Service Charge – Common Questions
What is Service Charge?
- If you live in a block of flats, it is likely that your Residents Management Company will carry out the maintenance and upkeep of ‘communal areas’ with costs being recovered from the leasehold and (where appropriate) freehold owners. The Service Charge is usually the anticipated cost of carrying maintenance and upkeep of the communal areas.
Why do I have to pay?
- Because you (or your predecessor/s) entered into a contract (either a lease or freehold purchase) and payment of the Service Charge was a condition of that contract.
How is it calculated?
- Our Property Manager will have prepared a budget/provision for the forthcoming financial period, which will have been arrived at having considered actual expenditure through the current period, and anticipated expenditure requirements for the forthcoming period.
How often must I pay?
- Typically, Service Charges are payable annually, half yearly, or sometimes quarterly, at dates set out in the lease or transfer. Please refer to your lease or transfer for absolute certainty.
How do I know what it is being spent on?
- Every year accounts will be prepared showing expenditure for the development of which your property forms a part. If you require further and more detailed information this is available on request in accordance with the legislative provisions.
Why am I paying more (or less) than my neighbour?
- You may find that the Service Charge you pay is higher, or lower, than that of a neighbour, but this does not mean that it is wrong. The amount payable is dependent on a number of factors including but not limited to the size of the property.
- You should always refer to your lease or transfer to establish what proportion of any Service Charge is payable by you, and then if you feel there is a disparity refer to us for further guidance and/or information.
What payment methods are available to me?
- You may pay your charges by cheque, bank transfer, credit or debit card. In certain circumstances our clients may countenance a deferred payment arrangement, such as monthly standing order.
- Details as to payment options available to you will be included with any demand we may issue on behalf of our client.
What if I can’t pay?
- The running of the development and the provision of services is entirely dependent upon funds being available to discharge contractual obligations. These funds come from you and your fellow owners/leaseholders, and if they are not forthcoming the company may not be able to continue providing services.
- If you cannot pay your Service Charge you should let us know as soon as possible in order that we may advise the client and seek instructions, but you should be aware that failure to pay, whether attributable to circumstance or intent, may result in your security of tenure being jeopardised.
- If you are in financial difficulties you should seek advice from a solicitor or other professional advisor, or the Citizens Advice Bureau.