Update on where we are with unfair service charges

Update on where we are with unfair service charges

NHG made lots of promises during the merger – one of them was about service charges.  You can still see the NHG promise on the website (as far as it goes):

“Accurate and fair service charges. We will make it easier for you to understand what you are being charged and why, as well as making the process of challenging your service charges simple and transparent. We will consult on service charge budgets before they are applied (1).”

NHG Residents negotiated on service charges in our meeting with NHG on February 19 2019(2)

At that time NHG gave a commitment that:

  1. Incorrectly added items will be removed from the service charges: “If we mistakenly include costs in a service charge account for a cost that is not eligible for that scheme we will correct those errors.” 
  1. For legacy NH properties reserve funds will not be held in separate accounts: “where we have combined reserve funds these are presented through service charge accounts on a block level, and estate level where applicable. Reserve funds are not held in separate accounts in trust as we are exempt as a registered social landlord. As such money is held in one account but represented on different legers.” 
  1. For legacy GHA properties there will clear sinking fund statements “For legacy GHA we endeavour to provide clear sinking fund statements at block level for all blocks that contribute to a sinking fund.” 
  1. NHG flatly refused to lift the 15% management fee:  “The 15% charge for major works is applied to recover the cost of administrative functions and has been in place for some years.”

Poorly attended NHG meeting on 14 August. Where do we go from here?

On 14 August there was very poorly attended NHG residents meeting at which service charges were discussed. You can see the question and response below (this document has been produced by NHG officers) and the minutes. 

Amongst the committee of NHG Residents there is the view that we should be pushing for three things at this point:

1.Residents should have access to paid expert help. Some estates/blocks are fortunate enough to have accountants and surveyors amongst the residents. But many do not and it is quite unjust that NHG has paid professional staff working to maximise service charges – whilst residents have no such professional support.

2. NHG said at the 14 August meeting that: “We will always seek to ensure costs are fair and reasonable and will take steps to ensure accountability.” They give no indication of how this will done. There needs to be much more detail.

3. Currently if there is a serious error in service charges – or faulty maintenance for which service charges are imposed –  NHG suffers no penalty. We believe that there should be real penalties for NHG if their service delivery is seriously faulty. We suggest several months rent/service charges holidays. 

We have contacted all associations/resident activists that we are contact with to ask which issues you think are important for us to raise with NHG. If you want to raise an issue now – please contact us on the e mail below.

Also we may set up a resident’s working group so that we can present a united response to NHG on the continuing problems with service charges. If you are interested please contact on the the email below

Genesis.residents.action@gmail.com

(1)https://www.nhggroup.org.uk/about-us/our-resident-promise

(2) http://genesisresidents.org.uk/negotiations/shared-ownership-issues-service-charges-sinking-funds-and-lease-extension-premiums-second-report-back-on-the-february-19-negotiations-between-the-joint-committee-of-notting-hill-and-genesis-re/

 

Service Charge points raised at NHG meeting of 14 August 2019

Service Charge consultation focus group, 14/08/19: resident feedback and staff responses

Resident Feedback

Responses

Quick Win/Long term or Not possible

Format

AH, AS: If there are changes to charges from the previous year, can this be showed clearly (perhaps visually?) on the statement. AS: e.g. lines with significant increases (above inflation) should be visually flagged using colours/symbols.

The provision of this information is not possible this year due to system restrictions. We will be reviewing this in our process for next year and will consult with you on our proposals at this stage. medium/long term

AH: The table for the narrative is clearly laid out – this is a good start.

We will continue to ensure this is the case with our narratives – will continue to check in with group on this. quick win

AS: A lot of text. How can this information be displayed visually?

As stated above, we will be reviewing possibilities in our process for next year and will consult with you on our proposals. medium/long term

LJ: Ensure all tables and figures are a good size font.

Unfortunately, the printing provided for the focus group presented the information smaller. If requested, we are able to provide a sample to you prior to distribution this year and beyond to double check quick win

SP: Include clearly titled headings of each document, and what it is showing.

We have edited the documentation as suggested and incorporated clearly titled heading and a front summary contents page to ensure the information is clearer. We are able to provide a sample to you prior to distribution to double check quick win

Clarity of information

AH, SB, PD: As much as possible, plan English. Remove unnecessary legal jargon, acronyms etc. Think of diverse audience.

We have reviewed the content of the information provided and made the necessary changes as requested. quick win

PD: Removal of references to ‘legacy’ – this will be the case once the letters go out.

To confirm, the reference to ‘legacy’ was only for internal purposes so will not be visible within any documentation distributed quick win

AH: Clarify if and where residents are being charged for testing costs.

Once fully integrated, residents will be able to liaise directly with a local officer who will be responsible for setting your annual service costs and will therefore be able to respond to any specific queries or information provision requests. long term

SP: Specify the exact dates (Not March 2020) – give an exact date where possible.when charges come in to effect

This has been completed and is included with the letters as requested quick win

PD: The ‘independent auditor’ referenced in the estimate – who are they are more about their role.

The letter has been updated to include more details about the auditors role and who they are quick win

Content

AH: Definitions of services are good, continue to maintain simplified language where possible.

We will continue to ensure this is the case going forward. We will also continue to check in with group on this. quick win
SP: If the narrative is bespoke to the resident, can the contractor details be extended to show when their contract expires? The provision of this information is not possible this year due to system restrictions. We will be reviewing this in our process for next year and will consult with you on our proposals at this stage

long term

LJ: ‘The devil is in the detail’ – even if the narrative stretches across multiple pages, give as much detail as possible. What is the service, but also what residents are paying for, why this charge can vary and HOW is this service delivered (e.g. staff costs or estate management fees)

We have reviewed your comments and descriptions of service costs and how they are calculated will be included within the narratives provided in the letter. We are able to provide you with a sample of this to review prior to distribution medium/long term

SP: Use more friendly language. Not ‘May I please request…’ more like ‘I would like to invite you’ – so it is more meaningful.

This has been completed and the letters have been updated as requested quick win

AH: Reference the relevant section of the Resident Promise in the letter or consider including the promise in the send out. Reinforces purpose of the consultation.

This has been completed and the letters have been updated as requested quick win

SP: Terminology – ‘block’, ‘estate’ ‘building’ ‘unit’ ‘core’ by including the correct terminology on the letter, it will reassure residents about accuracy, transparency, local knowledge. Definitions of terminology helpful

We have reviewed your comments and have updated the terminology to refer to ‘building’ as opposed to block. In the longer term we wil re-visit this in more detail quick win/long term

AS: I would hope narrative can be made more tailored to each area/development. For example, there is no gas in our development and yet that line is still use in the service charge to mean “heating”, (which is of course very confusing)

We have refined the table of service costs so they are individual to each resident quick win

AS: There should also be an additional column showing variation compared to previous year to make it easier for residents to identify any increases and be able to enquire about it

The provision of this information is not possible this year due to system restrictions. We will be reviewing this in our process for next year and will consult with you on any proposals that we have at this stage long term

AS: I would also strongly recommend additional narrative is required whenever the cost of a particular item has risen above inflation, so that specific and clear explanation can be given to justify such increase.

We will not be able to include sumamries specifically related to increases above inflation for this year; however, within the commentaries, we are including a basis of calculation for each service cost which will be individual to each resident medium/long term

Looking ahead

AH, SB: Feedback to the budget deadline is 5th January. Doesn’t allow for much opportunity for residents to input during and after the Christmas period. Consider starting sooner or ending later.

Unfortunately, we are unable to change this period because we need to factor in time for any final amendments to budgets and for any seperate rents to be calculated and letters issued within legislative specified time frames. not possible

PD, AS: How do we ensure accountability and accuracy? .  This shouldn’t just be a cosmetic exercise.

Once fully integrated, residents will be able to liaise directly with a local officer who will be responsible for setting your annual service costs and will therefore be able to respond to any specific queries or information provision requests. long term

ΑH: Meter reading – issues around this resulting in increased costs.  How NHG learn from this – should we consider readings being sent in by tenants cyclically?

This query falls outside the remit of this pre-consultation; however, we will review this at some point in the future and take learning from the specific case. As stated above, going forward, the new integrated model will enable residents to liaise with a local officer directly on service cost queries long term

SB: How will the feedback be managed – ensure the central inbox is managed correctly and all feedback is logged.

We will create a central inbox and all queries received will be reviewed individually. The responses will be collated per scheme and distributed to all residents within that scheme even where they did not raise a query quick win

AH: More tenants should be consulted on this. This initial meeting is very leasehold heavy.

We had invited  other residents/ leaseholder from both legacy organisations to attend initially, and while they couldn’t make this meeting, will continue to be involved. We aim to consult everyone next year long term

SP: Consider use of a shared document which residents living in the same area can access and all comment, and can be shared as a live document.  Reduce the amount of responses coming in to central inbox from the same group of residents querying the same charges.  Helpful for the officers to have all feedback in one place. Trial with some RAs as a starting point?

This will create data issues at present according to GDPR principles however we will review in future and explore how we could trial this. long term

SP: How can this consultation and ambition for transparency over service charge be applied to residents who have a Resident Management Company.  How can residents influence them to adopt similar practices?  What are they obligated to do? What is in their contract?  More broadly how does the resident promise apply to those under an RMC?

The provision of this information is not possible this year due to system restrictions. We will be reviewing this in our process for next year and will consult with you on any proposals that we have at this stage long term

AS: More transparency: more consultation during budget setting to give residents a chance to work with management to decide/understand what needs to be spent the following year. Service charge accounts (both forecasts and actuals) have historically always been extremely late so it was impossible for residents to input in the process.

Residents will obtain feedback on service costs but the decision to charge these will remain with NHG. It is important that we are able to raise charges for costs either incurred either in services provided or where the legislation requires us to provide the service. The resident promise confirms that we will strive to be transparent in our service costs and not the actual services provided not possible

As: More choice: NHG is making a lot of noise about “personalised” services. I would like to see this realised in the services we are charged for. Residents should be consulted and given choices and options rather than simply imposing decisions on residents. E.g. in my development there is a concierge located in another building (a private market rent tower) away from my block, inside a gated area. I am asked to pay for such service although I don’t use it. Why? It would be good to give residents a choice for any additional services that are non-essential to their block/unit.

We will certainly look at value for money and invite residents to be involved in this process in the future; i.e. via procurement. However, we cannot negiotiate on actuals service to be provided which are often contained within the lease long term

AS: More accountability: NHG should be accountable for how it spends residents’ money. If NHG cannot justify why the cost of a certain service increased above inflation year on year than they should absorb the cost increase as it is likely to be linked to system inefficiencies NHG is actually responsible, and therefore should be accountable, for.

We will always seek to ensure costs are fair and reasonable and will take steps to ensure accountability where necessary; any differences will explained in our year end accounts quick win

AH, SB: can there be housing surgeries set up to support residents with their service charge statements.

Yes we will  feed this back to senior housing managers and look at this in the future long term

SP, LJ: procurement of services. Ensure residents can get value for money and their service charge costsreflects the services they are receiving. Involve them in procurement of contractors more.

We are already looking to involve residents in procurement activities, working alongside our procurement team long term

 

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