Service Charge and WMC

[Sally Bertram]

Hi there,

Following a great webinar a month or so ago about how we should be working out service charge and adding it to the WMC so that it is covered by Local Housing Allowance, we are now in the middle of a bit of an overhaul of how we run our almshouse charges!

I have a very useful spreadsheet that was provided by the chap who led the seminar, that shows all ‘allowable’ expenses for service charge. However, I’m not sure from it whether we can include the following items:-
– Routine maintenance within individual properties e.g. new bathrooms / kitchens / boilers / periodic decorating
– Repairs within individual properties – e.g. replacement of a broken tap or air vent

Does anyone know the answer to this?

Many thanks!

Sally Bertram
Thornbury Town Trust

[Clare Heyes]

Dear Sally,

The two maintenance items you mention are not service charges. If you download the specimen budget from the Association you will see these are separate items within the wmc . Service charge is usually things like communal or individual utilities or communal gardening/cleaning/lift servicing/warden costs. General maintenance is not a chargeable service. The basics of service charge is that you must be able to work out what it is from invoices and you can’t make a surplus. You can’t foretell maintenance issues, hence why they are not a service charge.

Hope this helps.

Kind regards,
Clare
Legacy East Almshouse Partnership

[Sally Bertram]

Hi Clare

Thank you for your reply.

I notice you say individual utilities are in service charges, but I had thought that during the webinar we were told they should not be included.

They also told us that you estimate what the year will be, and then look at actual cost at the end of the year and adjust the following year accordingly, to ensure that you don’t make profit or loss. I also thought they had said that we do include general maintenance – I just wasn’t sure if it was individual flats as well as communal areas.

So your message has left me more confused than ever!

Does anyone else know the correct situation as it seems that at least two of us have different understandings?

Many thanks.

Sally

[Clare Heyes]

Dear Sally,

Sorry to confuse the situation. With regard to “individual utilities”, I have a site with a single communal electricity meter so the residents are all charged a service charge for their electricity but it is just divided up amongst the six of them. It is still a service charge but not covered by Benefits or Universal Credit. However, the electricity used by the lift to the flats or communal lighting is a service charge that is covered by benefits or UC! Obviously with only one meter we need to take a view on this and it is a best guess.

I am absolutely sure that general maintenance is not a service charge but stand to be corrected by the Association if I am wrong.

Kind regards,
Clare

[Sally Bertram]

Hi Clare,

That makes more sense now – thank you! All our residents have their own meters, which is obviously different to your set up. It looks like we are on the same page with how that all works, which is a relief to me!

The maintenance bit I’ve no idea, so will go with your thoughts on that one.

Thank you for taking the time to answer 🙂

Kind Regards
Sally

[Tina Collins]

We are just about to start the process of looking at WMC + service charge so any template/guidance would be greatly appreciated.
Please send to clerk.feoffee.osm@gmail.com.
Thanks
Tina

[Jane Edwards]

This matter is most confusing isn’t it? I rather think local authorities each have their own way of dealing with what constitutes a service. Further, we understand a service charge can only be charged if a social rent (wmc) is in place rather than an affordable rent, the method of calculating wmc increases being different for each, of course. We would be interested to get to the bottom of this if indeed a bottom can be located!
Jane
Berkswell Charities

[Sally Bertram]

Hi Tina,

I’ve just emailed you the spreadsheet template that I was given after the webinar. I hope it helps, but do let me know if you have any other questions!

KR
Sally

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