What is a service charge?
When you buy a flat or maisonette previously owned by Gateshead Council, as the landlord they
are still responsible for managing, repairing, improving, maintaining and insuring the building and
the shared areas of your block.
As a leaseholder, you must pay a share of the landlord’s costs in performing these obligations.
These costs are called service charges and are set out in your lease. You should make sure you
fully understand them before buying a leasehold property.
What is included in my service charge?
Your service charge will depend upon which services your block receives. There is a separate
charge for each service and this can change from year to year.
You will be charged for the following services but only where they are applicable to your block
- Management fee – is a charge for managing the leasehold service based on the property type
(low, mid or high rise) and the service provided to your block.
It includes all administrative costs, query handling and overheads.
- Ground Rent – is a specific requirement of the lease and must be paid on the due date.
By law we must give you notice that your ground rent is due and we will send you a written
demand before it is due to be paid.
This must be no less than 30 days before and no more than 60 days after the day your ground
rent is due to be paid.
- Caretaker/Cleaner – the cost of providing a caretaker or cleaner service to your block.
- Concierge – the cost of providing a concierge service to help maintain the security and smooth
running of the block.
- Communal lighting – the cost of electricity to power lighting to communal areas of your block.
This does not include the cost of replacing bulbs or tubes, resetting timers or other repairs.
- Communal heating – the cost of gas to provide heating and hot water to your home from the
communal boiler in your block. This does not include cost of repairs and maintenance carried
out to the communal boiler.
- Communal aerial – the cost of repairing and maintaining the communal television aerial
- Lift maintenance – the cost of repairing, maintaining and insuring the lift(s) within your block
- Door entry system – the cost of maintaining a controlled entry system, including annual servicing costs and any repairs and call-outs
- Structural insurance (Buildings) – your share of the cost of the buildings insurance premium, based on the current cost of rebuilding your property. This also includes for any communal areas.
- Grassed areas – the cost of maintaining communal areas of grassed land
- CCTV – the cost of servicing and repairing CCTV equipment
- Repairs and maintenance – the cost of day to day repairs, servicing and maintenance to the structure and communal areas of your block. This includes any boundary walls and fences for which the Council are responsible for maintaining.
- VAT – standard rate of VAT charged for any repairs, maintenance or services provided solely to your property.
- Painting – the cost of redecoration of the structure and communal areas of your block.
How are service charges calculated?
We will send out two service charge bills each year, which cover the period 1 April to 31 March, as follows:
Estimated bill – is issued in February of each year, and is an estimate of how much we expect it will cost to provide services to your block of flats. The exact amount cannot be known at this time; therefore the estimate is usually based on the actual cost for the previous financial year, plus inflation.
It does not include a charge for painting or major works. We will write to you separately advising of your contribution towards these types of works.
Actual bill – is issued in June of each year, and compares the estimated charges with the actual amount spent on each service provided to your block, in the previous financial year.
Your share of the costs is shown on your bill, and is usually based on the number of flats/maisonettes in your block.
How do I pay my service charge bill?
- Estimated bill – can be paid in full, quarterly or over ten or twelve monthly instalments, depending on your lease.
- Actual bill – in accordance with your lease, this must be paid in full within 21 days of receipt.
Your actual bill may include large costs for repairs, maintenance or improvements and as a result you may have difficulty in paying. If you have been advised throughout the year of any additional costs to be included on your actual bill, you can choose to increase your monthly estimated payments to help budget for your actual bill.
If you pay your estimated bill monthly by direct debit we will automatically collect your actual service charges by direct debit over the remainder of the financial year (to January or March depending on your lease). We will write to you to confirm your new payment plan.
How can I pay?
There are a range of payment options available to make it as easy as possible for you to repay any bill.
- Call 0800 052 3455 using your debit or credit card 24 hours a day.
- Pay by Direct Debit. Contact the Leasehold Services Team on 0191 433 5397 for a mandate.
- Check your balance and pay online http://gateshead.gov.uk/Housing/renting/council/Pay-housing-leasehold-service-charge.aspx
- Use Internet Banking – please use the following payment details: Barclays Bank Account no: 13774910 Sort Code: 20-59-42
- Pay at any PayPoint outlet or Post Office using your service charge payment card.
- Send a cheque or postal order to any of our payment offices, or to The Gateshead Housing Company, Civic Centre, Regent Street, Gateshead, NE8 1JN
- Cheques should be made payable to ‘The Gateshead Housing Company’ with the payment reference clearly shown on the reverse. Do not send cash in the post.
- Have your ground rent and service charges deducted from your salary if you work for the housing company or Gateshead Council. Contact the Leasehold Services Team to arrange.
To discuss these options call the Leasehold Services Team on 0191 433 5395.
Difficulties in paying your service charges
If you are having difficulty paying your service charges or keeping to an agreement, even if it is just one payment, you should contact the Leasehold Services Team immediately to discuss the situation.
We can offer help and guidance to try and assist you with payment of your service charges.
For advice on benefits you can contact our Welfare Benefits Advice Service on 0191 433 4646 or by email at email@example.com
Or you can contact Gateshead Council’s Debt Advice Team who offer free advice, support and representation to tenants and leaseholders in Gateshead, who are experiencing debt problems. They will help you deal with all of your debts, not just your service charge arrears.
If you have a low income they can also ensure you are getting all the money you are entitled to.
You can contact the team by emailing firstname.lastname@example.org or by calling on 0191 433 3174
Non-payment of service charges
Your lease is a legal contract between you and the Council. It is important that you pay your service charges in line with the terms of your lease. If you don’t or you fail to contact us to discuss your situation you may be at risk of losing your home.
We will take prompt action to recover costs where service charges and ground rent have not been paid. However, will ensure anyone experiencing financial difficulties is made aware of help and advice available to them.
If you do not pay your service charges, Gateshead Council or your mortgage lender could apply to the courts for possession of your home.
If the court decides that you have seriously broken the terms of your lease, it may grant forfeiture of your lease. This means you would lose your home and would not usually get any payment or compensation.
Forfeiture is a drastic action. As a responsible landlord, we only use it when we have to, to protect the interests of Gateshead Council, its tenants and other leaseholders. Before applying for forfeiture for unpaid service charges, the charges must be deemed reasonable by the First Tier Tribunal (Property Chamber, formally the Leasehold Valuation Tribunal).
What if I don’t agree with the charges I have been asked to pay?
If you do not agree with a service charge or a valuation for works, you should contact the Leasehold Service Team as soon as possible. We will investigate your concerns and respond to you within 10 working days. If extensive investigations are required, a response within 10 working days may not be possible. If this is the case, we will send you a letter advising you of the action taken and provide an estimate of when a full response will be available.
The Gateshead Housing Company is committed to working with all leaseholders to solve problems and disputes quickly, if and when they arise. However, if you are not satisfied with the company’s response, you have the right to apply to a First-tier tribunal (Property Chamber) formally known as a Leasehold Valuation Tribunal.
What does the First-tier tribunal (Property Chamber) do?
The First-tier tribunal (Property Chamber) has five regional offices which provide an independent service in England for settling disputes involving private rented and leasehold property. Legislation has given the tribunal powers to settle certain types of dispute which would otherwise have to be dealt with by the courts.
Tribunal members are appointed by the Lord Chancellor. There are two types of member:
(a) the chairman, who will usually be a lawyer or surveyor, is responsible for the conduct of the case and writes the reasons for the tribunal’s decision;
(b) other members who may be lawyers, surveyors, other professional people or lay people.
When a tribunal is set up to consider the case, there will usually be two or three members including the chairman.
On an application to the tribunal it can determine whether service charges are reasonable. The tribunal may inspect the property if requested by either party or if the tribunal considers it necessary.
Following the hearing, the tribunal will send its written decision to the company and you, usually within six weeks. The decision will either change the amount you have to pay by more or less, or will agree with the company’s charges or valuations.
What will a tribunal cost?
Initially there is an application fee, which can very between £65.00 and £440.00 depending upon the amount being disputed. In addition to this there is also a standard hearing fee of £190.00.
The tribunal does not usually award costs, so if you decide to employ professionals such as surveyors or solicitors to help your case, you will have to cover these costs yourself.
Visit www.justice.gov.uk/tribunals/residential-property, www.lease-advice.org.uk or contact the First-tier tribunal (Property Chamber) Northern Office on 0845 100 2614 or 0161 237 9491.