1 Home Ownership Services LEASEHOLD MANAGEMENT FEE (2) Pat Ronayne, Head of Home Ownership & Leasehold Services REGENERATION & HOUSING

2 Home Ownership Services What is a Management Fee? It is the non- profit Fee that a freeholder charges its Service Charge Payers for the cost of running the leasehold management function It’s your contribution to this It is not the cost of the day to day services you receive to your properties

3 Home Ownership Services Why do we charge a Fee It is a legal requirement that the cost of the leasehold management function is paid for by Service Charge Payers For Local Authorities this must be self sufficient and cannot be subsidised by the Housing Revenue Account (Tenants) Council leases & transfers allow for a Fee to be charged to all service charge payers

4 Home Ownership Services Background We have always charged a Fee, so not something new 16% in 1995 to 26% in 2005, onwards Currently the Fee is charged at that 26% of your annual service charge bill, plus £30 for about half of Service Charge Payers Under current percentage method the higher your bill; the higher your Fee, so £1000 = £260 fee, but £200 = only £52 Half of you pay an extra £30; half of you don’t

5 Home Ownership Services What does the Fee cover? The central leasehold management service including; calculating, producing & sending Estimates & Final Accounts, collection, advice, & dealing with queries managing service charge accounts, refunds, adjustments cost of Home Ownership Team itself, which includes, e.g. salaries, office equipment like desks, chairs, PC’s, stationary, like paper, postage, pens, envelopes, etc Publications, e.g. Handbook, leaflets, etc Plus % of cost of Area Team, e.g. Estate Management, ASB, Support services, e.g. Finance, IT, Human Resources

6 Home Ownership Services What does the Fee not cover? The Fee does not cover: the services to your property these are covered by your service charges the cost of the Right to Buy – covered by Council the cost of administering major works – has own Fee cost of Insurance Tenant-only services – covered by the Council (HRA)

7 How does it work? Example Service Charge Bill ServicesProperty cost Estate Services (cleaning/Caretaking)£ Graffiti Removal£4.18 Pest Control£0 Window Cleaning£1.62 CCTV£0.00 Concierge£0.00 Gardening£41.28 Lifts£0.00 Lighting£22.23 Routine Repairs£29.96 Total£ Variable Management Fee at 26%£66.55 Insurance£ Heating£0 Fixed Management Fee£30 Total for Services£474.82

8 Home Ownership Services What is being proposed? 1.Changing the method of calculating the Fee to make it fairer to Service Charge Payer’s. 2.Changing Fee so that the Council recovers the full cost of leasehold management, as we currently we under recover 3.Changing the Fee in the April 2013 Estimates

9 Home Ownership Services Why should we change the method (1) 1.Fairness Fee is currently based on level and cost of property services, but should be based on cost of leasehold management function Currently the highest Fee is £427; the lowest is £0, but level of leasehold management function is generally the same e.g. same number of bills issued, similar support from Home Ownership Team, same support services Half of leaseholders pay an additional £30, irrespective of where they live and the level of LM service they get

10 Home Ownership Services Why should we change the method (2) A non-percentage based method will be more transparent and you will see the actual cost of the leasehold management function reflected in your Fee Any efficiencies in the leasehold managent service will automatically be passed onto Service Charge Payers

11 Home Ownership Services What are the options? There are a number of options that we will be looking at 1.Flat fee method – Same Fee for everyone 2.Percentage method – stay as we are = high percentage 3.A combination percentage + flat for all – everyone sees an increase + unfair percentage method is kept 4.Sliding scale method – a range of percentages based on level of your bill 5.Your suggestions

12 Home Ownership Services What do other Council's do? Harrow£45 - Flat Fee Brent£73 average - % Ealing£106 average - % Lambeth£114 - % + Fixed Fee Camden£ average - % Greenwich£ average - % Hillingdon£ Gross rateable value Kensington & Chelsea£172 average - % Hounslow£190 l/h; £125 street props - % Barnet£190 average - Flat Fee City West Homes (Westminster)£200 + actual - Flat Fee Lewisham£200 average - Flat fee Islington£218 l/h, £ F/H estate, £ L/h street props - % Hammersmith£229 (actual, with maximum) - % + FF Havering£ actual - Flat Fee Hackney£235 actual - Flat Fee Haringey£262 l/h; £96 street props - Flat Fee

13 Home Ownership Services What next? The timetable is to change to a new method in April 2013, in readiness for 2013/14 Estimates Between now and the end of this year we will consult with leaseholders about a new method We will continue to write to all leaseholders, holding public meetings, and it will be a standing item at these FORUM meetings for the rest of the year We will use feedback from leaseholders about what new method we will change to

14 Home Ownership Services Thank you and any questions? Pat Ronayne Post: Perceval House, Uxbridge Road, London W5 2HL