In April 2003, Soha introduced service charges for all tenants living in sheltered accommodation. Before this, these charges were included in the amount of rent we charged. However, the Housing Corporation (the government agency who regulate Soha) require all housing associations to charge separately for rent and services provided that are not normally considered to be covered by rent.
What’s covered by rent and service charges?
Your rent is the amount you pay for your flat or house. It covers the costs of Soha providing and up-keeping your property. It therefore covers the costs Soha incurs in managing your home, collecting your rent, property insurance, carrying out repairs and renewing kitchens, windows etc.
Your service charge covers costs Soha incurs in providing additional services to tenants not covered by the rent. We have to show you what we are spending and they are set out in the service charge statements you receive. They include items such as the Scheme Manager service (only those costs not covered by the Supporting People regime), grounds maintenance, costs of communal facilities and the cost Soha incurs in running all these services. We are required to ensure that we recharge all the costs we incur and that we do not recharge more than it costs us.
The table below sets out the main items included in service charges:
| Scheme Manager Service: |
the costs of the scheme manager in looking after the building and its grounds, especially the communal areas such as corridors and common rooms. |
| Scheme Manager Management: |
the costs of supervising the scheme managers and managing the scheme manager service. |
| Costs of Running Scheme Manager Service: |
the costs of providing the Scheme Manager with an office, computer and stationery etc. |
| Grounds Maintenance: |
the costs of grass cutting, clearing the gardens and sweeping the paths. Please note this is not a full gardening service. |
| Electricity, Gas and Other Fuel: |
the costs of providing heating and lighting for communal sitting rooms, laundries, and corridors, plus electricity for outside lighting. |
| Communal Cleaning: |
the costs of cleaning corridors, communal sitting rooms, toilets etc. |
| Window Cleaning: |
this is the cost of cleaning the outside windows of all blocks (plus inside windows of communal areas) every 3 months. |
| General Water Rates: |
the cost of water rates for communal kitchens, laundries and toilet facilities. |
| Annual Cost of Equipment: |
the cost of providing communal equipment such as washing machines in laundries, chairs in lounges and kettles etc. in communal kitchens. This charge is paid over the time the equipment is expected to last, not in the year it is bought. |
| Other Costs: |
the costs of small items such as tea towels and cushions etc. plus any extra works such as tree cutting not dealt with by other charges. |
| Administration costs: |
the costs of calculating charges, paying invoices etc needed to administer the service charges. |
|
Property Heating: |
the charges for water and heating to individual flats. |
How were they introduced?
In order to ensure tenants did not pay more as a result of introducing service charges, tenants at 1 April 2003 had their rent reduced by the amount of the service charges. So, no-one was disadvantaged at the time we introduced them.
As many service charges have subsequently gone down as Soha tries to provide the services more efficiently, many tenants now pay less in real terms than they did before service charges were introduced.
Estimates and timings
As we do not know exactly how much each service is going to cost, we have to produce an estimate (or budget) for each financial year. This is used as the basis for calculating your charges. Once we know the actual costs, they are compared to the estimate and the difference is added to or deducted from the next year’s charge. This means that the actual cost of services always end up being charged to each property.
In the past we have changed your service charges at the beginning of April at the same time as your rent increase. However, this means that you have to wait a whole year before your charges are adjusted to reflect actual costs and it is also a lot of work for Soha to recalculate service charges at the same time we are working out rent increases. Therefore, from the beginning of October 2005 we have changed the timings, so all service charges changes will take place at the beginning of October each year. They are still based on the normal financial year (1 April – 31 March) and you will still end up paying the actual costs we incur in providing the services.
To give you an example:
| In October 2005 - |
Soha calculates the actual costs incurred in the year ended 31 March 2005 and compares it to the estimate for that period on which existing service charges are based.
The amount over or under paid is added to/deducted from the estimate for the year ending 31 March 2006.
This is your service charge that will be charged until the end of September 2006. |
| In October 2006 - |
We calculate adjustments between actual costs year ending 31 March 2006 and the estimate and add to/deduct from the estimate for the year ending 31 March 2007. |
Water Charges
Water charges are not included in your rent or your service charges. These are not charges made by Soha, but by Thames Water for their water and waste services. Normally, residents (whether renting or owning) are charged these charges direct by Thames Water. However, to make charging and collection easier, Soha have an agreement with Thames Water to tell tenants what the charges are and then to collect them on their behalf and pass them over to Thames Water.
Housing Benefit
Many tenants are on housing benefit (“HB”). HB has always covered the rent on your property, but once service charges were introduced it becomes a little more complicated. HB will cover all service charges that would normally form part of the rent. However, it will not cover items such as heating charges for individual flats and these are shown separately on your service charge statement. You, as the tenant, must pay these direct to Soha.
So what do you pay?
If you are not on HB, then you must pay the total of your rent, service charge and water charge to Soha.
If you are on full HB and have no individual property heating, then you only have to pay water charge direct to Soha, HB will pay the rest.
If you are on full HB and have a heating or other non-HB service charge, you must pay the non-HB element of the service charge and the water charge direct to Soha.
If you are on partial HB, you must pay the balance of the rent, service charge and water charge that HB has not paid.
If you pay by Direct Debit all these charges will be made to your payment by Soha (and, of course, we will notify you at least 14 days in advance of a changed payment).
More information
Hopefully, this has explained how your service charges work. If you have any further questions, please contact Customer Services or your Housing Officer on 01235 515900.