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The service charge
Why do I have to pay service charges?
When you bought your lease you became a shareholder in the building your flat is in. This means that you have a responsibility to pay your share of the costs to maintain and manage the building.
We have a legal duty to maintain the building and charge you your share of the cost. We also have to pay our share. The costs are shared among all the properties in the block unless a cost belongs only to one flat or to part of a block.
If there are 10 equally sized flats in your block and seven of them are rented to tenants and the other three are leaseholders, each leaseholder will usually pay a tenth of the cost and we will pay seven-tenths for our tenants. The rent that tenants pay covers the cost of repairs and providing services.
Because we are a social landlord we maintain our blocks to a high standard. This means that we have to spend money to keep them in good condition. Sometimes we may spend more than a private landlord would because we have a duty to our residents to provide them with good homes. If we did not spend this money the flats would become run-down and your property would be worth less if you wanted to sell the lease.
What you pay for
Your service charges are made up mainly of the following costs.
Shared block repairs and maintenance, such as outside painting, repairs to roofs or stairway lighting, and replacing windows and roof tiles
Repairing and maintaining controlled door-entry systems, lifts and shared TV aerials
Maintenance for shared garden areas within your estate, such as cutting grass, weeding, tree works and removing leaves
Cleaning entrance lobbies, shared internal windows, stairs and rubbish chutes
Cleaning external areas such as footpaths and parking areas
Heating and hot water, if you have a shared heating system
A management charge- our costs to manage leasehold flats
Lighting in the lobby of your block
These costs will be set out on your service charge invoice. You will get one invoice every year but sometimes you may get a special invoice if we have carried out repairs or improvements only on your flat, or we are charging for damage you have done.
The costs are shared out as follows.
Costs that apply to the whole block (such as for repairs, improvements and grounds maintenance) are shared between all tenants and leaseholders in the block.
Costs that apply only to one flat (such as a special improvement or a charge for damage) are charged to that flat only.
Management costs are shared between all tenants and leaseholders according to a formula, which considers the amount of work we need to do to manage each type of block.
Insurance costs are shared equally between all tenants and leaseholders.
We make sure that you are only charged for costs which apply to the block you live in. However some costs, such as estate cleaning and grounds maintenance, are shared between all residents on an estate. This is because we can't allocate these types of costs to each block.
The first five years
If you buy a flat as a secure tenant under the Right to Buy scheme, we have to tell you how much your service charges are likely to be in the first five years. We can only do this by looking at future work to your block and estimate how much it is likely to cost.
Once we have estimated the costs for repairs and improvements for the first five years, we cannot charge you more than this - except to allow for inflation. If we have overestimated the costs we will only charge you what the repairs or improvements actually cost. This is called the five-year protection period.
This five-year protection period applies to repairs and improvements from the date the first buyer buys the lease. If you sell the lease within this time, the next buyer is entitled to what is left of the five-year protection period. There is no extra five-year period each time the lease is sold on.
The service charge bill
One of the conditions of your lease means your yearly service charge bill is at first estimated - usually at the beginning of the financial year (from 1 April to 31 March of the following year). This is known as your estimated charge or bill because we do not know beforehand what the exact costs are going to be for the year ahead.
At the end of a financial year (31 March), we look at what was estimated and the actual cost. We then tell you the difference between the estimated and actual charges. This is known as your actual service charge bill.
If the actual charge is greater than the estimated bill, we will ask you to pay the difference. If the actual charge is less than the estimated bill, we will credit your service charge account with the difference.
Help to pay your service charge, buildings insurance and ground rent
If you receive Income Support or Jobseekers Allowance, you may be able to get help to pay your service charges, buildings insurance and ground rent. Please speak to your home ownership officer if you would like more information and advice.
What if I don't agree with my charges?
We will always try to work out your charges properly and fairly. However, if you think we have made a mistake or charged you for something you haven't received, please do the following:
First, tell our service charge recovery team. They will look at your account again and make sure it is correct.
If you are still not happy with what the team tell you, write to the Head of Income and Performance at Poplar HARCA Home ownership services,
167a East India Dock Rd, London, E14 0EA. Give your reasons for writing and be clear about what charges you don't agree with and why.
If you still think you are being charged unfairly, you can apply to an independent Leasehold Valuation Tribunal.
Leasehold Valuation Tribunals have been set up under the Housing Act 1996. You can apply to the tribunal to settle a dispute over charges. The tribunal will decide if:
the cost of the services we are charging for is reasonable;
the work we are charging for has been carried out to a reasonable standard; and
the amount we are asking for in advance is reasonable.
You cannot appeal to a tribunal if:
a court or tribunal has already made a judgement about your charges; or
you have already agreed that the charges are correct.
The tribunal may decide that you must pay all of the charges, or that we must reduce our charges to you. Once the tribunal have made a decision, we must both accept it.
The tribunal will charge a fee hear your case. They may decide not to charge you costs, or they may decide to charge costs against us. They are more likely to charge you costs if they think your claim is unjustified.
If you want a Leasehold Valuation Tribunal to consider your service charges, tell us so we can advise you how to go about it. If you think your charges are wrong, please tell us first and we will try to sort it out.
What happens if I don't pay my charges?
Your lease is a legal contract between you and us. Under the lease, you have to pay all reasonable charges that we pay to manage and maintain your block.
If you refuse to pay your charges without a good cause you are breaking the contract and we can go to court to ask to have your lease 'forfeited'. If the court decides that you have seriously broken the terms of your lease, it may end the lease and allow us to take possession of your flat. You would lose your home and you would not usually get any payment or compensation.
If you have a loan from a bank or building society, we would tell them before we start legal action. As they have a legal interest in the property, they could decide to pay the bill themselves and then take their own legal action against you.
If you have problems paying your charges, we will always try to help. But if it becomes clear that you are making no effort to pay your charges, we can:
apply to a Leasehold Valuation Tribunal for a decision that says your charges are fair; and/or
apply to the court for your lease to be forfeited and take possession of your home.