For residents, and for anyone considering buying here.
What the service charge actually is
Hythe Marina Village is not a typical block of flats. The majority of homes are individual houses held on a 999 year lease, and each leaseholder insures and repairs their own property. The service charge does not pay for anything inside or on your house.
What it pays for is the estate around it, and in particular the marine engineering that makes a marina village possible: the lock and its control building, the sea wall and revetment, the sheet piling forming the face of the marina wall, the pontoons and mooring piles, the dredged channels both inside the Village and out into Southampton Water, the roads, walkways and footways, the landscaping, the lighting and signage, and the safety and life saving equipment. It also covers estate insurance, the staff who run the lock and maintain the site, and the managing agents.
These marine assets are significant and complex, a conventional residential estate simply does not have comparable items. They are also why a properly funded reserve, and a long term plan behind it, matter much more here than almost anywhere else.
What it does not cover
Two exclusions are worth being explicit about.
Your own house. Repair, external decoration and buildings insurance are the leaseholder’s own responsibility under the lease. Nothing in the service charge touches them.
The landlord’s commercial pontoons. The landlord lets berths commercially to people who do not live here. It has been agreed that the pontoons and berthing infrastructure serving those commercial and remote berths fall outside the residential service charge. Residents contribute to the marine infrastructure that serves the Village and to their own basins, not to the renewal of pontoons let out as a commercial operation.
How your share is worked out
Step one, the estate total. Everything actually spent in the year meeting the landlord’s obligations under clause 8 of the lease, plus any interest and fees on borrowing used to fund it, plus anything set aside into the reserve fund. Money spent out of the reserve, and money received under estate insurance policies, is excluded so nothing is charged twice.
Step two, the residential share. The estate is split between a commercial side and a residential side under the Management Agreement in the Fourth Schedule of every lease. The residential side carries about 65% of the total, the commercial side the remaining 35%. The original leases were written on a 20/37ths residential share; the split was reset to its present level around fifteen years ago and has been settled since.
Step three, your unit. The residential share is then divided between the individual homes in proportion to their original rateable value, across the 225 residential units.
Payment is half yearly in advance on 25 March and 29 September, with the service charge year ending 24 March. An estimated interim charge is demanded before the year begins, the actual accounts are prepared and certified after year end, and any difference is settled within fourteen days or credited against the next service charge payment.
The reserve fund
The lease provides for a reserve fund kept separate from the landlord’s own money, with its own books and records, and audited annually. Sums set aside into the reserve fund count as service charge expenditure in the year they are set aside, so residents pay in steadily rather than in shocks.
The lease is explicit about why it exists. The fund provides against anticipated future costs “with a view to equalising so far as practicable the annual payments”. Smoothing the bill is not a by-product of the reserve. It is the reserve’s sole stated purpose.
That matters because costs here are inherently lumpy. Routine maintenance is broadly level year to year. Lock structures, gates, piling, revetment and pontoon replacement are not: they arrive at long intervals and in large amounts. Without a reserve, each would land on residents as a one-off demand in the year it happened.
The 25 year plan
To help manage the estate and smooth the costs using the reserve as much as practicable a long term maintenance plan has been developed and maintained.
The estate is managed against a reserve forecast running from 2023/24 to 2048/49. It identifies each major asset, when significant work is anticipated, and what it is expected to cost. The figures below are therefore working estimates that will move as the forecast is revised. The headline components:
| Component | Ballpark (net of VAT) | Broadly when |
|---|---|---|
| Recurring maintenance: lock shutdowns, approach channel dredging, lock maintenance contract, general allowance | £5.8m | Every year throughout |
| Revetment: rock armour, geotextile, kerbs, plus risk allowance | £4.0m | 2040 to 2044 |
| Lock: structure, gates, pumps, hydraulics, rams, stoplogs, generator, control systems | £3.5m | Control systems near term, structure mid 2040s |
| General estate projects: landscaping, planters, block paving, surfacing, lighting, timber, bridges, drainage, public conveniences, quay wall steps and handrails | £2.1m | Every year throughout |
| Marina basin walls: concrete capping beam and steel sheet piles | £0.85m | Early 2040s |
| Piles to residents’ basins, in three phases | £0.7m | 2026 to 2030 |
| Lock approach structures, pontoons and channel markers | £0.5m | Spread across the period |
| Public slipway: surface, retaining walls, flood barrier, marker pile | £0.4m | 2032 and 2042 |
| Hoist dock (north): walls, capping beam, guide rails, washdown slab | £0.3m | Early 2040s |
| Pontoon piles, resident basins A, B and C | £0.2m | Spread across the period |
| Inflation allowance at 2% a year | £7.5m | |
| VAT at 20% | £4.8m | |
| Total planned expenditure, gross | around £31m | 2023/24 to 2048/49 |
Two things about those figures are important.
Nearly a third of it is inflation, not work. Of the roughly £24m net major project total, about £7.5m is the inflation allowance rather than any additional activity. The costs were estimated in 2023 and inflation has to be applied, since some large costs are a long time in the future there is a significant impact of inflation.
The largest single item is the least certain. The revetment provision covers improvements to the sea wall against rising sea levels. Whether that work is needed in the form and at the scale currently modelled, and exactly when, is genuinely open. The plan reflects that honestly by including a risk allowance of around £0.75m within an estimated £4.0m figure. It is a provision against a possibility, not a commitment to a scheme. It also sits at the far end of the forecast, which leaves time for the position to become clearer and for the plan to be revised.
As noted at the start, the commercial and remote berth pontoons sit in their own separate reserve of around £4.2m gross and form no part of the figures in the table above. Commercial pontoons are covered by the landlord, remote berths assigned to leaseholders are paid for by those leaseholders.
What this means for stability
The forecast builds the reserve steadily to around £9.6m by 2039/40, then draws it down through the heavy years that follow. The peak spending years are 2041/42 at roughly £3.9m and 2046/47 at roughly £5.1m, with 2042/43 and 2043/44 each above £2.7m. The fund is projected to absorb all of them and still close the period in surplus.
That is the whole point of the exercise. A £5m year is not affordable as a demand in a single year but it is maneagable as twenty years of contributions. (Indeed the contributions should have started much sooner)
What that looks like per home
Applying the residential 65% share across 225 homes gives an average reserve contribution per home of roughly:
| Year | Estate reserve contribution | Residential share at 65% | Average per home | Same figure in 2025/26 money |
|---|---|---|---|---|
| 2023/24 | £0.6m | £0.39m | around £1,700 | around £1,800 |
| 2025/26 | £0.9m | £0.59m | around £2,600 | £2,600 |
| 2030/31 | £1.15m | £0.75m | around £3,300 | around £3,000 |
| 2040/41 | £1.65m | £1.07m | around £4,800 | around £3,500 |
| 2048/49 | £2.0m | £1.3m | around £5,800 | around £3,700 |
These are averages. Individual homes pay in proportion to rateable value, so actual figures for individual properties will be different. They cover the reserve only, and sit alongside the day to day running costs of the estate within the total charge.
Stripping the 2% inflation back out, the average reserve contribution rises from about £2,600 to about £3,700 per home over twenty three years – which is roughly 1.5% a year in real terms (above inflation), and it then flattens after the early 2040s rather than continuing to climb.
This is important – the service charge payments have historically risen substantially (doubling) this was due to previously not properly planning for large future costs. A large increase was necessary to ensure the reserve is properly funded, now however the plan allows us to manage it proactively and to hopefully avoid future dramatic increases.
So the current position is that reserve contributions do rise a little faster than inflation, by around a point and a half a year. That is a deliberate choice to fund the 2040s peak in advance rather than defer it.
The HMAs goal
In working with the landlord on the service charge the HMA has three goals.
- That the village is is returned to a high standard of condition and that it is maintained at that level by ensuring the maintenance plan is robust.
- That service charge costs should increase in line with inflation as a target. That is the benchmark against which budgets and proposed expenditure are scrutinised.
- That the plan is executed well and delivers value for money.
It is important to note that this is a plan and while we hope it goes according to the plan it might not!
Where a proposed increase runs ahead of inflation, the HMA’s position is that the reason should be identified and justified: a genuine step change in an input cost, a plan item brought forward, or a deliberate strengthening of the reserve against a known future liability. The reserve profile above is an example of the third, and it is the sort of increase the HMA “challenges”tests” rather than simply opposes.
It is also worth noting that inflation (assumed at 2.1% for planning) has recently been higher and some costs have come in more than expected.
What residents and buyers should look at
Four documents together give the full picture:
- The certified annual accounts, showing what was actually spent, final as to matters of fact once certified.
- The reserve fund position, separately accounted for and audited.
- The 25 year reserve forecast, showing what is coming and when.
- The year ahead budget and the HMAs commentary on it.
For a buyer, the question worth asking is not just what the charge is this year. It is whether the estate has a credible long term plan, whether the reserve is being funded in line with it, and whether increases are traceable to that plan. On this estate all three can be evidenced, which is unusual and is a point in the estate’s favour rather than against it.
Governance and consultation
The lease itself recognises the Residents Association and obliges the landlord to receive and consider its views on the general management and upkeep of the Village, having regard to the principles of good estate management. That is a contractual obligation, not a courtesy.
Separately, statute requires formal consultation with leaseholders before qualifying major works or long term agreements are entered into. Those rights arrived long after these leases were granted in the 1980s and operate alongside the lease rather than being displaced by it. Together they mean significant expenditure should be visible, consulted on and explicable before it reaches a demand.
This note explains the general position and is not legal advice. Figures are drawn from the reserve forecast at its current draft in 26/27 service charge year, and are estimates rather than commitments: they will change as the forecast is revised over the coming years. The real terms figures are a calculation from that forecast, not a figure published within it.