Rent and service charges Rent and service charges explained

All you need to know about the rent and service charges you pay when you live in one of our homes.

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How is rent set and reviewed?

If you are a tenant, it is likely you will pay a social rent or an affordable rent, which is set by us once a year. The Government sets the rent increase social landlords can apply and we write to customers to tell them what their new rent will be as a result of this increase.

For most homes, the Government Rent Standard sets the limit on how much we can increase your rent each year. This is normally inflation plus 1%. From April 2024 to March 2025, rent will be increased by no more than 7.7% (inflation of 6.7% plus 1%).

If you are an intermediate rent tenant or a garage tenant, your rent will also be increased by 7.7%.

If you are a shared owner, your rent is calculated and reviewed in line with the terms of your lease agreement.

If you are a leaseholder or freeholder, you will not pay rent.

Your tenancy or lease agreement sets out when you need to pay your rent and service charges and how much notice we need to give you before we can increase them. When we review your rent and service charges, we’ll always write to you before we make any changes.

What is a service charge?

If you live in a flat or house that has shared areas or facilities, you’ll pay a service charge towards the cost of maintaining and repairing those areas.

Here are some examples of what your service charge may cover:

  • administration and management charges
  • cleaning of shared areas, such as stairs and hallways
  • gardening and grounds maintenance, such as paths and car parks
  • gas, water and electricity supplies to shared areas
  • maintaining door entry systems and lifts
  • maintaining fire equipment and fire safety checks
  • repairs and maintenance in shared areas
  • If you are a shared owner or leaseholder - a sinking fund or provision fund to cover future work such as replacing shared carpets in hallways and major repairs like new windows or roofs. The sinking fund may not cover the full cost of all future major repairs, depending on the cost of the work and how much money is in the fund at the time, but it will contribute towards it.

We may provide you with other services and carry out other work that affects your property or shared areas. You can find full details of what your service charge covers in your tenancy or lease agreement.

How is a service charge calculated?

You’ll either pay a fixed or variable service charge, depending on your tenancy or lease. We’ll always let you know at least a month before any changes to your service charge.

A fixed service charge is when we set your service charge at the start of the year, based on our estimates. The amount you pay doesn’t change, regardless of how much we spend. If it costs us more than we expected to maintain your home and neighbourhood, we’ll cover the additional costs. If we spend less than planned, you won’t receive a refund.

With variable service charges, we estimate the charges you will need to pay from April each year and write to tell you what your new payments will be.

At the end of each financial year, we review our accounts to calculate the difference between what we estimated and what we spent.

We will send you a statement of account, called a service charge certificate, which explains exactly what we spent and gives you an account balance.

Your balance will usually show a surplus or a deficit:

  • Surplus – this is where we collected more from you than we actually spent and is shown as a minus (-). This means we owe you money.

  • Deficit – this is where we spent more than we collected from you during the year. This means you owe us money.

If you rent your home the surplus or deficit will be added to the estimates we provide the following year and you don’t need to do anything.

If you are a leaseholder or shared owner, and there is a deficit you will need to pay this off. If we owe you money, we will use this to offset future payments.

My service charge has gone up more than usual, why is this?

We charge customers based on estimates of anticipated expenditure for the upcoming year. These estimates have been calculated based on all known cost information we have pulled together and analysed to make sure the charge is as accurate as possible. If your service charge has increased, it is because the cost of the services which you benefit from have also increased. In many cases the cost of providing these services has increased significantly for us - for example, the cost of electricity to shared areas of the building.

What can I do if I think my service charge is unfair?

Service charges are required to be fair and reasonable. If you think a charge is unfair, you can challenge it at the First Tier Tribunal (Property Chamber).

I have received a letter telling me my rent and/or service charge has increased, do I need to do anything?

You may need to take action if your rent and service charge has increased.

If you don’t receive benefits and you pay by Direct Debit, you won’t need to do anything. We will automatically change the amount you pay to reflect your new charges. If you pay by standing order, bank transfer or cheque, you will need to update your payments to reflect the new amount. If you pay at the Post Office or at a PayPoint you can continue to use the same payment card.

If you receive Housing Benefit directly to your bank account, you need to let the benefits department of your local council know about the increase so that this can be taken into account. If Housing Benefit is paid directly to us we will inform them.

If you receive Universal Credit you must tell the Department for Work and Pensions about the increase on or after the change date so this can be considered. You can add this to your online journal or provide a copy of the letter to Jobcentre Plus.

Can I get help with paying my rent and service charge?

If you are struggling to pay your rent or other bills, contact us and we may be able to help. Call us on 0300 111 7000 and visit our cost of living support page for help and guidance.

Who pays my utility bills and council tax?

You’re responsible for setting up accounts and paying for the gas, electricity and water supplies to your home, as well as your council tax.

A few of our properties have a shared heating and hot water system that supplies individual homes and communal areas. A small number of our homes also have shared council tax. If that’s the case, we’ll collect the payment through your service charges.

When you move into one of our homes, you should let your local council know your new address. If you’re on a low income, unemployed or live alone, you may be able to get a discount on your council tax.

Information specific to leaseholders and shared owners

What is a management fee?

This only applies to leaseholders and covers the administration costs involved in managing your lease.

What is ground rent?

This only applies to leaseholders and is a payment you make to us, as the landlord and freeholder or head leaseholder, for using the land that your home is built on.

How do I pay?

We will invoice you separately if you have to pay ground rent. The easiest way to pay your ground rent, management fee and service charge is by using your online customer account.

We also have a number of other ways to pay.

Consulting you on long-term agreements and qualifying work

Legally, we must consult leaseholders and shared owners on qualifying long-term agreements and qualifying work. This is sometimes known as a Section 20 consultation.

A qualifying long-term agreement is when we enter into a contract lasting more than 12 months, where you’re likely to be charged more than £100 each year. Typically, these are contracts for cleaning shared areas, gardening and maintaining door entry systems, but the contracts could also be with contractors such as window fitting companies or fire safety specialists, etc.

Examples of qualifying works include repairs, maintenance and routine decoration or improvement work, where we will charge you more than £250 per year eg for roof repairs or replacing windows. We will consult you if you have to pay £250 or more towards the cost of any qualifying work during a financial year.

We’ll always consult any recognised residents’ associations if our maintenance or repairs will affect more than one household.