Schedule 20

Schedule 20 Service Charge Strategy

The service charge strategy is attached.
Generally the service charge terms of the Replacement Accommodation Lease will apply Provided
that where the specific circumstances of the Replacement Accommodation Lease require the service
charge provisions to be amended any amendments shall be agreed by the Parties in accordance with
the principles in the attached strategy.
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SCHEDULE 20
SERVICE CHARGE STRATEGY
EARLS COURT AND WEST KENSINGTON OPPORTUNITY AREA
Service Charge Strategy
The service charge strategy and computation forms a key element to the successful management of the Earls
Court development. The Landlords responsibility will be to deliver a service charge which represents value
and is sufficient to provide services to meet the aspirations of the occupiers and maintain the high standards
required.
Service Charge
The key categories of service costs relate to:
1. Estate Management costs
2. Building Related costs and sinking fund for lifecycle replacement costs
3. Internal Services
4. Tenancy Management costs
The agreed strategy is that Capco will undertake the Estate Management and Building Related services, and
LBHF will undertake the Internal and Tenancy Management services for its tenants. A list of services to be
provided is set out in the tables below.
A tenure blind approach is to be adopted, with all aspects of the estate and external fabric being managed as a
single entity. This will provide a high quality level of maintenance, presentation and services to all occupiers,
whilst delivery is achieved through the economies of scale which will be derived. Enhanced services can be
provided in addition to the agreed standard services, with those costs being ring fenced to those occupiers
who derive benefit.
A service charge structure will be implemented to accurately reflect the level and cost of services received by
the occupiers and will comprise:
e
An Estate Charge to reflect non building specific services which are provided to all occupiers be they
commercial, private residential or affordable.
Individual Building Charges reflecting the services and requirements of the individual buildings.
Where buildings comprise both residential and commercial elements a two schedule approach will be
adopted to reflect those items from which the commercial derive benefit and therefore contribute
and those items which solely serve the residential properties. A similar approach is taken where
there is a combination of houses (or other direct access units) and apartments within a building, given
that the houses do not derive benefit from the internal communal areas.
A Car Park Charge reflecting the services provided specifically to the car park area and chargeable only
to car space owners.
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o A contribution to life cycle tostings will be incorporated in the service charge budgets and collected
from the outset.
The service charge structure will be prepared on the basis that all services to a building are specific and in
particular that no mechanical and electrical plant serves more than one building. However, the individual
design of each building will be considered to ascertain whether there any specific features which have an
effect on the service charge structure and assessment.
It should be noted that whilst the costs associated with the maintenance of central boiler plant will sit in the
service charge, the consumption costs are metered and will be billed outside of service charge arrangements
and therefore individual occupier consumption costs will not form part of the service charge cap, and will be
billed directly to occupational tenants by the service providers.
Current Service Charge Costs on the Estates
LBHF have given an indication of current costs of between 2,000 to 3,500 per annum depending on dwelling
type. There is no breakdown of this.
Future Service Charge Costs as part of a Comprehensive Development
The Mayors London Design Guide space standards will be used for replacement dwelling types (1 bedroom/2
persons for example). Illustrative service charge cost ranges are set out below and are dependent on the size
of the unit and subject to indexation linked to RPI:
London Design Guide (bedroom/persons)
1b2p = 50 sq m or 538 sq ft @ 2,000 pa 3.72 psf (E40 psm)
2b4p = 70 sq m or 753 sq ft @ 2,500 pa 3.32 psf (95.71 psm)
3b5p = 86 sq m or 925 sq ft @ 3,000 pa 3.24 psf (94.88 psm)
4b6p = 99 sq m or 1,066 sq ft @E3,500 pa 3.28 psI (95.35 psm)
3b4p = 87 sq m or 936 sq ft @ 3,000 pa 3.21 psI (94.48 psm)
4b6p = 107 sq m or 1,152 sq ft @ 3,500 pa 3.04 psf (92.71 psm)
Three storey dwellings (or houses) are less relevant to these metrics as they dont contribute to lifts, cleaning
of common parts, capital replacement of plant etc. It is typical for them to just contribute to the estate
management costs and external building related costs. This will obviously fall within the cap referred to below
but will need to be determined at the time.
Service Charge Caps
CapCo have agreed to a cap on service charges payable in respect of Replacement Homes which replace
Council owned Residential Units occupied by Secured Tenants. The cap will apply to an agreed list of services
to be provided. The cap will cease to apply on the next accounting date as provided in the form of
Replacement Accommodation Lease upon expiry or termination of the Secured Tenancy which has been
transferred from an Existing Council Owned Residential Unit. The cap will not apply to units provided to the
Council on a vacant possession basis. The cap will also not apply (or will cease to apply on the next accounting
date as provided in the form of Replacement Accommodation Lease) to Units where a right to buy has been
exercised or which are owned by a Registered Provider. The cap will be as set out in the table below and will
be RPI Indexed.
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Phase 1 Seagrave Road
The service charge costs at Seagrave Road have been capped in the s106 as set out above.
The range of services to be provided is consistent with the strategy for the main site. The cap will only apply to
secure tenanted properties. It will also not apply to any unit that LBHF receives with vacant possession.
The CLSA and s106 agreements (both at Seagrave Road and the main site) need to relate to each other but the
key obligations in relation to the service charges for the decant homes are set out in the CLSA.
The cap will only apply to the units at Seagrave Road if, and to the extent that, they are provided to LBHF for
decant. If all or any of the units are not used for decant then the service charge capping arrangements will not
apply to these units.
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ESTATE CHARGE Description/ Frequency -
ESTATE STAFFING
Wages il N.I (Estate Proportion) Allocation of staffing costs to estate.
Estate Office Expenditure (Rent, Equipment, Uniforms Allocation of sundry staff costs to estate.
etc)
UTILITIES
Electricity (Office & Estate Areas)
IT Expenditure
Telephone / Fax! Radios
Water Charges (Office & Estate Grounds)
CONTRACTS, MAINTENANCE AND SERVICES
CCTV & Access Control Equipment Maintenance
Cleaning Materials & Light Bulbs
Drainage Contract / Maintenance
Estate Vehicle Leasing, Maintenance & Insurance
General Repairs & Maintenance
Landscape Maintenance
Play Area Equipment Maintenance
Refuse Bin Hire & Additional Collections
Refuse Lift Maintenance & Associated Costs
Travel Plan Costs
Water Feature Maintenance
INSURANCE
Building (inc. Terrorism, Public, Employers
Liability, Employment Law)
PROFESSIONAL
Audit Fee
Health and Safety Statutory Inspections & Training
Management Fee
RESERVES
Estate electricity costs - external areas and estate office.
Estate office IT costs.
Estate office telephone & internet costs.
Estate water charges for grounds and office.
Quarterly maintenance & reactive repairs.
Sundry estate related expenditure.
6 monthly estate drainage cleaning.
3- 5 year lease of estate vehicles.
Programmed & reactive repairs to estate areas.
Daily/weekly attendances subject to season.
Annual inspection/certification reactive repairs.
Weekly hire costs & cost of additional collections.
Monthly service visits on comprehensive contract.
Annual survey costs & printed material.
Weekly maintenance & chemical dosing.
Annual fully comprehensive cover to estate areas.
Annual audit cost for estate accounts.
Annual general & fire risk assessments and quarterly
audits.
Annual fee based on approved fee per unit.
Contribution to major works costs.
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BUILDING CHARGE
STAFFING
Wages incl. NJ (Apportionment of Cleaning Costs)
UTILITIES
Electricity (Common Parts)
CONTRACTS, MAINTENANCE AND SERVICES
Boiler & Associated Plant Maintenance
Cleaning: Materials and Light Bulbs
Cleaning: Communal Windows, External Balcony &
Faade
Door Entry System Maintenance
Fire & Smoke Systems Maintenance
General Repairs & Maintenance - External
General Repairs & Maintenance - Internal
Landscaping - Building Specific
Lift Insurance (Inspection)
Lift Maintenance & Repairs
Lift Telephone
Mechanical & Electrical Plant Maintenance
Television System Maintenance
INSURANCE
Buildings (incl. Communal Contents, Terrorism,
Liability)
PROFESSIONAL
Audit Fee
Health and Safety Statutory Inspections & Training
Management Fee
RESERVES
Description/Frequency
Common areas cleaning twice per week albeit daily
inspections and reactive calls to any major cleaning
issues, such as spillages or graffiti.
Internal landlords lighting & lift supply.
Apportionment of overall communal maintenance and
repair costs.
Cleaning materials for internal areas. Quarterly window
cleaning and annual faade including equipment testing.
Annual servicing and repairs.
Quarterly servicing and repairs.
External building programmed maintenance and repairs
Internal building programmed maintenance and repairs.
Weekly visits for communal courtyards/roof gardens.
Annual premium for 6 monthly statutory inspections.
Monthly servicing on comprehensive contract basis.
Emergency line rental.
Quarterly/6 monthly maintenance of M&E plant.
Annual service and repairs.
Comprehensive buildings and landlords contents cover.
Annual audit cost for estate accounts.
Annual general & fire risk assessments and quarterly
audits.
Annual fee based on approved fee per unit.
Contribution to major works costs.
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