Service charges are a key area of friction between residents and property managers and paying for unexpected repairs or maintenance can be a thorny issue for flat owners. This problem often escalates when large-scale projects have to be paid for.

Most well-managed blocks have reserves to call on when major refurbishment or repair is needed but for those that have been unable to build up suitable funds – and where replacing obsolete equipment has become urgent – residents are expected to put their hands in their pockets and split the cost between them.

What do you do?

This may not always be affordable and there are frequently added complications around lease terms and tenancy arrangements. Imagine this scenario. You live in a small block of six flats where four out of the six residents are tenants and two are owner occupiers. The four buy-to-let landlords are unwilling to contribute large sums to a reserve fund when there is every possibility that they will sell their flats in the next few years and buy elsewhere as the market changes. The lighting in your communal areas is dated, lamps are constantly failing and your lighting bill is getting higher every year. Wholesale replacement is unaffordable for the two flat owners by themselves and the constant maintenance required to the lighting system is getting all six residents down.

London-based Future Lighting, which specialises in retrofitting LED lighting in residential blocks, thinks it has come up with a solution – leasing. A relatively new phenomenon in the leasehold sector but familiar territory to mobile phone users and car owners, leasing gives flat owners the opportunity to commission a full block lighting replacement programme that can be purchased on a buy now, pay-as-you-go basis. Future Lighting has partnered with leasing specialists Clear Asset Finance to offer a package to customers that won’t break the bank and could offer a lifeline to blocks that are putting up with outdated, costly and inefficient installations.

Clear Asset Finance has funded more than £2M of LED lighting systems for both public and private sector clients in the last five years. The company only underwrites businesses, not individuals, in the residential market but is happy to talk to property management companies and RTMCos with a healthy balance sheet.

How it works

The first step is a free site survey to assess lighting requirements. Once this is completed and the relevant credit checks have been made, an agreement is finalised via Clear Asset Finance and the new lighting can be installed. According to CAF sales manager Carl Powell, if there are no problems, the whole process from start to finish can be completed in a matter of days.

The benefits of leasing are easy to assess:

• A repayment plan tailored to meet the needs of the client;
• Fixed payments agreed in advance to avoid nasty service charge surprises;
• no more costly maintenance call outs; and
• Up to 75% savings on energy bills may be achieved by replacing old systems with new, energy efficient alternatives.

Huge savings can be achieved

According to Future Lighting MD Jamie Willsdon, some blocks can even expect a new lighting installation to have paid for itself by the time the finance plan is fully paid up.  “On one of our recent projects, at Broadwalk House adjacent to London’s Hyde Park,” says Jamie, “the total cost of replacing the lighting system with an energy efficient alternative was just over £15k. Prior to replacing the lighting system, the electricity used was calculated at just over £8,500 per annum. Now it is expected to be just under £500 per annum, so residents will start to see a return on their investment after just 21 months.” So huge savings can be achieved without any initial outlay on the part of flat owners, who are able to set up a leasing agreement over a maximum of five years; less if it suits them.  

Jamie is also quick to point out that leasing is not only an option for cash-strapped blocks. “Leasing your assets makes technology such as energy efficient lighting more affordable even if you have significant capital resources,” he explains.  “It can still be beneficial to lease because paying cash outright can be a drain on a management company’s capital reserves or an RTMCos service charge funds. By making regular payments over a set period, you pay as you save on your energy bills so you achieve a faster return on your investment than if you paid upfront”.

Fast Process

Future Lighting has always been able to access funding for its clients via the government-backed Carbon Trust. However, this is often a long-winded process involving swathes of paperwork and sometimes lengthy delays. 

Jamie hopes that by partnering with Clear Asset Finance, the whole process will be speeded up and installation can take place in weeks, rather than months or even years!