We know that service charges can cause a lot of stress and worry. As your landlord we want to be more open and transparent about why service charges increase, and show you what we’re doing to try to stop sharp increases in the future.
What you see on your service charge estimate, sent in February, is a calculation of what we expect to spend over the next financial year (1 April 2022 to March 2023). After the year is over, you’ll receive your actual statement statement (in September 2023), showing what we actually spent for the year. This will highlight if we’ve charged you too much or spent more than our estimate.
The following services listed below have increased in cost sharply this year and we've explained the reasons why. You may have some, or all of the below services on your estimate.
Electrical maintenance | Fire safety | Energy contacts | Pest Control | Bin hire and rubbish removal |Responsive Cleaning |Contracted grounds maintenance and cleaning - routine works
Last year we carried out Electrical Installation Condition Reports (EICRs) on 100 blocks. This is where we inspect and test electrical equipment to make sure it is safe to use.
This year, we have to carry out 981. These inspections are a legal requirement to keep you safe and are carried out every five years. Work may then need to be done as a result of the EICRs, to make electrical equipment safe. We already have work scheduled for over 100 blocks. More work scheduled throughout the year will drive the average cost of the service charge estimate up, as we know the costs involved. As an individual, you may see the effects of this on your statement.
To make sure your homes are safe, we carry out regular Fire Risk Assessments (FRAs). Over the next financial year, we have to carry out 1,254 Fire Risk Assessments, and if we find any problems, we will need to do some work to fix them.
FRAs are carried out on a one, two or three year cycle, depending on the nature of the building to make there are adequate layers of protection against fire. If you have this line on your service charge estimate, it may mean an FRA is scheduled for your building in the coming financial year, or that works are being carried out as a result of a previous FRAs. This could be fire safety- contracted servicing, fire safety- responsive repairs or fire safety- fire risk assessment.
We’ve seen that the average overall estimate has increased since last year, because following FRAs, we identify what work needs to be done.
We’re looking at how we can reduce the cost:
Last year we upgraded one of our buildings in Chichester that had old and expensive emergency fluorescent lighting. This is the emergency lighting that comes on in the event of a fire. We upgraded to LED lighting, which is cheaper to run and we also installed a system that allows us to test the lighting remotely, which saved a lot on servicing and maintenance. We’re now looking at upgrading other systems to achieve similar savings.
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On 1 December 2021 we signed new contracts for our electricity supply. These contracts are for heating and lighting to the communal areas of blocks. We needed new electricity contracts at the same time as a peak in electricity prices, due to rising gas prices. We hoped that the prices would go down, but in the end, we had to go ahead with the change. There are several reasons for the high costs of electricity including:
- Gas supply costs have influenced the price of electricity, as in the UK around 45% of our energy demand is created by burning gas to produce electricity
- Increase in crude oil prices
- Low levels of gas storage in Europe
- More emphasis on using liquid natural gas (LNG) rather than gas produced from coal (after COP 26).
Read our recent news story on Getting help with rising energy bills and income shock. Together with the Hyde Foundation, we’re working hard to make sure that we can provide you with all the help and advice we can.
In Spring 2020 we changed our approach to pest control and as a result, we have seen a marked cost increase. Due to the Human Habitation Act 2018, and increasing concerns from our customers, we decided to take more responsibility for the issue and support our customers to remove or manage pests.
We used to refer customers to the local authority or request they seek their own pest control solutions and would only attend to treat communal areas or block access points. We now attend to all reports of pests.
In addition to the changes we have made to our approach, we have seen a lot more pests requests during the coronavirus lockdown. This is probably due to people eating more at home, homes being heated more throughout the day, and more people being at home to noticed pest activity that they may not have noticed before.
It is very hard to estimate how much will be spent on bin hire and bulk waste removal, but this service is used more and more each year.
There are some places where the council makes an additional charge for removing household waste, when it’s not included in council tax payments. This charge gets passed onto the customer. To estimate the charge for the next year, we took what was charged in your last service charge actual statement and added 3.2% Consumer Price Index (CPI)* which reflects inflation rates.
For rubbish removal, where Hyde has to clear items which the council will not remove, fly tipping or recycling bins which have been contaminated with household waste, we have used the average spend over the last three years, and added 3.2% CPI. This is the CPI figure from August, which was the available figure at the time.
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Over the last two years, there have been more instances of one-off cleaning jobs because of coronavirus. We think that this demand won’t be as high next year, so when we calculated the estimate, we looked at the average over the last three years excluding any coronavirus spend. We did put a 3.2% CPI on top of this, which means some locations will show an increase compared to last year. 3.2% CPI was the figure available to us in August when these were calculated.
You may already know that we’re currently working to select new contractors, to start in November 2022. We do not know how their costs will compare to the contracts we have now, so we have used the existing costs and added the annual CPI inflation increase (3.2% CPI). When we know the costs for the new contracts, we will let you know how they compare. 3.2% CPI was the figure available to us in August when these were calculated.
We’re working closely with our customers to select the new cleaning and grounds maintenance contractors, and will continue to provide information during this process, including publicising the times where customers can get involved. Keep an eye on our news stories for updates.