Publication of service charge accounts, and setting the service charge budget
Wherever practicable, the Association will hold a residents’ meeting to consult on and agree budgets for service charges for the following twelve months.We will aim to give at least two weeks notice of the meeting and send you the proposed budget one week before the meeting.
Accounts for the preceding year, and the budget for the following year, are drawn up by the end of May each year. The accounting year runs from 1st April to 31st March and the charging year runs from 1st July to 30th June. Consultation on the budget estimate takes place during February or March each year. Any surpluses or deficits are carried forward, and taken into account in the service charge which is set for the following year. Any significant deficit will be recovered over a two year period. Generally, service charges are designed to cover costs for the year in question. These costs may be known; e.g. where we have a fixed price for planned work; or estimated, e.g. where the cost of fuel and power may vary depending on consumption.
For leaseholders, in accordance with their lease and where legislation requires, an annual audit of the accounts will be carried out by a qualified accountant. Copies of audited accounts will be made available.
Owners have the right to inspect accounts, receipts and other supporting evidence in connection with the collection and administration of service charge accounts. Where appropriate, Westcountry may make a reasonable charge for this service.
Services charges include:
Sheltered communal lounge expenses
Cost of items purchased for the residents’ communal lounge facilities.
Fire alarm maintenance
The cost of servicing and repairing any fire alarm system on a scheme and also the repair, replacement and servicing of any fire extinguishers present on a site.
Sheltered scheme guest room income/expenditure
Represents costs incurred in providing the guest room e.g. cleaning of bed linen etc. All income received from visitors using this facility is credited to the service charge account.
Insurance
This cost represents buildings insurance of all the buildings within the scheme. i.e. communal property and leaseholders individual homes. Residents are advised, however, to take out contents insurance for their home.
Communal laundry expenses
These represent all costs relating to the maintenance and repair of communal laundry equipment. It may also include council water rates if applicable.
Maintenance and repairs
This covers the cost of any maintenance and repairs carried out on your scheme. For leaseholders and owners this may include some repairs to individual property.
Cyclical maintenance
For leaseholders and owners only. This indicates monies set aside each year for major works such as external painting, window replacements, and roofs. The monies collected for the year will be transferred into the reserve fund (See ‘reserves’ below).
Leaseholders and owners reserves
Some leases allow for the Association to collect money in advance to create a reserve which will pay for expensive items or work. The cost may be spread over a number of years, this is to prevent large fluctuations and undue hardship to residents. Monies collected for reserves will be held in a separate interest bearing account. The Association will advise residents of the name, address, account number and name, of where monies are held for this purpose. Interest from monies held in separate accounts will be shown in the annual service charge account. Residents may, on request, inspect the account which relates to
their lease or transfer document.
Caretaking
The charges under this heading cover the costs of employing a caretaker or contractor to do caretaking work, providing skips, and occasional charges for removing rubbish from a site.
Caretaking duties may include:
- acting as a contact point between the residents and the Association
- reporting repairs in communal areas
- holding contact phone numbers for office staff
- cleanliness and safety of communal areas
- arranging removal of bulky items.
A caretaker is not responsible for supervising residents. A separate Service Statement covering the caretaking service is available on request from any of the Association’s offices.
Service contractors
The Association may employ contractors for work on communal areas.
Typical duties are: cleaning communal areas and grounds maintenance
Electricity and lighting
This is the cost of providing lighting and/or heating and power to communal areas. It might also include the cost of power to a laundry facility or lift, as well as light bulbs, tubes and the cost of setting timeclocks.
Service assets
Service assets are items that are provided for residents’ benefit that are not a fixed part of the building. Examples include washing machines and communal furniture.
Depreciation of service assets
Some service assets, such as washing machines, are expensive to purchase and replace. Because they will last for several years, we split their cost to you into equal installments over five years. This helps to avoid big increases in your service charge in a year when we have to buy or replace an expensive item.
Provisions
We may set aside some money each year for the replacement of significant service assets such as lifts and carpets.
Lifts
Where a lift is provided, the service charge covers the cost of running, maintaining and insuring the lift. It also includes an amount towards the future cost of its replacement.
Support Charges
Support Charges will be shown for information purposes on service charge statements for “sheltered” properties.
Support charges include:
- Scheme Managers’ employment costs including training,
- accommodation (where applicable) and supervision
- the Central Control (alarm monitoring) service
- a contribution towards telephone expenses
- emergency call and intercom system including the maintenance of the equipment.
Support charges are not eligible for Housing Benefit but may be met by the Supporting People team of your Local Authority.
Management fee
A management fee is charged to cover our costs in administering and managing activities related to service charges, such as arranging contracts, attending meetings, collecting charges and preparing accounts.
In addition, for leaseholders:
- Management of leases and transfers and responding to enquiries
- Legal costs dealing with complex enquiries and issues
- Providing a repairs service
- Administering buildings and other insurances
- Membership of associated housing bodies
- Compliance with legislation and Housing Corporation regulations.
Service charges: your legal rights
For those renting
As part of your legal right to information about how we spend your service charge, we send you a financial account each year. We will also show you, on request, relevant invoices for the charges.
For leaseholders and owners
Leaseholders have the following legal rights in relation to service charges.The Association will provide equivalent services to freehold owners, based upon these rights.
We will guarantee your:
1. Right to regular statements of service charge accounts
2. Right to view budget statement for forthcoming year
3. Right to receive a statement within 6 months of the end of our accounting period. If we fail to provide you with this, you have the right to withhold payment until such time as we do so
4. Right to inspect documents relating to service charges
5. Right to carry out an independent management audit - the costs of such an audit must be met by residents
6. Right to appoint a surveyor
7. Right to challenge whether the cost and quality are reasonable
8. Right to challenge the reasonableness of administration charges Administration charges include, any charges made by Westcountry to provide information relating to your lease, or charges payable by you in connection with the sale of your lease. If you have any concern or query regarding service or administration charges, the Association will be happy to assist. Any leaseholder who thinks that any of these charges are unreasonable can apply to the Leasehold Valuation Tribunal on 020 7374 5380 or visit www.lease-advice.org for more information. Anyone renting who thinks that any of these charges are unreasonable can refer to the Residential Property Tribunal Service on 0845 6003178 or visit www.rpts.gov.uk You must do this before the starting date of the proposed new rent. You must remember to notify the Association that you are doing so; otherwise we may assume that you have agreed to pay the
proposed new rent.
Please do not hesitate to contact us with any further queries: 01803 200300 or 01752 254200..