Service Charges
What are Service Charges?
A service charge is a payment made by a tenant (or leaseholder) for services received in connection with the occupation of their home.
A service charge is not part of rent, but is in addition to rent.
Historically, the Council has used rent income to cover the costs of services required under the 1985 Landlord and Tenant Act, as well as the costs of other works.
In recognition of the financial shortfall in the Housing Revenue Account (HRA), there is now a need for the Council to consider alternative sources of income.
Currently, only tenants living in sheltered accommodation pay service charges.
The proposal being considered is to extend service charges to tenants living in properties with shared communal amenities and facilities.
This will include costs related to providing communal heating, lighting, fire prevention and facilities management and so on.
The income generated will be used to recuperate the costs of providing these services and ensure that our charges are fair, reasonable and transparent.
Our commitment to our tenants, is that any changes we made are we can;
- prove a legal or contractual obligation to deliver the service - Fair
- show value for money in services we provide - Reasonable
- clearly show why we have adopted a change and be able to explain it - Transparent
In general, the service charge budget is set over a 12-month period, from October to September. There are occasions and projects where we have to forecast costs over a longer period for things like Electrical Installation Condition Reports (EICR) in communal areas. This is budgeted over a five-year period.
Service charges include, but are not limited to, the following:
- Communal heating
- Communal lighting
- Communal area repairs to staircases, bin stores and so on
- Health and Safety measures, such as fire prevention
- Housing management inspections of communal areas around your home
The Council has not previously charged for the work carried out in communal areas - so why now?
The Council has to date relied on rent income to balance its finances, and cover the costs of services provided under the 1985 Landlord and Tenant Act.
The Council also has the cost of ensuring that its housing stock is well maintained, and is safe and secure.
This means that, in effect, tenants are paying for services that they will not directly benefit from.
We think you will agree that this is generally unfair.
The introduction of services charges will mean that tenants will only pay for services they directly benefit from, rather than rents being used to subsidise services provided elsewhere.
Service charging means the Council can afford to replace essential assets which protect the safety of residents and ensure their enjoyment of their homes and communal spaces.
Service charging will also lead to a more engaged tenant body. If you are paying for a service, you have the right to hold us to account in delivering that service to a high standard.
A fairer, more reasonable and transparent financial system will help the Council deliver a more tailored service, that is designed by our tenants and also gives them a greater say about what happens in their home and community.
Having a fairer system of service charges means that, as a landlord, we will be able to make better use of rent income.
The Council will also be able to reinvest savings into providing you with improved homes and services.
I am on a low income (and/or on benefits). How will this impact me?
If you are in receipt of full Housing Benefits, or the full rate of the housing element of Universal Credit, these charges will be covered by your benefits.
We have worked with our colleagues, in the Shared Revenue Partnership, to ensure that all the service charges we are introducing are ‘eligible’ following the Department of Works and Pensions Guidance to Social Landlords.
If you are concerned about how you will cover the costs of the proposed charges, please contact your Income Officer, who will be able to advise and support you, or refer you to our Financial Inclusion Team.
Tell us what you think
We are keen to capture your feedback on the proposal to introduce services charges from April 2025.
Please use the link below to give us your feedback:
Give your feedback on the Introduction of Service Charges