Charges, rents & sinking funds for homeowners
As a homeowner, you will pay a ground rent and a specified rent. If we provide you with services that you share with more than one property, a service charge will also apply. The payment of rent and any service charges is covered in your lease.
You may also contribute towards a sinking fund if any common parts will require replacement over time
Your rent - shared owners only
Your rent (this is not to be confused with ground rent paid by leaseholders) is calculated as a proportion of the total rent for the property, based on the proportion of the share you do not own. For example, if you own a 50% share, you pay 50% of the total rent.
Rents are reviewed each April for most schemes. Please refer to your individual lease for specific details on rent increases. We will send you at least one rent account statement each year. If you would like a statement at any other time, please contact us.
Your service charges (if any) - shared owners and leaseholders
Our financial year starts on 1 April and ends on 31 March the following year. Each financial year you will receive a service charge statement detailing the services provided (if any) and a breakdown of the amount payable per month. This statement is our estimate of what we expect to spend on the various services. Examples of items classed as services include the following:
- cleaning and servicing of communal areas
- refuse services
- lighting of communal areas
- caretaking services
- grounds maintenance
- maintaining communal equipment.
This list is not exhaustive.
The estimated service charge will vary from year to year depending on the circumstances, for example, if there are new contractors or new services. The starting point for our estimate is what we have actually spent in recent years and what we know the cost of the services will be for the year ahead. We start the budget process in October and will tell you about changes to your service charge in February before the start of the financial year.
The service charge you pay depends on the calculated service charge estimate. Most costs are shared equally. Service charge costs can depend on the size of your property and also on the conditions set out in your lease. At the end of the financial year we prepare an account that shows our actual spending. Our service charge team produce the accounts, which are checked and internally audited. We will send you a copy of the accounts within six months of
the financial year-end.
We will make any adjustment for any underpayments or overpayments you have made in the following year’s service
If you would like to see proof of the actual service charge, you are welcome to inspect all the invoices and supporting documents. If you wish, we can make copies of these documents. We will charge you for photocopying. If you would like to inspect the invoices, please contact our service charge team to make arrangements.
A sinking fund is money that has been charged over a period of time to pay for future works and repairs to communal areas. Details of what your sinking fund covers should have been provided to you on the purchase of your home and every time the contributions are revised. Typical items where sinking funds are maintained include communal TV aerials, car parks, boundary fences, street lighting etc.
We work out how much the sinking fund should hold by estimating how much certain items would cost to replace at the end of their ‘life’. This is the basis for our collection each year, so we should have enough to cover all the costs in the future.
We regularly review the sinking fund to make sure there is enough to cover the cost of the works. There may be times when we get our estimates wrong and there is not enough money in the fund to pay for work that is needed. If this happens we will consult you, but you will be charged the shortfall when the relevant works are completed.
We collect sinking fund contributions through the service charge, and hold it in a trust account that makes interest. The interest is added to the fund each year. You will receive an annual statement at the end of July that gives details of the balance of the fund, how much interest has been earned after tax and money paid in and out.
When you sell your property your buyer’s solicitor will generally ask if there is a sinking fund to cover the cost of major one-off works. This could make your home more attractive to buyers. All contributions you make to the fund will still remain in the sinking fund attached to your property if you decide to sell. We will not make any refunds.
Disagreements about service charges
Please tell us if you are not happy about the amount we have asked you to pay as a service charge. We will investigate your concerns and give a full response. If we agree with you, we will tell you what we are going to do to put things right.
If we cannot agree a way to sort out the disagreement, either you or we can apply to the Residential Property Tribunal Service (also known as the First Tier Tribunal or FTT), who are made up of experts such as solicitors and surveyors who have the power to settle disagreements about services and service charges.
The application fee is payable by the applicant and depends on the sort of application being made. For applications relating to the challenge of costs, the fee is based on the amount in dispute and for other applications it is based on the number of flats to which the application relates. For further information about the fees, visit the www.gov.uk website.
Important rights for those who pay service charges
If you pay a service charge you have a number of important rights, including to:
- be told beforehand about any changes to your monthly service charge payment
- see a summary of the service charge costs for the previous year, and to inspect the accounts and invoices on which the summary is based
- receive a summary of the building insurance policy for your building
- be consulted about work if the cost to shared owners is more than the amounts set by legislation
- be told about service charge costs to be charged at a later date, within 18 months of the cost being spent
- challenge your service charge at a residential property tribunal service.
The mortgage contract is between you and your bank or building society. If you have financial problems which may mean you cannot pay your mortgage, you should let them know as soon as possible. If you do fall behind on your payments and cannot agree on a solution with your bank or building society, there is a risk they will take possession of your home and sell it. You would be entitled to your share of the money received, after all your debts have been paid.
Depending on your lease, subletting of the whole or part of your property may not be permitted. However, we may consider granting permission for this in exceptional circumstances. Please contact us for further information on this. There may be a charge for this service.