Service charge management overview
A service charge is a fee levied to cover additional services pertaining to the provision of social housing. Such charges will relate to groups of properties in a particular geographical area, such as blocks of flats within an estate, and each location or building will be assigned a cost centre for the purpose of calculating the service charges that are applicable. Specifically, a service charge is a payment made by a tenant or leaseholder towards the cost of services and repairs beyond those specifically for their house or flat. For example, within a block of flats, the cost of maintaining the lift would be covered by a service charge because it is available to all residents as a communal amenity. An estate charge is a similar payment, and made by a resident for services to the estate in which their home is situated, such as grounds maintenance. Naturally, every resident that lives in the same building may not benefit from all the shared services; hence, subsets of applicable cost elements can be combined into a service charge group. By way of example, in the case of a lift, it may be appropriate to waive the charge for those residents with flats on the ground floor, and so a targeted group could be created for, say, 'Ground Floor Occupiers', from which the lift maintenance service charge has been omitted. Civica Cx Housing therefore provides the facility to create any number of service charge groups, and therein the flexibility to contain any subset of assets and any combination of cost elements, all derived from the same functional unit hierarchy. The service charges apportioned to the group can then be calculated, taking account of all fixed and variable charging policies in operation. In line with the details of the lease or tenancy, fixed service charges are estimated for the forthcoming year based on previous years' figures, with an increase to account for inflation and also any extension to their scope. Typically, fixed charges are not revisited at year end, which means that should a scheme be overspent across the year, further payments cannot be requested. Similarly, were a scheme to be underspent, no money would be returned. Most service charges are, however, based on the actual cost of the services and thus vary from year to year. These are known as variable service charges and they can be increased or decreased in accordance with the terms of an agreement. Unlike fixed charges, surpluses and deficits can be carried forward to the next accounting period; alternatively they can be collected or refunded through a one-off payment.
Subject to the tenancy or lease agreement, service charges for both tenants and leaseholders may include such items as:
Civica Cx Housing also supports the management, tracking and projection calculations necessary to operate a sinking fund - the name given to a long term savings account that leaseholders contribute to every month through service charges. This fund builds up every year and exists to pay for any major works that are required over a period of time, such as the painting of communal areas, replacement of a roof, windows, etc.
Separate help articles have been created for each key aspect of service charge management, including: