Understanding your shared ownership service charges
What is the service charge?
Your service charge is an overall cost based on various elements that we deliver and manage services to your block and estate common parts in accordance with your lease. This is separate to the shared ownership rent that you pay.
How do you bill me the service charge?
The service charge account year starts on the 1 April and ends on the 31 March each year. The service charge is estimated each year and once the service charge year ends (on the 31 March).
We will audit the accounts and issue a Service Charge Actual Certificate and this is called the reconciliation period.
We will send you the Service Charge Actual Certificate by 30 September each year. This could result in either a credit or debit being applied to your service charge account. You will never be asked to pay more than the cost of providing the service.
This process can be seen by the below diagram:
How do the estimates work and how do I pay?
Service charge estimates are usually sent out by March each year for the coming year's contribution toward services, or works provided to the block or estate where your property is located. These are paid in the same manner that you pay your shared ownership rent.
How do you work out how much to estimate?
Estimates are calculated by a number of methods such as by reference to the previous year’s costs or known contract costs.
How do you work out my share of the total cost?
The total cost is divided by the number of properties within your block or estate to give you your contribution.
There are two exceptions to this:
- The Insurance Costs which are based upon the rebuild cost of the property. This is the rebuild cost not the market value.
- The Management fee which is a fixed fee applied to all shared ownership properties. This fee consists of
- The management of the estates
- Management of service contracts and of buildings insurance
- Contribution to the costs of the contact centre which handles queries such as repairs or defects
- Legal services
- Preparation of accounts, Service Charge Officer & income collection
When are the Actual Service Charges issued?
In September each year, you will receive a Service Charge Actual Certificate based on the audited accounts which is the actual cost of providing all services for the previous service charge period.
What happens if you have over or underestimated the service charges?
If your estimated service charge was less than the actual costs this will show as a debit in your service charge actual certificate and will be invoiced to you.
If your estimated service charge was higher than the actual costs this will show as a credit in your service charge actual certificate and will be applied to your service charge account. If your account is in credit at that point then you can apply for a refund by contacting our Incomes Team on 01865 249 811.
What do the different service charge headings mean?
The following service charge headings that you may see on your service charge estimate and actual are explained below;
Insurance
The insuring of the structure of the block. Please be aware that you do not need to take out your own building insurance.
Building insurance is separate from contents insurance, which is not included in the policy we provide. You will have to arrange your own contents insurance.
Communal Cleaning
Block communal cleaning is typically done on a weekly basis, although the regularity of cleaning will vary from block to block.
Controlled entry system
The maintenance of any intercom or door entry systems. If the intercom handset in your flat is faulty, this will be repaired as a repair, as the handset is part of a communal system. Note - This does not include replacement fobs or communal keys. These are charged for separately.
CCTV
The maintenance and repair of any CCTV covering the communal areas.
Lift maintenance
The maintenance and repairing of any lifts in the block including any emergency call button and lift telephone lines.
Fire Detection Maintenance Equipment
The maintenance and upkeep of any fire alarms, air opening vents, dry risers, and related fire safety detection equipment in the block.
Landlord Lighting
The cost of electricity for the communal lighting. This also includes energy costs for powering lifts, or door entry systems.
Window Cleaning
The periodic cleaning of communal windows in the block. This does not include individual windows in a property.
Management Fee
This covers the financial and administrative running costs of providing our services.
Water Tank Maintenance and Inspection
Sometimes blocks have water tanks. These require servicing and statutory legionella testing.
Lightning Protection Equipment
Some blocks are fitted with lightning protection systems, which ground any lightning strike into the ground below the development. This cost is for the maintenance and repairs of these systems.
Grounds Maintenance
The gardening and external sweeping and litter picking.
Water Supply
The cost of water rates where there is a communal supply.
Repairs
This is general repairs to the communal areas of the block.
Sinking Fund
This is money held in an interest gathering bank account and is put aside to contribute towards the cost of any cyclical decorations and/or major works to the block or estate.
Please note it is used only for this purpose and is accumulated each year until a major works project arises and a contribution from this is required.
Sinking Funds
This is money held in an interest gathering bank account and is put aside to contribute towards the cost of any cyclical decorations and/or major works to the block or estate.
Please note it is used only for this purpose and is accumulated each year until a major works project arises and a contribution from this is required.
By offsetting the costs of such works, it reduces the individual contribution a shared owner has to make on completion of such works. Prior to such works, we would contact the shared owners giving them the total cost and what the contribution would be from the sinking fund. This would allow you to keep track of what the fund is being used for.
As a result this does not appear as an incurred cost in the reconciliation letter, although you still have a contractual obligation to pay this as part of your estimated service charge
However ,you can contact us via 01865 249 811 or landlordservices@oxford.co.uk and we can provide you with an accumulated total for your property.
