Your service charge is a share of the costs that the landlord pays to maintain and manage your building, according to the terms of your lease.
Service charges are usually split between leaseholders in a property. How your share is calculated should be set out in your lease.
There are many ways this could be done. For example, your share may be in proportion to:
- the size of your home
- the number of rooms in your home
- the rateable value of your property
- how different leaseholders benefit from different services
- the number of leaseholders in the building – an equal split
- other leaseholders’ contributions as determined by a landlord or their surveyor
It could also be just a fixed percentage of the total costs.
The terms of your lease
Your lease will not only tell you how the landlord’s costs are divided between leaseholders. It will also tell you what services are covered – that is, what services the landlord can charge you for.
This is important, because you do not have to pay for services that are not included in your lease.
Often, the terms of the lease could be general, such as ‘repairing and maintaining the structure of the building’. But some items such as legal costs, management costs, heating, cleaning, garden maintenance and alarm systems should be specified.
If you are not sure if you should be paying for something, check your lease or get legal advice.
The lease also tells you:
- how often you have to pay
- whether you have to pay in advance
- whether advance payments are based on last year’s costs or estimates for next year
- whether the charge is fixed from year to year or variable according to what the landlord has spent
Reasonable charges
The lease usually allows the landlord to get back the costs of maintaining and managing the building. But the law expects these costs to be reasonable, and that the works are done to a reasonable standard.
If you think any service charges are not reasonable, you have the right to make an application to the Tribunal to challenge them.
Ultimately, it is up to a Tribunal to decide what is and is not reasonable, depending on the circumstances of each case.
More information you might find useful:
- Service Charges and other issues: advice guide
- Resolutions for service charge disputes: flowchart
- Applying to the First-tier Tribunal: advice guide
- More Frequently Asked Questions on Service Charges
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