What are service charges?

Service charges are payments from the leaseholder to the Residential Management Company which arranges provision of services. These services include maintenance and repairs, insurance of the building, and in some cases provision of central heating, lifts, porterage, lighting and cleaning of common areas. The charges will usually also include the cost of management, either by the Residential Management Company itself or by a professional managing agent.

Service charges may vary from year to year; they are subject to unlimited but reasonable increases or decreases.

Details of the services which can be charged for by the Residential Management Company and the proportion of the charge to be paid by each leaseholder will be set out in the lease.

All costs must be met by the leaseholders; the Residential Management Company will generally make no financial contribution. Most modern leases allow the Residential Management Company to collect service charges in advance, repaying any surplus or collecting any shortfall at the end of the year.