- My service charge has increased – why?
Standard Lease: The Service Charge will be variable from year to year depending on the costs the property owner incurs in maintaining the common parts.
We are obligated by the RICS to keep expenditure under constant review in order to identify any unforeseen variances and endeavour to notify occupiers of any significant material changes as soon as possible. However, from time to time this is not possible, and hence service charges can go up (and down) as costs vary.
Smart Lease: The Facilities charge increases each year as detailed in your lease. This is to allow for inflation.
- I have paid my service charge invoices but have received an invoice / credit note for a ‘balancing charge’ – what does this mean?
Standard Lease: The Service Charge that you pay throughout the Service Charge year is an interim payment. The Service Charge budget is set at the start of the year by estimating future expenditure over the next 12 months. At the end of the year the actual expenditure is calculated and finalised after the completion of the service charge accounts. The service charge accounts will compare the amount budgeted for the year with the amount actually spent. If the actual is more than the budget then a deficit be produced, if less is spent than budgeted, there will be a surplus. The accounts are audited in compliance with guidance produced by the Royal Institution of Chartered Surveyors.
If there is a deficit or surplus the amount will be apportioned between all occupiers and invoices / credit notes will be sent out accordingly.
Smart Lease: All costs are included in your monthly rent payment, so no additional service charge payments or reconciliations will need to be made.
- Why do I have to pay a service / facilities charge and what does it include?
Standard Lease: Full details on the Service or Facilities Charge is set out in your lease.
The purpose of the Service/Facilities Charge is to pay for maintenance and repairs to the common areas at your property. The Landlord also recovers any reasonable costs incurred by them in providing these services. . Typical costs will include maintenance, ad hoc repairs, gritting, CCTV, signages and materials.
Smart Lease: All costs are included in your monthly rent payment, so no additional service charge payments need to be made.
- How much is the service/facilities charge?
Standard Lease: If your property operates under a service charge regime you will be provided with a Service Charge budget at the start of each Service Charge Year. This will include the apportionment applicable to your unit. At the end of the year the total amount spent will be compared to the budget and you will be invoiced or refunded the difference. The Service Charge will be variable from year to year depending on the actual costs the landlord incurs.
If you require a copy of the budget please contact us on firstname.lastname@example.org.
If your property operates a facilities charge, then you will pay a fixed sum to the Landlord towards repairs and maintenance. The Landlord will be liable for any profit/loss over and above the amount paid, and for any variation from year to year.
Smart Lease: The Facilities charge is included within your rent. It typically comprises 10-20% of the total amount paid.