Service charges can come as a shock but if you know your stuff you'll avoid additional stress, says Nigel Howell, Chief Executive of FirstPort, the UK’s largest residential property manager…
Moving into a home can be a blur. Between the joy, the stress, the relief and the angst, there often isn’t time to digest all the detail.
Service charges are one thing that can occasionally slip through the net. This can lead to unforeseen bills landing on your doormat which can cause frustration.
However, while they occasionally come as a shock, most professional and responsible property managers will provide you with a clear overview of what fees and charges will be due, what they will cover and how they will be spent. In the majority of circumstances, the service charge covers the cost of keeping communal parts of the place you live – such as hallways, car parks and shared gardens – in good condition, all for roughly the price of a cup of coffee every day. 
For a detailed breakdown of how FirstPort calculates charges at the developments we manage, you can see more information at our website. But as a starting point, here is a summary of what to look out for when settling into your new home.
What they are
Service charge money goes toward making sure the building you live in is safe, clean and comfortable. That means taking on the day-to-day tasks, like mowing the lawn. It means sorting out the big jobs, like refurbishing the lifts. And, if something goes wrong – like the underground carpark gets flooded – the service charge should help cover the cost.
Your service charge money should be kept in a separate bank account, just for your development, and at the end of the year you should receive a full account of what we have spent.
How much they cost
The cost of your service charge will vary depending on a number of factors. Variables like the number of homes on site, the facilities available and the location of your home will all have an impact. The service charge is based on an estimate or budget we prepare each year which takes into account all the running costs relating to the communal areas of your development.
Where your building is run by a professional, responsible managing agent, the service charge will be carefully budgeted every year to cover the work that is needed. Generally, the charges are divided up into equal portions and payable by everyone living at the development.
Paying into a service charge pot also means you never have to worry about finding the right supplier, or deciding how to split the bill with your neighbours – your managing agent should do that for you. At FirstPort we find that our scale and experience mean we can always find the right people for the job – from the gardener that comes every month, to the expert we call if there’s a leak in the roof.
Who to ask
All the information about the service charge at your new home should be communicated to you by your estate agent or conveyancer during the buying process. If you are unclear on any potential charges you should ask for more information.
It’s no secret that service charges have been a cause of controversy in the past, and in rare instances they have been mishandled by substandard managing agents – with homeowners bearing the cost. However, by being informed and knowing the right questions to ask you can protect yourself from any negative surprises.
Not all managing agents hold themselves to the same standards that we do. As the largest operator in our market, we have taken the lead in transparency and choice over fees. When buying a new home, you should make sure the managing agent provides all the detail you need and that you know how your service charge payments will be collected, kept and spent.
Where they are properly accounted for, responsibly held and transparently spent, service charge payments remove the worry about upkeep and disputes over the management of communal areas. They allow you to get on with the most important thing: enjoying your home, and it’s our job as managing agent to make sure that happens.
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