Service Charge FAQs
What should I do if I have a query with my service charge estimate or statement of actual expenditure or I have not received a statement?
Initially you should contact the Homeowner Services Team who will co-ordinate getting the information you require and make sure they keep you updated on progress. Sometimes the information is held by different teams and we will have to obtain this for you.
What if I am having problems making the payments due?
Contact us immediately as we may be able to offer advice or payment terms to help. Do not ignore the problem as it will only get worse.
What happens if L&Q are not the freeholder of my property?
In some instances L&Q is granted a long lease by a freeholder at a development in order to comply with planning restrictions. This gives L&Q a block number of individual properties. The freeholder will appoint a management company who are responsible for all the services on the site such as cleaning, gardening or ensuring repairs are carried out. The management company instruct the contractors and ensure the works are carried out. L&Q will work with the management company to ensure acceptable standards are maintained. the management company will invoice L&Q for services provided. You will then pay your proportion share of these costs through your service charges.
If you have any queries about the performance of the management company or charges please contact theHomeowner team.
What's a sinking fund and why do I pay into one?
We collect sinking fund contributions from many of our homeowners as part of their service charge. A sinking fund is a reserve of residents’ money, held in trust by L&Q, which accumulates over several years. When we carry out major works – for example, cyclical redecoration of communal areas, or replacement of large items like doors, windows, roofs or lifts, we use the balance of the fund to offset the cost.
Our aim is that the level of the contributions that homeowners make will be enough for the sinking fund to cover the cost of major works in full. If there's a shortfall in the fund, we invoice homeowners for the balance of their contributions, though this is normally not necessary. If there's surplus in the fund, we carry forward the balance to the next round of major works.
Note that if your property is in a block, scheme or estate with a mixture of tenures, L&Q covers the share of major works costs for properties that are tenanted rather than owned.
We review sinking fund contributions on a regular basis, taking into account projected works due in the future, so you may see your payments into the fund change from one year to the next.
Your lease or freehold transfer agreement says whether or not we can collect a sinking fund for your property.
What are L&Q’s management and admin fees?
Why do I pay an audit fee?
Do I have to pay for repairs to my building?
It's a requirement of most leases that we recharge homeowners for their share of any repairs to the common parts of the building or estate. Your lease indicates what your property’s share of the costs is, and also it defines what the common parts of the building are. Common parts will often include all external features of a block, including flat windows and patio doors, so we may legally ask you for a contribution towards the upkeep of these.
Your property’s share of responsive repairs is listed under the heading 'communal repairs' on your service charge statements.
In addition, we may charge you for the cost of an individual repair that has taken place within your property. Usually internal repairs are solely a homeowners’ responsibility, but there are rare occasions where our contractors carry out emergency works. When this happens, we will recharge you the cost in your final service charge statement at the end of the year.
What are third party management company costs?
On estates where L&Q does not own the freehold, a third-party managing agent normally provides some or all of the services. The freeholder of the estate employs the managing agent, who charges L&Q for the services supplied. We then recharge these costs to residents, as per the terms of the lease and head lease agreements.
Why do third party management costs appear under two headings?
Some residents will see two codes on their service charge statement: 4758 – Third Party Management Costs and 4759 – Third Party Management Costs – Homeowners Only.
Both codes relate to the invoices charged by the third party managing agent. The reason we divide the costs is that some headings within the managing agents’ budget are not rechargeable to tenanted properties. These include items such as repairs, insurance and reserve fund contributions, which are covered by tenants’ rents.
Any such ineligible costs are assigned under 4759, with homeowners paying their contribution towards them via their service charge. (L&Q covers the cost of tenants’ contributions.) Headings eligible for recharge to all tenures – eg cleaning, lift maintenance, grounds maintenance – we assign to all properties using 4758.
Note that in previous years we used code ‘4480 – Amenity Area Charges’ on your statements instead of 4759 code.
There are communal refuse bin hire costs in my service charge. Doesn’t my local authority provide the bins in our bin store?
What's specialist equipment maintenance/servicing?
How do you work out the costs I pay towards a caretaker each year?
IThe caretaker that provides services to your estate is an employee of L&Q. When we work out your contribution towards caretaking costs, we take the caretaker’s annual salary plus overheads, and apportion the value by number of hours they spend at your estate, dividing by the number of properties that benefit from the service.
What's 'External Electricity Consumption' on my service charge statement
How is my buildings insurance premium calculated?
If you live on a development that is managed by a third party, the managing agent or freeholder will charge L&Q for insuring your premises, which we pass on to you as part of your service charge.
If you own the freehold of a property that is on an L&Q estate, you need to arrange buildings insurance yourself. It is not covered by the L&Q policy.
Why are you charging me for bulk refuse collection – I thought this was covered by my council tax?
What does pest control in my service charge cover?
Please explain my water pump costs
We may also need to supply a waste water pump at some developments – in which case we recharge residents in a similar way.
Why is there no window cleaning shown on my service charge statement?
What items are covered by the fire protection equipment charges?
Why does ground rent appear as an item in my service charge statement?
Where L&Q is the freeholder of the estate or block where you live, your lease may require you to pay an annual ground rent charge to us. In which case, we send you a yearly ground rent notice and apply the charge to your account, usually around the beginning of April.
Where L&Q is not the freeholder of the estate, we normally hold a head lease with the main landlord. The head lease may require us to pay ground rent in respect of your property to the landlord. When this is the case, we recharge you with the cost of the ground rent we have paid, and it thus forms part of your service charge rather than standing as a separate charge.
What is a variable service charge?
All L&Q homeowners pay variable service charges.
Please can you explain the variable service charge balance that I pay?
This is the brought forward balance from the previous financial year’s final service charge statement for your property. For example, if your final balance for the 2015/16 year was a deficit of £240.00, we have carried the balance forward to the current financial year and spread it across 12 months. In this scenario, your Variable Service Charge Balance would be £20.00 per month throughout 2017/18.
Our old policy was to debit homeowners' accounts as soon as we had issued the final statement, giving you limited time to settle the outstanding amount. We have changed our way of working to give our homeowners extended time to clear balances, interest free, with a view to making charges more affordable.
Can I pay off my variable service charge balance early?
I live on a new development – I have noticed that my final service charge statements have shown large credits due to me: are you overestimating my charges?
When a building or estate is new, our Service Charge Team creates an estimated schedule of charges based on projected costs. If we know contract costs in advance – or if a third party managing agent is in place and they provide us with a budget – we use these as the basis of your estimate. We estimate other costs based on equivalent sized blocks on other estates.
In reality, over the first year or so of a development’s life, costs may be lower than the amounts we have estimated. This can be due to a variety of reasons: for example, facilities are still under warranty, contracts have not yet been set up, responsive repair costs are low, etc. As a result, it is quite common to see credit balances on the final service charge statements in years one and two.
However, we feel it is responsible to set your charges at a level that we think will eventually reflect the cost of providing services to your estate. This will mean that our residents are used to paying a certain amount towards their services each month, and that we can avoid a large uplift in charges in the third or fourth year following you purchasing your home.
I moved into a new estate 2-3 years ago. I have noticed my estimated service charge has increased this year – please can you explain why?
When a development is new, we calculate service charges based on projected costs. It is not always possible to determine how much the cost of providing some services will be, so we use best estimates based on equivalent costs from our other sites.
We tend to maintain estimated service charges at a similar level for the first 2 years. During that time we don’t always see the full cost of services for various reasons: for example, facilities are still under warranty or defects liability, accounts with utility suppliers may not be set up, etc. It is only after the second year that we start to see the true service costs, and at that point we set your service charges accordingly. In some cases this results in a higher service charge than you paid in the first two years.
What is Section 20 Consultation – does it apply to my property?
- For Qualifying Works – one-off jobs where the cost is greater than £250.00 per resident. This primarily covers planned major works, but can also include responsive maintenance in some cases. If we have not issued you with the correct consultation notices, we may only recharge you a maximum of £250.00 for the works
- For Qualifying Long Term Agreements – any contract longer than 12 months that is worth more than £100.00 per resident per year. Typically, these may include cleaning, grounds maintenance or lift servicing contracts. If we fail to serve correct notices, we may only charge you a maximum of £100.00 per year for the contracted service