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What are service charges and why do we have to pay them?

Service charges are payments by you as a leaseholder to High Peak Borough Council for all the services the landlord provides. These will include maintenance and repairs of communal areas, insurance of the building and, in some cases, provision of central heating, lifts, estate staff, lighting and cleaning of common areas etc.  The charges will also include the costs of management by High Peak Borough Council.

Your service charges will vary from year to year; they can go up or down without any limit other than that they are reasonable and payable under the terms of your lease.

Details of what can (and cannot) be charged by High Peak Borough Council will be set out in the lease. The proportion of the charge to be paid by each individual leaseholder may also be set out in the lease but is not always. In the absence of the lease stipulating the proportion payable the costs will be apportioned equally between the number of flats in the block. High Peak Borough Council arranges for provision of the services. The leaseholder pays for them.

 

All costs must be met by the leaseholders. High Peak Borough Council will generally make no financial contribution other than the amount of the costs apportioned to any tenants in the block as the tenants pay for block maintenance in their weekly rent.  Although the majority of High Peak Borough Council's leases allow for us to collect estimated service charges in advance, repaying any surplus or collecting any shortfall at the end of the year, we currently charge the actual costs based on the previous financial year. This means that you are only paying for what we have paid for and not what we think we may pay for. Because of the need to get all the costs in prior to commencing the calculations this means you will generally not get your invoice until September/October in each year.

High Peak Borough Council can only recover the costs of services which are reasonable. Leaseholders have the right to challenge service charges they feel are unreasonable by application to the First-Tier Tribunal (Property Chamber). The First-Tier Tribunal will only consider the reasonableness of the charge levied.

When considering the purchase of a leasehold flat, it is important to find out, for personal budgetary purposes, what the current and future service charges are likely to be. Also check if there is a reserve/sinking fund, and what plans there are for major works that could affect the service charge in the next few years after your purchase.