The purpose of this briefing paper is to summarise how service charges should be calculated in social housing. it includes sections on:
- What should go into a service charge?
- Administration
- Staffing Costs
- Supporting People
- Heating, Lighting and Energy
- Cleaning
- Lifts, Furniture & Equipment
- Grounds Maintenance
- Depreciation
- Usage Charge
- What should not be included in service charges?
- Designing out service charges
- Fixed and Variable Service charges
- Service Charge accounts
Revenue service charges are charged to leaseholders and tenants and charges must reflect actual costs and be reasonable. Capital service charges are charged to leaseholders only and must reflect actual costs and be reasonable. There is also a requirement to carry out specific consultation (including issuing section twenty notices) and demands for payment must be made within eighteen months of works being completed.
The briefing paper concludes that in calculating service charges, social landlords should:
- Decide what to charge for based on statute, case law and the provisions of leases and tenancy agreements
- Decide between fixed and variable charges
- Identify all appropriate costs
- Apportion costs between schemes and tenants based on the best available information
- Ensure charges represent Value for Money
- Keep it Simple
- Consult and provide complete information
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