Service charges
Service charges are the payments that you make towards our costs of providing and maintaining services for the block of flats where you live. We are responsible for maintaining the structure and exterior of the whole building and the communal areas such as halls and stairways. The costs incurred by us are passed back to you through the service charges.
When you purchase a flat, you'll need to pay service charges. No element of profit is included, so the charges relate to actual or estimated costs only. The service charges are split fairly between all the flats in the block. The cost of services to tenants is not subsidised in any way by leaseholders.
We hope that the statement we have produced for you is clear. Occasionally leaseholders have questions they’d like us to answer and so we’ve summarised the most popular questions here:
If your service charge account is in credit then the letter accompanying the statement confirms the value of the credit. If we have sent you an invoice because we spent more than we estimated in 2023/24, we will use any credit on your service charge account to help pay this invoice. In some circumstances this might mean that you do not need to pay us anything. Your invoice will confirm the amount you are required to pay us.
We will credit your service charge account with the amount that was overpaid.
Your lease says that this surplus should be used to pay future service charges. If you have not yet paid your 2024/2025 estimated service charge in full e.g. you are paying in monthly instalments, then the credit will be applied to your account and the monthly instalments can be reduced.
If you have settled the account for this current year in full already then the credit will remain on the account to help pay for service charges in future years as described in your lease.
We are unable to refund a surplus or a credit balance to your own personal bank account.
No. The statement just shows the services received. If ground rent is applicable then this £10.00 charge should have been paid in April 2022, either in full or by Direct Debit to pay by instalments.
Your lease requires you to pay the bill within 21 days of the invoice.
We understand that where the bill is for several hundred pounds you may not have immediate access to this amount of money. We are happy for the debt to be paid in monthly instalments along with payments for the current year, providing the debt is cleared in full by the end of the financial year (March 2025).
If you are already paying by Direct Debit then we will change your payment amount from November to collect the outstanding amount in full by the end of the year.
If you do not have a Direct Debit set up but wish to do so please contact us and we will arrange this for you.
Not all leases are identical. For example, leases within the same block may state an alternative apportionment method; or some leases allow us to recover the cost of improvements.
Your lease requires us to maintain the communal areas. There will sometimes be occasions where we need to remove fly-tipping or graffiti in order to meet our obligation to maintain the communal areas. Where this is the case we have no alternative but to arrange for a contractor to carry out this work.
Your lease requires you to pay a proportion of our costs in maintaining the communal areas.
We include these costs under the cleaning heading on your statement.
Your lease requires us to maintain the communal areas along with the structure of the building.
For your safety we must ensure that these areas are compliant with fire safety regulation and health and safety requirements. The fire alarm servicing contract covers the regular programme of inspections such as a fire risk assessment and/or asbestos inspection which helps us to identify any potential problems and resolve them before they become an issue.
Once an issue is identified, it must be repaired in order to maintain fire safety and this is the cost under the Repairs section on your statement.
Your lease requires you to pay a proportion of our costs in maintaining the communal areas.
External economic factors outside of our control are the reason for the variances in energy costs for 2023/2024.
When you purchase a leasehold property on the open market, the lease is assigned by the seller to the buyer. Upon assignment the new leaseholder steps into the shoes of the old leaseholder and becomes responsible for all historic, current and future issues relating to the lease. The current leaseholder is responsible for meeting all the terms of the lease which includes settling all invoices and demands for payment.
It is good practice for solicitors acting for you and the seller to retain a sum of money from the sale that can be used by the new owner to pay for any items of expenditure that occurred when the seller owned the property.
You should approach your solicitor to enquire whether they or the seller’s solicitor retained any money in anticipation of this situation arising. As the current leaseholder you are responsible for paying any invoice you receive in full, even if no money was retained by solicitors.
How the service charges are calculated and billed
At the start of each service charge year - which runs from 1st April to 31st March - we prepare an estimate of the costs we expect to pay for services. This is calculated by using the latest available actual costs for a year and the average of the previous five years' repair costs. The estimated charges will be billed to you during March each year, for the coming year.
These are estimates of what we expect to spend over the coming year to maintain the area that you live in, as set out in your lease.
We base our estimates on known contract costs and historical cost trends, such as the need to clear fly-tipping, carry out repairs, etc.
If your service charge account is in credit at the time of printing, the letter accompanying your service charge invoice will show this.
We will offset any credit against the invoice. If a balance remains this will need to be paid.
As set out in your lease, we must provide a statement of actual expenditure six months after the end of the financial year on 31st March 2025.
You will receive a statement in September 2025 which will confirm the actual costs incurred. If these are lower than the estimate, a credit will then be added to your account.
Your lease requires you to pay the bill by 1st April 2024.
We understand that if the bill is for several hundred pounds you may not have immediate access to this amount of money, so we allow leaseholders to pay over 12 months provided the balance is cleared in full by 31st March 2025.
If you have a Direct Debit set up this will be amended automatically. If you'd like to set up a Direct Debit please contact us.
Not all leases are identical. For example, leases within the same block may have different methods for working out how costs should be split, or they may specify a different range of services/repairs to be charged for.
Your lease requires us to maintain the communal areas. There will also be occasions where we need to remove fly-tipping or graffiti.
In order to meet our obligation to maintain the communal areas we have to arrange for a contractor to carry out this work.
Your lease requires you to pay a proportion of the costs in maintaining these communal areas, and we include these costs under the cleaning heading on your invoice.
If you have any queries about grounds maintenance or cleaning services, please email the Red Kite contract management team.
External economic factors outside our control are the reason for the variances in energy costs for 2024/25.
Household energy bills increased by 5% in January 2024. We have based our energy cost estimates on current bills plus 5%.
The estimates take into consideration the increase in any contract costs in line with inflation.
When we talk about repairs we include all the different types of repair we could carry out - for example, plumbing, lighting and electrical, doors and windows, internal and external communal repairs, fire risk assessment, and asbestos surveys.
Because repairs are carried out on demand they are unpredictable so estimating future repair costs is not an exact science. We look at what the costs were last year, but we also have to consider whether there was a significant cost which we would not expect to be repeated in the coming year.
Once we've done this, to help us make a reasonable estimate we use the baseline of costs from last year, then add an amount for inflation (costs of materials, labour, etc.) using the Consumer Price Index (CPI).
For this year, CPI has been applied to the costs of last year's repairs at a rate of 6.7%. For example, we have estimated that repairs that cost £100 last year would cost £106.70 this year.
The management fee covers our costs and time in administering and managing your account and all the services that are provided as part of your lease.
How to pay the service charges
The simplest way to make sure that you pay the correct amount on time is to set up a Direct Debit. Please email us at customer.services@redkitehousing.org.uk or phone us on 01494 476100 to make arrangements to pay.
Alternative ways to pay can be found on the reverse of your invoice. Please make sure that you quote your invoice reference number on any payment so that the payment reaches your account.
What happens if you don't pay your service charges?
If you do not pay your invoice by the date it is due and you have not arranged to pay by instalments, a reminder will be sent to you. If no payment is made within a further seven days, a final notice will be sent to you. If we still do not receive a payment and no arrangement has been made to make payments by instalments, we will take legal action in the County Court to get the money back.
Once we have obtained a County Court Judgment we will approach your mortgage company and ask them to settle the debt against your mortgage. This could lead to your home being repossessed and make it difficult for you to obtain credit cards, mortgages and loans in the future. If we fail to recover the debt from the mortgage company, we may seek a court order that allows deductions to be made from your salary, or ask bailiffs to seize and sell your possessions. In the most serious circumstances we may seek forfeiture which would mean that you lose your home but this is something we want to try hard to avoid.
If you have any problems paying your service charges bill, please get in touch with us straight away. If you contact us quickly, we will try to help and avoid taking any legal action.
Limits on service charges during the first five years
If you buy a lease from us under the Right to Buy or Right to Acquire schemes you will be given a notice known as a "Notice of Purchase Price", as required by Section 125 of the Housing Act 1985. This notice includes estimates for services and works that are carried out on a regular basis, together with a schedule of major repairs or improvements which are planned. We cannot charge you more than the estimates plus an allowance for inflation for such work during an initial period of five years from the date when the lease was first sold. When that period has run out, we can charge you your share of the reasonable cost of any work which is done.
Service charges - your rights
Your right to ask us for a summary of costs
This must relate to service charges for the current or the previous year. Our summary will show how the costs we have paid are reflected in your service charges. If there are four or more flats involved in the costs, the summary will be signed by a qualified accountant. Once you have the summary, you have six months to write to us and arrange to look at and copy any accounts, receipts, and other relevant documents. We will provide these facilities free of charge, but we may add the cost to the management costs in the yearly service charge. When we receive your request to look at the accounts, we have a month to reply to you and should make the facilities available for up to two months.
Your right to have a management audit
This would look at the services we provide and at their costs. You will appoint and pay for a qualified auditor to examine how effectively we are carrying out the housing management duties we charge you for; and how we are using your service charges.
To start the process, your auditor must send us a Section 80 notice. All the leaseholders involved must sign the notice and include their full names and addresses. It should also show the name and address of the auditor and list the documents that the auditor will need.
The auditor can look at documents and the shared parts of the buildings we manage. If the auditor wants to look at any shared parts, the notice should give a date on which the inspection will take place. We have a month to reply from the date of the notice. Our reply must include the relevant documents the auditor has asked for and what facilities will be available to look at them and copy them. It should confirm the inspection date or offer a different date. Again, we may add the cost of providing these facilities to the management costs in the yearly service charge.
More information can be found in the leasehold handbook.