Commonly asked service charge questions
Below are some answers to some commonly asked questions that we hope will give you a better understanding of what service charges do and don’t cover.
Why do I have to pay a service charge?
The service charge covers the cost of the shared services that we provide you as part of your tenancy, lease or transfer agreement. These charges are for servicing or maintaining any communal areas of the building you may live in such as the communal corridors or staircases, or also the shared outdoor areas of the estate where you live, such as a green space. This may also include any green spaces that are not managed by your local council.
Why have some costs increased?
When existing contracts come to an end, it gives us an opportunity to review them to make sure that you are getting the services you are promised and that the costs are fair and transparent.. There are a number of contracts that are due to expire during the 2018/2019 financial year (our financial years run from the first of April until the thirty first of March), so we have made an allowance for this and increased budgets to take account of any increases that may become apparent as a result of these changes. This is a precautionary measure and should there be any surplus or deficit at the end of the accounting year this will be either carried forward to the new budgeting year or added to customer’s accounts depending on your tenancy, lease or transfer agreement.
What is a surplus (underspend) and deficit (overspend)?
At the start of each year we set a budget for your property based on what we believe the cost of maintaining the communal spaces will be during that financial year. At the end of the financial year, the actual costs are calculated to establish whether there was a surplus (underspend) or deficit (overspend) i.e. was more money collected than spent resulting in a surplus, or the amount spent exceeded the money collected resulting in a deficit. Depending on your tenancy, lease or transfer agreement we may carry forward the surplus or deficit to the next budgeting year or we may add this to your service charge account.
If we have spent less on services than expected, you will receive money back from us. If you pay by Direct Debit, we will automatically adjust your future payments to reflect the refund amount. Alternatively, you can apply for a lump sum refund.
If we needed to spend more on relevant services, we will debit the cost of the shortfall against your service charge account. You will need to arrange payment to cover the shortfall. Single payments can be made via My Account or you can contact us to arrange an agreement to pay in monthly installments.
Why do I have to pay for gardening costs; I have my own garden or I don’t have a garden?
The gardening costs in your service charge relate to the maintenance of the communal outdoor spaces where you live, not just your own garden. These spaces can include green (grass, trees, and shrubs) and paved areas. The cost of maintaining these spaces is covered by us or our chosen partners, not the local council, and passed on equally to those customers who have access to and benefit from these spaces through the service charge.
Why do I have to pay for a lift when I live on the ground floor?
The lift in your block is for the use of everyone who lives there regardless of what floor they live on.
I am a leaseholder, why do I have to pay for ‘repairs?
Repairs includes repairs that have to be carried out to the communal parts of the building or estate (such as a roof repair, a repair to a communal entrance door or a car park or pathway repair). As a leaseholder, you are required to pay your fair share of the repairs costs (as stated in your leasehold agreement). For customers who pay rent, these costs are included as part of the rent you pay.
Why do I have to pay for grounds maintenance and rubbish removal, doesn’t the council do this?
The council collects your household waste which is paid for as part of your council tax. However, they will not collect any waste that collects in the communal areas of your building or neighbourhood, this could be anything from litter to larger items such white goods or abandoned vehicles. If we can’t determine who illegally disposed of these items (this is known as illegal fly tipping), then the cost of removing these items is split equally across all the customers who live in the building and/or neighbourhood where the waste has been left. Therefore, it’s a good idea for you to not only dispose of bulky waste responsibly, but report illegal fly tipping to us when it happens. For more information about bulky waste and our illegal fly tipping reporting form, please visit orbit.org.uk/bulky waste. Regarding grounds maintenance/cleaning, the council only maintains the areas that they own or have adopted. All other grounds within our neighbourhoods are maintained by us or our partners and the costs of delivering these services is split equally amongst the customers who live in that neighbourhood through the service charge.
Why do I have to pay for tree surveys/ tree maintenance?
Any land not owned by the local council needs to be maintained particularly if it contains trees. We will carry out a tree survey to assess the condition of all trees on communal land and carry out necessary works. The costs of these trees will be spilt between all customers living on that estate.
Why do I have to pay for play equipment when I don’t use it?
If the neighbourhood where you live has a play area which hasn’t been adopted by the local council, we have to pay for the inspection, testing and repairs of the equipment and surrounding area. All customers have equal rights of access and use for these facilities and so the up keep costs are also shared equally amongst all customers in the neighbourhood through the service charge.
Why am I paying for electricity, I live in a house and pay my own electricity bill?
Electricity costs are not just for internal communal lights in blocks of flats, they can also be for external lights for pathways, car parks and unadopted street/footpath lights. This will also include any lightbulb or repair costs.
Do I pay for window cleaning and environmental cleans?
We will only charge you for the services we provide at your estate. With regards to window cleaning for example, charges will only be charged if we carry out window cleaning in your building. The same applies to environmental cleans (where we would only deep clean where needed to remove any potential bacteria).
Why am I paying for gas, I pay my own gas bill?
The gas charge covers the costs of any communal heating systems. If you live in a property or scheme where your heating and/or hot water is supplied by a central boiler system, then you will charged for your share of the gas costs.
What is included in fire alarms and equipment?
We want to keep you safe in your home. These costs can include things like maintaining and servicing emergency lights, fire extinguishers, sprinkler systems and fire safety signs. This charge also covers the costs of servicing and maintenance of automatic opening ventilation systems. When smoke or fire is detected in communal areas such as a corridor, these vents automatically open to allow smoke to be taken out of the building.
What are warden call systems?
These are alarm systems such as an emergency pull chord system or a pendant alarm system for customers to request help in case of an emergency. The costs of the telephone line, maintenance and servicing of the equipment is included as part of this charge.
How do you calculate the management fee?
We reviewed the service charge management fees for all of our properties in April 2017. Our management fees are now a fixed fee which is based on the type of property you live in and the services that are provided to you. This is a change from previous percentage fees where the management fee can increase or decrease if the costs of delivering the services increase or decrease.
The management fee includes our costs of preparing and setting budgets at the start of the financial year, managing the service charge accounts throughout the year and preparing the year end accounts including issuing your service charge statement. It also includes the costs of managing and monitoring service contracts such as grounds maintenance, communal cleaning, fire systems or lifts.
If you’d like further information about your charge please contact the Service Charge team at firstname.lastname@example.org or call 0800 678 1221.