CONTENTS – 1 Increase in Service charges 22/23 and 23/24 – 2 Old Barnsbury Refurbishment – 3 Minutes of the Old Barnsbury Residents’ Group July meeting
1. Increase in Service charges 22/23 and 23/24
Newlon responded at the end of June to our query about the significant increase in Service charges for the financial year 23/24 building from an increase in 22/23 as well.
The verbatim response from Newlon is set out below. There are some interesting points to note, including Newlon’s requirement to consult leaseholders over use of our sinking funds. Does anyone have any experience or examples of this they can share? It feels like something we should encourage Newlon to formally engage with us about.
Thank you for your email. I do apologise for the delay in my response. We have been inundated with feedback from our residents regarding this year’s estimates that were issued in April, and as we had a date in the diary for meeting in July, I thought it be best to respond in person, but realise no one had informed you, so for that I do apologise.
I have looked at the below. It relates to a property in Berners House, so will respond as if it were them.
I will try to explain this in two stages – first stage being just the service charges alone; second stage looking at the surplus/deficit, as that has a significant effect on the service charge annually.
Service charge year 21-22: If I remove the surplus for the year, the service charge estimate equates to £130.65 per month (surplus was £20.61 per month, which reduced liability to £110.04)
Service charge year 22-23: If I remove the deficit for the year, the service charge estimate would have been £136.26 per month, a difference of £5.61 or increase of 4.29%. This is acceptable, and was in line with service contract agreements, in terms of annual uplifts.
Service charge year 23-24. If I remove the deficit for the year, the service charge estimate would have been £188.76 per month, a difference of £52.50 on last year. This difference is made up of the increase in insurance costs of £44.15 per month, plus the annual service contract rise, as allowable in the agreements, in line with RPI at the time, which would have been around 10%. So, as you can see, over the last three years, had I remove the end of year surplus or deficit figure, the actual services costs fluctuating over the three years can be considered within reason.
Now, looking at the surplus or deficit. As you may be aware, the reason for adding the surplus or deficit to the estimate has been a long and standing policy of Newlon. At the end of every year, we look at the actual costs of running the property, against the “estimated” cost we asked you to contribute towards, and if there is a difference, it gets applied to the following year’s estimate.
So, for the year 21/22, there was a surplus of £20.61 per month. This would have been used to reduce your liability, as what we asked you to pay was less than what it actually cost to run the building.
In year 22/23, there was a deficit of £15.60 per month, which meant what we asked you to pay towards costs at the beginning of the year was insufficient to cover all expenses, so we added the difference to your estimate. This is the same for this year. Last year’s accounts were insufficient by nearly £21,000 for the property. The majority of the shortfall was due to the new door entry system costs being charged to the service charges. I have attached the invoice for your perusal. This would have contributed to the deficit being added to your estimate this year (£29.31 per month). The reason why the door entry system wasn’t classed as major works, and not put through the Section 20 consultation (and sinking fund used to pay for it), was because the cost of the job divided by the number of properties within the building, was less than the £250 per property threshold.
In essence, this year was unprecedented, as this property (Berners) would have received a “double hit”, in that the deficit from last year’s account was high due to the door entry system being charged, as well as the hike in insurance costs.
If anyone would like to see the supporting documentation supplied, please email us and we will forward it on.
In addition, the following questions were raised and these are the responses from Newlon:
1. Based on my interpretation, if this year is unprecedented, can you please confirm that next year, we can expect to return to ‘normal’ levels or do you anticipate further uplift relating to the deficit in coming years? If so, in relation to which items?
I cannot confirm anything at this present time. We are currently working through the reconciliation of the annual accounts to March 2023, which at the end will give us an understanding of whether there will be a surplus or deficit carried through to the next cycle of estimates. I cannot confirm if there will be a similar hike in relation to our leaseholders contributions for insurance. We have been assured it will not be as severe as last year, however work is on-going to see how Newlon can reduce its premium next year (possible increase in excess on claims, grading schemes based on risk, etc,)
2. When can we be consulted on this if there are uplifts on this scale? One of this issues is the uplift coming with no warning or explanation so can you please commit to communicating in advance should the issue arise again.
Once the statement of accounts are completed and ready to issue, we can share this data with the Barnsbury Leaseholder group for perusal and examination. It should be available from late August.
3. Can you advise the basis /criteria for using the sinking funds instead so we are all clear on that point as well?
The sinking fund essentially is used to cover the cost, but not exclusively, on cyclical redecorations. In some instances, it may be used to cover costs associated with Section 20 major works, and my service charge book also states it can be used to offset fluctuations in service charges brought about by increases in services. So, in essence, it is the leaseholders’ money to assist with their maintenance programme contributions on their homes. The leaseholders would need to be consulted on how it is used, and when taking a snapshot of usage, the “majority” rules.
2. Old Barnsbury Refurbishment
Newlon’s plans are advancing and as mentioned in our previous update, there are significant implications for leaseholders and we need to be clear on a number of details ahead of the planning application being submitted at the end of the year by Newlon. At July’s Old Barnsbury Residents’ Group meeting information was shared but few leaseholders and a relatively small number or residents attended.
Keith Mandy who is the lead for the Old Barnsbury Refurbishment has kindly agreed to hold an online meeting with Old Barnsbury leaseholders. The date we are proposing is Monday 2nd October 7-8pm. Please can you advise if you would like an invitation to this meeting, it is applicable to resident and non-resident leaseholders. Keith has indicated that he may not have all the answers at this stage, but is open to our questions.
Some information about the plans, with Fisher House to be the first to be refurbished but little known about phasing beyond that, are on Best’s website but many details are only just emerging. https://betterbarnsbury.org.uk/wp-content/uploads/2023/08/2023-08-08-Update-presentation-FINAL.pdf
3. Minutes of the Old Barnsbury Residents’ Group July meeting
Minutes for the July meeting of the Old Barnsbury Residents’ Group can be found here:
https://barnsburyleaseholders.org/wp-content/uploads/2023/09/old-barnsbury-residents-meeting-8_8_23-draft-minutes.docx
Barnsbury Estate Leaseholders Group 