Council leaseholder service charges explained

Currently service charges for leaseholders of Council properties are calculated and charged over a 5 year period. At the end of the 5 year period, service charge accounts are reconciled and leaseholders informed of the reconciliation and any credit or debit that has occurred on their account.

What are service charges?

Service charges are the leaseholder's share of the costs incurred by us for provid­ing services to your block or estate.

These charges are due under the terms of your lease, and will vary depending on where you live. Every 5 years you will be charged an estimated amount in advance, based on a survey to identify the works needed. The actual cost will be calculated at the end of the 5 year pe­riod.

How are services charges calculated?

For most services your share is worked out by equally dividing the cost of provid­ing services between the properties in your block or estate. These will include the following things:

• Cavity wall Insulation
• Door security entrance system
• Gutters
• PVC windows
• Loft insulation
• External decoration
• Internal decoration
• Prior to paint repairs
• Prior to paint repairs stairwells
• Joiner repairs
• Footpath repairs
• Roof repairs
• Outbuildings
• External staircase & landing repairs
• Pointing brickwork
• Boundary wall and fencing

What happens at the end of the 5 year period?

A surveyor will check what works have been carried out on the block. The cost of any works carried out is then split by the number of properties in the block to calcu­late the share owed by each property. What you have paid in to repairs and im­provements over the past 5 years is then added up and the cost of any works car­ried out is deducted from this. You will receive a refund for any works that have not been carried out. If there is still money in the account this is refunded back to the leaseholder by cheque. If there wasn't enough in the account to cover the repairs and improvements a separate bill will be issued to the leaseholder for their share of the extra cost.

Are there any other charges?

Yes, service charge bills in Rotherham also include a charge for buildings insurance, Rothercare (if applicable), communal cleaning (if applicable) an annual commission­ing fee calculated at 15% of the repairs and improvements cost and also an annual administration fee of £25.00.

Are other charges refundable at the end of the 5 year period?

No, The only refundable part of the service charge (if work is not carried out) is the repairs and improvements cost along with the commissioning fee.

Service charges flowchart

1. A survey of the block / estate is carried out.
2. The cost of carrying out any works identified within the survey is calculated and divided by the number of properties in the block / estate. The amount per property is then divided by 5 to give the annual amount of repairs and improvements costs to be charged to any leaseholder in that block.
3. The repairs and improvements cost for the leaseholder is used to calculate the commissioning fee which is charged at 15% of the repairs and improvements cost. Also added to these amounts is the cost of annual buildings insurance to the proprty, extra services, i.e. Rothercare and communal cleaning along witha fixed administration charge of £25.00 per year. These amounts combined are used to produce the service charge invoice which is then sent to the leaseholder for payment each year for 5 years.
4. At the end of the 5 year period a check is made to find out what works have or haven't been carried out. The cost of any works that have been carried out are deducted from the overall amount paid over the 5 year period. If there is still money left in the account sue to the estimated amount of works not being done a refund will be issued to the leaseholder for that amount plus 15% which covers the commisiioning fee on the amount.
5. The block / estate will be resurveyed and the five year period starts again.

Last update 04/07/2011