Service Charge Recovery: Social Housing Challenges

What percentage of your estate service delivery costs are you actually recovering through service charges?

If you're like many organisations, the answer might surprise you. Without proper oversight, service charges can be inconsistent, difficult to justify, and challenging to collect.

With rising costs - implications of employers NI payments, we are often asked to review, for example, a ￡4m spend on grounds maintenance or estate services and find ￡500k savings.

This is ok but I believe it's often missing the wider point which can create a more sustainable and self-funding service. This comes to down service charge recovery!

Service charge recovery is often disproportionately low compared to the total costs. Sound familiar?

To maximise your service charge recovery, you need to ensure you are confident in the quality and costs of your service delivery. This means a service which is:

• Cost-effective
• Competitive
• Accountable - with an agreed specification and practical SLA.

It's not just about cutting costs in the short-term - though I should say, this is still a key part of our role. But a structured, sustainable approach to service charge management can deliver savings and keep recovery high for the long haul.

So what's causing low recovery rates?

Often it comes down to:

• Vague service specifications
• Inconsistent service delivery
• Lack of evidence of value for money
• Not meeting statutory requirements
• Difficulty demonstrating service effectiveness

Ready to tackle these issues head-on?

Here are the key steps - and we can of course support you with this - whether it is just an initial chat or a fee based project:

1. Lock in a service specification with clear expectations, measurable KPIs, and transparent pricing.
2. Assess value for money. Are costs reasonable and proportionate? How do your services stack up to industry benchmarks and commercial alternatives?
3. Improve contractual and financial accountability. Service charges should be demand-driven, fairly allocated, and supported by crystal clear audit trails.
4. Align with statutory regulations - lots of specific but ultimately service charges must be reasonable and fair.
5. Open communication with tenants and leaseholders is key. Clearly explain charges, back them up with evidence, and consult when required.

I appreciate we are also dealing with government advise limiting service charge increases to 7%. So something to keep in mind as you review your charges - but you need to start collecting it first! ;)

Maximising service charge recovery is about delivering real value with your estate services - being transparent, efficient, and consistent. Get the fundamentals right with a defensible service charge model and you'll see that recovery rate rise.

[email protected] - or direct message if you want to discuss