Freeholder service charge – Eligible for HB?

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  • #39772
    ben steventon
    Participant

    Hi All,

    I have had a question raised as part of our 2010/11 audit that has me looking into this, but to no avail at present.

    The case is that of accommodation with service charges included, the usual cleaning and management charges (all separately quoted on the rent schedule) have all been agreed but I have come across a stumbling block.

    Included in the rent breakdown is ‘Freeholder service charge’ of £25.74. I have spoken to the landlord and they couldnt give me a more specific breakdown or an answer as to what it is. I have also noticed that there is ‘Chief Landlord Rent’ of £4.25 as part of the rent.

    This is where I am struggling. The mention of chief landlord rent suggests a leasehold, i.e. leased from another landlord and then leased again by the housing association in question. If so, how can there be a freeholder service charge?

    It seems nobody at the housing association can give me any clarity regarding what these charges are, so my question becomes what do I do with these charges?

    Any suggestions/comments greatly appreciated.

    #113331
    Kevin D
    Participant

    HBR 12(8 ) states ‘services’:

    “means services performed or facilities (including the use of furniture) provided for, or rights made available to, the occupier of a dwelling.”

    Based on the info given, it appears the charges listed are not “services”. If that is correct, the charges are simply components of “rent”. Without seeing the paperwork, I’m guessing but the nature of the charges seems to suggest the tenant’s landlord it a “middle man” with there being another body above the LL – is that correct?

    #113332
    Anonymous
    Guest

    I think you are right that the HA leases accommodation from a “chief” landlord, and under the terms of that lease it must pay ground renmt and service charges. These are passed on to the HB claimants who rent from the HA. But the HA itself is also providing services directly to the tenants, for which it levies its own separate service charge. The freeholder charges have been probably been isolated from the core rent to keep the latter within TSA targets – these are really just landlord overheads that feed into the general rent level. It would be a surprise if the freeholder is providing the kind of service that is not eligible for HB – I doubt that the freeholder is providing services to the HB tenants at all, but I suppose you could ask in order to satisfy yourself that this does not represent a charge for luxury items or day-to-day living costs.

    #113350
    ben steventon
    Participant

    Yes the freehold service charge is separate to the amount of rent within the schedule.

    I think I’m a little confused here. As there is a ‘freeholder service charge’, I’m assuming this would be much similar to what a lessee would pay in a leasehold property? Such as window cleaning, gardening etc.

    In that regard, this makes it even more bizarre as the HA are also charging for cleaning and gardening. Sounds like a double charge to me! I smell a rat

    #113351
    Anonymous
    Guest

    You need to ask what the HA is paying the charge for, but I doubt that it will be those kinds of service. The freeholder is likely to be some remote institution and the servcie may be nothing more than the legal/accountancy costs associated with collecting the ground rent. But ask – what does the freeholder actually provide by way of a service?

    #113352
    ben steventon
    Participant

    Thanks Peter – I have just sent an email asking for a full breakdown which should confirm any duplicate charges and what this ‘freeholder service charge’ actually consists of.

    Many thanks to all for your replies. Much appreciated as always.

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