Service Charges: The Basics

So you pay a service charge, the first and most important thing you need to do is read your lease or transfer. Contained within this document will be everything you need to know. It will tell you when you need to pay, what proportion of the overall charge you should be paying and what services the payment will cover. This article will make assumptions and speak in general, basic terms. No two service charges are the same, so please use this advice in conjunction with your lease or transfer.

The service charge is usually an annual payment in advance. You will be paying for services that are yet to be provided and your payment will help to fund these services. You should get provided with a budget or forecast of expenditure when you receive your service charge invoice. This should show a breakdown of the service charge you will be paying and exactly how much your landlord or management company expect to be spending on certain services over the service charge period. Remember at this point you have a legal obligation to pay the charge, therefore if you do not pay for any reason (however valid) the landlord or management company are well within their rights to enforce payment.

The service charge has to be two things “reasonable” and in line with the lease or transfer. If you feel one or both of these is not the case then discuss your points with the landlord or management company. They may have made a mistake or not taken something into consideration. In any case, my advice would be whatever your dispute, settle the service charge and dispute after. If you think the charge has been unreasonable for any reason then get some legal advice and look to apply to the LVT or the courts. You will stand a greater chance if you have met your obligations and paid your charge. If you do decide to withhold payment then it is important to realise that if all the service charge payers did similar, then no money would be available for services.


The budget or forecast that you receive will outline the services you should expect to receive throughout the year. These services should be mentioned in your lease and transfer; if they are not then legally they cannot be collected from you. Get familiar with your documentation; sometimes items are paid or budgeted for that, although may benefit a development, such as CCTV, are not recoverable from the service charge payers under the terms of the lease or transfer.

You may also sometimes find that you are being charged an incorrect proportion of the service charge than prescribed in the lease or transfer. This may be an error from the landlord or management company but it is not uncommon for all of the proportions on a particular development to add up to over or under 100%. If you think you are being charged the wrong proportion speak to your property manager, they can investigate and hopefully remedy this situation. This may be an occasion where a trip to the LVT is needed to vary the leases on a development to bring them in line with 100%.

At the end of a service charge year your landlord or management company have a responsibility to provide service charge accounts to you within six months. These accounts should show you exactly how much service charge was spent against what was paid specifically for each property on the development. They should provide a balancing figure and  deal with this balancing figure in whichever way the lease or transfer prescribes. Often a deficit position means you will incur an extra charge and a surplus may mean a credit. Your lease or transfer will specify exactly how these should be dealt with, if you have never had any form of balancing charge or credit then we would advise you consult your documentation.

There is a lot to service charges however you will find all the information you need right here, and remember these steps.


• Read your lease/transfer
• The service charge must be reasonable
• Pay your charge as demanded in advance
• Remember that your payment funds services. No payment = no service
• If you have a dispute, get some legal advice
• Make sure you are only paying for what your documentation states
• Ensure you receive service charge accounts within six months of the year end
• Check your lease/transfer to find out how year end balances are dealt with

But remember the most important thing – READ YOUR LEASE/TRANSFER! – I hope I stressed this enough.