Major Works Charges

Leaseholders’ ‘Frequently Asked Questions’ about major works

Q.    What if I object to the works?

A.    Because we will be carrying out the works so that the Council can meet its landlord obligations and meet the Waltham Forest Standard, there are some works that we will have to carry out even if you object to them. We must however, consider your views and will take them into account as far as we can. This may mean that we make changes to the scheme such as changing the type of window we are going to install, but if the windows in the block need to be replaced, that is what we must do.

Q.    How do I find out about the cost of the works?

A.    At least 30 days before the work is due to start, we will send you a legal notice called a ‘Section 20’ Notice. The Notice will tell you what works we intend to carry out, the reasons why we think the works are necessary and will give you an estimate of the cost of the work. By law, we only have to tell you the estimated costs of works for the whole block, but if we can give you an estimate for your individual property, we will. However, the estimate will only be a rough guide based on the contractors’ Agreed Maximum Price divided by the number of properties involved.

The Notice will also tell give you contact details for someone you can write to for more information and will give you 30 days to let us have your comments. Although we have to take notice of your comments we do not have to act on them.

Q.    How much will I pay?

A.    Generally, you will be charged your share of the cost of works carried out to the block, plus professional fees and administration charges. Your share is calculated using Gross Values, which means that instead of sharing the costs out equally between all flats, smaller flats will attract a smaller share of the cost and larger flats will attract a larger share. When we calculate your invoice for the work we will look in detail at the work and at the terms of your lease to see if there are any works we can’t charge you for. For example, if the works includes replacing tenants’ front doors, the cost of that work will not be included in your bill.

The gross value of a block is the total of the gross values of all the flats in the block added together. For example, if a block has six flats in it and each flat has a gross value of £300, the gross value for the block will be £1800, (6 x £300).  Each flat’s share of work to the block that cost £36,000 would be

Calculated as £300 x £360 = £6,000

If your service charge is different from your neighbour’s charge, it could be because your flat is larger or smaller, or older or newer, and so has a higher or lower gross value.  (There may also be differences caused by the age and type of leases.)

Q.    Can I choose a contractor to carry out the works?

A. No. The works will be carried out by one of our ‘partners’. Our partners are contractors who have agreed to carry out a range of works for us over the next few years. The partnering arrangement means that we save costs by not having to go out to tender every time we need to have some work done.

We carried out the tendering, evaluation and ‘Section 20’ consultation for these long term partnering agreements in 2011.

Q.    I have already replaced the windows to my flat. If you are renewing windows in my block of flats will you remove my new windows?

A.    If you have replaced the windows to your flat you should have received permission from us in writing, allowing you to carry out the work. We will not normally refuse permission as long as we consider that the windows you install are satisfactory. If we are satisfied with the windows you have installed and they are in good condition we will not replace them.

If you have replaced windows to your flat without first getting our permission you can apply for retrospective permission. Again, if we are satisfied with the windows you have installed we will not replace them.

Whether not we replace windows to your flat, you will be charged your share of the total costs of the window renewals carried out at your block. This is because the window frames form part of the structure and ‘reserved parts’ of the block.

Q.    You are carrying out work to a number of blocks on my estate. Are you going to bill me a share of the total cost?

A.  No. We will calculate your bill taking into account only works carried out to your block of flats. The exception to this would be if we carried out any work to areas outside of the blocks such paving, slip walling or estate lighting. The cost of such ‘estate’ costs would be shared over all of the properties on the estate.

Q.  Why are you going to send me an estimated bill?

A.    We incur costs as soon as we start planning to carry out work, because we have to prepare a specification, plans, consult with residents and so on. It makes good sense for us to try to recover as much of these costs as we can, as early as possible.

Your lease says that you can be charged reasonably estimated amounts for work carried out or ‘to be carried out’. So, we can invoice leaseholders their share of the estimated costs while works are still being carried out. When the work has been completed we will calculate the final costs and compare them to the estimated invoices. If we have charged you too little we will send you an additional invoice. If we have charged you too much, you will get a reduction.

Q. The works are going to cost a lot of money. How do you expect me to pay my share?

A.    We understand that large bills cause great concern. In order to help leaseholders, we can agree a variety of payment arrangements. Our ‘Information for leaseholders –ways you can pay for major works charges’ gives information about the various methods available.

We send a copy of the payment option information sheet with all of the major works bills we send out.

Although large service charge bills will be worrying, it is worth remembering that flats bought under the Right to Buy are sold at a discount off the market value. This means that many flats will have substantial equity (the value of the property that is not tied to a mortgage).

It is also worth remembering that the works we carry out will improve the condition and the value of the property. Because of these two factors, most banks and building societies are willing to grant further advances to people who have mortgages with them (depending on their financial circumstances), in order to meet the cost of the works.

Where leaseholders are unable to get help from their bank or building society, we can arrange service charge loans through the Council. For leaseholders on Income Support or who receive Pension Credit, we can arrange ‘Interest-only’ loans. ‘Interest-only’ loans are loans for which only the interest on the loan has to be paid each month. For leaseholders on Income Support or receiving Pension Credit, the Benefits Agency or the Pension Service will normally pay the interest. The loan itself is registered as a charge against the property and doesn’t have to be repaid to the Council until the property is eventually sold or transferred to a new leaseholder.

Q. What are ‘preliminaries’?

A.  These are mainly set up costs for the scheme and site administration costs. Some of the things included are the site set-up costs such as setting up a site office or storage compounds and other work to ensure the site meets with Health & Safety and security requirements. Preliminaries may also include the costs of providing service supplies such as electricity and phones for any site office.

Q. What are ‘Contingency’ sums’?

A.  This is a sum of money that is intended to provide for the costs of unforeseeable or unanticipated works. 

Q.  What is a ‘provisional’ sum?    

A. A sum of money that is intended to provide for items of work for which an exact price cannot be obtained or which could be subject to re-measurement.

Q.  What are fees for?

A.  Fees are sums paid for professional services such as architects, quantity surveyors, Clerks of Works and so on.

Q.  What are ‘Design Fees’?

A.  Sum or sums paid to cover the contractor’s legal liability for any elements of work that have been designed by them.

Q.  What are the Administration charges’ for?

A.  Administration charges are to cover the costs (including salaries, petrol, stationary, postage) and overheads (including office heating, lighting, phones) of Ascham Homes’ staff instructing the contractor, attending feasibility meetings, preparing and holding consultation meetings, dealing with queries, sending newsletters, sending legal consultation notices, attending site meetings and so on.

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