Home: Homeowners: About Service Charges
About Service Charges
Service charges are costs incurred by the landlord, defined under the terms of the lease, for items such as:
- providing and maintaining communal facilities
- building maintenance and insurance
- management costs
- sinking fund provisions
and other allowable items. These could include provision of warden services, emergency call system, auditor’s fees, and other items specified in the lease.
Sinking Fund Provisions
Some maintenance work is expensive but not required very often, such as replacing a lift or re-tiling a roof. The estimate cost of such works is calculated and then spread over a number of years. The service charge includes an element of these costs each year. Colne holds these as a ‘sinking fund’ in a separate bank account.
Accounts
The financial year runs from 1st April to 31st March. The accounts will show how much was paid by leaseholders during the year, against what was spent. They also show the estimates that were made and the actual costs incurred, plus reasons for any differences. The accounts for the previous financial year are presented in June. An update is also given of the major works programme going forward. The first half year’s accounts are presented at the December/January meetings, at which time discussions regarding the following year’s service charges take place. Notification of these charges is made in February.
