Taking a closer look at your service charge for 2017/18
Last year, we changed the format of our service charge estimates, making them clearer and easier to understand. In this feature, we take a closer look at how your service charge estimate is calculated.
Each February, we send you a letter to explain how much we expect you will need to pay for the services we will provide to you over the next financial year. Some of our customers have a car park and pay towards its upkeep, while others don’t use a car park at all. Some customers pay for their heating, water and electricity through their service charge, while others pay for these services independently of A2Dominion. We want to cater to all our customers, and we also want to make service charge estimates as simple and clear as possible.
So instead of sending you one estimate showing all the different services we provide to you in and around your home, we’ve broken down these services into their specific areas. These areas include your estate, block, car park, home and sinking fund.
The number of individual estimates you receive will depend on what services you pay for. Here, we lay out examples of estimates to explain some of the charges you may be seeing on your own estimate this year.
What it means...
A - Lift depreciation
Lift depreciation costs £69 per year, per tenant and goes towards the reduction in the lift’s value over time, as well as the costs of installing the lift. Only tenants pay this charge, while leaseholders and shared owners instead pay into a sinking fund*.
B - Paladin hire
This covers costs related to the removal of normal household waste from flats. For example, hiring large bins from the local council.
C - Administration fees
All our customers pay towards the cost of our staff managing the services they receive. Tenants pay an administration fee, which usually costs 15% of their total service charge. This 15% will never work out as less than £20 or more than £200.
If your administration fee works out as less than £20, it will say ‘minimum’ in the percentage column, and you will be charged £20 in total.
If your administration fee works out as more than £200, it will say ‘capped’ under the percentage column, and you will be charged £200 in total. Read more about administration fees in our article, 'How we manage your services'.
While tenants pay a lift depreciation charge, leaseholders and shared owners pay into a sinking fund, or reserve fund, which is used for maintaining and replacing parts of the building.
We do this to try and avoid presenting our customers with a large bill at a time when major works, for example, replacing a lift, need to take place in your block. How much you pay towards your sinking fund will depend on how often parts of your building need to be fixed or replaced.
What it means...
E - Insurance
If you’re a leaseholder or shared owner with A2Dominion, we may have arranged building insurance as part of your service charge, however all of our customers are responsible for arranging their own contents insurance cover.
To find out about the affordable My Home contents insurance scheme, read our article 'Are your valuables safe?'. For more information about insurance or to download your most up-to-date insurance documents, visit the insurance section of our website.
F - Management fee, examination fee and external agents charge
We mentioned that tenants pay an administration fee for us to manage the services to their estates. The management fee is similar, but paid by leaseholders, shared owners and freeholders. Read more about the examination fee and external agents charge in our article, 'How we manage your services'.
Communal repairs: We’ve changed the way we present the cost of repairs on your estimate
If you are a shared owner, leaseholder or freeholder, you may notice that the amount you are being charged for ‘Communal Repairs’ seems higher than in previous years.
In the past, some communal repairs have been included in the costs of other charges, such as Access Control and Fire Safety. For example, if we repaired your block’s door entry system, this cost would have formed part of your Access Control charge.
While other costs within these charges, such as paying towards maintenance or service contracts, are easier to estimate (as they do not tend to vary much year to year), estimating how much you will need to pay towards repairs in these areas is more difficult.
We are therefore changing the way we present the cost of repairs on your estimate. From now on, we will include the costs of all communal repairs, whether it’s replacing a lift button or repairing a car park gate, within your Communal Repairs charge.
Due to this change, the amount you see for communal repairs may seem higher this year, but this should then bring down costs of other charges and, in some instances, they may have disappeared from your estimate altogether.
We are making this change because we believe it will reduce the number of instances where estimates and actual costs vary.
Take a look at other articles for explanations of some of the costs you may see on your service charge estimate. You can find a full list of explanations on our website.