Section A - Management Charges
This section of the accounts covers the Buildings Property Insurance, Audit Fee, Management Charge and in some cases there may be Interest Charges.
Property Insurance – This covers the cost of insuring the building(s) at the scheme against specific risks e.g. storm damage, fire damage, flooding etc.
Audit Certification Fee – This covers the cost of having the service charge accounts for your scheme certified by an independent auditor.
Management Charge – This covers the cost of managing the leasehold properties and includes staffing, office and administration costs of staff working on leasehold services.
Section B – Service Charges:
This section details specific expenditure required to provide the services detailed in the lease agreement.
Some examples of the items that may be included in this section are:
Scheme Salaries – This is the salary costs for staff directly employed at the scheme including scheme wardens, cleaners, handyperson etc. Other costs associated with employing staff will also be detailed in section B of the accounts and include: Pension contributions, staff training, resident warden accommodation costs, telephones etc.
Light and Heat – The cost of electricity and gas used for lighting and heating communal areas, powering lifts etc.
Gardening/Cleaning Contracts - Covering the cost of providing a gardening and/or cleaning service for communal areas.
Lift Costs – Repair and maintenance of lifts not covered in the terms of any servicing contract.
Section C – Day to Day Expenditure
Repairs and Maintenance – We may provide a repair and maintenance service to some schemes. This would include the cost of labour and materials for any repairs undertaken and the cost of necessary maintenance contracts.
Section D – Provision For Future Maintenance
Provision for external re-decoration – This details the amount required to be collected toward future re-decoration of the exterior of the buildings
Provision for internal re-decoration – This details the amount required to be collected toward future re-decoration of internal communal areas only.
Provision for General Maintenance – This will only apply if the lease states that the leaseholder is required to contribute annually toward a sinking fund and is then used to fund major works. (please also refer to frequently asked questions)
Please Note: The above items are examples of the type of services that may be contained in the service charge calculation for your property. Items contained in the service charge accounts vary from scheme to scheme depending on the services provided and as detailed within the lease.
Calculation of the Service Charge
The estimated service charges are calculated by adding up the total budgeted expenditure from sections A – D of the Service Charge accounts.
Any over or under collection of service charges from the previous years accounts are then added or deducted to the total expenditure which gives the Total Yearly Estimate for the scheme which is then divided down to provide the figure to be charged monthly for each unit/property in the scheme.
Sections E - Expenditure from Maintenance Provisions
This section shows any money either spent or estimated to be spent to the end of the financial year from the sinking funds.
Section F – Maintenance Provisions (This section is only updated for the Year End Accounts and not for the budget accounts sent out in February.)
- Balance brought forward as at 1st April – This is the amount of sinking fund left in the account from the previous year
- Provision for external redecoration
- Provision for internal redecoration - These show the amount collected in from leaseholders toward the funds for re-decorations
- Provision for general maintenance
- £% Long Term Maintenance from leavers - It will depend on the terms of the lease how we collect money from you toward the sinking fund. If we collect a contribution to the sinking fund as part of the monthly service charge, there will be an amount showing against the first heading i.e. Provision for general maintenance. If we collect toward the sinking fund on property re-sale then the amount collected toward the sinking fund will show against the heading £% Long Term Maintenance from leavers.
- Interest received from bank - This shows the interest added to the sinking fund account built up against the credit in the account.
- Less expended from fund (section E) - The amount spent from the sinking fund account as show in Section E of the accounts is deducted from the total amount held in the account to leave the remaining balance.
Section G – Statement of Current Assets/Liabilities (This section is only updated for the Year End Accounts and not for the budget accounts sent out in February.)
This shows how the balance of the fund is held.
- Bank Account Balance - This shows the balance of the scheme bank accounts.
- Owed By Residents Arrears/Prepayments - This shows the total of service charges in arrears or prepaid by residents of the scheme.
- Owed By /(To) JJH - This is the balancing figure between the actual service charges and the amounts estimated and reimbursed to JJH from the scheme bank account as JJH pays all invoices initially on behalf of the scheme and then reimburses JJH from the scheme bank account periodically.
- If the figure is a minus sign (-) next to the figure this is money which is owed to JJH.
- If there is no minus sign then this means that the money is owed to residents by JJH.
- Under/(Over) Charge To Residents - This is the value referred to in ‘Calculation of the Service Charge’ above which is the difference between the cost and the amount charged to residents.
- A minus figure represents an over charge of service charge to residents.
- If there is no minus sign this represents an under charge of service charge to residents.
The balance in the bank account will not always exactly match the value of the sinking fund due to the above items.