At Centrick, we’re here to make service charge collection simple and reliable with our all in one platform for bespoke financial tracking and digital collection. As members of the Property Ombudsman and RICS Service Charge Residential Management Code, you can trust Centrick’s Building and Estate Management team to perform a streamlined, hassle-free, service that works for all parties.
Service Charges
Service Charge Collection Made Easy
What Is A Service Charge?
Landlords set service charges for tenants to cover any services to the building. This includes general maintenance and repairs, building insurance and sometimes central heating, lifts, porters, and the lighting and cleaning of communal areas.
The service charge is set out in your lease or tenancy agreement, and outlines what the landlord can and cannot charge for. It is also an option for your landlord to partner with a management company, such as Centrick, and the service charge will also cover these costs.
What Does My Service Charge Cover?
Service charge agreements can differ significantly based on the type and location of the property. Typically, they encompass all cleaning, repair, and maintenance activities for shared areas such as hallways, lobbies, and lifts. Maintenance of communal garden spaces is also a common aspect of service charges.
In addition to these services, charges often include administrative fees, which may cover insurance for the apartment building housing the flats. If your development offers access to shared leisure facilities—like a pool or gym—these amenities are likely included in the service charge as well.
Why Do I Need To Pay A Service Charge?
Service charges are crucial for maintaining the quality and functionality of communal spaces and services within residential properties. They fund essential amenities such as cleaning, maintenance, mutual ground landscaping, and security, ensuring a safe and pleasant living environment for residents. Transparent service charges foster trust between property managers and tenants, promoting accountability in financial management. Moreover, well-managed service charges can enhance property values, making them attractive to potential buyers or renters. By contributing to the upkeep of shared facilities, service charges play a vital role in preserving community standards and enhancing the overall living experience.
Contact Building and Estate Management
Find out more about Centrick’s service charge collection services by getting in touch with the Building and Estate Management team below:
Service Charges – FAQ’s
How Is My Service Charge Collected?
The property management company will determine the service charge based on an estimated annual budget. Since they cannot precisely predict the total cost of all services, they rely on the previous year’s expenses for their estimate and consider any anticipated changes in inflation and VAT.
Once the annual estimate is established, it will be shared with all leaseholders by the company (or property owner). The total cost will then be evenly divided among the leaseholders, each contributing their respective share. If actual costs exceed the estimate, the additional charges will be added to the next bill. Conversely, if the costs are lower than expected, any surplus will be deducted from the upcoming bill.
Fixed vs. Variable Service Charge?
Fixed service charges are set for the year ahead based on previous years accounts, with a small increase for inflation. These are different to variable service charges, as if the building or estate overspends, they can not request additional money at the end of the year. Fixed service charges do not always reflect the actual cost of the services required, meaning you may be overcharged or undercharged.
Variable service charges are based on actual or estimated costs of services, and therefore these may change on an annual basis. These charges are outlined at the start of the year, and ensure that property owners pay the true cost of the service. Any surplus or deficit that accumulates will be reflected in your service charge.
What Is The Service Charge Structure?
The landlord must provide certain services under the lease and can charge a service charge for doing this. Within your lease will be the dates of the service charge period, which will generally be a year, and then how often payments will be required – this can vary from an annual basis, to every 3-6 months or once the costs have already run up.
Your lease should also state the percentage of the overall service charge that you will have to pay. This will often be based on the square footage of your flat in comparison to the full property, but could also be based on a simple percentage of the overall charge or in relation to the value of your flat in comparison to the building.
Your landlord will state in the lease whether you must make advance payments (either based on the previous year’s costs or an estimate of the following year) or once payments are already made by your landlord. It is generally better for landlords to ask for charges in advance or else the landlord will have to buy all of the service charges out of their own pocket before recovering this from their tenants.
Service Charges On Freehold Properties
Traditionally, service charges are applicable to leasehold units, hence why we generally see service charges applied to flats and apartments. However, some freehold properties – specifically homes built on private land as part of a broader development – can be subject to a service charge too.
Freehold units can be subject to a service charge if communal spaces are not council-managed, if the property is accessible by a private road or gate, or if there is a mixture of houses and residential apartment blocks on shared grounds. This would necessitate the paying of a service charge to the managing agent to be spent appropriately for the upkeep and improvement of the estate.
Service Charges Made Simple With Centrick
Managing service charges effectively is crucial for leaseholders, as highlighted by the 2019 Homeowners Survey, which found that the most common complaints from leaseholders are high costs of works (26%) and limited control over which works are carried out (23%). At Centrick, our service charge collection and management services prioritise transparency and delivering the best value for residents. We are committed to keeping service charges low by negotiating on behalf of freeholders, ensuring that residents receive maximum value.
Centrick have been responsible for the collection of service charges for years as part of our comprehensive Building and Estate Management package. Our team of service charge accountants don’t just collect your service charge from leaseholders – we work alongside maintenance teams, leaseholders and freeholders to advise you on how to spend your service charge in the most effective possible way. All leaseholders can log and track their service charge payments via our intuitive portal, MyCentrick, for optimal efficiency and transparency
Our team of residential property experts proudly comply with the RICS ‘Service Charge Residential Management Code’, as well as being registered members of The Property Ombudsman. We’re here to ensure your service charge collection is swift, hassle-free, and works for all parties.
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Explore Centrick’s range of Building & Estate Management services, designed to support your development.
Talk to the Building & Estate Management Team
Find out more about Centrick’s service charge collection services by getting in touch with the Building and Estate Management team below:
