How are service charges calculated?
When we set your estimated service charges, we will review the current cost of each service and calculate the new charge for it using one of the following methods:
Contract cost with uplift
Where a service is provided by a contractor, there's usually an annual uplift built into the terms of their contract with L&Q. We will mirror this contractual uplift and apply it to the charge for that service.
Services such as:
• communal cleaning
• grounds maintenance
Inflationary uplift
Where a service consists of regular and consistent costs, we will take the most recent 12 months’ worth of expenditure and increase it by the current rate of inflation to calculate the new charge.
Services such as:
• communal electricity
• communal water
• refuse bin hire
Reactive cost
Some service costs are less predictable and can vary from one year to the next. In these cases, we won't look at the previous 12 months’ costs, but we will take the average cost from previous years’ records (up to five years) to assess and calculate an estimated charge for that service.
Services such as:
• communal repairs
• pest control
• bulk refuse collection
Salaried cost
Some services are provided by our staff directly. In these cases, we will set the charges for them based on the salaries of those staff members plus overheads.
If the member of staff is not based full-time on your estate, we will apportion the costs according to how many hours they spend there on average.
Services such as:
• caretaking
• intensive housing management
Budgeted cost
On estates where a third-party managing agent provides some or all services, we will take the most up to date copy of the Managing Agent’s budget to use as the basis of your service charge.
Services such as:
• third-party management
• car parking
New estates
If the development where you live is new (up to two years old), it's unlikely that we will have a full set of previous expenditure on which to base your new service charge.
For services that have not yet had full costs, we will take the current year’s estimate and increase it by the rate of inflation to calculate your new charge for those services.
We do this to prevent you underpaying for services in the new year, which would lead to you having a large balance to pay after we issue you with your final statement for the period.
As your development becomes more established, the cost of providing services will become more apparent, and we will be able to calculate future estimated service charges in line with the other methods listed above.