Annual Building Service Charges: Your Questions Answered

As a leaseholder, you may have to pay an annual service charge towards the upkeep of your building or development. But what is this charge and what exactly does it cover? Here, we look at the most common questions people have about building service charges.

What is an annual building service charge?

The annual building service charge is the fee you pay to cover the overall management of your building. Typically, this fee is levied by a managing agent – a third-party company responsible for looking after the building or development. It’s important to note the service charge is different to ground rent, which is the financial consideration payable under the terms of the long lease between you (the lessee) and your landlord.

How much is a typical annual service charge?

Service charges can vary dramatically. The average annual service charge is around £1,800 to £2,000, although it can be significantly higher for luxury properties in prime locations.

What exactly does the annual service charge pay for?

The service charge includes all the pro rata costs for the repair and maintenance of the building, including its common areas. In other words, the service charge pays for all the things – big and small – that make your building or development a safe and comfortable place to live. This usually includes:

  • Everyday maintenance and management
  • Repairs to the building or development as required
  • Buildings insurance, and health and safety measures
  • Gardening and maintenance of the grounds
  • Cleaning of communal spaces and windows
  • Wages for any staff employed at the development (for example, a concierge)
  • The managing agent’s professional fees

What are the advantages of the service charge?

If you’ve ever lived in a poorly-run building, you’ll know it can really impact your quality of life, not to mention the value of your property. A well-run building or development – i.e. one that is properly serviced, comfortable and safe – is a far more pleasant place to live, and a better financial investment.

How do I know the money is being used properly?

This is one of the biggest concerns people have about service charges, yet a scrupulous managing agent will always be transparent about how your money is being spent. For example, at Perry Hill, each building or development that we run has its own dedicated bank account for service charges and, every year, we share a detailed breakdown of the account with payees, setting out how the money has been spent.

With 25 years’ experience managing buildings and developments across the South East, Perry Hill understands how to deliver maximum value for development owners and residents. Learn more about our trusted approach to property management.