Any Camden council leaseholders here? Help me understand "estimated" service charges.

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My student son is about to enter an assured shorthold tenancy for an ex-council property in Camden. The freeholder is Camden Council and the property is part of a community energy scheme. The landlord has shown my son an invoice for "estimated" service charges for 2023-2023, with the "estimated" heating costs highlighted. They are massive - way more than the average for similar properties. Nevertheless the landlord says he has had to pay this estimated cost up front so he wants the tenants to reimburse him in monthly installments over the year ahead. This is potentially unfair because:

1. The estimate is based on usage of previous tenants and,
2. Camden have calculated it using a forecast unit cost that is somewhat arbitrarily 50% higher than the 2022-23 cost (see here: https://www.camden.gov.uk/service-charge-insurance-and-freeholders#vmcnosuw).

My son and his friends don't want to lose the property but they are wondering if this situation is challengable. It would help to understand how the "estimated" service charges work. My question is - if the actual heating cost during 2023-24 is less than the estimated heating cost, will the landlord eventually get a rebate on his upfront payment from Camden Council?

No worries - after a lot of hunting around I've found the answer. Each September there is an adjustment for the previous year, which will be credited to or debited from the account. For 2023-24 that will be in September 2024, just after he has moved out, so I doubt he'll see it.

They need to challenge this but it's not clear whether there is a way of paying just for usage. 🙁

That sounds really unfair. I am a landlord in Camden (also in a scenario where Camden are the freeholder) but I haven't heard of this scenario. How much is the service charge? Is the rent a bit cheaper or comparable to other properties?

The rent isn't particularly cheap, no. It's £4500 pcm for a 5 bedroom (no lounge) apartment, plus an extra £300 pcm for gas heating/hot water. They will pay electricity & water on top of this, independently of the landlord..

Hi, I am currently facing a similar issue to you. Did you/your son manage to solve it? Thanks in advance.

Hi @GreyBox from what I've read online about this, the reasons the heating service charge is so high for Camden heat network properties are:

• in many cases the properties aren't metered so there's no incentive for residents to turn the heating down - the costs are pooled.
• the council can pretty much decide to charge leaseholders whatever they like, including extra to cover cost-of-living subsidies to their council tenants (see here: https://www.leaseholdersforum.org.uk/Discussion-Board/discussion-post/leaseholders-are-subsidising-freeholders-heating-bills/)
• Leaseholders can pass their heating service charges on to their private tenants, so long as the arrangement is made clear in the tenancy agreement.

It's a scandal (and in Keir Starmer's constituency too).