It’s no secret that the topic of service charge can be a contentious conversation. The property management industry often comes under scrutiny for confusion around residential service charge and what it entails. If a management firm isn’t implementing high levels of communication, residents can feel a disconnect between what they’re paying and what work they’re seeing done, with little transparency or control over the decision-making process.

At POD Management, resident satisfaction is always at the forefront of our processes and therefore, we endeavour to be as transparent as possible. Through effective communication and an open and honest approach, we are working to make a positive difference within the industry, challenge the misconceptions and ensure a resident-led approach to our management style at every opportunity. This week, we discuss service charges and how our streamlined processes are impacting residents.

 

What the Service Charge Covers

A service charge is a fee paid by leaseholders for the actual cost of running, maintaining, repairing and insuring the building. It is calculated based on the anticipated costs the landlord incurs to maintain and manage the building and is divided between the leaseholders in the property. The way the property is built, the materials used, the amenities or facilities, the machinery installed and even where certain things in the building are positioned, can all affect the fees.

Service charge can cover the following: 

●      Planned Preventative Maintenance (PPM), to proactively maintain plant and machinery such as servicing of lifts, upkeeping gardens and drainage.

●      Repairs of communal areas, including the costs of materials, as well as contractor fees to carry out the works.

●      Legal compliance, such as insurance and fire door testing.

●      Utilities for communal areas, such as lighting, heating and water.

●      Reserve fund contribution to cover future large-scale repairs, to avoid unexpected fees.

Often a lot of these elements go unseen by the resident. In a managed building, fundamental tasks and processes are constantly being carried out, even in the background, with the aim to cause as little disruption to residents as possible. Not only is this essential for health, safety and legal requirements, but this a more cost-effective way of managing service charge, rather than waiting for things to break and huge additional costs being incurred.

What residents pay towards is defined in the lease and leaseholders have the right to a summary of costs from their landlord and must be consulted for any charges exceeding certain thresholds. At POD, we provide all leaseholders with a breakdown of annual costs and works carried out so they can see exactly where their service charge was spent.

PODs Approach to Service Charge:

Transparency

Number one on our list of priorities is transparency. We believe it’s absolutely fundamental to be as open as possible when it comes to pricing and costs and all partnerships must be aware of service and maintenance cost principles from the get-go. Clear and upfront communication about fees prevents misunderstandings and unwanted surprises, allowing trust to build and enhance long-term client satisfaction.

We ensure that the difference between the likes of service charge and managing fees are property explained to our clients. We also believe that it’s important to educate on the fact that managing agents do not profit from increases to the total service charge amount (more on this below). For more information on transparency in service charges, see our recent LinkedIn posts.

Frequent Resident Communication

Key to our resident-led approach is our direct communication with those living in the properties we manage. We often hold in-person presentations for our residents at the communal spaces in apartment blocks to ensure awareness of our processes and that fees and pricing are carefully explained.

Our forthcoming approach ensures our customers know exactly where they stand when it comes to how we manage their buildings and the service charge impact. We are more than happy to explain processes and can assist in providing financial breakdowns to clarify expenditure and highlight what may not at first meet the eye.

These elements ensure that we are doing our utmost to offer an excellent customer experience, but also build genuine and strong relationships with our residents. Afterall, true care and attention to detail will always improve the quality of service, leading to happier residents that have confidence in their managing agent.

Clear Reporting

It’s extremely important that the realistic cost of living in a shared residential environment is properly communicated to the end consumer. Unfortunately, this often isn’t the case, which is why there is sometimes confusion and frustration surrounding the matter of rising service charges and the fees earned.

Not only are we transparent in every customer interaction, but we are able to provide clear reporting and breakdowns on where money is being spent, tasks carried out, upcoming works and more, essentially giving us a 360 view on every property from a financial perspective. This streamlines our customer interactions and ensures that everyone is on the same page, working to make every living experience as seamless and welcoming as possible.

 

Non-Profit Messaging  

There is a common misconception that managing agents profit from service charge. In truth, the managing fee is in fact a fraction of the overall residential service charge total, and this is actually what the property managing agent will receive.

At POD, our fees are fixed regardless of any fluctuations in service charge set. Managing agents do not make profit from increases in the total service charge amount. In reality, they form a very small percentage of the overall costs, ranging from around £75 to £125 + VAT for a freehold house and £225 to £350 + VAT for a leasehold flat (per annum and dependent on the size of the scheme).

Get in Touch

We hope you’ve found this post informative. Should you have any questions on our processes, or for comment, please contact podxverriberri@gmail.com.