Flat-Living.co.uk Service charges
Your at-a-glance guide to service charges
Leaseholders living in residential blocks are under an obligation to pay an annual service charge to their landlord to cover the cost of providing services and maintaining the common parts of the building they occupy, writes Lesley Davies. Residents commit to pay a proportion of these running costs, which will vary depending on your lease terms and the level of service and maintenance provided.
for and when;
apportioned between residents;
calculated;
the charges; and
sinking fund in place.
The lease will probably also
WHAT DOES THE SERVICE CHARGE COVER?
Service charges differ from lease to lease, depending on the size and quality of the building in question. A typical service charge might cover any or all of the following:
maintenance
and windows
as grass-cutting and gardening
insurance (even if you live on the ground floor)
insurance - although this may be paid separately
charges
Details of what is in included in the service charge are included in the lease. This will give details of:
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contain a ‘sweeping clause’. This is designed to cover any services not specified in the lease. If the lease doesn’t have one of these, residents are only legally obliged to pay for the ser- vices that are listed.
HOW MUCH IS THE RIGHT AMOUNT?
The amount leaseholders pay in service charges can vary from year to year and will undoubtedly rise with inflation. Landlords are
entitled to add a reasonable man- agement fee to the charge but should not make a profit. If the lease doesn’t provide enough in- formation about service charges for residents to determine wheth- er or not they are paying a fair rate, they are entitled to a break- down of costs to check whether they are acceptable. Landlords are legally obliged to allow resi- dents to inspect and take cop- ies of accounts, receipts and other relevant documents. If this information isn’t forthcoming or leaseholders feel they have been unfairly treated, they should take professional advice from a char- tered surveyor who specialises in residential leasehold property, or from a housing lawyer.
WHAT IS A SINKING FUND?
Leaseholders only have to con- tribute to a sinking or reserve fund if this is stated in the lease. However, having one in place
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