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Schedule 20

Schedule 2 Service Charge Strategy

The service charge strategy is attached

Generally the service charge terms of the Replacement Accommodation Lease will apply Provided

that where the specific circumstances of the Replacement Accommodation Lease require the service

charge provisions to be amended any amendments shall be agreed by the Parties in accordance with

the principles in the attached strategy

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SCHEDULE 2

SERVICE CH RGE STR TEGY

E RLS COURT ND WEST KENSINGTON OPPORTUNITY RE

Service Charge Strategy

The service charge strategy and computation forms a key element to the successful management of the Earls

Court development. The Landlord s responsibility will be to deliver a service charge which represents value

and is sufficient to provide services to meet the aspirations of the occupiers and maintain the high standards

required.

Service Charge

The key categories of service costs relate to:

Estate Management costs

2 Building Related costs and sinking fund for lifecycle replacement costs

3 Internal Services

4 Tenancy Management costs

The agreed strategy is that Capco will undertake the Estate Management and Building Related services, and

LBHF will undertake the Internal and Tenancy Management services for its tenants. A list of services to be

provided is set out in the tables below.

A tenure blind approach is to be adopted, with all aspects of the estate and external fabric being managed as a

single entity. This will provide a high quality level of maintenance, presentation and services to all occupiers,

whilst delivery is achieved through the economies of scale which will be derived. Enhanced services can be

provided in addition to the agreed standard services, with those costs being ring fenced to those occupiers

who derive benefit.

A service charge structure will be implemented to accurately reflect the level and cost of services received by

the occupiers and will comprise:

e n Estate Charge to reflect non building specific services which are provided to all occupiers be they

commercial, private residential or affordable.

ndividual Building Charges reflecting the services and requirements of the individual buildings.Where buildings comprise both residential and commercial elements a two schedule approach will beadopted to reflect those items from which the commercial derive benefit and therefore contributeand those items which solely serve the residential properties. A similar approach is taken where

there is a combination of houses (or other direct access units) and apartments within a building, given

that the houses do not derive benefit from the internal communal areas. Car Park Charge reflecting the services provided specifically to the car park area and chargeable only

to car space owners.

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contribution to life cycle tostings will be incorporated in the service charge budgets and collected

from the outset.

The service charge structure will be prepared on the basis that all services to a building are specific and in

particular that no mechanical and electrical plant serves more than one building. However, the individual

design of each building will be considered to ascertain whether there any specific features which have aneffect on the service charge structure and assessment.

It should be noted that whilst the costs associated with the maintenance of central boiler plant will sit in the

service charge, the consumption costs are metered and will be billed outside of service charge arrangements

and therefore individual occupier consumption costs will not form part of the service charge cap, and will be

billed directly to occupational tenants by the service providers.

Current Service Charge Costs on the Estates

LBHF have given an indication of current costs of between 2,000 to 3,500 per annum depending on dwelling

type. There is no breakdown of this.

Future Service Charge Costs as part of a Comprehensive Development

The Mayors London Design Guide space standards will be used for replacement dwelling types (1 bedroom/2

persons for example). Illustrative service charge cost ranges are set out below and are dependent on the size

of the unit and subject to indexation linked to RPI:

London Design Guide (bedroom/persons)

1b2p = 50 sq m or 538 sq ft @ 2 000 pa 3 72 psf (E40 psm)

2b4p = 70 sq m or 753 sq ft@ 2 500 pa 3.32 psf (95.71 psm)

3b5p = 86 sq m or 925 sq ft @ 3 000 pa 3.24 psf (94.88 psm)

4b6p = 99 sq m or 1,066 sq ft @E3,500 pa 3.28 psI (95.35 psm)

3b4p = 87 sq m or 936 sq ft @ 3 000 pa 3.21 psI (94.48 psm)

4b6p = 107 sq m or 1,152 sq ft @ 3 500 pa 3.04 psf (92.71 psm)

Three storey dwellings (or houses) are less relevant to these metrics as they don t contribute to lifts, cleaning

of common parts, capital replacement of plant etc. It is typical for them to just contribute to the estatemanagement costs and external building related costs. This will obviously fall within the cap referred to below

but will need to be determined at the time.

Service Charge Caps

CapCo have agreed to a cap on service charges payable in respect of Replacement Homes which replace

Council owned Residential Units occupied by Secured Tenants. The cap will apply to an agreed list of services

to be provided. The cap will cease to apply on the next accounting date as provided in the form ofReplacement Accommodation Lease upon expiry or termination of the Secured Tenancy which has beentransferred from an Existing Council Owned Residential Unit. The cap will not apply to units provided to theCouncil on a vacant possession basis. The cap will also not apply (or will cease to apply on the next accounting

date as provided in the form of Replacement Accommodation Lease) to Units where a right to buy has been

exercised or which are owned by a Registered Provider. The cap will be as set out in the table below and will

be RPI Indexed.

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Phase Seagrave Road

The service charge costs at Seagrave Road have been capped in the s106 as set out above.

The range of services to be provided is consistent with the strategy for the main site. The cap will only apply to

secure tenanted properties. It will also not apply to any unit that LBHF receives with vacant possession.

The CLSA and s106 agreements both at Seagrave Road and the main site) need to relate to each other but the

key obligations in relation to the service charges for the decant homes are set out in the CLSA.

The cap will only apply to the units at Seagrave Road if, and to the extent that, they are p rovided to LBHF for

decant. If all or any of the units are not used for decant then the service charge capping arrangements will not

apply to these units.

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E S TAT E C H A R G E escription Frequency

ESTATE STAFFING

Wages il N.I (Estate Proportion) llocation of staffing costs to estate.

Estate Office Expenditure (Rent, Equipment, Uniforms Allocation of sundry staff costs to estate.

etc

UTILITIES

Electricity (Office & Estate Areas)

IT Expenditure

Telephone / Fax Radios

Water Charges (Office & Estate Grounds)

C O N T R A C T S M A I N T E N A N C E A N D S E RVI C E SCCTV & Access Control Equipment Maintenance

Cleaning Materials & Light Bulbs

Drainage Contract / Maintenance

Estate Vehicle Leasing, Maintenance & Insurance

General Repairs & Maintenance

Landscape Maintenance

Play Area Equipment Maintenance

Refuse Bin Hire & Additional Collections

Refuse Lift Maintenance & Associated Costs

Travel Plan Costs

Water Feature Maintenance

I N S U R A N C E

Building (inc. Terrorism, Public, Employers

Liability, Employment Law)

P R O F E S S I O N A L

Audit Fee

Health and Safety Statutory Inspections & Training

Management Fee

RESERVES

Estate electricity costs - external areas and estate office.

Estate office IT costs.

Estate office telephone & internet costs.

Estate water charges for grounds and office.

Quarterly maintenance & reactive repairs.

Sundry estate related expenditure.

6 monthly estate drainage cleaning.

3-5 year lease of estate vehicles.

Programmed & reactive repairs to estate areas.

Daily/weekly attendances subject to season.

Annual inspection/certification reactive repairs.

Weekly hire costs & cost of additional collections.

Monthly service visits on comprehensive contract.

Annual survey costs & printed material.

Weekly maintenance & chemical dosing.

Annual fully comprehensive cover to estate areas.

Annual audit cost for estate accounts.

Annual general & fire risk assessments and quarterly

audits.

Annual fee based on approved fee per unit.

Contribution to major works costs.

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BUILDING CHARGE

STAFFING

Wages incl. NJ (Apportionment of Cleaning Costs)

UTILITIES

Electricity (Common Parts)

CONTRAC TS MAINTENANC E AND SERVICES

Boiler Associated Plant Maintenance

Cleaning: Materials and Light Bulbs

Cleaning: Communal Windows, External Balcony

a ade

Door Entry System Maintenance

Fire Smoke Systems Maintenance

General Repairs Maintenance - External

General Repairs Maintenance - Internal

Landscaping - Building Specific

Lift Insurance (Inspection)

Lift Maintenance Repairs

Lift Telephone

Mechanical Electrical Plant Maintenance

Television System Maintenance

INSURANCE

Buildings (incl. Communal Contents, Terrorism,

Liability)

PROFESSIONAL

Audit Fee

Health and Safety Statutory Inspections Training

Management Fee

RESERVES

Description Frequency

Common areas cleaning twice per week albeit dailyinspections and reactive calls to any major cleaningissues such as spillages or graffiti.

Internal landlords lighting lift supply.

Apportionment of overall communal maintenance and

repair costs.

Cleaning materials for internal areas. Quarterly window

cleaning and annual fa ade including equipment testing.

Annual servicing and repairs.

Quarterly servicing and repairs.

External building programmed maintenance and repairs

Internal building programmed maintenance and repairs.

Weekly visits for communal courtyards/roof gardens.

Annual premium for 6 monthly statutory inspections.

Monthly servicing on comprehensive contract basis.

Emergency line rental.

Quarterly/6 monthly maintenance of M E plant.

Annual service and repairs.

Comprehensive buildings and landlords contents cover.

Annual audit cost for estate accounts.

Annual general fire risk assessments and quarterly

audits.

Annual fee based on approved fee per unit.

Contribution to major works costs.

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