Service/facilities charge
Service/facilities charge
- What is a Fixed Maintenance Charge?
At Industrials we charge a fixed maintenance charge on our internal repairing and insuring leases. This allows tenants to forecast where their costs are going to be over the course of their lease, typically this charge increases by 3% per annum. The Fixed Maintenance Charge is established by reviewing the last 3 years’ service charge budget performance.
- How does my maintenance and service charge work?
Our units typically form part of a shared parade set within a shared estate. The common areas (such as central car parking, street lighting, landscaping and gritting) are tended to via contributions from our customers – this is paid via contributions toward the Service Charge or Fixed Maintenance Charge.
- 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 Royal Institution of Chartered Surveyors 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 on your estate is fixed at the time you take your lease, and increases each year by a fixed amount as detailed in your lease. This is to allow for cost inflation insured by us in the management of your property.
- 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 associated with maintaining your estate are included in your Facilities Charge, so no additional service charge payments or reconciliations will need to be made. No Hassle. No Surprises.
- Why do I have to pay a service / facilities charge and what does it include?
The purpose of the Service/Facilities Charge is to pay for maintenance and repairs to the common areas at your property, including the exterior of the buildings if you have signed an Internal Repairing and Insuring Lease. Typical costs include maintenance of roads, ad hoc repairs, gritting, CCTV, signage and labour. The cost of managing the maintenance is also included.
Where you pay a Facilities Charge the cost of this is fixed for the term of your lease (subject to annual fixed increases). Where you pay a Service Charge the cost is calculated annual, with any over or under spend invoices/credited back to the tenants on the estate.
- 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 help@industrials.co.uk.
Smart Lease: If you pay 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.
The Service or Facilities typically equals around 10-20% of the annual rent.