Soaring energy prices, inflation at levels not seen since 1992, rising labor and material costs, and fire safety issues that drive up compliance and insurance will result in greater than inflation increases in service charges.
Interest rates have remained at historically low levels so far, but increases in energy prices and service charges highlight the impact of rising costs and are having an effect on many households . This is felt most in the affordable housing sector, but also in the housing market as a whole, hence the government’s decision to introduce a rebate on energy costs.
Rising costs and static income are pushing many households into the financial danger zone. This is the case for many Dolphin residents and others living in affordable housing, who often struggle to cover basic living expenses. As a result, the focus is increasingly on resource optimization and increased cost control. This is particularly acute for tenant service fees, which have been a point of contention for several years.
This, and the government’s emphasis on ensuring a ‘fair deal for tenants’, means that the focus on service charges is unlikely to fade any time soon.
It is the tenants who pay the service fee and they should be treated as the customer
Service charges are a complex issue and some of the factors related to fire safety costs have been well documented, following government attention to the issue. But what often perplexes long-term tenants is the unpredictability of increases and the fact that service charge increases on new homes are significantly higher than inflation.
Tenant frustration is compounded by the lack of transparency around being able to see and potentially challenge cost allocations. Like many tenants, Dolphin has had difficulty obtaining information from managing agents on the value for money of service fees.
Perhaps even more worryingly, and on more than one occasion, we as an affordable tenant have not received the same service from managing agents as individual market tenants, despite paying our share of management costs and fees. The tenants pay the service charge and they should be recognized as the customer and treated as such.
To address this issue, we propose that service fee budgets include more detailed explanations and supporting evidence of costs, and that responses to tenant service fee requests be shared in a report to all tenants. . Service fees should also be required to provide value to tenants, including a provisioning process. At the heart of this is the premise that the fees offered by managing agents in the tender should reflect the actual level of work required.
A more drastic solution would be to pay greater attention to the factors determining the costs of service loads during the building design and planning process. This way we could ensure that buildings are designed and built to promote cost effective and efficient management from day one.
Olivia Harris is CEO of Dolphin Living