Service Charges Explained

A service charge is a fee payable by each leaseholder towards the day to day running of the development. This includes for example: the On-site Manager’s salary, gardening, window & communal cleaning, communal electricity, building insurance, maintenance & repairs. A specific list of the items covered in your service charge is included in your annual budget documentation.

Your lease agreement will define that a service charge is payable for a defined percentage of the overall shared costs for the maintenance and running of the building.

A service charge is payable in advance as per the terms of the lease.  In most cases it will be half yearly, but could be monthly, quarterly or annually.

A budget will be prepared at the beginning of each financial year. The budget is the estimate of what we believe the service charge expenditure will be in the upcoming year. This will typically be based on previous year’s expenditure, known contract costs and allowances for inflation. You will receive a copy of the budget approximately a month before the financial year begins and will usually be invited to a meeting where the Area Manager will consult with leaseholders prior to the finalisation of the budget.

At the end of the financial year, annual accounts will be prepared. These are reviewed and signed off by an independent auditor. All leaseholders are provided with a copy of these accounts and Owners will be invited to a meeting with the Area Manager to discuss.

We keep a record of all invoices processed for each development and leaseholders are able to request to see this information.

The service charge (and contingency) monies paid by leaseholders are held in a designated trust bank account (under section 42 of the Landlord and Tenant Act 1987). Any interest is paid into the account and is for the benefit of Owners at the development.

Funds in your development’s bank account are safe, completely independent and can only be used for the purposes of your specific development. All our bank accounts are protected by the Financial Services Authority (FSA).

This is an amount of money that you pay to your landlord either annually or in instalments for living at your development. Your lease agreement will define if ground rent is payable, any mechanisms for its recalculation and when it is due for payment.

Following the end of your development’s financial year we prepare annual accounts. These annual accounts are audited by an independent firm of auditors and will detail service charge fund expenditure. Your Area Manager will invite all Owners to attend an ‘Accounts Meeting’ to discuss the expenditure from the financial year and answer any questions you may have.

Service charge is invoiced as per the agreed budget for a development. Once the annual accounts have been audited, it will be confirmed whether there is a surplus (where budgeted costs have been overestimated) or a deficit (where budgeted cost have been underestimated). Any surplus or deficit will be distributed to Owners on their next available service charge bill as per their proportion of the service charge defined in the lease.

All invoices should be paid as they fall due. If a property is sold part way through the financial year for the development then normally the solicitors will arrange through the sale and completion process for those invoices to be pro rata’d and the new Owners to pay for the period of the invoice they will own the property for.

The management fee is payable to Churchill Estates to cover the costs of the extensive range of activities and functions we undertake to ensure the efficient management of your development. A copy of what is included in the management fee is available on your communal notice board or from your On-site Manager upon request.

A contingency fund is held on behalf of leaseholders to cover the cost of major works or other significant items of expenditure expected within the foreseeable future. An example of this would be a replacement roof, door entry system or lift.

Yes. These costs are calculated and divided amongst all of the apartment Owners and as per the lease are therefore still payable if the apartment is unoccupied.