As a leaseholder of a flat or apartment you’re responsible for paying a share of the management and maintenance costs of your building, from day-to-day upkeep and repairs to – in some cases – planned major improvement and refurbishment works.
These costs make up your service charge, and the terms of your lease will detailwhat your service charge covers, how it is calculated and how and when it needs to be paid.
While every lease is different, some aspects of landlord and leaseholder rights and responsibilities relating to service charges are set out in law as part of the Landlord and Tenant Act 1985.
At Pure Block Management, we handle service charges for the 100-plus apartment blocks we manage. Here are our answers to some of the most common questionsleaseholders ask about them.
What are the typical things service charges pay for?
The terms of your lease will set out exactly what your service charge covers but the type of things that are usually included are maintenance of the structure of the building, from replacing the roof to repairing the windows, clearing the drains and servicing the lift.
Your service charge could also cover maintenance of communal areas, such as the lighting in the entrance lobby or upkeep of the car park and gardens.
Service charges also often pay for professional building management and necessities like building insurance.
Does every leaseholder in a building pay the same service charge?
Not necessarily – it depends on the terms of each individual lease. However, for ease of management most landlords would want leaseholders in the same building to have the same lease terms, especially if the properties are the same or similar.
Will the service charge be the same amount each year?
Your service charge will usually change each year, based on the costs of managing and maintaining the building for that year.
Most leases require the landlord (or the management company they have appointed) to estimate costs for the year ahead and base the service charge on this, collecting it before the work takes place, but some leases allow for the landlord to incur all the costs for management and maintenance as they arise and recover them afterwards.
How do I know if my service charge is being well-spent?
If your service charge is based on estimated costs for the year ahead, it’s likely that your lease will require the landlord or their management company to produce a summary at the end of the year of what has actually been spent and make this available to leaseholders. If you have any questions about how your service charge has been spent get in touch with your landlord or block manager for a breakdown of costs.
What if the actual management and maintenance costs are more than the estimated costs, so aren’t covered by the service charge?
This can happen, especially during times of high inflation, when costs can rise rapidly. Most leases allow for any shortfall to be charged to leaseholders – this is called a ‘balancing charge’.
Your lease will also set out what should happen if the actual costs incurred are less than estimated. In some cases this will result in a credit towards the following year’s service charge, while in others it may be returned to you or transferred to the sinking fund.
Is there a limit to how much I can be expected to pay for management and maintenance through my service charge?
No, but if ‘major works’ are required that will cost more than £250 for any one leaseholder, the landlord or the management company they have appointed needs to consult with all leaseholders about the work. The consultation process that needs to be followed is set out by law and gives leaseholders the right to comment on the work and even suggest a suitable contractor to carry it out.
You can find more general information about leasehold service charges on the gov.uk website – or, for information relating to your block, check the terms of your lease or contact the block management company.
