Service Charges

How is my invoice calculated?

The Service Charge accounts are always annual, with a year-end date defined in your lease or deeds and usually on the last day of March, June, September or December.

Each year a Service Charge Budget is prepared by us for discussion and agreement with the freeholder and/or Resident Management Company (RMC) directors.

This budget is the anticipated cost of maintaining and managing the building or development in the next twelve months. How this is calculated can be quite complicated but factors include:

• Regular contract costs where the costs in the upcoming year are known - for instance cleaning and gardening.

• Current expenditure – the expenditure in the last couple of years may be a guide for the expected costs in the coming year.

• Known upcoming expenditure – for example if it is known that a buildings insurance revaluation is due in the coming year the fee estimates can be budgeted for.

• Provisional figures – for example we may not be expecting to have to spend any sum on a satellite television system in the coming year, but a sum is put in the budget just in case.

Sometimes the budget is split into different categories, known as “Schedules”. This enables a fairer split of the costs between different types of owner. For example, if a development comprises both freehold houses and leasehold flats there may be one schedule to which everyone contributes, e.g. for gardening on the estate, and other schedules to which only flat owners contribute, e.g. the cleaning of communal corridors or lift maintenance.

Once the Service Charge budget for the coming year is agreed with the freeholder and/or RMC directors the contribution for each individual owner is calculated. Your contribution is defined in your lease or property deeds. Often it will be calculated as a percentage of the floor area of your property against the total of floor areas of all the properties. You may pay different proportions on different schedules. It all depends on what the leases and property deeds say.

The Service Charge is paid in accordance with the terms of the lease or deeds. It will be paid in advance annually, half-yearly or quarterly depending on what the lease or deeds say.

In summary, therefore, your service charge invoice will be:

• The overall service charge budget for the upcoming year

    multiplied by

• The percentage or proportion applicable to your property as per your lease or deeds

    and then divided by

• Two - if the lease or deeds say you pay half-yearly
• Four - if the lease or deeds say you pay quarterly    

For a Summary of your Legal Rights and Obligations in respect of Service Charges click here.