With a service charge account, the payments you make are kept in a ‘client bank trust account’ designated to your property and is separate from the trading accounts of Gateway.

The money is used solely to pay for expenditure on your building. Most leases require payment in advance to ensure that we can pay bills as they fall due.

At the beginning of each year we will send you an estimate of likely service charge expenditure based on the previous years experience and known commitments. Please note that we cannot foresee unexpected expenditure.

We will then invoice you, allowing 30 days for payment. Your prompt payment will ensure that we can maintain services.

We will not know the final service charge costs until the end of the financial year. The final cost may vary from our estimate. Soon after the end of the financial year, we will send you a Service Charge Account, which will detail all expenditure on your building and be certified by an independent Accountant.

Should expenditure exceed the budget a balancing charge will be raised and this is payable immediately. Conversely, should there be a surplus then the credit is normally transferred into the reserve fund to offset future expenditure. Reserve fund balances are held in an interest bearing trust account.

Late Payments

As trustees of the Service Charge Account we have a duty to ensure that all payments are collected in a timely manner. If a payment is late, we will send a reminder and have the right to add interest at 4% over clearing bank base rate or the rate allowed by the Courts on any sums that are more than 28 days overdue.

If payment is still not received, our Legal Department will seek to recover not only the outstanding sum and interest, but also costs.

Failure to pay could then lead to forfeiture of your lease after we obtain a certificate from the Court or the Leasehold Valuation Tribunal confirming that the service charge is reasonable.

If a lessee is likely to have difficulties making a payment on time please tell us promptly. If you do not communicate with us, and do not pay on time, you may incur extra costs.

Controlling Service Charges

An actual limit is not usually set within a lease, but the Landlord and Tenant Act 1987 stipulates that service charge expenses must be reasonable and the Housing Act allows lessees to challenge unreasonable costs.

We try to provide an efficient service at a reasonable cost, and to work in friendly co-operation with lessees to achieve this. But we hope you will appreciate the problems we sometimes face, and the difficulty of pleasing everyone in a building where many people have different points of view.

There are several ways in which expenditure can be minimised, for example:

• Many repairs, clean-ups and carpet replacements would be avoided if lessees did not allow their pets to foul common areas, did not store bicycles or motorbikes in hallways (resulting in dripping oil and damaged paintwork), or park their cars on grass verges (damaging lawns and flowerbeds). Lack of care and consideration can be costly.
• Advising us promptly of the need for a minor repair can prevent the fault developing into a larger, more expensive problem.
• Co-operating in allowing access when required. Surveyor's and contractors who visit a leaseholder at a prearranged time only to find that they are not available, and of course charge for these wasted visits.

Deficit Funding

On occasion, there may be insufficient funds held for a building to meet current expenditure, perhaps because of unexpected costs. We will then have to raise additional invoices during the year to ensure the service charge fund maintains a credit balance.

Charging for our time

We recover the costs of our staff time and overheads in management fees that fall into two general categories:

01. Fixed annual fee

This is for our day-to-day management and covers arranging for regular maintenance, collecting payments, maintaining the service charge accounts, inspecting the property, reporting to clients, and responding to queries on routine maintenance.

02. Additional fees

We sometimes need to spend additional time on maintaining your building, for instance, when major works are required and we need to obtain quotations from builders, consult with lessees and organise the work.

Estimates and Quotations

If we need to obtain quotations due to the possible extent of a repair, we will try to obtain them from a number of contractors, but you should be aware that sometimes it is not possible for them to estimate accurately until they have gained full access to the problem (for instance, they may need to erect scaffolding to assess the true state of a roof). This means that the builder’s estimate may subsequently change.

Surveyor's costs

When we need to obtain specialist advice or services, such as a Chartered Surveyor for drawing up specifications for major works, their reasonable costs will be charged to the Service Charge Account. If we use one of our own people for normal surveying work their time will be charged at our current hourly rate or at a percentage of the cost of the project.

In addition, we visit the building at regular intervals to ensure that work is being carried out successfully and to see if any further work is required.