Service charge explained
A service charge is a payment made alongside your rent, that contributes towards the cost of the services provided to maintain and manage communal areas and shared facilities. Service charges help to keep buildings, estates, and communal spaces safe, clean, and well-maintained.
Rent is the payment you make for your home. Service charges are separate payments that cover the cost of services provided to residents and communal areas.
Your service charge will be used towards things that maintain shared spaces in your building or estate, for example:
- Cleaning
- Repairs
- Grounds maintenance (looking after outdoor spaces)
- Lighting
- Lifts and lift services
- Building insurance
- Safety checks
- Management costs
The exact services that your service charge goes towards will depend on your property, and will be detailed in your service charge statement.
The amount you pay depends on the type of home you live in, and the services that are provided to your property/block or estate.
If you rent your home, your service charge is usually included as part of your rent account and is reviewed annually. We will let you know if the charge changes and explain the reasons for any increase or decrease.
If you’re a leaseholder or shared owner, you contribute towards the cost of managing, maintaining, repairing, and insuring the building and shared areas, as set out in your lease. We calculate your service charge based on the terms of your lease and the services provided to your building or estate. Each year, we provide an estimate of anticipated costs and a statement showing actual expenditure. If costs are higher or lower than estimated, an adjustment may be made in line with your lease agreement.
Frequently asked questions
- If you rent your home, your service charge is reviewed annually in line with the terms of your tenancy agreement.
- If you’re a leaseholder or shared owner, your service charge is based on the actual costs or contractual/estimated costs from suppliers.
The services included will vary depending on your home and tenancy or lease agreement. You can check your service charge statement to see what your service charge goes towards.
Service charges may increase or decrease each year depending on how much it costs to provide the services you receive. There are lots of things that might impact these costs, like inflation, changes in utility prices, or a change in the level of service we provide.
We always try to keep costs reasonable and provide the best possible value for money.
Some services are for the benefit of all residents and to make sure that our buildings stay safe, secure and well-maintained. You might not choose to use every facility or service directly, but the costs are shared across all residents who benefit from living in the building or scheme.
Your service charge is calculated in line with your lease or transfer document. The amount you pay can vary depending on how costs are split between the properties in the area, which takes into account things like the size and location of your home, the services you receive and any shared facilities you have access to. This means that it’s normal for neighbouring properties to have different service charges, even if they are on the same estate or in the same building.
If you believe there is an error or you do not understand a charge, please contact us. We will explain how the charge has been calculated and investigate any concerns you raise.
If you don’t pay your service charge this could lead to arrears, and we may have to take recovery action. If you are experiencing financial difficulties, please contact us as soon as possible so we can discuss the support options available.
Some service charges may be eligible for support through Housing Benefit or Universal Credit, depending on the type of charge and your personal circumstances. You should contact your local authority or the Department for Work and Pensions for advice.
It is essential that we have up to date information to contact you.
If there are any changes that we need to know i.e. correspondence address, new telephone number, name change etc please contact us to have this amended on our system as soon as possible.
Over recent years, service charge costs have increased because of the rising costs of managing and maintaining buildings and estates, due to materials, utilities and other services becoming more expensive. We collect service charges to cover the cost of providing services, repairs and maintenance, and meeting any legal obligations. When the costs of providing these services increase, we have to increase our service charge so we can continue to keep your communal areas clean, safe and working as they should.
When you buy a property, your legal representative and the seller’s legal representative are responsible for agreeing how any service charge costs or adjustments from before your ownership are handled. This is often managed through a retention fee.
We send service charge statements and adjustments to the owner we have recorded on our systems. If we have not been notified of a change in ownership, these might still be issued to the previous owner.
Once our annual accounts have been completed, you may receive a charge for a service charge deficit or a credit for a surplus from the previous year, even if you did not own the property at that time. As the current legal owner, you are responsible for any deficit. We recommend checking with your legal representative whether a retention fee was agreed as part of the purchase to cover any adjustments.
For leaseholders and shared owners
If you have variable service charges as part of your lease or other legal documentation related to the property, we should supply you with a statement within an 18 month period. This statement provides details of the actual service charge costs incurred during the financial year (1st April to 31st March). Your current monthly service charge payments are based on estimated amounts and this statement confirms the actual costs incurred for the estate and/or block.
Estimated service charges are based on anticipated costs for the year ahead. Actual service charges are based on the costs that were actually incurred during the year. For leaseholders and shared owners, any difference may result in a credit or debit adjustment to your account.
If costs are higher than what was estimated, we will request that you pay the remaining difference. This is known as a debit and will be applied to your account. If costs are less than what was estimated, we will apply the difference (known as a credit adjustment) to your account.
Need help or support?
If you have any questions about your service charge, please contact our Income, Service Charge, or Customer Services team. We will be happy to help explain your charges and answer any queries.
Service charge definitions
Important: The charge names below are examples of the most commonly used terms. Your agreement may use different wording for the same service. Please choose the definition that best matches the charge shown in your agreement. For example, a charge described as "Communal Utilities" in one agreement may be referred to as "Communal Water" in another.
Amenity - The amenity charges cover predominantly grounds maintenance and some other communal maintenance.
Audit fee - The cost of having the annual service charge accounts or actual service charge expenditure independently reviewed and certified by an external auditor or accountant.
Cleaning - The cost of cleaning communal areas like corridors, stairwells, entrances and windows.
In some cases, there may also be external cleaning costs relating to the wider estate rather than the area immediately surrounding your property. These may include litter picking, cleaning of car parks, roads and pathways that are not maintained by the Local Authority, removal of fly-tipped items and pest control services.
Community rooms - The cost of maintaining and operating communal rooms or shared spaces for residents' use.
DDH septic charge - The cost of maintaining, servicing and operating a communal septic tank system.
Digital aerial - The cost of maintaining, repairing and operating a communal television aerial system.
Door entry system - The cost of maintaining, repairing and operating a communal door entry or access control system, including the replacement of keys or access fobs where applicable.
Furniture pack (Including renewal and depreciation) - The cost of furniture provided by the landlord for the resident's use, including replacement or renewal where required.
Ground rent - A payment made by the leaseholder to the landlord for the use of the land on which the property is built, where applicable under the terms of the lease.
Grounds maintenance - The cost of maintaining communal grounds and outdoor areas where these are not maintained by the Local Authority. This may include grass cutting, hedge and shrub maintenance, tree management, and the upkeep of car parks, pathways and garage areas.
Housing management - The cost of providing on-site housing staff to support the management of the building and assist residents. This may include regular site visits, resident engagement, addressing housing-related concerns, monitoring communal areas and helping to ensure the building is managed effectively.[HH3]
Insurance - The cost of buildings insurance for your property where this is required under the terms of your lease or Deed of Covenant. Please note that we are responsible only for buildings insurance. You are responsible for arranging your own contents insurance to protect your personal belongings.
Laundry facility - The cost of maintaining and operating a communal laundry facility available to residents.
Lift maintenance - The cost of routine servicing, inspections and planned maintenance of lifts to ensure they remain safe and operational.
Lift repairs - The cost of unplanned repairs required to restore lift service following faults, breakdowns or damage.
Management fee - The cost of managing and administering the services provided to your building or estate. This may include calculating service charges, arranging repairs and maintenance, managing contracts, customer services and neighbourhood management.
Planned maintenance - The cost of planned servicing, inspections and maintenance of communal assets and health and safety systems. This may include servicing fire alarms, emergency lighting, lifts, asbestos inspections and surveys, and other statutory compliance requirements.
Renewables and maintenance - The cost of maintaining, repairing and operating energy-efficient and renewable energy systems. This may include solar panels, electric vehicle charging points, solar-powered communal lighting and associated equipment. The charge may also include any required subscriptions, monitoring services or software needed to operate these systems.
Responsive repairs - The cost of unplanned or emergency repairs to communal areas of the building, such as communal doors, roofing or guttering, or to estate facilities such as car parks, pathways and street lighting.
Sewerage - The cost of maintaining and repairing communal sewerage systems, drains and associated pipework.
Sinking / reserve fund - A fund built up over time to help pay for future major repairs or replacement works, helping to reduce the impact of large one-off charges. This may include works such as resurfacing a private road, replacing communal equipment or carrying out significant building repairs. The types of costs that may be charged to or paid from the sinking fund are determined by the terms of the lease.
Third-party management or external managed services - Costs charged by an external managing agent or management company that provides services on our behalf.
Utilities - The cost of utilities supplied to communal areas, typically electricity and water. This may include lighting in communal areas, communal water supplies and estate services such as street lighting.
