Management Consultancy: Service Charge Advice

Service charges are an integral part of landlords’ work in financing value for money services and sustaining customer satisfaction. Housing Associations have traditionally levied service charges with most local authorities in England introducing them in the ‘noughties’. In Wales, local authorities and housing associations have introduced service charges as part of the Welsh government’s new rent policy. In Scotland service charges are also significant. The rolling out of Universal Credit is having an impact on benefit entitlement for service charges.

Service Charges can cover:

Revenue costs such as grounds maintenance, cleaning of communal areas and management of sheltered schemes.
Capital costs for communal areas (leaseholders only)
Ground Rent (leaseholders only)

According to the Homes & Communities Agency's global accounts of private registered providers, housing associations in England spent £1.5billion on service charge costs in 2016 but recovered only £1.2billion in service charges. This represents an under-recover of £300million (20%). The situation in local authorities and in Scotland and Wales is similar. It is clear that many social landlords haved significant scope to raise revenue and achieve good practice by moving towards the full recovery of service costs.

The calculation and management of service charges for leaseholders and tenants can be complex. We have recently worked with a number of social landlords on various aspects of service charges. This web page outlines some of the services that we offer to help social landlords with service charges.

Service Charges ‘Health Check’

We have devised a service charge ‘health check’ that offers social landlords a comprehensive high level review of special and communal services and service charges to establish their robustness, effectiveness and sustainability and that offers recommendations for improvement.

The ‘health check’ asks and answers the following questions:

· What do services cost to provide and is income maximised?

· Does the service comply with legal requirements and good practice?

· Does the service offer value for money?

· How good is the property data?

· How good are the accounting systems and charging mechanisms?

· How good is the input and monitoring from residents?

· Could further charges be de-pooled?

This is a useful check for landlords who would like to establish the strength of their existing approach to services and service charges and whether and how that approach can be improved. However, we can also tailor this standard approach to the individual requirements of a client. For more information, please contact Adrian Waite at Adrian.waite@awics.co.uk

Introducing and De-Pooling Service Charges

We have developed a methodology for introducing and de-pooling service charges that enables us to identify the scope for new and / or increased service charges and to develop options for their introduction. Our methodology includes:

· Considering what to charge for based on statute, case law and the provisions of leases and tenancy agreements

· Identifying the merits of fixed or variable service charges

· Identifying all appropriate costs

· Identifying options for apportioning costs between schemes, leaseholders and tenants based on the best available information

· Ensuring charges represent Value for Money

· Keeping it Simple

· Consulting residents and providing complete information

This is a useful process for landlords who would like to examine the scope to introduce new service charges or to vary existing service charges as part of a strategy to maximise income or improve value for money. However, we can also tailor this standard approach to the individual requirements of a client. For more information, please contact Adrian Waite at Adrian.waite@awics.co.uk

Training

We offer open seminars and in-house training in service charges. For further information please see the panel 'Other Information about Service Charges' to the right.

Brochure

To download our brochure on the advice and support that we can provide on service charges please click here.

hand_and_money