Service Charge Policy for Tenants

Policy reference number: POL-FIN-CHARGES
Version number: 2
Date applies from: 29/7/14


1. Aim of Policy

1.1. This policy ensures that all tenants have information about their service charges including costs that their charges cover, how charges are budgeted and changes to services are managed. City West Housing Trust will aim to deliver continuous improvements and value for money in their service provision.

1.2. City West Housing Trust will provide services on a ‘variable service charge’ basis, which means that we must abide by the provisions set out in the Landlord and Tenant Acts of both 1985 and 1987 (as amended).

1.3. City West Housing Trust will adopt a consistent approach in the calculation and recovery of the cost of providing services. This policy will ensure that service charges are:
• Accurate – reflect the cost incurred by City West Housing Trust in providing the service, ensuring that sufficient income is generated;
• Transparent – calculation methods are clear and accessible to all tenants, in accordance with current legislation and best practice;
• Fair and reasonable – are apportioned according to the services provided, whilst ensuring the services are Value for Money;
• Reviewed regularly in line with legal requirements and best practice.

1.4. City West Housing Trust will ensure that the tenants are provided with easy to understand information about the level of services they provide and the cost of the provision. Tenants will be involved in the decisions and choices regarding procurement of the services, and also in the monitoring of the quality of services provided.

2. Policy

2.1. Calculation of Service Charges
2.1.1. Service Charges are calculated by identifying the services provided within each of the service charge schemes. The full cost of providing these services for the forthcoming year is estimated using prior years’ costs uplifted for inflation and any known changes to the service provision.

2.1.2. The cost of providing these services is then allocated to individual properties using relevant allocation principles.

2.1.3. A 15% management charge is added to the service charge to fund the management and admin related costs relating to the provision of those services.

2.1.4. The service charge estimate is reconciled against the actual costs for that year within six months of the financial year end. The following years charge will be adjusted by any under or over-recoveries.

2.2. Principles of allocation of costs
2.2.1. The costs of providing services are allocated to individual homes on a fair and reasonable basis based on the following principles:
• Where the service relates to the communal areas – internal communal;
• Gardening;
• Personal heating;
• Allocations are not adjusted if a tenant or group of tenants choose not to use the available service. Where a service is no longer required then all tenants being charged for that service will be consulted with before the service is withdrawn and charges adjusted. See section “Increases and variations to service charges”.

2.3. Notifications of Service Charges for the year
2.3.1. Tenants receive a service charge estimate each year, at least one month prior to the commencement of the new charge. The estimate details all services provided and gives a breakdown of how the service charge is split between these services.

2.4. Increases and variations to services
2.4.1. City West may introduce new services in the future, which may result in additional service charges.

2.4.2. Any additional service charges will only be introduced after full consultation with tenants who would be affected by the charge. If a new service is introduced a Service Level Agreement would be developed with the tenants who would be paying the charge.

2.5. Section 20 Consultation
2.5.1. City West will consult with tenants and leaseholders in accordance with the Landlord & Tenant Act 1985 for long term agreements and major works.

2.5.2. City West will provide tenants with notices of service charge increases at least one month prior to any increase. A written summary of service charges will be provided breaking the services down clearly.

2.5.3. City West will provide clear information about the services provided on request.

2.5.4. City West will fully consult with tenant and leaseholders where new services are proposed to be introduced. This will include consultation as to the costs of these services and any associated charges.

3. How the Policy will be delivered

3.1. This policy will be delivered and monitored by the Finance Team. Income collection will be the responsibility of all City West employees.

3.2. If staff become aware that there are problems with effective operation of the policy or the associated procedures, they should report this to the Policy Owner. This feedback will be incorporated into the policy / procedural review process.

4. Related Procedures

4.1. The following procedures need to be followed to implement the policy:
• Service Charge Procedure (and appendices).