Service Charge Consultation

Consultation overview

Introduction

The Government introduced a national policy in 2000 which changed the way that councils and housing associations set rent for their properties. This enabled landlords to separate out charges for services from rent. Milton Keynes City Council decided not to separate out charges at this time and continued to charge all tenants through their rent for services.

The cost of energy, materials, and labour to repair and build homes has since increased at a much greater rate than we are allowed by Government to increase your rent. This means we are covering the shortfall instead of using that money to fund repairs, improvements and to build new homes for local people.

We now propose to separate service charges from rent.

In February, we sent you a rent increase letter which contained more information about this review, and we will shortly update our website with more details including how you can help us make decisions for the future. If we hold a mobile phone number for you, we will text you whenever we add things to our website, so you can check out the information if you are interested.

Consultation working group (1 Feb 23 - 31 Mar 24)

Decisions made

1 March 2023 Meeting 2

Decision 1 Keep minutes format the same
Attendees were happy to keep the format of the minutes.  It was noted that as the project commences minutes may need to evolve.

Decision 2 Close membership of the group
Membership to the Service Charge Review group is now closed. Other residents can still comment or vote though our website on items requested by the group. 

Decision 3 The right to have confidential meetings
We will along the principles of transparency so residents can monitor and influence progress through our webpage. Both the group and MKCC can request for aspects of meetings to be confidential. Particularly if it effects privacy and data protection.

Decision 4 High priority service charge items
Group will look at Electricity, Utilities and Management Fees as high priority. Items which are statutory and prescribed will be discussed on one meeting.

1 February 2023 Meeting 1 

Decision 1 Accepting new group members
Group will be open to new members until the next meeting on 1 March 2023. Before the next meeting, the working group should be advertised online, by email, and by letter if possible.

Decision 2 Maximum group size
Group agreed that the maximum group size should not exceed 50 members.

Decision 3 Frequency of meetings
Initially monthly, but the group will remain flexible and the schedule of meetings will depend on the workload. At times, the group may need to meet every 2-3 weeks, some other times e.g., August, there may be fewer meetings.

Decision 4 How, when, and where to meet
- Next time the meeting will be online via Teams, on the same day (Wednesday), at the same time (6.30pm-8.30pm)
- In the future, the meetings could be face-to-face at Civic (expenses to be covered).

Decision 5 Selecting the chair
Andy Hodgson to be the chair for now, and later the group may decide to change this.

 

 

Your observations and our replies

We will be adding in this section new information on this consultation, and we will be updating your observations and our replies in the document below.

Service charge consultation - observations and replies

12 April 2023 - Meeting 3

Agenda

Minutes

Meeting presentation

1 March 2023 - Meeting 2

1 February 2023 - Meeting 1

Agenda (no agenda)

Minutes (PDF)

Minutes (WORD)

Meeting presentation

Initial Engagement (31 Oct 22 -1 Feb 23)

Consultation details

Consultation A - Spreading the rent collection weeks for tenants

Your observation and our replies - Consultation A.pdf

All social housing landlords calculate rents and service charges on an annual basis and then collect it as a weekly ‘gross rent’ amount. It has long been the practice in Milton Keynes that we have not been charging tenants rent during the two weeks over the Christmas and New Year period. This is not policy or part of your tenancy agreement. Annually, you still pay the same amount, but your gross rent is divided by 50 weeks rather than 52 weeks, making your weekly amount slightly higher.

For example, if you pay £4,966 annually in gross rent, your weekly charge is spread over 50 weeks and is £99.32. If there were no ‘rent free weeks’ and it was spread over 52 weeks, it would be £95.50 each week.

We are proposing to remove the two‐week rent‐free period and collect the annual rent over 52 weeks from April 2023. We think this is a small way to reduce the amount you pay weekly, which may be useful as the costs of living rise. It will also streamline some of our admin processes, such as submitting returns to the government, which will save us time and costs.

Consultation B - Reviewing service charges

Your observation and our replies - Consultation B.pdf 

The Government introduced a national policy in 2000 which changed the way that councils and housing associations set rent for their properties. This enabled landlords to separate out charges for services from rent.

Milton Keynes City Council decided not to separate out charges at this time and continued to charge all tenants through their rent for services.

The cost of energy, materials, and labour to repair and build homes has since increased at a much greater rate than we are allowed by Government to increase your rent. This means we are covering the shortfall instead of using that money to fund repairs, improvements and to build new homes for local people.

We now propose to separate service charges from rent.

In February, we sent you a rent increase letter which contained more information about this review, and we will shortly update our website with more details including how you can help us make decisions for the future. If we hold a mobile phone number for you, we will text you whenever we add things to our website, so you can check out the information if you are interested.

Consultation C - The timeframe for charging leaseholders for services

Your observation and our replies - Consultation C.pdf

As a landlord we have two types of leaseholders: outright leaseholders who own the leasehold of their home and we own the freehold, and shared owners who own part of the equity of their homes.

This part of the consultation only affects our 1,650 outright leaseholders.

Service charges in most cases are payable for an accounting year which runs from 1 April to 31 March. Typically, landlords will estimate what they are likely to pay for things like maintenance around February/March and leaseholders pay regular service charges based on that estimate. Once an accounting year is complete, the landlord reviews actual spend, and the leaseholder will be asked to pay the difference if it is higher ‐ or will receive a credit where this is lower.

Milton Keynes City Council does not do this. Instead, we send you one invoice a year which includes the estimate for the current year and the actual costs for the previous year. We are looking to modernise how we charge you, with service charges initially billed based on an estimate, and then revised based on actual spend. This means:

Soon

August 2023

March 2024

Sept 2024

March 2025

Sept 2025

Leaseholders will receive estimates for 2022/23 and actual statement for 2021/22

Leaseholders will receive estimates for 2023/24 and actual statement for 2022/23

Leaseholders will receive estimates for 2024/25*

Leaseholders will receive actual statement for 2023/24*

Leaseholders will receive estimates for 2025/26*

Leaseholders will receive actual statement for 2024/

* In 2024 we will need to reset the period in which you can pay your service charges. This gives leaseholders a shorter period in which to pay, so we seek views on how any unpaid service charges can be spread to make payments more affordable.

Housing Consultations

Housing Consultations contact information

Milton Keynes City Council, Civic, 1 Saxon Gate East, Milton Keynes MK9 3EJ