Why tenants and landlords need to start talking about service charges.
Service charges have always been a subject of debate and discussion between tenants and landlords regarding value for money. They are not regulated by Welsh Government Rent Policy (that caps the amount a landlord can raise the rent by) and so have been subject to some challenging rises over the years.
Being transparent and engaging with tenants to discuss service charges is something that should always happen.
Why do service charges need particular focus right now?
Covid-19 lockdown led to windows not being cleaned, grass not being cut, communal gardens weren’t attended to, and all resident lounges (‘shared living spaces’ is the fancy term) were shut.
Tenants: During our tenant networks, tenants have indicated they are expecting a service charge rebate for the Covid-19 period as services have not been delivered. ‘If staff either internal or external were furloughed, why are we also paying?’ I talked to a tenant who has kept a diary of every missing window clean and is clearly expecting a refund. Another tenant wanted to know ‘did they remember to cancel the Sky subscription and TV licence in the lounge to save money?’
This comment made by a prominent tenant activist in a recent TPAS Cymru webinar sums it up for me ‘..there is a lot of unrest that service charges are still being taken for the services not being received’
Another point made by a TPAS Cymru colleague is ‘…for those receiving Universal Credit, often service charges are factored into the benefit sum, but with the lack of delivery, is public money being given away …?’ This is further complicated by the service delivery supplier maybe also receiving furlough payments so is public money paying twice for a underdelivery?
Landlords: On the reverse, landlord have told us they have needed to increase cleaning of communal areas including deep cleansing of higher risk contact points like entrance doors etc. There has also been an increased need for PPE, hand sanitiser stations etc, meaning they have incurred extra cost. Some have said there is no under delivery and generally most services have been delivered.
Contracts of service suppliers
Another factor in all of this is commercial contracts – are they still getting paid even if they didn’t provide the service?
As a Governor of a school with financial challenges, I was hoping we would have saved some money on commercial bin collections, grass cutting etc whilst school was closed. It seems not. The contracts were fixed and the suppliers argue they were able to provide the service, it was the school/local authority who chose to close, therefore payment is still due. How were your contracts set up? This is of course arguable based on the fact the schools were ordered to close by Welsh Government.
Local commitment and doing the right thing
Many of us never expected shutdown to be so long.
Some locals service suppliers may have continued to be paid as it was the right thing to do.
Many local service industries have struggled during this time and they are a vital part of our communities.
We want them to stay in buisness as they are part of the local community
Signs like this have become common and have led to the devastation amongst many local tradespeople’s business.
So, where does this leave tenant service charges?
You tell me? We need landlords to have open and transparent conversations with tenants. From my conversations across Wales, I suspect there may be some under spend in some areas and some new costs in others.
What concerns me greatly is ‘the new normal’; new ways of working and new practices could mean increased service charges going forward. This is why we need service charge transparency; with tenants having a strong voice in co-designing and decision making of these new services and approaches. They are the people who pay the bills.
So what could landlords and tenants do right now?
Landlords and the lead tenant groups should be discussing this via online meetings now. What is known about the current situation, any underspend, overspends, contract positions etc – what is the forecast? What do we see changing in the future?
Landlords tell tenants that you acknowledge the issue and are working on bringing some transparancy. Include it in the next video update. Service Directors mention it in their next Facebook Live, reference it in your next newsletter etc. If a Tenant group are involved, will they say something for a video/newsletter?
Set a time to review the Service Charges in detail together– what have we learnt from this pandemic as to how service charges are set? How and what services are delivered going forward etc.
For TPAS Cymru, we have raised it with Welsh Government, and Community Housing Cymru have been in touch with TPAS Cymru to discuss collaborative working to assist the sector in bringing some transparency and understanding. If you have thoughts, get in touch [email protected]
If any tenants, tenant groups or landlords wishes to discuss further, TPAS Cymru is always here to assist you.