Apportionment of service charges – calculating each leaseholders’ share of the costs

The leases generally say that the apportionment method to be used to calculate the share of the costs to each leaseholder is to be decided by the landlord. However, a few leases actually state a percentage share. Again, your TMO/EMB Officer will be able to advise you further on this. The same apportionments are used for calculating major works charges as for service charges.

Where possible, costs are allocated to the block concerned, or to the estate if the property is located on an estate, and then apportioned to each flat on a weighted room basis. For this purpose, a “weighted room” is deemed to be as follows:

Bed sitter with separate kitchen or kitchen area and bathroom........ 2 weighted rooms
Flat with two rooms, kitchen and bathroom .................................. 3 weighted rooms
Flat with three rooms, kitchen and bathroom ............................... 4 weighted rooms

The formula then continues as the flats get larger. You should note that the statement is the number of rooms, rather than the kind of rooms, except where the bathroom and kitchen are stated. In most flats, the rooms will be a general living room plus any number of bedrooms. In that way, using the examples shown above a flat with two rooms, kitchen and bathroom would probably be a one bedroom flat, etc. An easier (or shortened) version to remember is to take the number of bedrooms in your flat and add 2 to get your weighting.

To actually calculate your share of the costs, the weighted-room value (as it is called) for each flat in the building is calculated and totalled. Each individual flat weighted room share is then used as a fraction of that total against the relevant costs to get that flat’s share of the costs. For example, in a building where there are 10 flats, each with 2 bedrooms (therefore 4 weighted-rooms each), the total weighted-rooms is 10 x 4, or 40 weighted-rooms.

A cost of £1000 would be split between the flats so that each flat would have a share of 4/40ths of that cost, or £100.

It should be remembered that this calculation takes into account all flats in the building, not just those with leaseholders. That means that each leaseholder is paying for his or her share of the costs only, and is not subsidising the Council’s tenants in the other flats. As landlord, the Council is responsible for those shares, though it may collect some costs back through the rent charged for those flats. This calculation also takes into account other areas of the building or estate on some cases, such as some basements.

Estate based charges only

Where costs relate to an area used communally by more that one building, such as communal gardens or communal lighting, the amount is apportioned between the buildings concerned on the basis of the number of weighted rooms in each building.

Heating and hot water (where applicable)

The cost of heating and/or hot water includes fuel, repairs and maintenance and insurance. Many flats have their own individual heating and hot water systems, and these flats do not incur heating charges as part of their annual service charges. However, some are connected to district heating systems (communal systems). The cost in those cases is apportioned amongst the flats connected to the district heating system.

In the past, that calculation has involved “heating points”, which were originally calculated on the basis of type and size of heating and hot water facility within each individual flat in most cases. However, in common with the remaining properties, the decision was taken recently by the Council and the TMO, in conjunction with the Leasehold Services Sub-Committee and after various requests and surveys, to calculate charges on a weighted-room basis.

Leaseholder Alterations

From time to time leaseholders may wish to alter their properties to the extent of adding or removing rooms. On occasions this may alter their weighted-room values, though the reduction in the number of rooms by converting the property, for example, may not automatically qualify the property for a reduction in weighted room value.

Querying your weighted-room value

If you do not agree with your weighted-room value, please notify your contact officer immediately, who will take this up on your behalf with The Borough Valuer (for the Council as landlord). However, it should be remembered that the TMO itself does not have the right to change weighted-room values, unless instructed to do so by the Council, and the lease agreement allows the landlord the right to decide on any apportionment method or calculation.