Service charge group maintenance overview

It is widely recognised that there is no ‘one size fits all’ approach to setting and implementing service charges; a situation reflected in the varied management approaches adopted by housing organisations nationally, with each having unique constraints - often influenced by tenure differences - as well as their own mix of fixed and variable arrangements. The regulatory framework for social housing places an explicit obligation on the Homes and Communities Agency (HCA) to be proactive in ensuring greater value for money from social landlords, specifically in the aspect of service charges. One such approach is to explore with residents the options to include or exclude services to more closely match the needs of the individual tenant, and also to consolidate the provision of services where it is practicable to do so e.g. on multi-landlord and multi-tenure estates, taking the opportunity to liaise with other stakeholders to consider whether an estate-wide service contract for some communal work is feasible.

The creation of service charge groups provides a housing organisation with the greatest flexibility in controlling how service charge costs are channelled to the right tenants. Indeed, the extensive range of service charges in operation and also the many varied choice-based combinations that might be appropriate for different assets and tenants is managed most effectively through user defined groups. Put simply, service charge groups are used to combine costs into subsets, with each subset applicable to a particular charging scenario, where cost variations between the subsets constitutes a separate group in each case.

Each service charge group consists of three main components:

• Functional Unit - A specific node within the hierarchical asset structure used to define and implement service charges that are applicable to the group.
• Cost Elements - The individual charging components that are used to derive the final service charge applicable to each asset within the group e.g. grounds maintenance, lift maintenance, door entry system, concierge, communal lighting, etc. At the end user's discretion, each cost element can be assigned to a fixed percentage, therefore controlling the amount cascaded to each asset; similarly a fixed fee can also be stipulated over a defined period of time e.g. to accommodate introductory, preferential rates. Whilst a cost element can be linked to multiple groups, the cost apportionment attributes are specific to each individual group.
• Assets - Those properties for which the defined subset of cost element charges are applicable. System configuration options permit an end user to control how cascaded charges are apportioned to each individual asset, whether that be by equal share or a fixed percentage.

In addition, a group will typically be linked to an administration rule, defining how the management fee applicable to the inherent cost elements should be calculated, and also a capping rule, setting out the maximum threshold limit for charges in accordance with the housing organisation's policy. Rule exceptions can also be defined on an individual asset basis to honour localised commitments around charging policy, and will supersede any overarching rule set at group level for the duration of the assigned effective period.

Separate help articles have been created for each key aspect of service charge group maintenance, including:

• To create a new service charge group
• To add an administration rule to a service charge group
• To add a capping rule to a service charge group
• To add a cost element to a service charge group
• To add an asset to a service charge group
• To add a service charge administration rule to an individual asset record
• To add a service charge capping rule to an individual asset record