Service Charges Explained

Your Service Charge (or Variable Rent Charge)
The ‘on account’ service charge is based on an estimate prepared each year of all the running costs of your development. These could include a number of elements. Some of the most common are:

  • Landscape maintenance – from cutting the grass, maintaining communal gardens, watering and sweeping. Every development’s requirements will be different and be managed accordingly
  • Lighting, heating and cleaning of communal internal areas
  • Window cleaning – specific to each development, however some leases stipulate that all external windows are to be cleaned and others are for the communal windows only.
  • Lift maintenance
  • Fire equipment maintenance
  • Other electrical and mechanical equipment maintenance – specific to each development but could include items such as water pumps, entry or security gates, communal heating boilers (CHP Systems), door entry systems etc.
  • General repairs and maintenance
  • Buildings insurance – in the case of apartments, full buildings insurance is required under the terms of the lease to cover the risks relevant to the development. Standard insurance risks might include fire, explosion, lightning, aircraft, terrorism, storm or flood, sprinkler leakage, subsidence or landside etc.
  • Bank Charges and Audit fees
  • Salaries of any onsite staff that are employed specifically to work for the development
  • Management fee – the only part of the annual service charge which is paid over to the managing agent from the development’s bank account, held under the terms of a statutory trust.

The money you pay can only be spent on your development, and only residents on your development can benefit from it. Money collected is never used on other developments. These requirements are all designed to protect you and to ensure your fund is safeguarded.

For your benefit and peace of mind, all owners will receive a certified set of accounts after completion of the first accounting year. Any surplus on your ‘on account’ payment will be credited in accordance with the terms of your Lease or Transfer. Similarly, any shortfall will be charged.

Ground Rent/Fixed Rent Charge
Your Lease or Transfer may state that as the property owner, you are required to pay an annual Ground Rent/Fixed Rent Charge to the Freeholder. Sometimes the Freeholder asks us to collect this charge on their behalf or they or their agent will do this direct.

Management Fee
The Management Fee is the fee that we charge for managing your building or development. This charge may be subject to an annual increase. These fees form part of your annual service charge.

Estate Insurance
Where appropriate, external communal areas are insured for Third Party and Public Liability insurance and the premiums are included in your annual charges.