Service Charges

Service charges are collected for the maintenance, insurance, repair of the building and communal areas plus the employment of staff and management of the property.

Service charges can be split in to three sections:-

Reserve funds – which are for long term expenditure, for example roof replacement.

Cyclical expenses – which are for more regular expenses like external and communal area decoration.

Day to Day expenses – which are for the cleaning, insurance, salaries etc and other items which are payable each year.

Service charges can vary each year dependent on the expenditure due for that period and they are required to be reasonable.

Details of what is included to be paid with the service charges is set out in the lease and all contributions will be met by the leaseholders as it is not usual for the landlord to contribute to these costs.

When purchasing a leasehold flat is important to find out what the current and future service charges are and what the level of the reserve fund may be for any major works that could be planned.

Service charges apportionment should be clarified in the lease, unfortunately this is not always done well, and leases often refer to the amount payable by each leaseholder to be fair and reasonable which could be determined to be, for example, the rateable value or the square footage of the property.

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