Service charge - frequently asked questions

We know that service charges can be confusing. You may wonder what they are? Why you’re paying it and what the money is used for. 

We have put together some frequently asked questions to try and answer your queries, but if you can’t find the answer that you’re looking for, please give us a call on 0330 175 9540. 

If you’re finding the cost of living a struggle at the minute our Money Matters team is here to help  

They can offer support with benefits and bills and help with heating, energy top-ups and shopping. If you have had a change in your pay or benefits, please get in touch with us. The team can let you know of any benefits that you may be able to claim and help you make a claim if you are entitled.  

Get in touch with the team through our website or by calling 0330 175 9540. The service is free to Incommunities customers. 

Q. Who pays a service charge?

Both tenants and leaseholders pay the service charge.  If you are a tenant, the service charge is in addition to the rent you pay, but it’s paid at the same time as your rent.

Q. What is a Service Charge?

A service charge is a payment made by a tenant or a leaseholder towards the cost of shared services and repairs. For example, if you live in a block of flats with a shared garden, the cost of maintaining that garden is covered by a service charge, because it’s available to all residents as a communal service and it’s outside of your flat. 

An Estate Charge is a similar payment made by a resident for services in the estate where their home is. 

Q. What services are covered by the service charge?

As part of our responsibility as a social housing provider, we must provide you with certain services so that we keep you and your home safe. We then charge you for the services that apply to your home. The service charge that you pay depends on what your agreement is with us, and whether you are a tenant or homeowner. 

 Some of the services covered by service charges could include: 

  • Cleaning shared areas, including cleaning windows and removing dumped rubbish. 
  • Cutting shared grassed areas, looking after planted areas and tree cutting. 
  • Repairs to shared facilities such as door entry systems, television aerials and lighting. 
  • Providing fire fighting equipment, including repairing and testing emergency lighting and smoke alarms. 
  • Providing water, electricity and gas supplies to shared areas. 

Q. What is a variable service charge?

Incommunities residents are charged a variable service charge. At the beginning of the financial year (April), a Service Charge Estimate is set and sent out to all residents who pay a service charge. Residents then make payments towards those charges during the year. If you are a tenant of Incommunities, this payment is made at the same time as your rent. 

After the end of the financial year (March) residents are sent a Service Charge Certificate which shows the actual costs of providing services and repairs. The Certificate will show whether the scheme has underspent (surplus) or overspent (deficit). 

Q. How is the service charge calculated?

Service Charge Estimate: 

Firstly, we set a budget for your local area and/or the building that you live in each financial year. We don’t know in advance the exact amount it will cost us to provide services and repairs, so we estimate the cost of the service charge for the coming financial year by looking at previous costs and changes to the service.  Also included are changes in the cost of contracts provided by suppliers of services to us at Incommunities, and any expected changes in VAT and inflation over the coming year. 

A Service Charge Estimate is prepared before the start of the new financial year (April) and sent to you in February.  

Q. What are provisions?

Some large items, for example, door entry systems need to be replaced from time to time. To plan for this, and to avoid charging you the costs all at once, we collect regular amounts as part of the service charge. These are known as provisions.  When the work needs to be carried out, this money is then used to pay for the work. 

In some cases, you may pay for equipment that has already been replaced. This is because the cost is spread over a number of years, so that we don’t have to pay for it in one big lump sum. 

Q. Service Charge Certificate

At the end of the financial year we compare the amount residents have paid during the year, against the actual cost of providing communal services and repairs to your local area and/or communal building. 

Where we have spent less on providing the services than we have charged you, there will be a surplus on your Service Charge Certificate. This is also known as an underspend.  

Where we have spent more on providing the services than we have charged you, there will be a deficit on your Service Charge Certificate. This is also known as an overspend.   

Q. What happens to the surplus or deficit if you are a tenant?

If you are charged a variable service charge, the surplus (underspend) or deficit (overspend) will be included in the Service Charge Estimate for the next year. 

Q. Who receives a Service Charge Certificate?

Service Charge Certificates are only sent to tenants with a variable service charge. 

Q. What do the management fees cover?

A management fee is also included within the service charge to cover the administrative cost of managing the service charge. It is normally calculated at 5% of the total service charge amount or a minimum of 35p per week. We do not charge a management fee for the cost of insurance, or for providing gas supplies to communal areas.

Q. What is a tenancy agreement?

The legal contract between the landlord and tenant it sets out the rights and obligations of both parties.  

If you have any queries or would like to provide feedback about service charges, please contact the Income Team on 0330 175 9540.