Service charge transparency requirements – briefing for housing associations

The Department for Levelling Up, Housing and Communities (DLUHC) is consulting on service charge transparency requirements for the ongoing costs of implementing regulatory requirements in existing buildings that are 18m or over in height.

The Building Safety Act 2022 requires landlords to ensure the safety of buildings they own or manage through measures such as assessing fire risks, taking reasonable steps to mitigate risks, and applying for building safety certificates. Unlike remediation charges, the costs associated with these duties can be passed onto residents through service charges.

DLUHC is seeking views on how the service charge mechanism can be made as transparent as possible so that residents understand exactly what they are being charged for. It is proposing that residents and leaseholders should receive an itemised breakdown of costs in their annual statements. Alongside this, they suggest residents’ monthly service charge demands should separate building safety costs from other charges.

DLUHC is seeking views on:

• The proportionality of the transparency requirements.
• The administrative and operational changes required.
• The timings required to implement any changes to service charge mechanisms.

This briefing summarises the key points of the consultation.

The NHF agree with the government’s option of a slower implementation of these rules as we believe housing associations need more time to put the right processes in place, particularly where this will help limit any additional costs to leaseholders as a result of implementing the changes.

The NHF will be submitting a sector response to this consultation. To help shape our response and share your views, please get in touch with Marie Chadwick, Policy Leader by 17 March 2023.