Service charges Policy
The purpose of this policy is to provide a framework for the
legal, regulatory and operational management of service
charges. It also sets out the overarching values and ethos of
Genesis with regards to Service Charges.
The principles we follow are:
- Genesis to recover 100% of the costs of providing services
through service charges and other charges paid by customers.
- Service charges will be in compliance with all relevant
legislation (currently the Landlord & Tenant Act 1985, (L&T
Act 1985) and Commonhold and Leasehold Reform Act 2002).
- Service charges will be set and managed in accordance with
current best practice.
- Existing secure tenants, who pay a Fair Rent, will be liable to
pay a fixed or variable service charge set by the Rent
- Some forms of tenancy (commercial, supported, retirement) have
varying requirements according to specific agreement and
legislative acts and this policy confirms the application of the
relevant standards and legislative requirements of individual acts
wholly related to specific tenures and tenure types.
- The services provided will be clearly identified to customers
and set out in agreements (which include licences, tenancy
agreements, leases and any other relevant documentation).
- Estimated service charges are calculated with an understanding
of previous costs incurred and a forecast methodology applied to
account for any known charge increases or decreases.
- Estimated service charges are not altered as a result of
temporary breakdown or failure to provide a service. The
difference between estimated and actual costs will be identified in
the financial year end service charge accounts. Any balances will
be accounted for according to tenure type and as set out later in
- The difference between estimated and actual costs will be
identified in the financial year end service charge accounts.
Any balances will be accounted for according to tenure type and as
set out later in this policy.
Service Charges - Section 18 (1) of the
Landlord and Tenant Act 1985, as amended defines a variable service
charge as an amount payable by a tenant of a dwelling as part of or
in addition to the rent which is payable, directly or indirectly,
for services, repairs, maintenance, improvements or insurance or
the landlord's costs of management; and the whole or part of which
varies or may vary according to the relevant costs
Examples of service charges may include:
- Grounds maintenance
- Cleaning, lighting & repairs for communal areas
- Lift maintenance
- Building funds for future major works
- Management fee
Genesis recognises that the determining factors in the
administration of service charges are the terms of the tenancy or
licence agreement for tenants of rented properties, the lease in
the case of ownership and commercial customers, or the transfer
document in the case of freeholders.
Genesis is committed to collecting service charges in a timely
and cost-effective manner in order to recover its incurred
Genesis strives to operate all its service charges in accordance
with legislation and guidance issued by the Regulator.
Genesis will endeavour to maintain the highest of standards and
reflect best practice within the industry.
Genesis recognises that customers may receive different types of
services and as such have different liabilities for service
Individual tenancy agreements, leases or transfer documents will
give full detail of services that are chargeable to each
Genesis service charges will be based on actual costs of
providing each service or, where these are not available, for
example on new developments, Genesis will provide estimated costs
based on evidence from comparable estates or properties. We will
prepare estimates annually and reconcile the actual costs and
accounts each year.
Service charges will be apportioned between individual
properties in accordance with the terms of the tenancy agreement,
lease or transfer document. Genesis recognises the need for
reasonable and fair apportionment of charges to customers and where
none is prescribed will adopt a fair and reasonable approach to
Genesis is committed to ensuring that all its customers who pay
service charges have the opportunity for on-going involvement in
deciding the type and extent of services subject to constitutional
and legal requirements.
Disputed items should be notified to Genesis for
4. Information, consultation and
Genesis will consult and inform customers in line with statutory
requirements as and when required in the specified processes. A
notable process where consultation is required is when issuing a
Section 20 for work to be completed. Section 20 of the
Landlord & Tenant Act 1985 will be adhered to.
Wherever possible, Genesis will involve customers in assessing
value for money and will assist them in making informed
In the case of a request to inspect documentation, Genesis will
make such information available for inspection or in the case of
another provider holding such information Genesis will supply the
name and address of the freeholder or superior landlord.
Genesis will aim to control new development services and charges
to create the lowest possible overall service charge by selecting
facilities appropriate to the type of development. This will
include some items requiring regular maintenance and those
benefiting from a longer life cycle.
In the planning phase of new developments, those in Genesis
responsible for new development will liaise with internal
colleagues to provide the highest possible degree of accuracy in
estimating service charges in order to assist potential homeowners
with planning their own domestic budgets.
Contributions to sinking funds or usage charges for new
developments will be set by estimating or calculating specific
lifecycles and costs for applicable components.
In cases where Genesis is not the freeholder, Genesis will take
all reasonable action to comply efficiently with requests for
information from customers or secretaries of recognised Residents’
Genesis will make a charge to cover our own reasonable costs of
managing services as long as we are permitted to do so.
Sinking funds or depreciation / usage charges may be in place to
cover the replacement or renewal of key facilities such as roofs,
lifts or door entry systems.
Statements and demands
An annual statement of account will be produced for each
property where service charges are payable, unless the lease,
tenancy agreement, licence or other tenancy / title document
provides for more frequent accounts. Where service charges
are fixed then accounts will not be provided.
Genesis may seek agreement to standardise the frequency of
accounts statements in order to control administrative costs.
Demands for service charges will be made in writing and will
contain the landlord's name and address and a summary of rights and
obligations as per Section 47 & 48 of the Landlord & Tenant
In addition to rights under the lease or transfer document,
Genesis will, where appropriate and applicable:
- Provide customers with an estimate of their service charge
bill. This will include statements of anticipated expenditure for
services to which the customer contributes.
- Provide customers with a statement of actual service charge
expenditure within six months of the year end or as the binding
- Offer payment options for service charges for the year –
including direct debit.
- Provide customers with an annual statement of major works /
sinking funds charges.
- Provide in house debt advice or provide information on/
signpost customers to an organisation that can provide debt advice
for those finding payments difficult.
- Service charge accounts will be independently audited in
accordance with statutory requirements.
Surplus (credits) and Deficits (debits)
Any surplus or deficit on a customer's account for the financial
year will be determined by the calculation of actual costs in
comparison to estimated costs. These will be calculated by the end
of September of the next financial year, i.e. costs incurred
between April 2014 to March 2015, will be calculated by the
end of September 2015.
If there is a matter that prevents Genesis from completing
account calculations and finalising surplus and deficit balances,
in accordance with best practice and legislation, Genesis will
ensure customers are informed of potential costs as yet unaccounted
for, through provision of a formal notice.
The treatment of surplus / deficits will depend on the
requirements of the lease, tenancy agreement, licence or other
tenancy / title document, which are contractually binding.
In the case of tenancies the standard form of agreement allows
the balance to be carried forward to the next service charge
In the case of most leases the obligation is to credit any
surplus and debit any deficit after the close of the financial
year. The customer's surplus / deficit balance and overarching
account balance must be settled by the end of that financial year
i.e. for the year 2014/15 when the surplus / deficit is
determined in September 2015, the balance must be settled prior to
the end of March 2016.
All customers have rights allowing them to inspect and check
accounts and supporting documents. These rights are subject
to time limits set down by law.
Genesis operates six separate schedules of charges: these
- Estate – if the property forms part of an estate, then certain
services that are provided across the estate will be captured under
- Block - if the property forms part of a block, then certain
services that are provided across the block will be captured under
- Unit – if the property receives services that are unique to the
property and not directly connected to any other properties the
charges will be captured under this heading
- Insurance – this heading covers charges for buildings
- Sinking funds & Usage – dependent on any specifics in Lease
or Tenancy Agreement, this will form charges for longer term
replacement of major assets to the property, block or estate.
- Management Fees – this heading covers the overhead costs
incurred in managing the services we provide. The law requires that
this charge is reasonable.
Documents for customers
Genesis is committed to keeping its administrative costs as low
as possible through efficiency and appropriate administration. As
such, service charge statements and demands will only be sent to
customers who pay variable service charges by separate
Where customers pay one all-inclusive charge (e.g. market rents,
licensees) Genesis will not provide a separate service charge
Genesis is committed to providing clear statements for all
charges with commentary on how the charges are calculated and what
services they represent. Customers will receive a covering letter
determining the charge period and confirming content of:
- A demand for payment (demand is a legal term and we wish to
confirm that we use this term for legal purposes only)
- A statement of expenditure; this will determine the overall
sums spent on each schedule, your contribution in percentage and in
10. Sinking funds
and usage charge
A sinking fund is a collection of funds taken from leaseholders
and freeholders over a set time period in order to replace/
redecorate/ improve a major asset when required.
A usage charge is an amount of money paid by a tenant on set
time periods e.g. monthly, weekly etc. that covers the eventual
replacement of the major assets contained in the block. These
payments ensure that Genesis is able to replace, redecorate, or
improve the asset when required. Customers renting a Genesis
property (e.g. general needs, care and support customers etc.) will
pay a usage charge for these purposes where the monies are not
automatically taken from rent revenues.
Setting up a sinking fund/usage charge ensures that all
customers, irrespective of when they live in the block/property,
share the financial cost of major works and replacements.
The sinking fund/usage charge maintains the value of the assets
and circumvents or offsets the need to pay large one-off sums when
major works are required.
Genesis will abide by all legal requirements when setting up,
maintaining and using a sinking fund/usage charge.
If Genesis intends to use a sinking fund for any purpose we may
be required to formally consult with the relevant leaseholders or
freeholders about this. This is covered in Section 20 in the
Landlord and Tenant Act 1985 and in the Commonhold and Leasehold
Reform Act 2002.
11. Diversity and
Diversity and Inclusion Assessment has been completed as part of
this policy review and a copy is available on request. To
request a copy please contact us at firstname.lastname@example.org or for
further information on our commitment to equality and diversity at
Genesis please visit our
12. Related internal
- Leasehold Management Policy
- Income Collection Policies
- Procurement Policy
- Leasehold Handbook
13. Legislation, regulation and
The Landlord and Tenant Act 1985, as amended, sets out the basic
ground rules for service charges, defining what is considered a
service charge, and setting out requirements for reasonableness and
for prior consultation.
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