What is a reasonable service charge?
What even is a fair service charge ?
Normally your freehold and/ or managing agent agree the required service charges for your block. There is no set level defined by a lease or enshrined in law.
The estimates laid out for itmes in service charge for your block do need be based on the actual costs of maintenance whichare normally estimated or quoted for by contractors. They are not to be confused with profit for the Freeholder or indeed the managing agent. All monies demanded must be go towards the maintenance of the building and what is charge must reflect a reasonable amount for the size of job, age of building, condition and amenities of the building.
When initially buying a flat your solicitor usually asks the managing agent or Freeholder for the current and future projected service charge levels, so you have foresight on the on ongoing charges before buy the property.
The avergae costs for these "Solicitor Enquiries" starts from about £275 plus VAT
Ringley have an historic reputation for reasonable service charges in the industry : go see our website area on client savings for proof : https://ringley.co.uk/savings. ARMA (the Association of Residential Managing Agents) reckons the average service charge in London should be in the region of £1,800 to £2,000 a year for a one or two bedroom flat. However this will course vary throughout the country but be wary of anything over £4,800 is a little high and you should conatct your managing agent for a breakdown.
Why am I even paying Service Charge ?
Laid out in your lease will specify how your service charge is estimated, when it’s due and what it is utilised used for. Normally, service charges vary so they can alter from one year to the next in line what has been spent the previous year and what is been planned for in future years.
Normally, service charge will cover :
Day to day maintenance expenditure for the block (i.e. cleaners, gardeners, concierge)
Maintenance and specialised services (e.g. electricians, locksmiths, building and repairs people)
Electricity for lighting, lifts etc of communal areas
Managing Agent fees and associated admin expenses
Your lease normally include provisions towards a reserve fund for major internal and external decorations.
If you are unhappy about the level of service charge :
Normally your lease will stipulate you have to pay a reasonable service charge (see above). If ithere is no such provision in the lease and you have received a demand for payment, you can then potentially challenge this.
Always ask your solcitor to scrutinise this area of the lease and ask them to gain an estimate of current and future service charges.Your prospective and inherited managing agent or Freeholder must let you have an annual statement layng out how the money was apportioned and ultimately spent. This is how it can be demonstrated that the money is being allocated professionally and charges are at a reasonable level.
If this basic information is witheld you are at liberty to query the charges (whilst not withholding payment which may put you in breach of contracted lease). It’s more adviseable to make the payment and then seek legal advice or recompenset.
You can also apply your case to the First Tier Tribunal (FTT) to make a judgement on fairness. For futher advice go to https://www.gov.uk/courts-tribunals/first-tier-tribunal-property-chamber