Service Charges

‘Barbicanage. Tribute paid for the construction and maintenance of barbicans.’

Oxford English Dictionary (2nd Edition)

You have to pay a percentage of certain expenses. The percentage for your particular flat is set out in your lease. In very general terms, the expenses are for the maintenance of the building, estate-wide services such as the Garchey and rubbish collection, and other facilities you use, such as Thomas More and Speed Gardens. The Barbican Estate Office can give you a detailed practical explanation.

Major costs every few years

Every few years there may be an estate-wide renewal or replacement of lifts and roofs and other major works. Most of these do not recur very often but they are expensive when they do because there is no ‘sinking fund’ to save up for them. It is worth checking with the Barbican Estate Office what works they have planned.

Each year the Corporation produces an estimate of future expenditure on major works (such as replacing the lifts or the roof) for each building. To get the up-to-date estimate you need to contact Barbican Estate Office.

The Barbican Estate does not operate a ‘sinking fund’. (A sinking fund is a cash reserve for anticipated capital expenditure built up by small advance contributions with every service charge payment. It softens the eventual blow.) Apparently it was the residents who wanted the present painful system where your lift and roof are replaced and the next month you have to sell all your silver to pay for it. However, there is a service charge loan scheme which you may (depending on the circumstances and the terms of your lease) be able to use. The Corporation lends you the cost and you pay them back over several years.

Service charge payments

The Corporation are entitled to be placed in funds ‘up front’ for all reasonably anticipated expenditure. So each year they makes an estimate of what the likely expenses of running the residential elements of the estate will be, and they calculate the amount they need from you, and from the other flat owners, to cover it. You pay your share by quarterly instalments.

After the end of the relevant year, when they have been able to calculate the exact expenditure, you may be required to make up any balance if it turns out that they have underestimated. Experience shows that this doesn’t often happen.

The Corporation charge in advance for rent (e.g. a June rent demand may ask for rent for one quarter in advance from June to September). But they charge service charge quarterly in arrears (e.g. in the June demand, there will just be an item reading ‘one quarter on account of service charge’, without specifying which quarter or three month period it relates to. But it is, in fact, the last quarter – April to June). If the payments you make exceed the final figure, the Corporation can pay the excess back or credit it to the next year’s service charge. Their figures are usually fairly close to what is ultimately due.