Block Management Charges Explained

At Benjamin Stevens we offer Block Management services covering Edgware, Bushey and the surrounding areas.  It is a service that’s often misunderstood so we want to take this opportunity to explain it to you!

What am I actually paying for and why?
The terms of your lease should specify how your service charge is calculated, when it’s payable and what it can (or cannot) be used for. Typically, service charges are variable so they can change from year to year in line with the actual amount of money (or estimated amount) being spent on maintaining the property.

Generally speaking, service charges cover things like:
•    Contract costs for the people who supply a regular service to your block (i.e. cleaners, gardeners, concierge)
•    Day to day property maintenance and specialist services (e.g. electricians, locksmiths, building and repairs people)
•    Electricity costs for lighting/heating of communal areas
•    Buildings insurance
•    Property management costs and associated admin expenses (i.e. payment of a third party management company)
If the terms of your lease provide for it, your service charge may also include a contribution towards a sinking or reserve fund to cover the more costly maintenance projects that your block will need.

These major works include things like replacing the roof or redecorating the entire block – those infrequent, but large-scale projects that can cost a pretty penny. By collecting and saving money towards these things on a regular basis your managing agent or freeholder can avoid having to sting you for a large and unexpected bill when the time comes to do the work.

How is the service charge calculated?
Your property manager or landlord should have a good eye on the money they’ve already committed to contractors for the coming year, as well as the cash they need to collect and set aside for those future maintenance projects.

This will give them a total estimated figure for the coming year, which typically gets divided equally between all of the apartments in your block, or proportionately according to the size of your flat.

If there was a shortfall between what was collected in the previous year and what was actually spent, or there is likely to be an increase in costs for the coming year for whatever reason, then you should be notified with the details so you can see what’s going on.

Should I expect extras or one-off payments on top of my service charge?
Again, this depends entirely on what is detailed in your lease. Some leases do state that there may be an extra charge at the end of the year when actual costs are known (e.g. if there was a shortfall from the previous year).

Some will also credit money back to you if there was an underspend, although commonly if there is leftover cash, the managing agent or landlord may hang on to this and add it to the reserve fund for future major works.

For more information on leasehold charges, or if you’re unhappy with your current managing agent, feel free to give us a call today for some advice with no obligations. 020 8958 5501.