The Service Charges may be collected in various Categories to ensure that only those Flats or Units that benefit from Services pay for them. The Reserve Fund collection is identified separately as there are special requirements regarding the treatment of such Funds. We list below with a brief explanation the Expenditure Headings you may well find in your Building Budget:

  1. Audit Fees: the cost of the preparation of annual accounts by an independent Auditor; a copy of these accounts will be provided to each resident. It is a legal requirement to prepare Audited Service Charge accounts where there are four or more flats in a building if a lessee requests it, and so we do this anyway. Our Service Charge Auditors are Arnold Hill & Co situated at our Registered Office, Craven House in Northumberland Avenue.
  2. Carpet Cleaning: the cost of periodic steam cleaning/ shampooing, normal six months.
  3. CCTV Maintenance: the cost of maintaining CCTV coverage.
  4. Electrical Maintenance: a provision for the changing of Light bulbs, testing of Emergency Lights, and repairs to the common parts electrical installations.
  5. Electricity: power for the entryphones, the lifts and other electrical installations. There is a Landlord’s Meter for these supplies, and these costs may include the cost of occasional meter readings if the supplier does not do this.
  6. Emergency Lighting: maintenance and testing of the emergency lighting system. Battery packs need changing after about three years.
  7. Entry Phone Maintenance: a provision for the costs of any call-outs during the year to repair the entry phone system; these would be to remedy damage that was not covered by the warranties or guarantees from the supplier and installer.
  8. Fire Precautions, Health & Safety: a provision for Health & Safety Risk Assessments and consequent work, together with an allowance for any fire precaution work that may be necessary.
  9. General Cleaning: weekly cleaning as appropriate of the common parts.
  10. Gardening: weekly maintenance to include watering, pest and disease control, weed control and replacement of dead or dying plants.
  11. Insurance: the cost of insuring the buildings, together with employer’s liability and public liability cover. Details of the current insurances are available on request from your Property Manager. Contents insurance needs to be arranged by each resident for their own apartment: you should include in this cover any specialist decorations and fittings and loss of rent (if applicable). Water Damage: please note that the building insurance may only cover repairs to the structure if your premises are flooded by, for example, a leak from the shower in the flat above. Furniture and furnishings have to be covered on your contents policy.
  12. Directors & Officers Insurance: the cost of the premium for insuring the Board of a Residents’ Management or Right-to-Manage Company against third party claims.
  13. Insurance Valuation: the cost of a Building Surveyor calculating the re-building cost for the purposes of insurance premium calculation.
  14. Fire/Smoke Alarm: maintenance of smoke alarms and smoke vents,and normally testing on a quarterly basis.
  15. Lift Engineering Insurance: the cost of annual inspections of the lift by insurers to comply with statutory responsibilities. A Report is sent after each inspection, with the requirements of the insurers listed as either essential or advisory.
  16. Lift Maintenance: the cost of an annual contract for Preventative Maintenance of the lift, together with a provision for call-outs during the year.
  17. Lift Telephone: the cost of the line rental of a telephone line for emergency calls from a lift.
  18. Management Fees: HSC Property Management’s fees for the management of the property. This is a fixed fee that rises with inflation; it is not a percentage on costs incurred. The RICS Standard Form of Management Agreement sets out the services provided for the fixed fee, which cover all the day-to-day administrative services necessary.
    • HSC Property Management aim at all times to work in accordance with the March 1997 RICS Code of Conduct for the management of residential buildings.
    • When there are the occasional non-recurring items of major expenditure, such as the maintenance work envisaged to be financed from the Sinking Fund, HSC Property Management do not charge a percentage fee but will charge for the time of their Building Surveyor.
    • When there is an alleged breach of covenant by another resident, the Landlord needs to have an indemnity for legal costs before taking action; this indemnity also applies to HSC Property Management’s fees, which are generally charged at £85 per hour.
  19. Pest Control: the cost of a contract for control of vermin or call outs as and when necessary if no contract is in place.
  20. Porter: the salary and employment costs of any Porter are included in the budget.
  21. Temporary Porters: an allowance for holiday cover or sickness cover as appropriate during the year.
  22. Refuse Containers: an estimate of the cost of hiring refuse containers from the Local Authority or Contractor.
  23. Repair & Maintenance: An estimate of the probable expenditure for routine maintenance together with an allowance for unforeseen repairs that may become necessary during the year. In addition, this item may be broken down into:
    • Insurance Claims: the net cost of any insurance claims made. During the year this may show a significant cost where expenditure has been made but funds have not been received from the insurer. However at audit, prepayments and accruals will be added as required.
    • Insured Risk, Not Claimed: the cost of repairs for damage caused by risks that are insured, but where it was decided not to make a claim. This decision will depend on the Excess (there is no point in claiming £300 if the Excess is £250) and the probability of increasing the insurance premium at renewal. Insurers look at claims history on renewal, and we think carefully before making claims of less than £750.
    • Surveyors Fees: the cost of Building Surveying Professional Services, which may relate to Section 20 Notices, preparation of Specifications, obtaining and administering tenders, administration of Insurance Claims and preparation of Maintenance Plans or Insurance Re-Valuations.
  24. Reserve Fund: a fund set aside for future maintenance, replacement, redecoration and renewals for the building structure and internal common parts. In calculating the collection, a notional 20 year programme of maintenance and replacement is costed, and the sinking fund contribution is set at the level necessary to collect in the funds required. In the first year, our Building Surveyor will prepare a Maintenance Plan for a more careful calculation.
  25. Sundries: a provision of for sundries during the year, which will be expended only on the authority of the Board. There is also a provision for bank charges and legal costs, but these will only occur in abnormal circumstances. Lloyds TSB do not make any charges on the Service Charge cheque accounts.
  26. Water for the Flats: the cost of water used by all the flats in the building. This will be apportioned by the relevant service charge percentage.
  27. Water Pumps Maintenance: the cost of an annual contract for Preventative Maintenance of the water pumping system, together with a provision for call-outs during the year.
  28. Water Quality Testing: the cost of periodic testing by specialist contractors.
  29. Water Feature: the charges received from the Water Utility Company for water consumed, together with the costs of cleaning and maintenance.
  30. Window Cleaning: the cleaning of the external faces of the windows, which happens every quarter at Westminster Green.