Service charges: glossary of terms

Common terms

Rent

If you’re a shared owner, you’ll pay rent for the share in the property that you do not own.

Ground rent

If you’re a home/shared owner your lease may include a requirement for you to pay ground rent. However, a decision has been made not to recover ground rents due to MTVH since 1st April 2022. If however, the building you live in is owned by another organisation (superior landlord) MTVH may still be required to pay a ground rent that will be recovered as part of your service charge.

Service charge

If you rent with us, you’re a home/shared owner or freeholder, you may have to pay a charge for any services that may be provided, and for the servicing and maintenance of any internal or external communal areas where you live. The exact make-up of your service charge depends on the type of property you live in.

Personal service charge

If you rent with us, you’re a home/shared owner or freeholder, we may be responsible for utility supplies to your individual property. This could be where there is a single electricity, gas or water supply to the building and the individual properties, or where there is a communal boiler for a heating system that serves all properties. This is known as a personal service charge. In a few instances this may include Council Tax. Not everyone pays a personal service charge as for most properties these charges are billed direct to you by the utility provider.

Variable service charge

The monthly service charge you pay through the year is an estimate of the cost of the services we provide. After the end of the financial year we review the actual costs, compare them to the estimate and calculate the difference, or variance, between them. The service charge is defined as ‘variable’ as the final actual cost may be different from the estimated amount.

If the estimate was too low, we’ll charge you the shortfall or balancing charge, or if the estimate was too high, we’ll credit you for the overpayment. If your agreement requires the difference to be paid or credited to you immediately, we’ll add it to your account with us and you can request we provide a refund, if you don’t have any arrears on your account. You’ll be required to pay this balance charge if it’s a shortfall.

Retail Price Index (RPI)

This is measure of inflation that is still used to increase shared ownership rents with the particular terms being specified in your lease.

Year-end account or service charge reconciliation statement

This is the annual statement that compares the actual costs of providing services to the estimated service charges that you pay each year. Sometimes this will mean you have paid too much or not enough (see variable service charge above for more information on this).

Refund

Where there is credit, and an amount is paid back to you – usually by bank transfer. This can only be done on receipt of a request via our website.

Breakdown of services

Scheme/estate or block charges

A scheme/estate charge applies where the service is used or accessible by all properties on your development, e.g. electricity used for lighting of outside areas that all properties benefit from.

A block charge is where the service is only accessible or used by the residents that live within that block, e.g. electricity used for internal corridor lighting. In some cases, both charges may apply.

Management and Audit fees

The management fee covers the cost of the administration of the services we provide, including tendering for services, the calculation and issuing of service charge estimates and accounts, and a proportion of all our office support functions such as customer services.

Depending on the services we provide and the terms of your agreement with us, the management fee may be calculated as a percentage of the costs of the services or charged as a fixed management fee. Your estimate and statement may also include an audit fee which covers the cost of external audit, if applicable.

Warden Call Alarm and CCTV

The costs of servicing and repairs to any ‘warden call’ emergency alarms system or any Closed Circuit Television (CCTV) system that may be installed for your property. If your scheme has a ‘warden call’ emergency alarm system, this cost will also include any charges incurred from the alarm monitoring service, used to call for assistance where there is no on-site staff, or outside of normal working hours. If the alarm system requires a dedicated telephone line this cost will also be included here.

CCTV covers the servicing, repairing and maintenance of development or scheme CCTV, but not the electricity to run it. CCTV systems are installed on some of our schemes to help tackle anti-social behaviour, vandalism and other problems that affect residents’ security.

Internal Communal cleaning

The cleaning of any communal areas such as internal corridors, stairwells, common rooms and windows in the communal parts within your scheme or block. This may be carried out by a cleaning contractor or our own staff. In general, the cleaning service covers sweeping and litter picking the scheme’s communal areas such as stairwells, as well as one-off cleaning tasks such as deep-cleans or carpet cleaning, and any cleaning materials used. Where there are more extensive communal areas such as a communal lounge, this cleaning service will include the regular cleaning of these areas.

Communal Utilities (scheme/estate and/or block)

This is a charge for the gas, electricity or water supplies that may be provided in the internal communal areas of a building such as corridors, stairwells, common rooms, or guest rooms, and/or external areas like car parks and footpaths etc.

We pay charges for the electricity supply to provide lighting to any communal areas (described above) and to provide power to any other communal systems that may require an electricity supply, such as CCTV system and door entry systems. There may be gas supplied for communal hearting systems in some blocks and we have water supplies for communal bathrooms and kitchens, where they are provided.

To make sure we obtain the best price for the electricity supplied to our estates, we’ve competitively tendered our electricity supplies and secured ‘bulk’ supply contracts, covering most of our schemes.

Communal repairs

These are the repairs required to the communal areas of the building or scheme that are not included under any specific service heading. All communal parts of building require preventative maintenance and reactive repairs. This might happen when something unexpectedly breaks down, or through normal everyday wear and tear. Whilst it is difficult to predict what parts of the building will require maintenance in any one year, we estimate what might be needed based on previous years’ experience.

Door and gate entry

The servicing and repair of any powered or electronic door or gate entry system. Door entry systems are installed in some of our blocks to provide added security and to control access. They often consist of main entrance doors with an electronic fob key system, with a fob reader, keypad, microphone and speaker to enable residents to speak to visitors and unlock the door remotely.

Fire equipment maintenance and servicing

The servicing, repair and maintenance of the fire equipment within the block or scheme, but not the electricity that may be required to run it. The equipment installed will depend on the layout and nature of the scheme or block, and may include emergency lighting, dry risers for emergency services, fire-fighting equipment, fire detection alarms and smoke vents. The costs of any fire risk assessment will be included in this charge. Any repairs or remedial works identified as part of the risk assessment will also be included.

Gardening grounds maintenance and external cleaning

The cost of maintaining the scheme or development communal gardens and grounds, including materials and equipment. The level of gardening and grounds maintenance required will depend on need, but generally it will include grass cutting, pruning bushes and shrubs, weeding flower beds and, where necessary, occasional re-planting or landscaping, along with cleaning these areas.

This service is usually provided through a gardening or grounds maintenance contractor. Gardens associated with specific individual properties are usually the responsibility of the resident or homeowner.

Buildings Insurance

This charge is made to home/shared owners to cover the costs of buildings insurance, where we as property owner are required to insure the building. Your lease gives each party specific duties, one of which is to maintain a level of buildings insurance cover for the property, to protect your and our investment. On some of our schemes, this charge will cover the cost of furniture and fittings that we may supply as part of our services.

Laundry

The maintenance of any communal laundry, covering washer and drier machine rental, servicing and maintenance, but not the electricity to run them (see Communal electricity).

Laundry income

This is a credit for any income we receive from coin operated laundry equipment. This income contributes to the overall running costs of the laundry.

Legionella testing

Where a block has a communal water storage tank, we must use specialist contractors to regularly test the water for any contamination and infection, such as legionella, and, where appropriate, carry out any necessary treatment. The charge will also cover a water risk assessment to make sure the appropriate testing and monitoring is undertaken.

Lift

This charge is for the servicing and maintenance of lifts provided in a block or scheme. It may include the costs of emergency alarms and telephone lines, but not the electricity required to run the lift. We employ specialist contractors to maintain, repair and service the lift and to certify that they are serviceable and safe to use.

Lightning protection

This charge covers the inspection of any lighting protection system (commonly referred to as a lightning conductor) on a scheme. It’s usually only required on taller buildings, and it’s inspected periodically to make sure it will provide adequate protection from a lightning strike.

Third party management fees

This is a charge for services provided on some schemes where a third party is responsible, or has been appointed, to provide some or all of the services that we would normally provide. This may apply where we’re not the freeholder of the block, or when our block is part of a larger development, and some services are provided by the managing agent.

Switch2 admin charge

The fee that our billing agent – Switch2 – charges for services they provide in billing individual properties for utility charges. This only applies where there is a single supply to the scheme which is then metered for each property, and we are responsible for recharging individual residents for their usage.

Pest control

For the removal or treatment to control and eradicate infestations of pests, such as rats, mice, wasp nests or cockroaches.

Play equipment

The maintenance, repair and servicing of play equipment provided by us to a development or scheme. We have a duty to make sure that the playground remains safe and employ a contractor to regularly undertake health and safety inspections and carry out any necessary repairs, servicing, or maintenance. This will usually be the Grounds Maintenance contractor.

Portable Appliance Testing

The inspection and testing of portable electrical appliances that are provided for communal use, or for use by a scheme manager, and equipment such as storage heaters in communal areas. We’re required to test to ensure that the appliances are safe to use. This cost is covered in the servicing contract budget.

Refuse and waste collection

The cost of removing fly-tipped items, one-off bulky waste disposal and the hire and collection of domestic waste where large communal bins are provided. It doesn’t include the emptying of wheelie bins, which is usually undertaken by your local council.

Your local council is not responsible for clearing any fly-tipping in areas where the land is owned or has been adopted by us, and we’ll therefore be charged for this service. For some schemes where there are communal rubbish bins, this may include the cost of hire and collection of the waste from these bins.

Renewals and replacements

To cover the cost of any furniture or appliances that we provide and are responsible for on your scheme. This may include furniture in a common room, appliances in a communal kitchen area and some furniture supplied in your home if you live on one of our supported housing schemes. It doesn’t cover personal belongings and furniture in your own property. Also, where white goods may be provided in some of our new properties these usually become the owner’s responsibility and are not covered by this charge.

Sinking fund or reserve fund

This charge is to allow for the collection of a fund to cover the cost of longer-term repairs, maintenance or replacement of parts of your block or scheme that may only be required periodically. This can include replacement of windows and doors, heating systems, and maintenance of the structure of the building and associated services. The actual frequency of the works will be determined by the actual condition of the items. This fund may also cover the cost of cyclical works like redecoration of internal communal areas or external painted surfaces. The actual frequency of the works will be determined by your lease agreement as well as the condition of the areas.

The money collected through these charges is held in trust for the benefit of the residents contributing to the fund, and in a bank account specifically for funds and separate to our everyday operations. When the works are due, if there is insufficient money in the fund and if the works can’t be deferred, a separate charge may be raised to cover any shortfall.

Staff

The cost of staff connected directly to your services, e.g. a concierge, scheme manager or cleaners. For a small number of properties where we employ caretakers, this charge covers the cost of their services they provide such as cleaning, gardening and litter picking (see also Communal cleaning and gardening).

Tree surgery

This covers the cost of surveys, pruning and felling of trees where these are situated on land that we own or have adopted and are therefore responsible. We employ specialist tree contractors to carry out this work which may include pruning or pollarding the tree to reduce or limit its size, and the removal of dead, damaged or oversized trees.

Where a tree is in a private garden, this will normally be the responsibility of the individual. If we’re required to undertake work to such trees for health and safety reasons, we may recharge the individual for this work. The cost is charged to the external maintenance budget.

Water pump

The maintenance, repair and servicing of any water pumps, communal tanks and sewage systems. If the water supply pressure is low, either because of the geographic location or the height of the building, we may have to install water pumps to ensure there is an adequate water pressure to all properties.

In some locations, properties may not be connected to the main sewerage system. In these circumstances, we have to install sewerage systems to treat sewage and arrange for tankers to periodically remove sewage from the tanks. The cost is charged to the servicing contracts budget.