Service Charges Explained

Your Service Charge (or Variable Rent Charge)
The Service Charge or Variable Rent Charge collected from all property owners is to pay for the regular maintenance of the development. These monies are used to ensure all communal areas and grounds are maintained to the highest standard, buildings are insured, utility costs such as gas and electricity are paid and that all residents can enjoy a clean, pleasant and safe environment.

The money you pay can only be spent on your development, and only residents on your development can benefit from it. Money collected is never used on other developments. These requirements are all designed to protect you and to ensure your fund is safeguarded.

For your benefit and peace of mind, all owners will receive a certified set of accounts after completion of the first accounting year. Any surplus on your ‘on account’ payment will be credited in accordance with the terms of your Lease or Transfer. Similarly, any shortfall will be charged.

Advanced Billing
Your Service Charge/Variable Rent Charge is an ‘on account’ payment billed in advance. This is to make sure that sufficient funds are available for annual expenses like building insurance costs and regular maintenance work.

We need to make sure that money is available to pay contractors and utility company invoices to ensure that the development’s bank account does not become overdrawn. If the service charge ‘trust’ account runs out of funds, it will incur additional bank charges. This will then result in increases to the Service Charge/Variable Rent Charge, which we seek to avoid on your behalf, if at all possible.

Reserve Fund
It is common sense and good practice to save, on an annual basis, for future known large expenditure and the proverbial 'rainy day'. That is why we think it is sensible for a development to have its own 'Reserve Fund'.

Reserves are collected to help meet some of the cost of non annual expenditure such as external and internal decorations, renewal or major repair to parts of the building and also plant and machinery such as lifts and pumps.

The money is held in the same way as other service charge funds in a trust account with any interest being for the benefit of the reserve fund. It can only be used to finance projects on your development. It is set aside to provide a contribution to the actual costs incurred.

Ground Rent/Fixed Rent Charge
Your Lease or Transfer may state that as the property owner, you are required to pay an annual Ground Rent/Fixed Rent Charge to the Freeholder. Sometimes the Freeholder asks us to collect this charge on their behalf.

Management Fee
The Management Fee is the fee that we charge for managing your building or development. This charge may be subject to an annual increase. These fees form part of your annual service charge.

Estate Insurance
Where appropriate, external communal areas are insured for Third Party and Public Liability insurance and the premiums are included in your annual charges.