Owners of flats are ordinarily required to pay service charges to the owner of the building (who we will call the Landlord). In recent years, the average service charges have increased dramatically. A study released last year found that service charges for new build apartments in the UK had reached an average of £2,777.00 per year. This figure is likely to continue to rise.
While the average has no doubt been increased by the number of exclusive apartment buildings that include gyms, roof gardens, and even cinemas, even flats in older buildings are looking at a yearly average service charge of around £1,800.00. This leaves people either looking to get out, or challenging the charges in court.
What are service charges?
A service charge is a sum payable in respect of repairs, maintenance and services.
The Landlord will incur sums in looking after the building: usually maintenance and repairs to communal areas such as lifts, corridors, gardens and roofs. It can also include things like the cost of lighting and cleaning the communal areas of the building. The Landlord (or its property manager) will then pass these charges on, splitting them between the owners of the flats. All leases are different, so how, when and how much service charge is paid will depend on the terms of your lease.
Unless some special works are required in a particular year, a flat owner’s service charge will often be similar from year to year.
Top Tips for dealing with service charges
There are a number of things you can look out for when you are considering your service charge bill. If the Landlord does not follow the correct procedure, you may be able to reduce the amount of your service charge bill or even avoid paying it altogether! Here are our top tips:
Check your lease. The lease should set out when your landlord can ask for a payment of service charges, and whether this is in advance, or once the works have been carried out.
The service charge must be “reasonable”. This means that the works that have been carried out must be reasonable and the amounts charged to you must also be reasonable.
The Landlord must demand the service charge from you properly. There are many requirements for a Landlord to meet for its service charge demands to be valid. If those requirements have not been met, there is a chance that you may not have to pay the service charge.
Are the service charges for one off, major works? If so, has the Landlord consulted you and your fellow tenants in advance about the work that it wants to carry out? There is a lengthy procedure that Landlords must follow before they can charge you for such work and, if they do not follow that procedure, those service charges may not actually be payable at all.
Are the charges in relation to areas of the common parts for which you should be paying? For example, leaseholders of ground floor apartments will often not have to pay towards the maintenance of the lift.