If you own a leasehold property, you're familiar with service charges. But understanding how budgets are created, what you're paying for, and your rights as a leaseholder can save you thousands and prevent disputes.

What Are Service Charges?

Service charges cover the cost of maintaining and managing the common parts of a building or estate. This includes cleaning, gardening, insurance, repairs, management fees, and contributions to reserve funds for future major works.

The Budget Cycle

Service charge budgets typically follow an annual cycle:

  1. Budget Preparation (Month 1-2): The managing agent prepares a forecast based on historical costs, planned works, and contract renewals.
  2. Consultation (Month 3): For significant changes, leaseholders must be consulted.
  3. Demand Issuance (Month 4): Demands are sent to leaseholders, usually quarterly or half-yearly.
  4. Year-End Reconciliation (Month 13-14): Actual costs are compared to budget, resulting in a surplus or deficit.

Key Components to Review

  • Management Fees: Are they fixed or percentage-based? Are they competitive?
  • Insurance: Is the rebuild cost accurate? Are you paying for unnecessary cover?
  • Reserve Fund: Is there a sinking fund for major works? Is it adequately funded?
  • Contractor Costs: Are contracts competitively tendered?

Your Rights as a Leaseholder

Under the Landlord and Tenant Act 1985, you have the right to:

  • Request a summary of costs
  • Inspect receipts and invoices
  • Challenge unreasonable charges at the First-tier Tribunal
  • Be consulted on major works (Section 20)

How Atom Care Helps

Atom Care provides transparent, real-time service charge reporting. Landlords and leaseholders can access budgets, track expenditure against budget, and view year-end reconciliations through the portal—anytime, anywhere.

Want to learn more about service charge management? Explore our block management services.