Service Charges

For Walsall, the original leases specify that the apportionment should be based on a simple calculation of the number of flats in a block and the number of flats receiving wider services to part or all of the estate. Therefore the apportionment does not reflect the size of the dwelling; each eligible property is charged the same proportion of the costs.

See simple example below.

Leases for the London flats which are based on the original London Borough of Lambeth leases, use relative Rateable Values to calculate the share of costs for each individual property. This means that each flat pays a specified proportion of the total costs for the block and the total costs for the estate. The Rateable Value (£RV) is a figure fixed by the Local Authority Valuer for all properties in every Borough and Council area in around 1990 as the basis on which the annual Rates were charged. This was the predecessor of Council Tax. £RV’s were based on a notional open market rental value of a property and therefore these apportionments tend to fairly reflect the relative size of each flat, so usually larger flats pay a bigger share of the total costs. These figures cannot be changed unless all the leases are amended, which is a lengthy and very expensive undertaking.

See the simple example below.

Watmos’ financial year runs from 1 April to 31 March the following year. All accounts are based on this annual period. 

Each year in March (or earlier if possible) Watmos will send you a demand for service charges payable in advance for the coming year from 1 April. This is based on our best estimate of what the costs are going to be, referring mainly to service contracts in place, typical repair and maintenance costs over previous years and any planned works, with a small allowance for inflation. We aim to estimate the charges as accurately as possible to avoid large surcharges at the end of the year. Please note that contingency sums are not generally included in service charges estimates and therefore leaseholders must be prepared for additional costs to be incurred which will result in a surcharge when the estimated and actual costs are reconciled.

The annual advance Estimate will comprise a summary of anticipated expenditure to be incurred by Watmos in providing the services, separated into main cost headings and further divided between “Building” (your block)  and “Estate”(the Estate which your block is located on) costs. Some blocks also benefit from a District Heating system providing heating and hot water, which is charged for through the service charge. In addition it will include the cost of Landlord’s Buildings Insurance, any Ground Rent payable and the Watmos Management fee or fees. Where Major Works (including repair, renewal and replacement of larger items) are planned for the coming year, we will include an estimate of the total costs. It will also show your share of the costs based on the proportion that you are being charged and may include a covering letter, explanatory notes, a separate formal demand for payment and the statutory Summary of Rights and Obligations.  

The total estimated service charge costs set out in the Estimates summary will then be debited to your service charge account, with effect from 1 April which is the start of the new financial year. The whole amount is payable by the end of the month (usually April) unless you have made a formal arrangement to pay by regular monthly instalments, to which terms and conditions apply.

Reconciliation of estimated with actual costs

As soon as is practicable after the end of the financial period on 31 March, Watmos will prepare a certified summary of actual expenditure in relation to the service charge payable for the previous accounting period, compared to the advance estimated costs.  This usually follows the completion of Watmos’ audit and statutory company accounts and is normally provided to leaseholders in the September following the end of the financial year on the previous 31 March. If this is not possible due to accounting delays or other unforeseen circumstances, Watmos will issue a formal notice to you advising you of the delay, giving an updated estimate of what the actual costs will be and when we expect to be able to provide the reconciliation, so that you can prepare as necessary. 

The costs reconciliation summary compares the estimated amounts already charged to you on account with the actual costs and will show you the difference for each cost heading and the net resulting deficit or credit, depending on whether the actual costs have been greater or less than the estimated amount. The Landlord is obliged to provide a summary of the costs, not a detailed schedule of every payment which is comprised in each cost heading. Watmos does generally provide a detailed listing of all block and estate repair charges as these tend to be the costs most often queried by residents.

Any net credit or deficit (surcharge) is then applied to your service charge account.

A credit arises when the estimated costs were higher than the actual costs; 
A debit/ surcharge occurs when the actual costs are more than the estimated costs.

Please bear in mind that a credit or debit adjustment on your account will offset any existing credit or debit balance you have on your account. 
The letter accompanying the summary will explain how such deficits and credits will be managed, according to Watmos current policy. Where there are significant differences between the estimated and actual costs, we will provide an explanation in the accompanying commentary but you are always able to refer any specific queries to the Leasehold Services team.

Surcharges are payable on demand and, as mentioned elsewhere, leaseholders are urged to make provision for additional service charges arising due to unforeseen costs of at least 10%.