The Ins and Outs of Service Charges for Flat Rentals

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The ins and outs of service charges
Services charges will be a common occurrence for those living in a flat, as they play a part in how the building is taken care of and maintained. Service charges are considered the only measurable and manageable way to cover the buildings maintenance costs. If you live in a converted house, odds are you won’t need to pat monthly service charges, but in some cases you may be asked to pay such charges either quarterly, half-yearly or annually,
The purpose of service charges is to cover general repairs, regular cleaning and employment of certain building staff. In some instances service charges may cover building insurance, but this isn’t always the case and you may need to enquire with freeholder to see this is applicable to you. Service charges are usually non-negotiable and you will be required to pay them whether you utilise the building services or not.
Cost
The details regarding the amount you will pay in service charges should have been detailed to you prior to moving in. However, if you are unsure of what you are paying for check your lease or speak with your freeholder. Either should be able to clarify the following:
- The services you pay for
- When service charges are due
- How the service charges are collected
- How service charges are calculated and divided
- Whether or not there is a reserve or sinking fund in place
Your lease will more than likely have a sweeping-up clause, this will be a term that covers general services that aren’t mentioned or broken down in the lease agreement. Not all lease agreements will have this clause and if yours doesn’t then you can’t be held accountable for any services that aren’t strictly detailed.
Service charge costs can vary for year to year, this i...

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...r can take you to court over the matter and an eviction notice may even be served. However, for the freeholder to get a court order they must follow a special process known as forfeiture proceedings.
Reserve or sinking fund
As a precautionary measure some leaseholders pay repairs costs into a separate fund on top of their ordinary service charges. These funds are called “sinking funds” or “reserve funds” and act as contingency should a large repair bill come in. In order for this fund to be effective it needs to be paid into regularly over an extended period of time. Remember, if you sell your home before a payout is required it is doubtful that you will see any of your money back. Payment into such a fund is only necessary if it is stated in your lease. If you feel the time is right to set one up, speak to a solicitor or law firm to get information on how to do so.

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