as caretakers, porters, wardens,
cleaners and cooks - employed on site to provide services to
residents. If staff accommodation is provided to resident staff then
the notional cost of the rent is also included in this section.
Staff costs can include the following cost elements:
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wages/salary
life insurance
permanent health insurance
accommodation
Energy costs
This charge is for the cost of electricity and power to
communal areas including power supply to lifts and water
pumps if applicable. For
sheltered schemes, this will include the power to common rooms,
laundry room, guest room, kitchen and warden room.
Charges are based on the amount billed by the power provider
or it may be the expected cost if bills from the provider for energy
use within the financial year have not yet been received.
Garden and grounds maintenance
This is the cost of maintaining the grounds of the estate around
your property. This includes gardening costs, pavement cleaning
and gritting when necessary, tree felling and so on.
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Costs include salary or fees per hour and charges for cleaning
materials and transport.
Cleaning and refuse collection
This is the cost of cleaning the communal parts inside and
outside the building such as stairs, communal windows,
communal hallways and pathways.
The charge covers the cost of plastic bin sacks and/or hire of
communal bins plus bulk refuse removal if applicable.
This category also includes clearing vermin from common areas
or areas adjoining common parts.
TV and aerial costs
This charge is for the maintenance of any communal TV aerial
provided for use in your block. This may include the cost of
converting your aerial to digital.
Equipment repair and maintenance
This covers your share of the cost of day-to-day repairs on
equipment in communal areas to your block. The cost can
include repairs and maintenance to equipment such as lifts or
pumps.
Entryphone and security costs
This is the cost of maintaining door entry systems, electric gates
and CCTV, as well as any monitoring of the cameras, if provided on
your estate. In some estates, this also includes the cost of
responsive security patrols
Managing agent costs
This is also known as third party or outsourced service charges
and it is only charged where a management
company provides
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services within the estate. We will show charges under this
heading if we do not have enough information from the managing
agent to give you a full breakdown.
Note that for leaseholders these charges may include buildings
insurance and repairs and maintenance to the fabric of the
building.
Water (including Legionella testing)
This is the cost for the consumption of water in communal areas
(including outside taps) and the costs incurred to carry out water
checks such as Legionella testing. Some developments only
have one water meter therefore the water consumption includes
the personal consumption of water in private accommodation. In
this case, the charges will be broken down, if appropriate,
between personal consumption and communal consumption.
See below for more information on personal consumption.
Health and safety
These are costs incurred to provide health and safety checks in
your development. These include, but are not limited to, electrical
testing and fire equipment testing. These tests are carried out
primarily for the health and safety of our tenants and staff although
some of them are to comply with laws and regulations.
Estate and car park costs
This covers the cost of maintaining the estate roads, car
parks, gates, walls and fences, and so on.
Underground car parks may also have lighting and fire
prevention or ventilation systems that have to be
periodically inspected and maintained.
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Repairs and maintenance
This covers the cost of repairing and maintaining the building
and may include the share of costs applicable to leaseholders
or costs to communal areas. It includes internal and external
decoration and other building maintenance.
Tenants pay for repairs and maintenance to the building from
their rent but leaseholders pay it as part of the service charge.
Contribution for equipment renewal
This is the cost of replacing rather than repairing equipment
such as pumps, lifts, fire appliances, paved areas and private
roads.
We estimate the life of the equipment and make an annual
charge to residents (known as depreciation). We do this to
prevent you having to pay a large bill for the full cost when the
equipment is replaced.
Personal consumption
This includes costs that are individual to you such as water,
heating and electricity within your home, and the costs of
providing meals.
For some homes, water, electricity or heating are provided centrally.
The utility companies charge us and we divide that cost up between
all homes receiving services. In this case, the cost charged will be
broken down, if appropriate, between personal consumption and
communal consumption. Communal consumption will be charged
under energy costs or water consumption costs as appropriate.
Personal consumption costs are not eligible for housing benefit.
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Management fee
This is our cost to manage the services we provide. The law
requires that this charge is reasonable. The management fee
covers the costs
of finding a suitable contractor, ensuring they do the work
properly and processing the payment of their invoices. The
management charge reflects our cost of doing that for all the
services provided.
For tenants we calculate the management fee by charging
15% of the costs of providing the services.
For leaseholders we now (from April 2012) charge a fixed amount
depending on the number of services we provide. For
leaseholders the management fee also cover costs such as
providing accounting systems, the costs of receiving payments,
credit control, providing account statements, dealing with
standard enquiries, providing advice, preparing service charge
estimates and accounts, managing shared ownership rents and
carrying out our obligations and regulatory requirements as a
registered social landlord. Tenants pay for these costs within their
rent.
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Home ownership costs
You may be charged the costs below in your service charge if you
are a leaseholder or a freeholder. We do not charge these costs to
tenants because we are already collecting for these services in the
rent. Note that for shared owners, your rent only covers our
borrowing costs for the retained part of the property. References to
leaseholder below apply to all shared owners, 100% leaseholders
and freeholders.
Building insurance
Under the terms of the lease, we have an obligation to insure the
building on behalf of the leaseholders against risks like fire and
flood and the leaseholders are obligated to pay the cost of the
insurance.
Usage Fund
We have changed the way that we charge depreciation. We now
levy a charge on the basis of a ‘fit for purpose’ rather than a precise
calculation for the depreciation on an individual piece of equipment.
By having a usage fund we can now include smaller items of
equipment for example furniture. As we operate a variable service
charge regime the Usage Fund may go up as well as down
dependant on the contractor we employ.
Audit fee
If there are more than four leaseholders receiving services, we
have the block or estate accounts independently audited.
Sinking funds
We collect sinking funds from leaseholders for cyclical works and
major works to make payments more predictable. We transfer the
amounts charged monthly into a separate bank account that
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holds residents’ monies. This account, currently at Barclays Bank,
is held in trust on behalf of Genesis residents.
We will send you a summary of your sinking fund account each
year in September when we send you the accounts of actual
costs for the previous year.
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This is a statutory notice which Genesis Housing Association is
required to send under Section 153, Commonhold and
Leasehold Reform Act
2002. The legal term ‘tenant’ includes leaseholders.
Summary of tenants’ rights and obligations
1. This summary, which briefly sets out your rights and obligations
in relation to variable service charges, must by law accompany a
demand for service charges. Unless a summary is sent to you
with a demand, you may withhold the service charge. The
summary does not give a full
interpretation of the law and if you are in any doubt about your
rights and obligations you should seek independent advice.
2. Your lease sets out your obligations to pay service charges to
your landlord in addition to your rent. Service charges are
amounts payable for services, repairs, maintenance,
improvements, insurance or the landlord’s costs of
management, to the extent that the costs have been
reasonably incurred.
3. You have the right to ask a leasehold valuation tribunal to
determine whether you are liable to pay service charges for
services, repairs, maintenance, improvements, insurance or
management. You may make a request before or after you have
paid the service charge. If the tribunal determines that the
service charge is payable, the tribunal may also determine:
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who should pay the service charge and who it should be paid to;
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the amount;
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the date it should be paid by; and
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how it should be paid.
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However, you do not have these rights where:
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•
4.
a matter has been agreed or admitted by you;
a matter has already been, or is to be, referred to arbitration or
has been determined by arbitration and you agreed to go to
arbitration after the disagreement about the service charge or
costs arose; or
a matter has been decided by a court.
If your lease allows your landlord to recover costs incurred or that
may be incurred in legal proceedings as service charges, you may
ask the court or tribunal, before which those proceedings were
brought, to rule that your landlord may not do so.
5. Where you seek a determination from a leasehold valuation
tribunal, you will have to pay an application fee and, where the
matter proceeds to a hearing, a hearing fee, unless you qualify for
a waiver or reduction. The total fees payable will not exceed £500,
but making an application may incur additional costs, such as
professional fees, which you may also
have to pay.
6. A leasehold valuation tribunal has the power to award
costs, not exceeding £500, against a party to any
proceedings where:
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it dismisses a matter because it is frivolous, vexatious or an
abuse of process; or
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it considers a party has acted frivolously, vexatiously,
abusively, disruptively or unreasonably.
The Upper Tribunal has similar powers when hearing an appeal
against a decision of a leasehold valuation tribunal.
7. Your landlord:
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proposes works on a building or any other premises that will
cost you or any other tenant more than £250, or
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• proposes to enter into an agreement for works or services
which will last for more than 12 months and will cost you or
any other tenant more than £100 in any 12 month
accounting period.
Your contribution will be limited to these amounts unless your
landlord has properly consulted on the proposed works or
agreement or a leasehold valuation tribunal has agreed that
consultation is not required.
8.
You have the right to apply to a leasehold valuation tribunal to ask
it to determine whether your lease should be varied on the
grounds that it does not make satisfactory provision in respect of
the calculation of a service charge payable under the lease.
9.
You have the right to write to your landlord to request a written
summary of the costs which make up the service charges. The
summary must:
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cover the last 12 month period used for making up the
accounts relating to the service charge ending no later than
the date of your request, where the accounts are made up
for 12 month periods; or
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cover the 12 month period ending with the date of your
request, where the accounts are not made up for 12
month periods.
The summary must be given to you within one month of your
request or six months of the end of the period to which the
summary relates whichever is the later.
10. You have the right, within six months of receiving a written
summary of costs, to require the landlord to provide you with
reasonable facilities
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to inspect the accounts, receipts and other documents
supporting the summary and for taking copies or extracts from
them.
11. You have the right to ask an accountant or surveyor to carry out
an audit of the financial management of the premises containing
your dwelling, to establish the obligations of your landlord and the
extent to which the service charges you pay are being used
efficiently. It will depend on your circumstances whether you can
exercise this right alone or only with the support of others living in
the premises. You are strongly advised to seek independent
advice before exercising this right.
12. Your lease may give your landlord a right of re-entry or forfeiture
where you have failed to pay charges which are properly due
under the lease. However, to exercise this right, the landlord must
meet all the legal requirements and obtain a court order. A court
order will only be granted if you have admitted you are liable to pay
the amount or it is finally determined by a court, tribunal or by
arbitration that the amount is due. The court has a wide discretion
in granting such an order and it will take into account all the
circumstances of the case.
If you need any part of this information in large
print, Braille, on audio tape or explained in your
own language please contact us on the
number below.
Genesis Housing Association, Capital House, 25 Chapel Street, London NW1 5DT
www.genesisha.org.uk
GHA1158
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