1.1 It is the policy of the Association to ensure that it operates service charges within the current framework of the law and good practice guide.

Transcription

1 1 Policy 1.1 It is the policy of the Association to ensure that it operates service charges within the current framework of the law and good practice guide. 1.2 A service charge may be fixed or variable according to the Tenancy Agreement. 1.3 The Association will ensure that service charge calculations are accurate and reflect the true costs of providing the service. Where costs are over or under recovered, these costs will be shown as Over and Under charges on the service charge statement for the following full financial year. 1.4 Service charges are set in a consistent and comparable manner across the Association, in line with this policy, and will be subject to a minimum of an annual review. 1.5 Provision of service charges will take account of NCHA s responsibility to maintain communal areas to a high standard, regulatory Health and Safety requirements and tenants aspirations and views. Tenants will be consulted about significant changes to the services provided and where fixed assets are replaced. 1.6 A schedule detailing the annual and weekly cost of all services provided under the service charge will be produced for all tenants subject to a service charge including under and over spends (surpluses and deficits) from the last full financial year prior to the current financial year. NCHA must, when requested, give tenants a written summary of the costs which relate to the service charge payable in the previous period. 1.7 NCHA will aim to maintain service charges at levels that are affordable to people on low incomes and are fully eligible (with the exception of charges for individual water supplies and window cleaning for certain property types) for Housing Benefit and Universal Credit benefits so as to aid affordability for NCHA (see Appendix D.6.1 for full information) 1.8 NCHA will monitor the quality of services provided through a variety of mechanisms including regular review of Praise and Grumbles, Informal and Formal complaints received, Estate Inspections with Tenant Representatives, one off inspections by Rent and Service Charge staff and an annual survey of tenant satisfaction. 1.9 Where the quality of services provided by NCHA falls below the expected standard, tenants have the right to complain using NCHA s Complaints and Compensation Policy. Page 1 of 23

2 2 Procedure Introduction 2.1 For all Assured and Secure Tenancies payment of the Service Charge should be either stated in the original Tenancy Agreement or through a Notice of variation of the rent and Service Charge (normally issued in February/March for implementation in the first week in April) as a condition of occupation of the property. A service charge is a payment made by a tenant, leaseholder or freeholder towards the cost of providing and maintaining services and benefits provided for them beyond the benefit of enjoying occupation of their home. 2.2 Service Charges should fall into the following categories; Maintaining the general standard of accommodation such as window cleaning where tenants are not able to undertake this task themselves. Basic communal services to maintain areas of communal use such as communal cleaning of corridors and stairwells and communal grounds maintenance. Basic communal services such as the provision of communal lifts or TV transmission equipment. Accommodation specific services such as the provision of mains water to individual flats. 2.3 Service charges for properties using new Affordable Rent Tenancies are included in the total rent figure. This means that the service charge is effectively a Fixed Service Charge and tenants should not receive a Service Charge statement detailing the costs of the services provided. Instead, tenants will receive a Service Provision Sheet providing details of the services provided and the standards that services should meet. 2.4 Service charges may be fixed or variable, according to the tenancy agreement. The Association uses fixed services charges for pre 1999 Assured Tenancies and variable service charges for post 1999 Assured Tenancies. 2.5 Variable Service Charges allow for the Association to carry forward surpluses and deficits (otherwise known as Unders and Overs ) from a past to current financial year. It is NCHA practice to carry forward surpluses and deficits in Service Charge budgets from the last full financial year which in effect means that under and overspends are actually applied one full financial year after they have been incurred as the accounts for the current financial year are not available until after the Service Charge calculations for the forthcoming financial year have been completed. In effect this means that the Service Charge calculation for the financial year 2014/15 will use the accounts for the financial year 2012/13 because full accounts for the current year 2013/14 are not available until after the process has been completed. Page 2 of 23

3 This practice avoids the use of estimated costs for the remainder of the current financial year and there the complication of further adjustments to take account of errors in th estimated costs used. 2.6 NCHA s Assured Tenancy Agreement allows for service charges to be varied where there is a new service, or a significant change in the services provided. Written consultation must have been undertaken, and a Notice of Variation served on the tenant at least 4 weeks prior to the effective date. 2.7 Tenants with post 1999 Assured Tenancies should receive a Service Charge statement with a full breakdown of costs and a Service Provision sheet which provides details of the services provided and the standards which the services should meet. Tenants with pre-1999 Assured Tenancies should not receive the statement of the breakdown of Service Charge costs provided to post 1999 Assured tenants, although they should receive a Service Provision sheet. 2.8 Service charges for Secure Tenancies are fixed and tenants will therefore not receive a statement of the charges as per pre 1999 Assured Tenancies. For these tenancies, The Rent and Service Charge Officer submits details of the Service charge to the Rents Service (part of the Valuation Office Agency). If the Service charge is less that 5% of the total rent, the Service Charge will not be noted separately by the Rents Service. Further details of this process can be found in the Rent Registration Policy. The Rent and Service Charge officer should ensure that the Service Charge is shown on the Capita Open Housing system but that the total of the Service Charge and rent do not exceed the total of the registered rent awarded by the Rents Service. Rent registrations for Secure Tenancies apply for a period of 2 years before NCHA can apply for a re-registration of the rent. On the second year to which the registered rent applies, the Rents and Service Charge officer should adjust the Service Charge on the Capita Open Housing system but ensure that the total rent charged to the tenant does not exceed the registered rent set by the Rents Service. 2.9 Where a new development requires a service charge to maintain communal areas an estimate of the likely service charge should be made by the Service Manager Customer Contact & Rents. At the point of letting properties on a new development, a Service Charge statement/schedule should be produced to incorporate into the Tenancy Agreement where standard social assured tenancies are being used as well as a Service Charge provision sheet detailing the services provided. Where the Affordable rent tenancies are offered the service charge should be calculated for internal budgeting purposes and a Service Provision sheet provided All Service Charges should be reviewed annually as part of the Service charge setting process in the period September early December and notified to tenants at the end of February/beginning of March and Page 3 of 23

4 implemented at the same time as the annual rent increase on the first Monday in April. Service Charges for new developments let for the first time will normally run without a full review until Service charge accounts are available for a full financial year and it is therefore possible to review all costs and calculate surpluses/deficits. This review may occur earlier if there are major changes in the provision of services and known cost such as grounds maintenance contracts NCHA need at least 6 weeks to prepare, implement and provide legal notice of the annual rent increase to tenants whose tenancies have recently started. Properties offered and let during the period beginning week 46 (3 rd week in February) to the end of the last week in March must use the relet rent and service charge calculated for the new financial year. 3 Items deemed to be Service Charges. 3.1 Due to the lack of statutory definition and the independent nature of the Rent Service, the detailed list of items acceptable for inclusion in a service charge has been built up over time. Guidelines are available from the Rent Service, Case Law and Statute (the Landlord and Tenants Act 1985 and 1987). Within the Association, guidance is available from the National Federation of Housing Association Manual, Service Charges - A Guide for Registered Social Landlords and in the Institute of Rent Officers Educational Trust (1994) Services- Service Costs for Residential Premises as Affected by Statute and Case Law. 3.2 Each Regional Office or Department, responsible for setting service charges must make sure that they have a copy of the most up-to date edition of this manual. 3.3 Universal Credit (UC) Under Universal Credit (UC), only services which fall within a list of eligible charges (see Appendix D.6.1) will be paid and those that do not are automatically ineligible. This is change from the treatment of service charges under Housing Benefit (HB) where services are deemed to be eligible unless specifically stated as ineligible. The list of eligible services under UC is more restrictive than under HB and includes depreciation and servicing costs for adaptations. NCHA aim to ensure that as many costs as possible are eligible for Universal Credit or Housing Benefit payments. Guidance from the National Housing Federation states that tenants will need to provide details of the rent and eligible service charges in the form of a rent statement and a copy of the tenancy agreement. In order for the DWP to Page 4 of 23

5 calculate housing costs accurately, landlords will need to provide tenants with information that shows which charges are eligible and ineligible for UC. NCHA will ensure that the Service Provision Schedule will state which service charge costs are eligible and ineligible for UC and will clearly state which costs tenants will need pay themselves. 3.4 Depreciation of capital assets under Universal Credit The rules for UC do not allow for depreciation as an eligible charge. However, guidance issued by the National Housing Federation states that the DWP will treat the cost of an eligible item (such as flooring, door entry system or fire alarm) as eligible for UC regardless of whether the cost is of the item is recovered in a single year or period of years. The guidance further advises that landlords who recover capital costs in this way over a number of years specify the nature of the item for which costs are being recovered rather than use the term depreciation. See Appendix D.6.1 for list of items deemed eligible to be services. 4 Water Supplies to Individual Properties 4.1 NCHA is not normally responsible for the costs of domestic water supplies to individual properties and such costs are not eligible for Housing Benefit or Universal Credit. However, the water meters for individual flats on a small number of schemes have not been adopted and read by the regional water company. This means that charges for the communal water meter are used to calculate individual water charges for all tenants in these schemes after taking account of water used for communal purposes. 4.2 Where water charges for individual properties are charges, these should be listed on the Service Charge Statement/Schedule and clearly marked as ineligible for Housing Benefit or Universal Credit. The Water Charge should also be listed on the Rent Increase Notice as a separate item and on the Capita Open Housing system so that tenants are aware that they need to pay these costs themselves and that recovery action will be taken against tenants not paying the water charge. 5 Recovery of Capital Costs 5.1 Capital costs for communal assets and equipment such as communal TV aerials, intercom systems, and flooring can be recovered through the Service Charge over a period of years where the recovery of a cost in a single financial year would result in a significant and unreasonable increase in the Service Charge. Page 5 of 23

6 5.2 It is standard practice to recover the costs of capital assets or equipment at a rate that takes into account the estimated lifespan of the asset/equipment, the total cost of the equipment and the impact that this will have on the level of the Service Charge. The decision on the period of recovery of the costs should be made by the Customer Contact & Rents Service Manager, balancing the need to keep charges affordable with the need to minimise the recovery period and a realistic assessment of the potential lifespan of the capital item. 5.3 Many Capital assets/equipment such as door entry systems, fire detection equipment and flooring are installed in a property when it is built. The Rents and Service Charge officer should request the capital costs of these assets/equipment from the Development team and ensure that the costs are included in the Service Charge budget calculation for the scheme. See 8 Initial Service Charge Calculations on New Schemes for more information. 5.4 Once the cost of the capital equipment or assets has been recovered, the charge should be zeroised although it should stay listed a Nil item on the Service charge Statement/Schedule. The capital charge will only be reinstated on the Service Charge when the equipment is replaced again. 5.5 Although it is NCHA practice to replace equipment at the end of it s estimated life and sooner if it is judged necessary to do so, it is good practice to consult tenants before replacing an asset or equipment. It is NCHA practice to write off any unrecovered capital costs if a piece of equipment is replaced before the cost of the original equipment has been fully recovered. 5.6 The Customer Contact and Rents Service Manager should consult with a range of teams to identify schemes which require replacement capital assets or equipment so that these can be included in the capital budget setting process. These budgets should now be set on an overall basis rather than for individual schemes. Budget headings will normally include; Flooring Trees Door entry and intercom systems Scheme Manager vehicles TV aerial and satellite systems 5.7 The Rent Service sets out guidelines for the anticipated lifespan of particular items of communal equipment or asset. Further guidance is also available in paragraph 3.1. In addition to the guidance above, the Customer Contact and Rents Service Manager should consult the manufacturer of the equipment being installed to confirm the anticipated lifespan of the equipment in the situation in which it is installed and to ensure that the period used to recover the capital cost of the equipment is realistic. 5.8 Charges for the recovery of the costs of capital asset/equipment should always be based on recovering the cost of the capital item as originally Page 6 of 23

7 purchased and not on the potential costs of replacing the asset/equipment. If the replacement costs are higher, the charge for the recovery of the capital costs following the replacement and when the updated costs are implemented in the service charge. 5.9 When a new capital asset/equipment is purchased, the recovery of the capital costs should not begin until the first full financial year following the purchase or replacement of the asset The Rent and Service Charge Officer should ensure that assets are recorded on the Association s Capital Asset Register. They should also ensure that details of the period over which the cost of the capital asset/equipment is recovered and the date that the recovery is due to finish is recorded on the Service Charge Statement/Schedule. 6 Sinking Funds 6.1 NCHA does not operate sinking funds for general needs housing. 7 Housing Management and Scheme manager Ineligible Charges 7.1 Scheme Managers and site staff are recognised as assisting in the housing management function of schemes and that the time taken on these costs should be deducted from the hourly charge for these staff. It has been common practice to deduct a standard 15% for staff and other ineligible costs in recognition of the costs which should be funded from rental income. 7.2 NCHA should undertake a periodic assessment (at least once every 2 years) of the amount of time staff typically spend performing housing management duties and other duties which are ineligible for Universal Credit and/or Housing Benefit. The information from the surveys will be used to calculate the deduction for housing management and other ineligible costs. 7.3 The deduction for housing management and other duties should use regional office averages and shouldnot generally be calculated on a scheme by scheme basis 7.4 NCHA will use guidance issued by the Department for Work and Pensions (DWP), Welfare Benefits guidance and legal case law as this becomes available to determine which activities are eligible for universal Credit and Housing Benefit. 7.5 NCHA will charge an administration fee for the management of services. This is normally set at 10% and should only be applied to running costs. The charge should not be charged on staff costs or the recovery of capital costs. 7.6 For Universal Credit purposes, only administration charges relating to the management of eligible services are eligible for the payment of Universal Page 7 of 23

8 Credit. These amounts should be clearly indicated on the Service Charge statement/schedule. 8 Initial Service Charge Calculations on New Schemes Capital Costs 8.1 Rents and Service Charge staff should refer to and follow the Handover of New Developments procedure for Development/Housing Management for the process and timescale to implement estate services and service charges for new developments. 8.2 During this process Service charge and Rents staff should identify what capital assets/equipment will be installed and the capital costs to be recovered through the service charge. The Customer Contact and Rents Service Manager should also consider the length of time over which the capital costs of the assets/equipment should be recovered and ensure that this information should be recorded on the Association s Capital Assets Register and on the proposed Service Charge statement/schedule (even if tenancies in the scheme may be let on an Affordable Rent tenancy). 8.3 Where any contracts or the purchase of capital equipment/assets affect shared ownership leaseholders under the Commonhold and Leasehold Reform Act 2002 for which the cost of the contract, purchase or works will exceed the value of per property per annum the intermediate Housing Team will need to serve a Section 20 Notice. The Section 20 Notice will outline the nature of the equipment purchased and provide an opportunity for leaseholders to nominate an alternative supplier able to undertake the work at a lower price. 8.4 The Rents and Service Charge team should also consider the other service contracts will be required to meet statutory obligations regarding the servicing and maintenance of capital equipment/assets including the servicing of fire detection and ventilation systems, water and sewerage pumps (for as long as NCHA is liable). The costs of maintaining this equipment should be included within the service charge and are fully eligible for Universal Credit and Housing Benefit. 8.5 Service contracts for technical capital equipment/assets such as fire detection equipment and lifts will normally be procured by the Maintenance Department (unless the equipment is still under guarantee and subject to servicing by the manufacturer) and recharged to the Service Charge account for each scheme. The Maintenance Department will confirm that all servicing and maintenance contracts procured meet statutory standards and are performing to the required standard. (See Section 8 for more information) 8.6 However, it remains the responsibility of the Customer Contact and Rents Service Manager to ensure that servicing and maintenance contracts have been taken out and that all statutory responsibilities for the servicing and Page 8 of 23

9 maintenance of equipment have been met in liaison with the Maintenance Department. 8.7 The Rents and Service Charge officer should ensure that details of any guarantees on capital equipment/assets are recorded and stored for further reference. Any requirements for servicing and maintenance and extended service charge contracts should be noted to ensure that guarantees are not invalidated. 8.8 Costs for replacement parts should be charged to the annual service account and should only be recovered as a capital cost if the cost of replacement results in a cost which cannot be reasonably recovered through the Service Charge in one year The Rents and Service Charge team will also need to liaise with the Allocations, Estates and Development teams to determine an estimate of the on-going costs of cleaning and maintaining communal areas and landscaping in the development. The Rents and Service charge team should also liaise with other internal teams to determine whether any work required should be undertaken by NCHA Scheme Managers or external contractors and seek clear estimates for the costs of these works or the number of hours of Scheme Manager time that will be required for the work and charged to the Service Charge. 9 Scheme Manager and Site Staff 9.1 Scheme Manager and site staff are managed by the Estates Team. Staff costs and the Scheme Manager Charge are managed and calculated by the Rents and Service charge team. 9.2 The full cost of Scheme Manager or other site staff based on salary costs provided by finance using estimated pay and pension figures for the forthcoming financial year, minus a deduction for the time used for housing management and other ineligible costs can be included in the service charge. 9.3 The Association charges for the services of Scheme Managers and other site staff by calculating an hourly Scheme Manager charge. The hourly rate for the Scheme Manager and associated site staff should include the following costs (not an exclusive list); Staff salaries including on costs (Employer pension and NI contributions etc). Vehicle Costs including vehicle fuel, depreciation, servicing and maintenance, tax and insurance and replacement vehicles where required. Mobile phones and IT equipment including running costs. Scheme Manager equipment including clothing and official workwear, health and safety equipment and equipment required to perform duties such as vacuum cleaners, lawn mowers etc. Day to day consumables including cleaning products etc. Page 9 of 23

10 Administration on running costs (but not on salary and on costs) can be charged at 10%. 9.4 As the majority of scheme running costs are included in the Scheme Manager and other site staff costs, the apportionment of costs to schemes and individual properties is achieved through the allocation and charging of an appropriate number of hours to undertake the work required at each scheme. For example, scheme A is charged 2 hours of Scheme Manager time. The scheme has 12 flats and each tenant therefore pays 1/12 of the cost of the charge. If the Scheme Manager charge is 15 per hour, the total scheme charge is 30 per week and the cost to each tenant is 2.50 per week. Schemes receiving more hours per week will therefore pay a greater proportion of the Scheme Manager costs fully reflecting the greater time spent at the scheme. Charges for other site staff are calculated in the same way and will apportion shared costs fairly based on the fraction of hours against total hours provided against which costs are charged. 9.7 Scheme manager and Site Staff costs will be shown on Service Charge statements/schedules as an annual and weekly cost for the scheme. Information provided with Service Charge statements/schedules should explain what costs are included in the overall charge. 10 Apportionment of costs 10.1 Apportionment of running costs and equipment purchased for Scheme Managers and site staff used over a number of schemes is managed through the Scheme Manager charge Charges for services provided by contractors is calculated on a scheme by scheme basis and apportionment is therefore not required. 11 Monitoring Service Charge costs 11.1 The Service Charge and Rents team should continuously monitor service charge and capital expenditure to ensure that costs are not over or significantly under-spent Where expenditure is significantly over or under budget the cause should be investigated and remedial action agreed, for instance to take action against persistent fly tipping where this is causing an increase in waste disposal costs or make a request to the Executive Team to replace capital equipment which is proving costly to run. Page 10 of 23

11 11.3 Where capital expenditure budgets are under-spent, the Customer Contact and Rents Service Manager should confirm whether the budget is likely to be spent and ensure that Finance are updated Where capital expenditure budgets are over-spent, the Customer Contact and Rents Service Manager should ensure that Finance and the Assistant Director are aware of the extent and nature of the overspend and what actions can be taken to reduce the overspend. 12 New Tenancies 12.1 On signing up for a new Assured Starter tenancy (social rent), the service charge schedule detailing the costs and the services provided should be copied into the section for the Services Provided. The cost of the Service Charge on all standard social assured tenancies should be written as a separate item on the second page of the tenancy agreement and recorded as a separate charge on the Capita Openhousing housing management system If the tenancy is an Affordable Rent tenancy, the tenancy agreement should contain only the details of the services provided but not the costs of each service as the Service charge for these properties is included in the total rent figure. Only the total rent figure should be recorded on the tenancy agreement and on the Capita Openhousing housing management system For Secure Tenancies, a secure rent should be applied for in line with NCHA Rent Registration Policy. In addition, the total charge for the Service Charge should be included on the Capita Openhousing housing management system. It is important to remember that the total of both charges does not exceed the total registered rent and the rent figure must therefore be adjusted by the Rents and Service Charge officer to take account of this. 13 Assured Service Charge Calculations 13.1 All Service Charge budgets should be recalculated using the Service Charge budget sheets provided by Finance in the period September to the end of December. This process is completed each year in preparation for sending out the rent and service charge letters from the middle of February to the beginning of March. This will ensure that all tenants have been given the statutory 4 weeks full notice of the change in their rent and service charge to be effective on the 1 st Monday in April The Service Charge calculation time table should be agreed in July between the Rents and Service Charge team and the teams involved in the Service Charge calculation process. The Rents and Service Charge, Intermediate Page 11 of 23

12 Rent, Finance, ICT, Estates and Allocations Teams should be aware of the deadlines set to ensure that the Service Charge process runs smoothly and all essential deadline dates are met The calculation of surpluses and deficits (unders and overs) should be undertaken early in the process before the Service Charge workbooks are issued. The calculations of surpluses and deficits uses the Service Charge accounts for the last full financial year. It is important that any surpluses and deficits are investigated thoroughly to confirm that amounts have been over and under collected and that it is reasonable to refund tenants over collected amounts or increase charges to recover deficits. Staff should therefore check whether the accounts are showing a surplus or deficit because of the timing of the receipt of invoices before or after the end of the financial year which can produce false readings. Staff should also check estimated utility bills and seek confirmed readings so that consumption and costs can be agreed before surpluses and deficits are agreed and charged through to the Service Charge. Staff should also be wary of refunding surplus funds where income has been received to pay an invoice that has not yet been received. If a surplus is refunded prematurely, this could result in a loss to the Association which would be impossible for NCHA to recover The Customer Contact and Rents Service Manager should consult with a range of teams to identify schemes which require replacement capital assets or equipment so that these can be included in the capital budget setting process. These budgets should now be set on an overall basis rather than for individual schemes. Budget headings will normally include; Flooring Trees Door entry and intercom systems Scheme Manager vehicles TV aerial and satellite systems 13.5 The Rents and Service Charge officer should confirm with contractors providing services any price rises for ongoing contracts for the forthcoming year. It is NCHA practice to authorise increases in contract prices up to the increase in the September CPI inflation rate. Requests for higher increases should be made in writing to the Customer Contact and Rents Service Manager who will consider the reasons given to justify the higher increase. Where a larger increase is requested and agreed, the Customer and Rents Service Manager should consider whether it is appropriate to bring forward the procurement and tendering process Following the calculation of the service charges before the end of December, the Rent and Service Charge Officers should undertake audit checks, finalise calculations and prepare the Service Charge statement/schedules and Page 12 of 23

13 Service Provision sheets which provide details of services and the standards tenants should expect Following the final completion of the Service Charge workbooks by the end of December, the Finance team will complete the transfer of data to the Service Charge input sheet which the ICT team use to input the updated Service Charge figures into the Capita Housing Management system NCHA need at least 6 weeks to prepare, implement and provide legal notice of the annual rent increase to tenants whose tenancies have recently started. Properties offered and let during the period beginning week 46 (3 rd week in February) to the end of the last week in March must use the relet rent and Service Charge calculated for the new financial year. 14 Consultation and variation of the service charge 14.1 NCHA has a legal obligation to consult tenants where significant changes are made to the services provided. Examples of circumstances where a consultation should be conducted are; The full list can be found in Service Charges - A Guide for Registered Social Landlords. a) When providing additional services at a higher cost. b) Modifying or reducing services which result in a significant change to the cost or quality of the service provided. c) Installation of new capital assets or equipment such as replacement flooring or CCTV cameras Consultations may also be undertaken where the service charge is provided for a large and complex estate, where there are significant under and over charges (surpluses and deficits) where there is an active tenant group and/or concerns have been reported about the provision of services through formal complaints or the Praise and Grumble system. The Customer Contact and Rents Service Manager may decide to conduct a consultation in writing or at a meeting with tenants The wording of consultations should be carefully considered in terms of the outcome expected and the number of people likely to respond to the consultation. Where the item subject to the consultation must be replaced in order to meet statutory health and safety requirements, to meet the needs of a majority of tenants or maintain the condition and appearance of the communal areas in a good state, the Customer Contact and Rents Manager should ensure that the consultation is worded to make the range of acceptable outcomes to the consultation transparent and state the minimum response and majority is required for an outcome to be binding Where NCHA wishes to vary a Service Charge between service charge annual reviews, the Association must serve a preliminary Notice of Variation (See Appendix D.6.9) which must specify the proposed variation and its Page 13 of 23

14 effect, and inviting tenants to comment on this within a reasonable time specified in the notice. (A meeting may be an effective way of consulting with tenants). NCHA must then consider any comments made by tenants within the specified time limits. This is important for Assured tenants Following this, a Notice of Variation can be served (See Appendix D.6.10) detailing the variation effected by it: and the date on which it takes effect. The period between the date the notice is served and the date it comes into effect must be at least 4 weeks. 15 Mixed Tenure Schemes 15.1 The Association has developed a number of mixed tenure schemes (schemes including general needs and a range of shared ownership and private rent properties managed by the Intermediate Housing Team) Management of the service charges for mixed tenure schemes is determined on the basis of which team has the larger number of properties in the scheme The team responsible for the management of the Service Charge is responsible for the procurement of service contracts and should ensure that consultation is undertaken on all important decisions, costs and service delivery issues relating to the management of the service charge It is NCHA policy to ensure that there is no cross subsidisation of services between general needs and shared ownership or other private rented tenancy properties. Apportionment of Service Charge costs should therefore be based on the proportion of properties managed by the general needs Rents and Service Charge team and the Intermediate Housing Team, and the services received by individual properties within the scheme if there are variations in the extent of services such as grounds maintenance provided to different tenure and property types. This should ensure that tenants do not pay for services they do not receive or pay for an unfair proportion of the costs incurred Where any contracts or the purchase of capital equipment/assets or works affect shared ownership leaseholders under the Commonhold and Leasehold Reform Act 2002 for which the cost of the contract, purchase or works will exceed the value of per property per annum for a period of more than one year, the intermediate Housing Team will need to serve a Section 20 Notice. The Section 20 Notice will outline the nature of the contract being offered, equipment purchased or works undertaken and provide an opportunity for leaseholders to nominate an alternative contractor/supplier able to undertake the work at a lower price. Page 14 of 23

15 16 Contractors, Procurement and Tendering 16.1 Service charge contracts should be procured at least every 3 to 4 years in line with the NCHA Tendering and Negotiation Procedure (See S7 Financial Procedures). The Customer Contact and Rents manager should maintain a register of contracts and the date on which the contract should be retendered/procured The Customer Contact and Rents manager is responsible for co-ordinating the tendering and procurement of all contracts that fall under the responsibility of the Rents and Service Charge team and recorded in the register of contracts. These contracts include services for grounds maintenance, communal cleaning and window cleaning. Contracts for the statutory servicing of fire detection equipment, lifts and other technical equipment are normally procured by the Maintenance Department but it remains the responsibility of the Customer Contact and Rents Manager to ensure that appropriate contracts are in place for these services All contractors working for NCHA should be registered on the Approved Contractors list and should also be registered with Construction Line. Any contracts held with companies removed from the Approved Contractors list must be terminated and retendered The Rents and Service Charge Service Charge team are responsible for checking that contractors have up to date business and public liability insurance and must maintain a register of insurance renewal dates. Maintaining this information will ensure that there is no risk of contractors failing to renew business and public liability insurance Any contractor found to not have current and valid business and public liability insurance must be stopped from working on NCHA contracts immediately and alternative arrangements made to provide the service It is NCHA policy to ensure that contractors provide value for money for the service that they provide. Service Charge and Rents staff will also provide reports on the performance of contractors as part of the Approved Contractor reporting to the NCHA board The Customer Contact and Rents Service Manager should co-ordinate the process of tendering and procurement according to the 3 year timetable for the retendering and procurement of the contracts recorded in the register. Small contracts can be tendered on a 3 yearly basis with a 1/3 of contracts tendered each year. The total value of grounds maintenance contracts means that an OJEU Part B complaint framework procurement process should be undertaken every 3 years Where any contracts affect shared ownership leaseholders under the Commonhold and Leasehold Reform Act 2002 for which the cost of the contract will exceed the value of per property per annum for a period of more than one year, the intermediate Housing Team will need to serve a Page 15 of 23

16 Section 20 Notice. The Section 20 Notice will outline the nature of the contract being offered and provide an opportunity for leaseholders to nominate an alternative contractor able to undertake the work at a lower price The Customer Contact and Rents Service Manager is responsible for ensuring that any Invitations to Tender exercises adhere to the process set out in NCHA s Tendering and Negotiation Procedure. (See Section 7 Financial Procedures Manual) The overall value of the grounds maintenance services provided by NCHA means that the procurement/retendering process should be OJEU Part B compliant. Contracts can be offered on a Framework agreement and split into sensible geographical areas so that contractors can price competitively and provide economies of scale. A framework agreement can also facilitate contractors providing a local service. It is NCHA practice to offer contracts for services provided on a large number of schemes on a grouped basis in order to achieve effective cost savings and more effective arrangements for the monitoring and supervision of contract performance. a. The tendering/procurement process should involve a panel constituted in accordance with the Tendering and Negotiation Procedure. The panel should include Tenant Representatives who have received Procurement Training. b. The panel may arrange for presentations to be made by the contractors submitting tenders and use a pointing system to identify the successful tender using the following factors; consider a the following factors and Price Quality of the proposed service Ability of the contractor to provide the service at the price quoted References or current experience of the contractor s performance 17. Feedback, Surveys, Praise and Grumble and Complaints 17.1 NCHA welcome feedback and complaints about the Association s services as an opportunity to improve services NCHA receive feedback and complaints from a variety of sources including surveys undertaken by the Rents and Service Charge and Estates teams, Estate Inspections, Tenant Involvement CAPs and the Praise and Grumble and complaints system All feedback should be recorded on the Capita Openhousing Contact Management system as Praise and Grumble or as a formal complaint and logged to the Customer Contact and Rents Service Manager. Page 16 of 23

17 17.3 All Praise and Grumble logged should be responded to by the Rents and Service Charge officer to the tenant providing the feedback and the actions taken recorded on the Feedback reference Informal complaints and formal stage 1 complaints should be answered by the Customer Contact and Rents Manager to the complainant and the complaint responded to and completed on the Capita Openhousing Contact Management system All Praise and Grumble, Informal and Formal complaints should be analysed to identify issues and problems with service provision and contractor performance. Praise and Grumble feedback and complaints should be used in a positive manner to improve services and improve tenant satisfaction with the services provided by NCHA 17.6 Where following a complaint a service is found to be very poor or to have not been provided, tenants and leaseholders may be eligible for compensation under the NCHA Complaints Policy Where a service that is paid for through the service charge is not provided, it is standard practice to refund tenants through the service in the next financial year based on the time period and extent that the service has not been provided. 18. Performance Monitoring of contractors 18.1 The Rents and Service Charge Team is responsible for monitoring and managing the performance of contractors providing communal services to ensure that contractors maintain a high standard of performance in accordance with the NCHA Procurement and Value for Money Register. The Rent and Service Charge team should also complete NCHA contractor monitoring and Approved Contractor monitoring A number of methods are used to monitor the performance of contracts including; Praise and Grumble and Complaints Tenant surveys CAP and other tenant meetings Estate Inspections by the Estates Team and tenants Site visits by Rent and Service staff The feedback received should be analysed and used to identify trends, issues and concerns with contractor performance. This analysis should be recorded for use in contractor Performance Appraisal meetings Contractors should attend Performance Appraisal meetings at least twice a year. The meeting should be used an opportunity to discuss any positive and negative feedback and the standard of service provision overall and issues on specific sites. Page 17 of 23

18 Minutes should be taken of Performance Appraisal meetings and all evidence of performance appraisal and feedback retained for audit purposes. Contractors should be set targets for any service improvements required and actions agreed for any improvements or changes required on specific sites Whilst the Contractor Performance Appraisal meetings should be used to address general performance issues, poor performance that falls significantly below the expected standard should be addressed promptly. This may involve a programme of urgent inspections and site meetings, further performance appraisal meetings and clear time limited targets set for improvements in performance Where the performance of a contractor fails to improve within a reasonable period of time and the contractor does not respond to the targets set, the Customer Contact and Rents Service Manager (in consultation with other key NCHA stakeholder) should consider terminating the contract and making emergency arrangements to provide the service pending a full retendering of the service at the earliest opportunity. 19 Management Companies 19.1 Services on a small number of NCHA are managed and provided by Management Companies who fund the services through a Management Charge NCHA must pay the Management Charge and recover these funds through a Service Charge NCHA should provide as much information to tenants as possible in line with the information provided by the Management Company. Management companies should also provide information on services which are eligible/ineligible for Universal Credit Where the Management Company is performing poorly and services are not of a satisfactory standard, NCHA should liaise on tenant s behalf to negotiate improvements in service provision Where action to improve performance is not successful NCHA should consider all options and the use of the Leasehold Valuation Tribunal and consider working with other residents to nominate a new management company under the Right to Manage clauses of the Commonhold and Leasehold Reform Act Page 18 of 23

19 20 Disabled Adaptations 20.1 Servicing and maintenance of Disabled Adaptations installed in individual properties is not eligible for Universal Credits and should not therefore be included in the service Charge Servicing and maintenance of Disabled Adaptations installed in communal areas are eligible for Universal Credit and can be included in the Service Charge. The servicing and maintenance costs for adaptations in communal areas can be charged to all tenants subject to a service charge in a scheme. 21 Tree Maintenance 21.1 A number of schemes have significant numbers of mature trees and trees planted for landscaping purposes that require maintenance and pruning for visual and health and safety purposes Tree surgery works are usually expensive, particularly if required on a number of trees at the same time This policy outlines NCHA s approach to the management of trees and associated costs in communal areas of NCHA schemes only. The policy does not cover trees in private gardens as these are not eligible for communal service charge or Housing Benefit/Universal Credit A range of tree diseases pose significant risks to trees on NCHA communal sites. This policy will detail the management measures that NCHA should take to minimise the risk of tree diseases and any health and safety risks that these pose to the general public Whilst some schemes are large enough to fund ongoing tree works that within the annual service charge, many schemes are too small to raise enough money to fund necessary works within the timescales required and the cost of works should therefore be spread over a maximum of 5 years and at a maximum cost of 1 per week Demand for tree work 21.7 There is significant demand for tree pruning where uncontrolled tree growth is causing a nuisance to NCHA tenants and the neighbours of NCHA schemes through falling branches and leaves and the blocking of light where tree growth is excessive There are also many cases where trees are designated as unsafe and health and safety considerations dictate that urgent tree pruning or felling is required Tree diseases may result in large numbers of trees on a site being designated as unsafe or requiring felling to prevent the spread of disease. Page 19 of 23

20 21.10 NCHA recognises the visual and amenity value of trees on NCHA schemes and the contribution that these make to tenant s quality of life and the environment NCHA will endeavour to replace dead or diseased trees in order to maintain the visual amenity and wildlife value of communal areas Tree management issues should be agreed with tenants for all schemes with communal trees and should form part of the Service Provision Schedule NCHA will consult closely with tenants about the development of the Service Provision Schedule and any necessary tree maintenance works on the basis of health and safety grounds or cosmetic/visual amenity reasons Service charges and calculation of costs Nottingham, Ollerton and Leicester regional offices all have schemes where tree maintenance in communal areas is or is potentially a significant issue Where significant tree maintenance work costs on a scheme have been incurred and the costs of the tree work if implemented in one financial year would result in a charge of more than 1 per week, the Rents and Service Charge team should spread the cost of the works over sufficient years (to a maximum of 5 years) so that service charge costs are capped at 1 per week Where the costs of tree works are charged over a period of more than one year, this information should be stated on the Service Charge statement/schedule A small number of schemes have a significant liability for tree maintenance that is beyond the ability of each scheme to fund the necessary works through a sinking fund within a reasonable time period and at an acceptable cost to tenants NCHA will therefore cap tree costs recovered through service charge sinking funds at 1.00 a week with charges reviewed in accordance with the schedule for the review of this policy. This should be sufficient to recover costs on all but the smallest schemes NCHA will maintain a capital tree budget for each financial year at a level to provide sufficient funds to cover foreseeable contingencies. The Customer Contact and Rents Service Manager should ensure that this budget is set at an appropriate level Where tree maintenance costs have not been recovered before further substantial and costly tree maintenance works are required NCHA will write off and not recover the additional costs exceeding the cap level The Customer Contact and Rents Service Manager should procure a Tree Survey of communal and trees in individual gardens in conjunction with the Page 20 of 23