The service charge is an amount that is paid by the owner of each property on the development. The service charge is paid monthly in advance, by standing order, into the bank account of the owners’ company.
The service charge covers a variety of costs relating to operating and maintaining the development, as set out within the lease.
This accounts for about 64% of the service charge and staff, and the cost of employing a manager, a team of duty managers providing 24 hour on site cover, and a team of housekeeping assistants providing domestic services in communal areas and apartments.
Utilities – gas, electricity, water and telephone in the communal area account for approximately 4.5% of the service charge.
Maintenance and repairs – cost an average of 6.5% of the service charge, and cover the alarm call system, fire alarm system, cleaning materials, window cleaning, gardens, grounds and sundry repairs.
Administration and insurance – an average of 8% of the service charge goes to meet professional fees (audit, accountant and management fees), office expenses and insurance (building, communal area contents, employer liability, directors indemnity).
Fund for future maintenance – an average of 17% of the service charge is put aside for future maintenance and refurbishment.
This fund meets the cost of regular internal and external redecoration, and the refurbishment or replacement of furniture and fittings in communal areas. It also meets the costs of repair or replacement of major items such as the emergency call system and lifts, and any major items of building maintenance and repair that may be required over time.
The boards of directors of each of the management companies aim to keep the annual service charge increase at no more than the % increase in the state retirement pension. Where a greater increase is proposed, this can only be done if agreed at a formal meeting of all the owners.
You are responsible for the utility bills (gas, electricity, water and telephone) for your own apartment. You are also responsible for paying any council tax on your own apartment. You will need to take out contents insurance.
You are responsible for payment for any additional services you may use, such as meals in the dining room or additional housekeeping assistance (over and above the 1.5 hours provided under the service charge).
You will not need to employ domestic, gardening or maintenance help. Buildings insurance is covered by the service charge and there is no ground rent payable. Because an alarm call system is fitted you will not need to register with an emergency lifeline service.
You will probably find that your utility bills are reduced – most owners are now paying less than previously for gas, electricity and water. You will usually pay less than the local market rate for additional services – charges for meals and for additional help are competitive as the owners’ company is non-profit making and charges are kept to a minimum.
Perhaps above all you will maintain the equity in your property – people with capital assets above £23,250 are required to fund the accommodation and living cost components if they move to a residential or nursing home. Our owners typically remain in their own home for much longer than average, and in most cases for life.
Many older people are eligible for attendance allowance, which is not means-tested. Depending on your financial circumstances you may also be entitled to financial support from the pensions service.
The services manager for the court can advise you in confidence and assist with making applications where appropriate. If you would like to discuss these options, please make your request by contacting Retirement Security Ltd. at our Stratford office.