Service charge

40% of Leaseholds Don’t Know Exactly What Their Service Fees Are Making

Research by property management specialist Keller Williams UK found that the majority of leaseholds view service charges as unfair, the lack of transparency on how they are spent is also a significant issue.

In addition to land rents, rental charges will be paid by some tenants to cover the maintenance costs of the building in which their property is located.

They can also be invoiced by the owner of a building for any work necessary to maintain the value of the property.

While there is no cap on what can be charged, the owner or owner must prove that the cost is justified based on the work performed.

Typically, the service charge will cover the ongoing maintenance of a building with multiple residences including, but not limited to, cleaning of common areas, building heating, personnel costs such as a janitor, building insurance, maintenance and repairs and grounds maintenance.

Of course, this cost can vary from region to region, and Keller’s research shows that the average service charge will cost leaseholds over a thousand pounds sterling in London (£ 1,900), the South East ( £ 1,301), East of England (£ 1,1882). and the South West (£ 1,121), while in the North East it averages around £ 650.

So while service charges can be high, they play an important role in the maintenance of leasehold homes and so it is perhaps surprising that Keller Williams found that 74% of leaseholders don’t think that it is fair to charge them.

However, research also shows that it could be due to how their money is spent, rather than having to pay to maintain the building itself.

A whopping 96% of leasehold owners said they would like to see more transparency about how their service is calculated and why they are paying the required amount.

Keller Williams UK CEO Ben Taylor commented:

“Service charges are an integral part of maintaining the wider community areas and standard of living in many leasehold properties, so it’s quite surprising that so many leaseholders think they are unfair. “

“Of course, this attitude seems to stem from a lack of transparency about how they are spent, rather than having to pay them in the first place.”

“I think many appreciate that their service charges could increase if substantial maintenance work was required.”

“However, this point of friction between tenant and upfront landlord could be greatly reduced by focusing on educating and informing tenants about how their money is spent.”

Do you think it is fair to charge a service fee for the maintenance of rental units?

Responnse

Respondents

No

74%

Yes

26%

Do you think there should be more transparency on how service fees are billed and spent?

Responnse

Respondents

Yes

96%

No

4%

Survey of 1,203 rental buyers (last six months) conducted by Keller Williams UK (April 8, 2021).

The table shows the average service charges by region

Site

Average service charge (2021)

London

£ 1,900

South East

£ 1,301

East of England

£ 1,182

South West

£ 1,121

North West

£ 944

West Midlands Region

£ 894

East Midlands

£ 860

Yorkshire and the Humber

£ 824

Northeast

£ 649

Source: Keller Williams United Kingdom