What Is A Management Fee?
Your annual service charge will include a management fee. This covers your contribution towards the cost of:-
- The administrative costs of calculating your service charges
- The administrative costs to send out your service charge bills every year
- The administrative costs of dealing with any repairs that may need carrying out.
- The time spent by maintenance staff who may need to come and look at the repairs to check what work needs to be done.
- The time spent by staff who are available to answer any queries you have.
- The management fee is calculated at 10% of the total cost of the common services and repairs in each year.
What Is The Expenditure Reserve Fund?Your annual service charge includes a contribution to an expenditure reserve fund. This is usually a fixed amount each year. If you have purchased your flat from Wigan Council, you will only start to contribute to the expenditure reserve fund when the first 5 financial years after the completion of the sale have elapsed. If you have purchased your flat from a previous leaseholder, and not the Council, and the first 5 financial years have already elapsed you will start to contribute to the expenditure reserve fund immediately.
The amount you pay into the expenditure reserve fund is held by the Landlord for you and interest is added each year (at a rate set by the Government). The money in the expenditure reserve fund may be used in future years to supplement the service charges if major repairs are required.
If you sell your property in the future, you may wish to negotiate with the purchaser over the balance in the expenditure reserve fund in agreeing the sale price. You will need to inform your solicitor, before exchanging contracts, of any agreement reached between yourself and the purchaser regarding the expenditure reserve fund. Your solicitor should inform Wigan and Leigh Housing if the balance in the expenditure reserve fund is to be refunded to you.
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