Service charges

What does the service charge cover?

Your lease should state whether you will be charged for certain shared services, and how you will be credited with interest earnings from repairs and maintenance funds. The service charge normally includes the following:

Upkeep of the estate

This includes the grounds, any private roads and parking spaces, and communal areas in the buildings, and covers gardening and general cleaning (including materials and equipment), window cleaning, estate lighting and lighting of communal areas, communal central heating and hot water and power for communal facilities such as lifts and standing charges.

Maintenance of equipment

This includes maintenance under contract of boilers, lifts, ventilation fans, emergency lighting, fire prevention and fire fighting equipment, fire escapes, provision and maintenance of relevant notices.

Building insurance

Insurance of the buildings, any equipment for communal use and passenger lifts. Contents insurance is the responsibility of residents.

Repair and day-to-day redecoration

This includes day-to-day repairs to the outside of the buildings and any communal areas. Residents are responsible for their own internal repairs, decoration, fixtures and fittings.

Major repair

Major repairs to the building will be paid for by contributions from the service charge account to a repairs and maintenance fund (Sinking Fund).

Management & administration

The management and administration of all services, staff costs and the audit of accounts relating to servicing the estate is provided for in the service charge account.

How the cost of services will be shared between leaseholders will normally be set out in the lease. Otherwise, the costs should be shared reasonably between all the residents entitled to receive them.

Your right to be notified of any changes to your service charge

Your landlord should give you advance notice of any proposed increase in your service charge. You have the right to know how the increase has been calculated and have information about the budget for the services concerned. All demands for service charge payments, or written notification of costs that you will have to contribute towards, must be sent to you within 18 months of the costs being incurred.

Your right to challenge your service charge at a leasehold evaluation tribunal

If you believe that your service charge, or a proposed service charge, is unreasonable, you have a legal right to go to a Leasehold Valuation Tribunal for a 'Determination' (ruling). An unreasonable charge may be for:

• services
• repairs and maintenance
• management
• insurance

You can also go to the tribunal if you think that the services or works were not of a reasonable standard.

The Tribunal will look at both sides of the argument and then issue a Determination (ruling). If you are dissatisfied with the Determination, you can appeal to the Leasehold Tribunal. You will have to pay a set fee of up to £500, but this fee can be waived in some circumstances. Your landlord can also go to a Tribunal to ask if a charge, or proposed charge, is reasonable.

You can get information about the Leasehold Valuation Tribunal from your landlord or an advice centre, or you can write to the Leasehold Advisory Service at:

LEASE 6-8 Maddox, Street, London W1R 9PN (tel 0171 493 3116).

Your right to see a summary of service charge costs

You can ask your landlord for a summary of the service charge costs in the previous year. You can also inspect the accounts and receipts on which the summary is based, and take copies of them. Your landlord can make a reasonable charge for this.

Your right to a management audit if you live in a flat

Provided that at least two thirds of leaseholders with common service charges agree, you can have a management audit carried out by someone who is suitably qualified.

You will have to pay for the audit and your landlord's costs.

This will help you to judge whether the service charges for your home give you value for money and meet the standards required by your lease.

Your right to appoint a surveyor to inspect your landlord's premises and documents

If your Residents' Association has been recognised by your landlord or by a Rent Assessment Panel, it can appoint a surveyor who then has right of access to the landlord's premises and documents. The Residents' Association will have to pay for the surveyor's work.

Information about your service charges

As well as the information already mentioned, you are entitled to know:

• your landlord's policy on consulting with mortgage providers about service charge arrears
• what standard of services you can expect
• your rights under the 1985 Landlord & Tenant Act, if you are paying variable service charges (as amended by Commonhold & Leasehold Reform Act 2002)
• how to apply for housing benefit or income support
• how outstanding service charges are collected

Additional privileges

On some estates residents may pay additional costs for specific privileges for example car parking spaces, extra storage, etc. The costs are normally agreed at the time of purchase with the developer and taken over by Plumlife on completion of the sale of all the dwellings, or at the reversion of the freehold of the scheme. The cost of any guest suite is not covered by the general service charge.

Payment

The service charge is to be paid on 1st monthly, in advance, preferably by Direct Debit, but standing orders or cheques are acceptable. Cheques should be payable to "Plumlife".

The service charge is reviewed annually and each resident receives details of their estate's expenditure for the financial year.

Difficulties in payment

If for any reason you experience difficulties in keeping up with the payments due from you to Plumlife in respect of the service charge, you should let Plumlife know as early as possible. Such problems are dealt with as confidential matters, and Plumlife may be able to give you practical advice and assistance.

In exceptional circumstances it may be possible to make an arrangement with Plumlife to reduce arrears by paying the service charge plus a supplementary amount.

You should be aware that failure to pay your service charge could lead to the forfeiture of your lease and the loss of your home.