Paragraph 13 Amount in respect of service charge payments
This paragraph provides for the calculation of the amount to be included in the owner-occupier’s housing costs element under this Schedule in respect of relevant payments which are service charge payments.
The amount in respect of the service charge payments is to be calculated as follows.
Step 1
Determine the purchase price of the accommodation to which the alternative finance payments relate.
Step 1
Determine the amount of each service charge payment.
Step 2
Determine the period in respect of which each service charge payment is payable and determine the amount of the payment in respect of a month (see sub-paragraphs (3) and (4)).
Step 3
If there is more than one service charge payment, add together the amounts determined in step 2.
The result is the amount to be included under this Schedule in respect of service charge payments.
Where the period in respect of which an owner-occupier is liable to make a service charge payment is not a month, an amount is to be calculated as the monthly equivalent, so for example—
weekly payments are multiplied by 52 and divided by 12;
four-weekly payments are multiplied by 13 and divided by 12;
three-monthly payments are multiplied by 4 and divided by 12; and
annual payments are divided by 12.
Where an owner-occupier is liable for service charge payments under arrangements that provide for one or more service charge free periods, the monthly equivalent is to be calculated over 12 months by reference to the total number of service charge payments which the owner-occupier is liable to make in that 12 month period.
“Service charge free period” means any period in respect of which the owner-occupier has no liability to make one or more of the service charge payments which are to be taken into account under paragraph 8.