About service charges

Major works service charges

As well as your yearly service charge bill, you may also receive an invoice for major works charges.

Estimated Major Works for April 2024 to March 2025

About major works

Major works are large items of work, such as repairs or renewal to the exterior and communal elements of the block. This includes the roof, windows and external structure, the communal electrical supply, and communal services such as lifts, door entry systems and communal heating. Under the terms of your lease we're responsible for these works to your property.

Sometimes major works contracts are for extensive refurbishment of the whole building. It may also include work to the inside of tenanted properties, and where this is the case, the cost of these works is excluded from the major works service charge.

Major works service charges differ from annual revenue service charges such as day to day maintenance and repairs. Major works usually have a longer term effect on the building than the work carried out under the responsive repairs contract. Where major works costs are over £250 per homeowner, we have to consult with you in a specific way before the works are carried out.

We charge major works separately to the annual charges because we're able to make available various payment schemes for major works charges. 

How we decide what works are required

The investment team use stock condition records which identify the age of the main elements of the blocks to indicate which blocks may require major works.

Surveys are carried out and referenced against repair and maintenance records to determine what work may be required. When work is programmed for a block more detailed surveys are undertaken in order to draw up a specification of work.

If you're a leaseholder then you can find more information about leasehold ownership on the government website.

Who carries out major works

We deliver major works either through one of the long term maintenance or partnering contractors that are in place, or by inviting tenders for the work.

Long term agreements are in place for many of the service elements of the blocks such as lifts, heating and door entry installation. These agreements are based on a tendered schedule of rates that allows us to place work with a long term contractor at pre-agreed competitive rates.

The partnering contracts are similar to the long term contracts, however the partnering contractors deliver comprehensive refurbishment works at their tendered rates. They are also incentivised to reduce their rates in line with market changes and in line with other contractors working in partnership with us.

Where separate tenders are sought for major works we will usually invite tenders from a framework of contractors who have pre-agreed an upper limit to the rates that they charge. Where tenders are invited for work leaseholders are entitled to put forward nominations of their own to be included in the tender list.

How we calculate the charges

Your lease states that the council may adopt any reasonable method for calculating your service charge and may adopt different methods in relation to different items of costs and expenses.

Typically, for works to the structure of a building such as roof, windows or external decorations, service charges are based on a unit system. This is calculated by adding four to the number of bedrooms in a property. For example, a bedsit has four units, a one-bedroom-flat has five units. The number of units for each block or estate is totalled and divided into the cost to give a cost per unit, and that cost is multiplied by the number of units for each individual property to come to the charge for that property. This means that the owner of a three bedroom property will pay more for an individual service than the owner of a one bedroom flat in the same block. This method was agreed by the Home Owner Council.

For contracts that are specific solely to service items, such as lifts, door entry systems, water tanks etc. costs are equally apportioned to all properties. The costs relating to estate works such as drainage or lighting are also equally apportioned to all properties.

Service charges are fairly apportioned between all properties in your building. We pay the proportion relating to rent-paying tenants from the rents received. The cost of services to tenants is not subsidised in any way by homeowners.

Professional fee

We use specialists (both in-house and external) such as building consultants and quantity surveyors, to prepare the specification of works and oversee the contract. These professional services are part of the contract cost and are charged as a percentage of your contribution.

Where the services are provided by an external consultant the services are subject to tender. Where they are provided in-house they reflect the audited internal staffing costs that relate to that function.

Administration fee

We charge you a fee for administering your service charge account. This is charged at 10% of the total of your service charge as outlined in your lease in the third schedule. This fee includes the cost of:

  • staffing and office costs of parts of the home ownership services that deal with service charges
  • the calculation, billing and collection of service charges
  • providing information about your service charge account and general information on all aspects of home ownership
  • the administrative and IT costs of calculating and sending you invoices and accounting for payments made.

How major works charges are billed

Service charges represent a share of the cost of the maintenance and upkeep of your building and estate. You're required to contribute towards this cost under the terms of your lease or, if you're a freeholder, your transfer of part.

Before the start of major works we send you an estimate of the amount we expect the service charges to be and tell you when the estimate will be invoiced.

When the contract has finished, and the defects liability period has ended, the final account is prepared by the contract manager, and we use this to revise the estimated cost that was billed to you to reflect what was actually spent on your block and/or estate. If we've overestimated the charges, you'll receive a credit on your account, but if we've underestimated the charges, you'll receive an invoice for the extra costs.

Freeholders aren't sent estimated charges and are only invoiced on completion of the scheme once we've finalised the charges.

Estimates

The major works estimate is based upon the contract cost identified in the specification of work. The specification is drawn up from surveys of the block, however much of the work can't be properly specified or measured until the contract is on site, and, where appropriate, until scaffold is in place.

The specification therefore includes provisional and contingency sums which give an estimate of what we expect to spend on the work.

Final accounts

The final account details the work that was agreed on site and the amount that has been paid to the contractor to carry out the work. It shows the measured quantities of any work that was previously provisional, and takes out any contingency sums, replacing them with the detailed cost of the work done. The final account is cross-referenced with the payments that we've made to make sure that all costs are accounted for.

 

Page last updated: 20 February 2024

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