Fixed Service Charge Policy

Fixed Service Charges are where an estimate is calculated of how much it’ll cost to deliver a service for a financial year. This may be based on actual historical cost information, known contract costs or estimated service delivery costs.

A Fixed Service Charge will be defined within tenancy agreements and will be set at the start of each year, depending on the review date within the tenancy agreement. The service charge cannot therefore be changed during the year.

A Fixed Service Charge also means that Amplius won’t be able to recover any overspends on the service charge at the end of the year or refund any underspends. It’s therefore important that service charges are calculated as accurately as possible.

The service charge will cover the cost of providing and maintaining all services provided for the customer that are in addition to the benefit of living in their own home.

Amplius will calculate service charges on a scheme-by-scheme basis to provide greater transparency to its customers and ensure that they pay the true cost of the service provided.

The content of the service charge will vary according to the tenure, scheme, location and property type, i.e. house, bungalow, flat, sheltered accommodation. Customers will only be charged for the services that are available to them and as defined by the terms of the tenancy agreement.

Costs to be included within the service charge are those which are directly incurred for providing the service, meaning that costs are transparent and can be checked through an appropriate audit trail. In contrast, costs which are incurred indirectly, such as the management charge for administering the charge, would be more difficult for Amplius to identify the exact breakdown of cost.

Certain costs will always be excluded from a service charge for rented property, and these are the costs of housing management, maintenance of the structure and exterior of the building and building insurance.

Having established the content of the service charge and the cost of providing those services on an annual basis, we’ll then split these costs fairly between everyone receiving the services.

Where apportionments exist, clear rules must accompany them so that they can be explained to customers and costs remain transparent.

Where mixed tenure schemes exist, the apportionment of the service charge will be done in the same way, and all occupiers will be charged their proportion of costs as defined both within the tenancy agreement and the lease.

Tenancy agreements will define service charges as fixed. Therefore, the setting of the service charge must be as accurate as possible, to ensure that actual costs are recovered.

Service charges will be based on estimates of the sum that is likely to be spent when providing services over the coming year. This estimate will be based on actual costs for the previous years, together with any new contract prices for re-tendered services such as a grounds maintenance contract.

Service charges will be set at scheme or estate level. Scheme-by-scheme service charge budgets will be maintained so that income and expenditure can be matched. As well as the initial setting process, systems will exist to ensure that monitoring of expenditure is completed throughout the course of the financial year.

Within the service charge, an allowance can be collected for the future renewal of communal equipment such as lifts, door entry system, communal TV aerials etc. 

Amplius will determine the estimated life span of its installations by using historical information together with information provided by suppliers when equipment is replaced. Amplius will manage its own asset management strategy and will hold its own asset register in respect of service charge purposes and ensure that this information is regularly reviewed.

No management charge will be added to either the depreciation charge or the renewal allowance within the service charge.

Provided that there is a contractual obligation by Amplius to provide the services for which a customer shall pay a service charge, most services are eligible for Universal Credit or Housing Benefit. Tenancy agreements must therefore be explicit about the obligations to provide services and for the customer to pay for them.

Universal Credit: service charges - guidance for social landlords - GOV.UK

Due to varying tenure types across Amplius, different review processes will be required for different tenancy agreements. The different tenure types are detailed below:

• Assured tenancies
• Secure/Fair Rent tenancies

All Amplius service charges are reviewed annually.

Amplius also has different effective dates within tenancy agreements dependent upon whether a tenancy is weekly/monthly/quarterly. In most cases the review date is either 1 April or the first Monday of April each year. In exceptional circumstances, service charges may be reviewed at other times during the year in accordance with the requirements of the tenancy agreement.

As part of any service review, customers will be consulted on the proposed changes in line with legislative requirements, their tenancy agreement and good practice guidance.

We’ll use different methods for customer consultation, including:

• Customer Forum / Customer representatives when procuring new services.
• The Board of Management

Different methods of consultation will also be implemented dependent upon the type of change within the service charge. For example, when the amount of the service charge is changed in line with the cost of the service, this may be communicated by letter to notifying the customer of the change.

However, where services are being introduced or removed, a meeting with customers may be needed to communicate all the information to them and to hear their views on the changes.

It’s also important to adhere to the terms of the tenancy agreements, as different tenure types have different clauses within the tenancy about varying services.

Where a stock transfer or rent guarantee agreement exists which contains clauses referring to service charges, then any such agreement overrides certain sections of this policy until the end of the guarantee period. Service charges would be reviewed at the earliest opportunity under the terms of the rent guarantee or transfer agreement.

Amplius has determined that a 15 percent management charge on services is reasonable and in line with good practice guidance. Within Amplius statutory accounts and management accounts, management costs will be shown at 15 percent, however a separate record will be maintained to provide Amplius with an indication of what actual true management costs are.

This management charge is added to enable Amplius to resource the administration of service charges and to monitor the quality of services provided whilst ensuring we provide value for money.

Depreciation/renewals charge is the only service chargeable item that will be excluded from the management charge.

When planning new developments, Amplius’ Development Team will, as far as possible and within the constraints of design and planning requirements consider the reasonableness of service charges.

Factors to be considered when assessing what is reasonable include:

• Service charges compared to those of similar properties.
• Whether the services provided are necessary.
• Whether service charge costs may be avoided through modified design.
• Eligibility of services provided for Housing Benefit and Universal Credit.

This process is carried out through design review and future schemes meetings which are attended by all relevant teams within Amplius and contain an approval process.

Risk arises from Amplius’ Fixed Service Charge policy in a number of ways, including:

• Financial risk through potential failure to ensure that enough income is generated to cover operating costs.
• Failure to comply with legislation, performance standards, good practice guidance and the terms of tenancy agreements.
• The service charge being viewed as unfair and not affordable.

Given the importance of these risks, it’s recognised that the effective management of these is essential. This will be achieved through the ongoing review of this policy, systems and practices within Amplius to ensure that service charges are administered in the correct way.

Service charges can be a significant addition to customer’s rent, and it is therefore important that affordability is taken into account when setting a service charge. Amplius will aim to always obtain value for money.

Customers have the right to complain against the level of service charge that has been set under Amplius’ complaints procedure. The complaints procedure can be found on the ‘Contact Us’ page on our website.

Depending on the type of tenancy agreement that a customer has, they may also have the right to complain as follows:

• For secure tenancies with fixed service charges, this will be to the Rent Officer by the customer, within 28 days of the rent registration, requesting that the Rent Officer forwards the appeal to the Rent Assessment Committee.
• For assured tenancies with fixed service charges and where a rent review clause is omitted from the tenancy, tenants have the right to appeal to the Rent Assessment Committee following a Notice of Increase under Section 13 of the Housing Act 1988.

Where services are not delivered, charges will be reviewed, and changes or refunds will be made accordingly.

Amplius will seek opportunities to benchmark to ensure its service charges and associated practices are comparable with other landlords in its peer group.

Amplius is committed to training and developing colleagues and Board members so that they have a good knowledge of the procedures and systems in place that meets the expectations of customers and stakeholders. As such, colleagues who are involved in the delivery of this policy will be provided with appropriate training and guidance to ensure that its aims and objectives are met.

The policy adheres to Amplius’ approach to Equality and Diversity.

Amplius is committed to equality and recognises diversity in all areas of its work. Amplius will seek to treat people with respect and deliver services that meet individual need.

Amplius encourages tolerance and respect for different lifestyles, beliefs and views. Amplius values diversity and believes that everyone should be treated with dignity and respect.

We won’t discriminate or tolerate discrimination against any person or group on the grounds of their race, ethnic origin, religion, age, disability, gender or sexual orientation.

Equality Impact Assessments will be completed where there are any major changes to scheme-based services or service charges.

Local authority housing benefit departments can vary on what charges are eligible and the amount they deem reasonable, therefore this is considered when setting service charges across Amplius.