How are service charges calculated?
The lease allows for any reasonable method to be used for the apportionment of service charges and therefore some services are calculated per dwelling rather than on the bed-weighting method. An example of this would be Building Insurance and Front Entrance Door repairs.
Major works contracts may include work to the inside of tenanted dwellings, and where this is the case, the cost of these works is excluded from the major works service charge.
The calculation of most annual service charge headings are based on a ‘weighting’ method. This assumes that each property has four basic rooms – bathroom and toilet, kitchen, living room and hallway. We then add the number of bedrooms to come to a number of units for each property.
For example a one-bedroom property consists of five units, whilst a three bedroom property has seven ‘units’. Next, we total the number of units in the block – so a block with 5 two-bedroom and 5 three-bedroom properties would total 65 units – and divide this total into the cost of providing the services. This gives us the unit cost.
Finally, the unit cost is multiplied by the number of units for each individual property in order to reach the charge for that property. Consequently, the larger the property the higher the charge.
Service charges, estimated and actual bills
Home owners are required to pay a fair proportion of the cost of managing and maintaining their estate and the services the JMB and the council provide. Each years’ annual service charges are estimated based on the last financial year, which runs from the 1st April – 31st March. Estimated service charges are notified and invoiced in the February/March and the payment is due quarterly in advance starting 1st April.
Major Works estimated service charges are based on the contractual tender received and the JMB invoice these separately in order to facilitate various payment options outside of the terms of the lease (if applicable).
For annual service charges, every autumn the JMB calculates how much was actually spent providing services to your property and/or estate in the preceding financial year. Major works service charges are calculated based on the actual amount spent on the contract.
If the amount is higher than estimated, you will be invoiced accordingly and must pay the difference within one month. If the amount is lower, the credit will be applied to your service charge account immediately.
Major Works comprise large items of work, such as repairs, refurbishment, replacement or renewals to the exterior and communal elements/services of the block and/or estate.
Where costs are expected to be higher than £250 per dwelling for an individual contract of works, there is a statutory consultation process where the JMB must notify both it’s intent and proposal to the affected leaseholders who will be expected to contribute by way of service charges. The consultation process is S20 of the Landlord and Tenant Act 1985 (as amended) and the Commonhold and Leasehold Reform Act 2002.
Major Works contracts are usually on site and/or have a defects period which last more than 18 months. Therefore, the JMB must notify leaseholders of costs incurred every 18 months until actualisation of the Major Works service charge in accordance with S20B of the Landlord and Tenant Act 1985 (as amended).
If you’re having trouble paying your service charge
If you are having problems paying your service charges, please contact the JMB immediately to discuss your situation and review your options.
If you’re not happy with service or charges
If you are not happy with a service you are receiving from the JMB you should contact us so we can put it right.
If the problem goes on longer than is reasonable you should record a complaint in a letter or e-mail. JMB staff should answer/ acknowledge the complaint.
If you don’t think you should be paying for a service because you didn’t receive it or the standard was not good enough you may want to ask for a rebate of some of your service charge. As the actual service charge bills are sent out a year after the close of the financial year the service was received then rebate request may relate to what was going on almost two years ago.
The only way to decide whether a rebate is reasonable is to review written records from that time, so we can only consider rebates if we received a formal complain about the service at the time.
Try to resolve the issue informally: Not all matters of concern are necessarily complaints, and the JMB asks that Homeowners raise any queries with their Resident Services Officer in the first instance allowing them time to resolve the matter first time. The JMBs response target is a maximum of 10 working days.
A Homeowner can raise a formal complaint, or alternatively a Senior Manager or Director may recognise that a homeowner does not think the JMB has got it right first time. If a homeowner feels that the JMB has not got it right first time, they are encouraged to email their Resident Services Officer heading the correspondence as Official Complaint or Not right first time.
It should be noted, for Leaseholders, that the Southwark Lease states that a Service Charge dispute does not permit non-payment of Service Charge contributions by the Lessee. Should the complaint not be upheld and a service charge debt has occurred, the Leaseholder may be liable to pay contractual interest from the date of the breach of Lease should the matter progress to the Courts.
Level 1: A phone call or email by a JMB officer to resolve the problem is best and will take place within 15 working days of receipt of the complaint. If it is not possible to resolve within this timescale, the action being taken should be confirmed in writing either by letter or email to the complainant. Occasionally an extra five working days may be required to investigate a complex issue, if so this should be communicated to the homeowner as soon as it becomes apparent and within the 15 days initial response period. The Service Charge debt recovery process will be put on hold until a full response is provided to the Homeowner (if applicable).
If resolution is achieved on the basis of future action that is promised, the Service Manager should ensure that the action is completed. In the response the JMB Officer should say that s/he hopes that s/he has resolved the issue to the homeowner’s satisfaction, however; if this is not the case the Level 2 process should be set out as well as providing the Summary of Tenants’ Rights and Obligations document/JMB Website link.
Once the Level 1 complaint has been responded to in full, the Service Charge debt recovery process will be continued (if applicable). This process starts with a chaser letters to the homeowner and their Mortgage Lender (if applicable), follows the Legislated Pre-Action Protocol and can conclude with a County Court Judgement being obtained.
Level 2: A Senior Manager will consider the issue.
The JMB officer who dealt with the issue at Level 1 should submit a written report setting out the nature of the complaint and action taken to resolve it. It is important that a full investigation is undertaken, all elements of the complaint are addressed and the information provided is accurate.
The Service Charge debt recovery process will be put on hold until a full response is provided to the Homeowner (if applicable). The investigator will when possible determine the action to be taken and should endeavour set out their decision in writing within 25 working days. A Level 2 issue may be complex and have multiple strands, in which case the homeowner should receive an up-date within 15 working days of each contact.
If the homeowner wishes to introduce new issues these should be raised separately as a new enquiry, which may not warrant being treated under the complaints process. The final decision letter should refer to the Summary of Tenants’ Rights and Obligations document/JMB Website link.
Once the Level 2 complaint has been responded to in full, the Service Charge debt recovery process will be continued (if applicable). This process starts with a chaser letters to the homeowner and their Mortgage Lender (if applicable), follows the Legislated Pre-Action Protocol and can conclude with a County Court Judgement being obtained.
Level 3: If the resident is not happy with the Level 2 response they can ask Southwark’s complaints section to undertake an independent review of the action undertaken by the JMB. The resident should notify the JMB at the same time the Level 3 complaint is submitted so that the Service Charge debt recovery process can be put on hold until a full response is provided to the Homeowner (if applicable).
If the homeowner wishes to introduce new issues these should be raised separately as a Level one issue. Should Southwark’s complaints section uphold the JMBs findings, the Service Charge debt recovery process will be continued (if applicable). This process starts with a chaser letters to the homeowner and their Mortgage Lender (if applicable), follows the Legislated Pre-Action Protocol and can conclude with a County Court Judgement being obtained.
Level 4: The Housing Ombudsman does not have jurisdiction in relation to Service Charge disputes, as this has been legislated to be heard in the County Court, First Tier and Upper Tribunals.
If the homeowner believes that neither the JMB nor the Council have adequately addressed and resolved the complaint, they can exercise their statutory Rights as per the Summary of Tenants’ Rights and Obligations document.
Once a Service Charge Dispute is in litigation, the JMBs Service Charge debt recovery process will be put on hold until a final judgement is made by the appropriate body. Should the Courts find in the JMBs favour, the Service Charge debt recovery process will be continued which may result in a S146 forfeiture Notice being served and executed or a Legal Charge being placed on the property.
Dear Residents, Southwark Council is partnering with Leathermarket JMB to deliver its Winter Cost of Living Fund. Eligible low income households will receive a £100 Post Office Payout Voucher (by email or in post) that can be redeemed for cash at any Post Office. To be referred to the Fund, you must meet the following […]Read more
Dear residents in Crosby Row and Hamilton Square, please be aware that a Social Value Workshop is due to take place on Tuesday 21st November, 6pm – 7:30pm, at the Leathermarket JMB Offices in 26 Leathermarket Street. This will be an opportunity to find out more about the ongoing development of the Snowsfields Quarter, and […]Read more