1 Home Ownership Services LEASEHOLD MANAGEMENT FEE 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 leaseholders 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 What is a Management Fee? (2) Three types of Fee 1.Service Fee – included in the cost of service 2.Major works Fee – only if you have major work 3.Management Fee – Service charges Variable – 26% Fixed - £30

4 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 leaseholders 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

5 Home Ownership Services Background We have always charged a Fee, so not something new Currently the Fee is charged at 26% of your annual service charge bill, plus £30 for about 50% of leaseholders 16% for 1995 to % in 1997/98 18% 1998 to % for 2001/02 20% for 2002 to % since 2005

6 Home Ownership Services What does the Fee cover? The central leasehold management service; calculating, producing & sending Estimates & Final Acc’s collection, arrears problems & advice, deal with queries managing service charge accounts, refunds, adjustments cost of Home Ownership Team, which includes Salaries, Office equipment, e.g. desks, chairs, PC’s, Stationary, e.g. paper, postage, pens, envelopes, etc Publications, e.g. Handbook, leaflets, etc Plus cost of Area Housing Team, e.g. Estate Mgment, ASB, Support services, e.g. Finance, IT, Human Resources

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

8 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

9 Home Ownership Services What is being proposed? 1.Changing the method of calculating the Fee to make it fairer to leaseholders. Under current percentage method the higher your bill; the higher your Fee, so £1000 = £260 fee, but £100 = only £26 Half of you pay an extra £30; half of you don’t 2.Changing Fee so that we recover the full cost of leasehold management Currently we under recover 3.Consult on what method we could use This is the start of that consultation

10 Home Ownership Services Why should we change the method (1) 1.Fairness Fee is currently based on level and cost of 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 officer, same support services Half of leaseholders pay an additional £30, irrespective of where they live and the level of LM service they get

11 Home Ownership Services Why should we change the method (2) 2. Recovering the full cost of the leasehold management function Currently we do not do recover the full cost This places a burden on the Housing Revenue Account (HRA) This means that tenants are subsidising leaseholders

12 Home Ownership Services Will this give leaseholders better efficiencies and VfM? Yes, as a non-percentage based method will be more transparent you will see the actual cost of the leasehold management function reflected in your Fee If a Flat Fee method was adopted we can send a breakdown of the Fee with annual service charge bills Efficiencies happen every year, e.g. Home Ownership have reduced staff by 3 staff in 3 years, Graffiti Service has reduced from 3 Teams to 1 Team in 3 years

13 Home Ownership Services What are the options? There are a number of options that we will be looking at 1.Percentage method 2.Sliding scale method 3.Flat fee method 4.A combination of some, or all, of these 5.Your suggestions These will be explained in more detail in the first consultation letter

14 Home Ownership Services What do other Council's do? Harrow£45 - Flat Fee Brent£73 average - 15% 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

15 Home Ownership Services What will this change mean for leaseholders Leaseholders will see a more transparent method A new method will be fairer to all leaseholders Whatever method we adopt there will be winners and losers but many leaseholders will probably see an increase in their Fee because our current average is very low

16 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 be writing to all leaseholders, holding public meetings (centrally & locally), 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

17 Home Ownership Services Thank you and any questions?