TOWER HAMLETS COMMUNITY HOUSING. SERVICE CHARGING - Policy

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1 TOWER HAMLETS COMMUNITY HOUSING 1. Statement of Intent SERVICE CHARGING - Policy 1.1 THCH aims to charge for its services in a reasonable, fair and transparent manner, and in accordance with its leases. 1.2 THCH will take every opportunity to charge for each type of service in a consistent manner across all its estates and tenures although in certain respects services will be charged in accordance with the terms of the lease, even if the approach does not accord with best practice. 1.3 THCH approach to calculating and allocating service charges will be driven by our desire to keep such methods as simple as possible in order to keep the costs of administration down. 1.4 THCH will set Service Charges to reflect actual costs for each block where ever possible. 1.5 It is not THCH s intention to make a surplus from service charges, but at the same time THCH will not subsidise the cost of services for leaseholders or its administration. 1.6 THCH will prepare timely and accurate information about the cost of services for which service charges are due. We will prepare annual service charge statements and get these certified by an accountant within six months of the end of the accounting period. 1.7 THCH will provide leaseholders with an estimate of the following year s charges once a budget for that year s expenditure has been agreed. 1.8 This Policy should be read in conjunction with the Leasehold Management Policy which it complements. 2. Scope 2.1 This policy covers all THCH leaseholders, THCH shared owners and THCH commercial units. Separate arrangements exist for tenants, service charges-paying freeholders, and THCH New Homes Limited leaseholders. Committee approval: 21 February 2013 Page 1 of 7

2 3. Definition of Service Charge 3.1 Section 18 of the Landlord and Tenant Act 1985 defines a service charge as an amount payable by a relevant tenant of a dwelling as part of, or in addition to, rent which is payable, directly or indirectly, for services, repairs, maintenance, improvements, or insurance or the landlord s costs of management; and the whole or part of which varies or may vary according to the relevant costs. 3.2 The recovery of major works arising from refurbishment of transferred estates, for example, is covered by service charges. 3.3 Relevant costs within the definition include actual costs incurred, or estimates of costs expected to be incurred, by the landlord including management costs. 4. Service Charging Approach 4.1 THCH will keep its service charges reasonable. We will use our best endeavours to ensure that costs are reasonably incurred and the services and works undertaken are carried out to a reasonable standard. 4.2 THCH will review its approach to service charges to ensure that we keep up to date with legal and regulatory changes. 4.3 The primary basis for apportioning and allocating service charges will be the lease agreement between THCH and the leaseholder. Presently, all leases in use at THCH oblige leaseholders to pay for the upkeep of all common parts of each block and estate, regardless of whether a resident benefits directly from them (with the exception set out under paragraph 4.6, below). 4.4 Where service charge items are not specifically referred to in the lease, THCH will aim to apportion or allocate the costs in the fairest way possible while keeping the methodology as free of complications as possible. 4.5 To make service charges fair, THCH will aim, wherever possible, to allocate general service costs equally among all properties. For instance, for a block with a concierge service THCH will allocate the running costs of the concierge to all flats in the block equally. The same will apply to CCTV and communal aerials. 4.6 Leaseholders who transferred to THCH as a result of stock transfer who were not charged by LBTH for lifts if they lived on the ground floor or for door entry phone systems if they were not used for direct access to their Committee approval: 21 February 2013 Page 2 of 7

3 homes even though their leases clearly show that they are liable for such charges; will continue to not be charged by THCH; even though this decision was made in error by LBTH, THCH will, abide by this arrangement for leaseholders who transferred to THCH as a result of stock transfer. However, upon re-sale of the property, THCH will collect the full service charge as laid down in the lease from the new leaseholder. 4.7 In blocks where knock-throughs have taken place to reduce the number of units, service charges will be apportioned on the basis of the original block numbers. 4.8 THCH will have regard to the materiality of the cost of the service in deciding how best to allocate the cost. Where the cost of operating an allocation system for any service exceeds what THCH deems reasonable, it will be allocated equally amongst the properties to which it is applicable. 5. Major Works 5.1 The charging arrangements for major works, including improvement works, will be carried out as set out in the consultation arrangements and in legal and regulatory instruments applicable at the time. 5.2 THCH will aim to carry out its major repairs obligations as set out under the lease agreement to ensure that it protects the investment in its properties and keep the properties in good repair and condition. In planning major works THCH s approach will be to ensure that current and known future commitments in relation to maintenance works can be fully recovered through the service charges. 5.3 THCH does not maintain major repairs sinking funds (also called reserve funds). Therefore, each leaseholder will require to plan for this cost separately. 6. Accounting for Service Charges 6.1 THCH will maintain comprehensive and accurate accounting records in support of its service charges and estimates. 6.2 THCH will maintain an open book policy with respect to its allocation and apportionment methods and these will be available for inspection upon request. 6.3 Annual statements will be produced and, where applicable, audited within six months of the end of the financial year to which they relate. Committee approval: 21 February 2013 Page 3 of 7

4 6.4 The cost of audit and accounting administration will be included under the management charge for each year. 6.5 Schedule 1 below illustrates the normal calculation of service charges in THCH. Schedule 2 provides explanatory notes for various service charge headings. 7. Review Period 7.1 The Service Charging Policy will be reviewed every three years. Committee approval: 21 February 2013 Page 4 of 7

5 SCHEDULE ONE Calculation Method Expenditure Item Apportioned Charge Method of Calculation Communal Electricity Block Per Property Heating Block Property Size Caretaking/ Cleaning Area Per Property Deep Cleaning Block Per Property Communal Window Cleaning Block Per Property Concierge Block Per Property Bulk Rubbish Removal Estate Per Property Refuse Containers Block Per Property Horticultural Maintenance Estate Per Property Communal Repairs Block Per Property Chute Blockages URS maintenance <Merged with Communal Repair> <Merged with Communal Repair> Lift Maintenance Block Per Property Boiler Maintenance Block Property Size Entry Phone Maintenance Block Per Property Communal TV. Aerial Maintenance Block Per Property Insurance THCH Number of Bedrooms Administration and Management Charges Administration Charge Flat Fee Per Property Management Charges (Costs Shared with Tenants) 9% Per Property Committee approval: 21 February 2013 Page 5 of 7

6 SCHEDULE TWO Service Charge explanatory notes Communal Electricity This charge covers the cost of lighting to the communal areas and other electrical facilities, such as lifts and entry-door systems. Heating Where the block has a communal heating system, you will find that you do not receive a bill for heating; this is because Tower Hamlets Community Housing Limited pays for it directly to the utilities company and then recovers the charge within the service charge actuals. Caretaking /Cleaning The caretaking charge is based on the cost of employing a team of cleaning operative for the community housing office area; this includes salaries and associated on costs such as uniforms, cleaning materials, transport. Communal Window Cleaning This charge is for employing contractors to clean the communal windows. Concierge and CCTV Monitoring The charge for concierge includes the costs of employing a concierge for those blocks with a concierge scheme. In some instances, they will also monitor CCTV for our estates and this is the CCTV monitoring charge. Bulk Rubbish Removal This is the cost of removing large items of rubbish left in the communal parts of the estate. Refuse Containers This charge is for the hire, replacement or repair of paladin bins. This charge should NOT be confused with refuse collection, which is covered by the Council Tax bill. Horticultural Maintenance This charge is based on the cost of maintaining the communal grassed and paved areas within the estate. Currently, an annual horticultural contract has been implemented, which includes items such as, weeding, pruning, grass cutting and removal of leaves in Autumn and Winter. Communal Repairs This charge covers the cost of day to day repairs carried out to the communal parts of the block. Works may include minor repairs to balconies, drains, landings, windows, estate roads or pathways. LSG Consideration: Finance & Development Committee approval: Page 6 of 7

7 Lift Maintenance This charge is based on the annual expenditure for day to day cyclical repairs/maintenance to lifts. Please note, no charge is made, for the provisions of the lifts. Boiler/Heating Maintenance This charge covers the cost of day to day and cyclical repairs/maintenance to the communal system, if there is a system in the block. Entry Phone Maintenance This charge is based on the annual expenditure for day to day and cyclical repairs/maintenance to the entry-phone system. Please note, no charge is made for the provision of the entry-phone system. Communal TV Aerial Maintenance This charge is based on the annual cost for day to day and cyclical repairs/ maintenance to the communal TV aerial. Please note no charge is made for the provision of the TV aerial. Even if a resident does not use the communal aerial, they will still be charged for this facility. Insurance Band This charge is broken into bands. This is calculated by the number of bedroom e.g. Insurance band 1 = 1 bed; band 2 = 2 beds etc. Ground Rent Depending on the lease agreement, Ground Rent is charged at 10, 50, or 250 per annum. Leaseholder Administration Costs This charge covers the cost of providing resources to deal with Leasehold issues. The services provided include calculation and dispatch of annual and estimated service charge bills, calculation of final accounts, service charge arrears, investigation and response to service charge complaints, major work consultation and invoicing, calculation of rebates and account adjustments and other lease related issues. Management Charges (Costs shared with tenants) This charge covers the cost of work carried out by Community Housing Officers that directly or indirectly benefits Leaseholders. Although, this does not normally involve repairs inside your home, it covers ordering repairs to communal areas, like roofs, wall, windows, landing, staircases and sewers. Other duties include provision of information and statistics to both Leaseholders and the Headquarters Housing Office, managing the Caretakers, Handypersons and Horticultural Contract, advice on service delivery, servicing the Area Resident Board and dealing with anti-social behaviour issues and complaints. LSG Consideration: Finance & Development Committee approval: Page 7 of 7