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Service charges
housing@knh.org.uk
Understanding your lease
When you bought your lease, in effect you became a 'shareholder' in the building your flat is in. The service
charge represents the cost to the landlord for providing services to you in your block.
As a landlord 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 equally among all the flats in the block (unless a cost belongs only to one flat or to part
of a block). For example, if there are four flats in your block and three of them are rented to council tenants
and the other is a leaseholder, the leaseholder will pay 25% (1/4) of the cost and we will pay 75% (3/4)
for our tenants. The rent that council tenants pay covers the cost of repairs and services to council homes.
Because we are a social landlord we have to maintain our blocks of flats to a good standard. This means that we
have to spend money on keeping them in a good state of repair. If we did not, the flats would deteriorate and
your flat would be worth less if you wanted to sell it.
We bear in mind that when we have leaseholders, a fair proportion of repair costs are paid by them. Some
leaseholders would rather we did not spend any money at all, but if we did this we would not be doing our duty to
our tenants, and your investment in your home would suffer.
Because we maintain more than 24,000 homes, we have large, professional repairs contracts with a team of
surveyors and architects to look after your home. Government regulations covering contracts make sure that our
contractors give us and you value for money.
How service charges are made up
Your service changes are mainly made up of the following costs:
- Ground rent. This is set at £10 a year under the Housing Act 1985.
- Maintenance of your block and your share of electricity bills for any lighting, replacement bulbs.
- Building insurance for the replacement of the structure. Contents insurance is the responsibility of the
leasehold.
- Maintenance of the district heating system and boiler (if there is one). You will also receive a separate
bill for the units you have used.
- A 10% management charge, which covers the administration of the service charge and the other elements
of the lease.
- Repair of the block and repairs to any part of the communal area, including work to the shared structure,
the roof and walls, and foundations. For example:
- drainage, gutters and fall pipes;
- steps and pathways;
- windows and communal doors;
- internal and external painting;
- door entry system and CCTV;
- asbestos removal.
Please note this is not an exhaustive list.
These costs will be listed on your service charge invoice. When it is necessary to carry out a repair in your
block you will be notified in writing. However, if the repair is urgent you may not receive notification until
after the repair has been carried out.
Your right to be consulted
Under Section 20 of the Landlord and Tenant Act 1985 and the Commonhold and Leaseholder Reform Act 2002 you
have a right to be consulted:
- about works which will cost you more than £250;
- when we are tendering for a new contract;
- when we are making a long term agreement with a contractor or company.
We will:
- tell you what type of work is involved;
- tell you why the work is required;
- ask you for your comments;
- give you the opportunity to nominate a contractor (the contractor must meet Kirklees Council's approved
contractor requirements);
- tell you who the contract has been awarded to.
If contract prices for supplies or service costs exceed £144,371.00 or £3.6 million for works,
then we cannot give you the opportunity to nominate a contractor. By law the work will require a Public Notice,
also known as an EU notice. This amount was the threshold as of 31 January 2006.
If we are using an existing contractor (agreed prior to October 31 2002) we will not be able to give you the
opportunity to nominate another contractor.
The first five years after Right To Buy (Reference period)
Before you buy your flat under the Right to Buy scheme, you will be provided with details of your likely
service charge contribution.
Within the reference period of the lease (first five years), we can only add an inflation allowance to the
figures quoted during this period.
Once we have estimated your repair and improvement costs for the first five years, we cannot charge you more than
this (except for an allowance for inflation) unless this involves the cost of insurance. If the insurance provider
increases their costs to us, this will then be passed onto you. If we find we have over estimated, we will only
charge you what it actually cost.
This five-year reference period applies from the date the first buyer purchases the lease. If you sell the lease
within this time the next buyer is entitled to what is left of the five-year reference period.
How you get your bill
Currently your service charges are charged to you in arrears every three months (quarterly).
In addition, we will provide an annual statement at the end of the year, which will summarise the charges for
the previous year, along with any outstanding charges and payments you have made.
Paying your bill
There are two options for paying your bill:
- You can pay the full amount within 20 days;
- You can pay by monthly instalments by making arrangements with our finance section.
There are a number of ways to pay your bill, which are listed on the back of your invoice.
If you have problems paying service charges
If you cannot pay your service charge bill straight away, don't ignore it! It will not go away and you could
end up losing your home if you don't try to pay it.
We do understand that bills for major repairs and improvements can cause difficulties for your budget. However,
here are some ways to make payments easier.
You can set up a bank, building society or credit union account and regularly set aside as much as you can
to pay for any big repairs. You can also earn interest on the savings. If you want to do this, you need to
start saving as soon as possible.
You can add additional amounts to your existing mortgage. You should speak to your mortgage lender about
this. The works we do will be about maintaining or increasing the value of your home.
If you are receiving Income support, you may be able to get some help with the costs of major repairs. You
should contact the Benefits Agency for help making a claim.
If you are having financial problems and require help, you can contact one of our Money Advisers. They
offer free, impartial and confidential debt advice to all KNH customers.
If the service charge bill causes you financial difficulties you should contact our Finance section.
Service charge loans you can get from the council
There are two main types of loans we can give and they are controlled by government regulations:
1. Loans under the Housing (Service Charge Loans) Regulations 1992 - Mandatory LoansYou have a right to a loan under these regulations if:
- your lease is not more than ten years old;
- the charges made since the start of the lease are at least £2,000 (but not more than
£20,000);
- you owe at least £500.
If you qualify for one of these loans, there are several conditions:
- You can get a loan for maintenance charges (which includes window replacements and any improvements
to existing features) but not improvement work (which means new features such as door entry systems), and
not for ground rent, management charges, insurance and other regular yearly charges.
- The loan must be for at least £500.
- The loan must be secured against your property (like a mortgage).
- You still have a right to a loan even if you have negative equity on your mortgage.
(Negative equity is where the money you could get from selling your flat is less than the amount you owe on
your mortgage)
- You cannot get a loan under these regulations if your lease is more than 10 years old.
The regulations also set an upper limit on the time the loan can be repaid over:
- three years for a loan between £500 and £1,500;
- five years for a loan from £1,500 up to £5,000;
- ten years for a loan over £5,000 (the limit is £20,000).
You can take out a loan for a shorter period if you want. Interest is charged on the loan and there is an
administration charge, which is added to the cost of the loan. Ask our Finance Section for the current
interest rates.
2. Loans under the Housing Act 1985 - Discretionary LoansWhere you are not entitled to a loan under the regulations, the council may give a discretionary loan.
This might cover the following situations:
- You can still get a loan if your lease is more than 10 years old.
- You can get a loan for improvement work as well as maintenance work.
However, you cannot get a loan under these regulations if you have negative equity on your mortgage.
(Negative equity is where the money you could get from selling your flat is less than the amount you owe on
your mortgage)
Loans under the Housing Act 1985 are discretionary. This means you don't have an automatic right to a loan
and the council can choose whether to give you a loan or not. We will normally give you a loan if we think
it will help you.
The law does not set a lower limit for the amount of loan, and it does not give a repayment period. However,
because of the administrative costs that you would have to pay, we would not normally give a 'Housing Act'
loan for less than £500 or for a period of more than five years.
What if I don't agree with my charges?
If you do not agree with your service charges you can telephone our finance department, stating your reasons
why. We will put your account on hold until we have fully investigated and notified you of the outcome.
If you are not satisfied with the outcome you can make an application to the Leasehold Valuation Tribunal.
This is an independent body set up to resolve leaseholder disputes.
For more information about the Leasehold Valuation Tribunal contact the Home Ownership team or the Leasehold
Valuation Tribunal.
What happens if I don't pay my charges?
If you do not pay your service charges we follow a stringent debt recovery process. If we are still unable to
recover the debt, we can apply to the Leasehold Valuation Tribunal for a for a determination order. This is the
first stage in applying for forfeiture on the grounds of breach of your lease for non-payment of service charges.
See also
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