Service Charge and Reserve Fund Budget
Pleasingly, there will no requirement to increase the service charge portion of the quarterly charges for the forthcoming financial year.
The vote held during the Extraordinary General Meeting of 23rd November 2023 concluded that the funds needed to replace the building’s climate control system and associated pipework should be collected over two years, to allow this important project to be executed the end of 2025. This was confirmed to all lessees in the minutes of this meeting circulated on 29th November.
Whilst this will result in a significant surge in the quarterly cash outlay (service charge + contribution to the reserve fund) over the next eight quarters, the outcome of the EGM vote offers several significant advantages, both financial as well as in terms of reduced inconvenience, compared to the other options of collecting the funds over three or four years :
The presentation explaining how the building’s heating and cooling system will be replaced can be viewed clicking here.
We can expect more favourable quotes when we go to tender to run the project over two years than over longer periods, because this reduces the contractors’ uncertainty regarding the cost of materials and labour.
Completing the project earlier means that we start capturing the significant savings generated the future system (running costs and maintenance) as soon as possible. These are estimated at ca. £100,000 per annum. It also reduces the period during which the residents will be inconvenienced on-going works in the building.
The efficiency of the cooling system will only reach its full potential once all of the current pipework has been replaced new insulated pipes, because the current pipes can only circulate water at higher temperatures.
Extending the project over a longer problem would raise an issue regarding the sequencing of the implementation, as some flats would be contributing to the cost of the project for several years before benefiting from the advantages and added comfort offered the future system.
The quarterly reserve fund contributions which will be charged for the coming eight quarters are in lieu of the quarterly amounts which have been charged since March 2018.