Why do you have to pay a service charge and what is included in the charge?

Optimized Service charge

Within the terms of the lease which you signed when purchasing the flat, you will have agreed to pay a service charge (as well as a possible ground rent) to the landlord in the manner in which the lease stipulates, whether that be annual, half-yearly or quarterly being the typical payment periods. Service charges payments received are then used to pay for the services which will be detailed in the lease, for cleaning, insurance, repairs, maintenance and so on. The service charge is also used to pay the management fee of the block management company.

Service charges are paid each year (although the frequency may differ depending on the lease terms) with the collective charges held in a trust account by the landlord or the block management company acting on their behalf.

At the start of the financial period, a budget will be produced, typically by the block management company, with each leaseholder then being sent an invoice for their proportion of that budget. Without going into the complexities of the invoicing terms, it is right to advise that all invoices must be accompanied by the summary of tenants’ rights and obligations, otherwise, these are not due.

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