A lower number on the price list makes the sales conversation easier. Nobody wants to be the one explaining a service charge that looks steep next to the scheme down the road, so there’s always pressure to bring it down.
That’s not a criticism, and it’s not every developer, or even most of them. Sometimes rather than a conscious decision, its a gap nobody’s flagged because the budget was built early and never really revisited against the finished plans.
Here’s the bit that doesn’t show up until later. A service charge that’s been squeezed to look competitive still has to pay for the same lifts, the same landscaping, the same lighting. If the budget was never really enough, someone finds out eventually, usually a resident, usually about eighteen months in, usually asking why their bill just went up by a third.
By then it’s not your problem anymore. It’s the property manager’s, or the RMC’s, or whoever’s fielding the calls. But it’s still your brand’s name on the marketing that sold the flat.
This isn’t how we work with the developers we partner with. We push back on the number at budget stage, while there’s still time to get it right, rather than watching it unravel after handover.
What a fit-for-purpose budget actually needs
Getting the number right at the outset isn’t really about being generous. It’s about the budget matching the plans as they actually stand, rather than a rough estimate carried over from the last scheme.
For housebuilders, that means reviewing the Landscape and Ecology Management Plan alongside any Biodiversity Net Gain reporting the scheme needs to meet. For developers building blocks, it means understanding what the Building Safety Act will actually require of your development, rather than assuming the last one you built is a fair guide.
It also means looking at the practical stuff many budgets skip. Whether the refuse arrangement actually works once residents move in and bins need collecting from wherever they’ve been planned to sit. How a contractor gets up to a flat roof to service a piece of plant, because someone has to eventually, and if there’s no safe way up there, that’s a cost nobody’s priced in.
Pull that together and what you get isn’t just a number. It’s an appraisal of the development from the perspective of whoever has to run it for the next twenty years.
It also means procurement done properly rather than done cheaply. There’s a real difference between a contractor priced well through proper tendering and one picked because their quote happened to be the lowest that came in. The first brings the number down without anyone noticing a drop in standards.
Why this matters more than it used to
Buyers are more switched on about service charges than they were five years ago. Solicitors flag them at exchange. Forums and Facebook groups compare notes between developments. A charge that jumps sharply in year two gets noticed, and it gets talked about.
That conversation happens whether or not you’re still involved with the scheme. Reputational damage doesn’t check who’s currently managing the building.
What we do
We work with developers while the budget’s still being set, reviewing the plans, pricing the detail, and building in the phasing so the number holds up once residents move in. It’s a lot easier to get this right at the start than to explain it away later.
If you want a second opinion on a service charge budget before it goes out, get in touch. We’ll talk you through what that should look like for your development.
