Consulting you on rent and service charges

We need to change the way we recover costs from tenants and leaseholders so we can continue to provide high quality services. We are aiming to provide improved information, ensuring what we do and how we charge for services is clear and transparent, and making sure the timing of our charges is efficient and useful. We’re seeking your views on how we do that, specifically on:

     A. Spreading the rent collection weeks for tenants
     B. Reviewing services we provide and how we charge for these
     C. Changing the timeframe for charging leaseholders their service charges

We understand that there will be many different views and we want to listen to all of them. There are lots of ways you can have your say listed at the end of this page.

We also want to set up a working group of around 70 tenants and leaseholders who will be asked to help us make decisions about:

• Your views on services we are currently providing to our residents
• How service charges are determined and accounted for
• When we should start to charge people
• How to deliver high quality standards of service and provide good value for our tenants and leaseholders
• How we move from fixed to variable service charges If you would like to join the working group or have any questions, please get in touch.

You can also find up to date information about each consultation on our housing consultations page. We will be adding new information and sharing observations over the coming months.

Consultation A - Spreading the rent collection weeks for tenants

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

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

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:

* 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.

Your observations and our replies

We will be updating your observations and our replies on our housing consultations page.

How to have your say or join the customer group?

If you would like to join the working group or have any questions, please get in touch:

Text:         07860 098637
Form:       Housing Consultation online form
Email:      rentservicechargereview@milton-keynes.gov.uk
Post:        Housing Consultation, Milton Keynes City Council, Civic, 1 Saxon Gate East, Milton Keynes, MK9 3EJ