Understanding your homeownership service charge

As an Anchor Homeowner your service charge is the amount you pay towards the running costs of your location.

Running costs include things like:

• Maintenance and repairs
• Local manager service
• Window cleaning and gardening
• Utilities for communal areas (such as heating, lighting, and water)
• Insurance and fees such as accounting report fee and management fee

The yearly costs are divided equally over 12 months, allowing each property to pay a consistent monthly amount rather than facing large, unpredictable bills throughout the financial year.

Each property contributes a specific percentage of the total service charge, as stipulated in the lease or transfer agreement.  

Anchor operates a variable service charge. This means the amount can go up or down each year, depending on the actual cost of providing services. 

What does your service charge cover?

The services you pay for are set out in your lease or transfer agreement. These vary from location to location, so each service charge is unique.

How do we set the budget?

Every year, Anchor prepares a budget which estimates the costs for the following financial year. The budget is based on a number of assumptions, including:

• September CPI (inflation rate) – used in line with government rent-setting guidance
• Estimated Real Living Wage – as this affects staffing costs
• Known costs – such as gardening and window cleaning contracts
• Historical spending and cost of living increases
• Estimated utility costs – based on expected usage and price per unit (kilowatt)

Insurance costs

Insurance premiums are renewed every July. This means that when the annual budget is set, we only know the actual cost for three months and for the remaining 9 months, an estimate is used.

Your involvement

Residents can get involved in discussions around service charges through Annual Review Meetings (ARM) which are held at every location and led by your Location Manager (with your Area Manager sometimes attending).

At this meeting we:

• Review the year-end accounts.
• Discuss the services required for the following year.
• Use this information to help build the budget.

Your service charge is based on real costs and best estimates, reviewed every year. You’ll always have an opportunity at the Annual Review Meeting, which usually takes place during the summer, to understand how your money is spent and to discuss plans for the year ahead.

Understanding surpluses and deficits on the year end accounts

• Surplus - If the actual costs are lower than the amount budgeted, the extra money collected is a surplus.
• Deficit - If the actual costs are higher than the amount budgeted, the shortfall is a deficit.

Surpluses and deficits are managed according to your lease. Usually, they are carried forward to adjust next year’s service charge, however there are always exceptions. Your local management team can explain how the statement balances are treated at your location at the Annual Review Meeting.

For more information please contact your Location Manager.